The overall benefit cap is believed to only affect the larger family yet it will also see the lone parent with 2 children inevitably evicted from some social housing properties.
Late last night I was directed by a tweet to the Scrutiny Unit as the House of Commons who are seeking submissions on the Welfare Reform & Work Bill 2015 of which the reduced benefit cap levels are a part. Upon looking at the criteria however it says that:
- Submissions should be in the form of a Word document. A summary should be provided. Paragraphs should be numbered, but there should be no page numbering.
- Essential statistics or further details can be added as annexes, which should also be numbered. To make publication easier, please avoid the use of coloured graphs, complex diagrams or pictures.
- As a guideline, submissions should not exceed 3,000 words.
Those criteria are limiting and wrong. The benefit cap can only be explained using numbers and actual figures which are best represented and most easily communicated in table form as below. For ease of understanding it is a pain in the neck to have to follow a written argument but then to stop and refer to an annex or appendix. Further this apparently only acceptable format makes submissions lengthier as well as not flow cogently. Moreover, I can procrastinate (Oi!!)
Seriously, I could knock off 5,000 words on the benefit cap reductions alone and still not cover all the issues and the benefit cap reduction is just one of the elements of the (knee-jerk) Welfare Reform & Work Bill with other key issues including pay more to stay etc.
I then looked at the members of the Work & Pensions Committee and decided to show in tabular form precisely what the reduced benefit cap will mean in their constituencies using exact data from official sources and I quickly knocked off a series of tables for their consideration and for their horror at what this policy does mean.
The Work & Pensions Committee need to look at the facts and that is the only possible way to do their job and scrutinise so here are those tables so they have no excuse NOT to scrutinise and see this policy for what it is and what it means and why it has to go.
Here’s the first table
Notes (Applies to all tables):
- The Income figure in the top left £254.04 is the amount of welfare benefit income a lone parent with 2 children gets including child benefit and child tax credit – and in this case the base benefit is ESA working group which is £29.05 more per week than JSA.
- This £254.04 income when deducted from the £384.62 cap (£20k pa outside London) gives the maximum housing benefit the household can receive of £130.58 as shown in the second column
- The first column shows 6 members of the Work & Pensions committee and their constituencies
- Columns 3, 4 and 5 are actual rent levels in each committee members constituency and come from the housing regulator’s official figures in the SDR published September 2014 for the 2013/14 financial year which are the official returns social landlords give to the regulator.
- These 2013/14 figure for social rent (SR) and affordable rent (AR) have been uplifted by 3.7% for 2014/15 and then by 2.2% for 2015/16 – both the official SRS formula rates – to arrive at accurate figures for today.
- The private rent figures are derived from the AR level being 80% of the local market rent and a cross check with VOA figures sees these levels being accurate
- I have defined the shortfall as unaffordable if the top up to the rent is more than 10% of the subsistence level income the household receives and in this case that it greater than £25.40 of the £254.04 Income level
- Any figures in red type for shortfalls are thus not affordable
- NB1 -South Shields is one of the lowest rent areas in England with few if any areas having lower rent levels
- NB2 -South Cambridgeshire is a high rent area although a number of more expensive rent areas exist outside of London such as Brighton and a few more.
Lets now look at the 2 parent household with 2 children and assuming the base benefit is JSA
Gloucester now joins South Cambridgeshire in seeing the 2 child family hit by the benefit cap reduction in social rent and from the lowest possible base benefit income in JSA.
Now we need to look next at the couple with 2 children whose base benefit is ESA which is £29.05 per week more in income and so gives £29.05 per week less in the maximum housing benefit payable to the household in the zero-sum benefit cap. Yet first note extremely well that the higher ESA as the base benefit in the benefit tenant income is far more common than JSA as the official housing benefit data tables (at tab 6) reveal:
As you can see clearly there is almost four times the number of housing benefit claimants in receipt of the higher ESA than there is receiving JSA and being passported onto housing benefit. You can also see that this is an increasing trend too as in December 2013 there was only 2 ESA to JSA claimants and now the ration is 4 to 1.
The couple with 2 children with ESA as the base benefit which is far more likely than those receiving JSA now sees a bog-standard 3 bed property at SOCIAL RENT become unaffordable for the 2 child household in Gloucester and arguably in South Cambridgeshire as well – Any notion that the benefit cap only hits the large family and only then in private rented accommodation is a huge myth and the scale of the impact of the £20.000 benefit cap reduction is revealed.
Official DWP figures show that some 418,000 households on housing benefit and of working age have 3 or more children and from that base I projected with very detailed figures here that 197,000 households of working age outside of London alone would be hit by unaffordable rent shortfalls directly created by the reduced benefit cap.
This cautious figure of 197k HB households hit contained 654k children who will likely be made homeless and into poverty by any definition and of course cost the public purse hugely increased amounts just in temporary homeless accommodation costs which local authorities cannot avoid given their duties under the1996 Housing Act
If we THEN have to include a number of households with 2 children that figure rises dramatically as while there are 418,000 working age HB households with 3 or more children, there are 464,676 HB households of working age with just 2 children, or more than the entire numbers of HB households with 3, 4 and 5+ children combined.
The Lone parent with 3 Children
As we can see the 1P3C household cannot afford a 3 bed property at a social rent even in the lowest rent areas with the yearly shortfalls ranging from £1,265 to £2,920 per year and that is at a social rent level. That rises to over £5,650 per year in South Cambridgeshire for the affordable (sic) rent model of social housing and I again remind that there are more expensive SR/AR areas than South Cambridgeshire.
The numbers say it all in terms of the ability of a tenant on benefit being able to afford the cheapest rented properties and the ability of the cheapest social landlords to be able to afford the benefit household with 2 or more children.
Where will such households live if they cannot afford social housing?
That becomes the obvious question yet in order to address it we have to look again at the benefit cap as the blunt instrument it is. The Benefit Cap policy hits only on the benefit income level and the only way to escape it is to take up employment that qualifies for Working Tax Credit which then exampts the household. However because the Benefit Cap only operates with a crude income criterion and nothing more it hits many households who we can term not expected to work.
The lone parent with children of under school age is an obvious case in point as the lone parent is NOT EXPECTED to seek work until the children are of school age yet the Benefit Cap takes no account of that and hits those households in the same way it hits the stereotypical single parent with 3 children by 3 different fathers who lives on Benefit Street or any other poverty porn TV show.
The DWP publishes a range of ad hoc reports in addition to the quarterly housing benefit statistics and other usual reports and in December 2014 it published a breakdown of the number of benefit households by constituency and by principal benefit received and below is that table for ESA.
What this reveals is that almost 21% of ESA households have children under school age and so – ceteris paribus – it is not unreasonable to deduce that 21% of benefit capped households will have pre-school age children in them and these not expected to work households will be caught by the blunt instrument that is the benefit cap and be evicted and made homeless.
The last set of ESA official figures I have seen date back to 2012/13 (and if anyone has later ones please let me know) which detail what percentage of ESA recipients are in the working group (72%) who are caught by the benefit cap and the other 28% are in the support group of ESA and thus exempt from the benefit cap.
Two practical and significant problems with the support group being exempt and working group non-exempt in ESA occur.
Firstly, no landlord whether social or private knows whether their tenants are in the support or working group and therefore they cannot assess the risk of arrears for all ESA claimants – and that assumes they are aware their tenants are on ESA in the first place as both ESA and JSA automatically passport the claimant onto housing benefit which is all the landlord needs to know and has ever needed to know.
Secondly, there is no apparent lawful way for landlords to get this very precise information unless the tenant volunteers that information to the landlord.
This second point will work differently for private and social landlords. The social landlord will find out after the fact when the first 4 week housing benefit payment comes in (assuming direct payments not operable before April 2016) and can then respond and react to that risk. However, the private landlord I strongly suspect will seek to evict the tenant on ESA, whether in working or support group, from January 2016 as the private landlord will simply not take the potential financial risk. January 2015 as two month notice is needed yet this can often take 3 months so the private landlord will not have any ESA tenants by the time the reduced benefit cap comes in at April 2016.
What that means is the private landlords are likely to evict 100 of each 100 private tenants in receipt of ESA when only 72 of each 100 private tenants on ESA is a financial risk. That means that 39% more private tenants on ESA will be evicted than is logically needed which creates more cost to local government homeless departments and to the local taxpayer.
The benefit cap is ill-considered and morally repugnant and it can never work in either changing behaviours or of reducing cost.
This IDS benefit cap policy shows his epiphany in Easterhouse made him into the Queen of Hearts and the temptation in not calling this post IDS the Phallus in Wonderland was er…