The affordability crisis in social housing

IF the Conservatives know the inevitable consequences of their social housing policies THEN they are deliberately setting out to destroy the social housing model.

IF the Conservatives do not realise the inevitable destruction their policies will cause then there is hope for the benefit cap and pay more to stay to be changed.

Little if any hope can be held out for a change in Conservatives right to buy policy as giving housing association tenants the same right as council tenants is a powerful basis for selling RTB2 to tenants, landlords, political opponents and the general public. Much has been written on RTB2 and much more will be yet the overt and sole focus on it is deeply worrying as the benefit cap and pay more to stay really do create a radical change and they both centre on affordability

In short:

What tenant household types can afford social housing and
What tenant household types social landlords can afford to house…

…are THE issue for social housing and a far deeper and more immediate problem for social housing than RTB2.

In a post a few days ago I outlined how the benefit cap at £20,000 per year means that the household with two children will be hit by the cap as the following table details

The amounts above are the weekly HB shortfalls and tenant top-ups needed per week and the range of 3 bed social rent levels outside of London falls within the £90 – £140 per week range so you can see immediately the benefit cap at £20,000 per year makes a larger number of benefit households financially toxic.

Of course both the larger households, those with 4 or more children and smaller households who are in the so-called “affordable rent” property are even more toxic. The social landlord cannot afford such tenant households and those tenant households cannot afford the cheapest form of rent which is social housing.

If the social housing model was a new invention beginning at April 2016 when the £20k per year and £384.62 per week cap begins then councils, ALMOs and housing associations would NOT house any family at risk of being on benefit never mind those that are if that household had 2 or more children.

We can extrapolate from official HB data that social housing has circa 550,000 households of working age receiving housing benefit that have 2 or more children and outside of London. Put another way that is 550,000 potentially toxic and existing social tenant households who could be hit by the £20k benefit cap.

Those claiming working tax credit or DLA /PIP will be exempt as will the 28% of ESA claimants who are in the support group yet that leaves a huge number of affected social tenant households. The table also puts paid the disingenuous DWP estimate of the reduced benefit cap affecting 126,000 households in total and that wholly inadequate DWP estimate covers London too. My cautious estimate of 197,000 households containing 654,000 children affected and just outside of London is also way too low

Social landlords can and will severely tighten new allocations from right now to prevent any more such toxic households from becoming social tenants and so will private landlords. Private landlords can easily get rid of the toxic benefit tenant households and nobody doubts they will. Social landlords will have no choice but to evict the financially toxic tenant households as the average weekly shortfall is circa £75 per week and £3,900 or so per year – and that average excludes London too.

This is where pay MORE to stay also factors in and makes this mess ten times worse.

Without pay MORE to stay social landlords could replace the 3% – 5% of social tenants evicted because of the benefit cap with working tenants. This would see the current 64% of social tenants receiving HB fall to around 60% and social landlords will have a steady and constant stream of working tenants who would jump at the chance of social renting rather than the much higher private rental cost they now have.

Pay MORE to stay means those with a household income – note a household income not just wage income – of over £30,000 per year will have to pay full market rent rather than a social rent level. Such tenants would have greater security of tenure and a higher standard of property and greater rights to repairs and all of the other benefits and advantages social housing gives over privately rented housing.

As I detailed here a couple with one child and partner working full-time at £6.80 national minimum wage (from Oct 2015) and the other working 24 hours per week will have a household income of over £30,000 per year and will see a 50% rise in rent if in a low rent area and if they live in a high rent area such as Surrey could see their 2 bed rent rise from £130 per week to £280 per week if not more.

What that means is the social tenant forced to pay full market rent will INEVITABLY take up the right to buy option as a mortgage payment will be far less than the gross market rent they will have to pay.

So two obvious issues flow from the benefit cap and pay MORE to stay policies:

Just who the hell can social landlords accommodate?
Where in hell can benefit households live if they have 2 or more children?

They are both rhetorical questions as the only way to escape the benefit cap is to work which then gives the PMS risk yet the crudeness of the benefit cap means the real issue for social landlords and social tenants are in those existing households where the parent(s) is not expected to work.

Social housing largely comprises those not expected to work and that exposes the crudeness and real impact of the benefit cap. Two-thirds of the 1.765 million HB households with dependant children are headed by a lone parent and many of them are not expected to work until the youngest child reaches school age.

In fact the emergency budget contains a measure which says from 2017/18 and note well a full year after the benefit cap begins that “UC parent conditionality from when youngest child turns 3” will apply. A condition of receiving welfare benefit for a parent will be the parent seeks works when the youngest child is 3. Yet the benefit cap makes no such concession or allowance for this and the lone parents of children who are 1 day old to school age are at immediate risk from the benefit cap reduction.

If the lone parent does not work that household will be evicted and it genuinely is a case of get a job or lose your home and 94.9% of lone parents with dependant children receiving housing benefit are women.

Note well the benefit cap like all welfare benefit policies does not have a morality clause. Unlike the Daily Mail reader it cares not how a woman becomes a lone parent it merely accepts that lone parenthood is the norm for dependant HB households whether the mum is the (DM) proverbial gets pregnant to get a council house lone parent or the mum whose husband has been run over by a bus or run off with somebody else or the relationship has broken down like the majority of relationships do.

The plight of the single mother and lone parent due to the benefit cap is stark. If the can’t get a job because of child care or any other factor they WILL be evicted. This is not a possible scenario, this is a definitive racing certainty and the lone parent households become dependent on the parish once again. The local council will have to find them somewhere to live and the local council will have to foot that bill and this is a huge transfer of cost from central to local government and a cost that can easily be in excess of £3 billion per year.

The single mum may resort to working in the grey economy or even turn to the oldest profession as they have done so often in the past in order to keep their roof over their children rather than be placed in allegedly temporary and unsuitable homeless accommodation that becomes almost permanent accommodation and permanently unsuitable for the mum and for the children.

The benefit cap is the nudge theory of administer super glue to your thighs and you shouldn’t even be contemplating having safe sex in case the condom bursts. Only have children if you can afford and IF you are 100% certain that your partner will not bugger off with his secretary and will not get run over by a bus. Yes there is also a clear and obvious argument there for greater domestic violence and abuse as it forces couples to stay together regardless.

The pay MORE to stay policy actively discourages the take up of employment and/or additional employment and so together these two policies are straight out of Dr Doolittle with their Pull Me Push Me nudge theory.

As I stated here the benefit cap and the bedroom tax are exactly the same Pull Me Push Me policy as the bedroom tax forces social landlords to fully occupy a property and only let on that basis given the under occupancy charge or bedroom tax. Yet in fully occupying the social housing property the much greater financial risk of the benefit cap comes into play.

Financially it is better for the social landlord to deliberately UNDER OCCUPY the property and be left with the 14% minimum bedroom tax which averages £15 per week than to fully occupy the property and be left with a financial risk of £75 per week or 5 times that financial risk.

I refer back to the table above and all of those household types can qualify for a 3 bed property which if it is £100 per week in a low rent area sees the bedroom tax give a £14 per week risk of arrears yet fully occupy it with the couple with 3 children and have a £49 or £78 per week arrears risk.

The couple with 4 children who also qualify for a 3 bed if they have two boys and two girls will not a penny in housing benefit and so their arrears risk is 100% and the 4 child households – 97,870 of working age in receipt of HB – are as toxic as can be as are the additional 46,932 households who have 5 or more children.

I started this post asking IF the Conservatives realise the inevitable consequences of the benefit cap and pay more to stay which I touch on above.

They do not is my considered view and neither can the Labour Party and neither can anyone who promotes the benefit cap policy or the pay MORE to stay policy. It is time the real horrors of the benefit cap are disseminated as wide as possible so the general public realise just how horrific and how ill-conceived these policies are.