Bogus DWP Benefit Cap figures

The DWP has issued a dangerous and bogus underestimate of the number of families with children the reducing benefit cap levels will evict and make homeless.  The DWP estimate of 126,000 households containing 330,000 children is bad enough yet the far more realistic figure will be 255,00 households and over 800,000 children.

I have written dozens of posts on this very specific issue yet they are difficult to comprehend as they involve two critical factors.

  • The first is that they involve complex numerical calculations and many have an immediate aversion or number blindness to such calculations.
  • The second is the fundamentally errant assumption that as London has higher rent levels and sees 45% of the GB total households affected currently, that this will continue in the reduction of the cap limits.

All I can do with the ‘number-blindness’ issue is keep explaining and hopefully it will sink in.

Both Conservative and Labour politicians are in favour of the cap reductions and so no democratic scrutiny is taking place and they wrongly believe a cap must equal a reduction in benefit paid out, when as a matter of verifiable fact, a cap reduction increases the amount of ‘welfare’ paid out as strange as that may read.

I explain both of these points again below.

With regard to the current 45% affected in London and 55% in the rest of GB that proportion will move to 22% in London and 78% in GB – ie rest of England plus Scotland plus Wales.  This is largely due to the fact the existing cap already hits most households in London yet does not in the rest of GB and note well that London accounts for 17% of all rented housing and 83% or 5 times as much is in the rest of GB – the regions.

Two tables below explain.

Table 1: The Regions – all GB except London

 

obcreduction-regions

The left hand column represents households.  For instance 2P1C represents the household with 2 Parents and 1 Child and the 1P3C represents the 1 Parent 3 Child household and so on.

If these households are on ESA they receive £29.05 per week more in welfare benefit than if they were on JSA and as a result they have 1 £29.05 per week lower entitlement to the maximum housing benefit they can receive.

This is how the benefit cap operates by subtracting the welfare benefit plus child benefit plus child tax credit combined amount from the cap limit leaving a maximum amount of housing benefit payable.

In the above regional table we see that the 2P1C household right through to the 2P3C hosuehold is NOT currently affected by the £500 per week cap yet will be affected when it reduces to £384.62 per week in April 2016.  This is the shading going from green to red above and this reveals many more households are caught by the cap.

Now let’s compare that to London in Table 2 below and we note that all of these household types are already affected

Table 2 – London

obcreduct-london

 

As you can see these smaller household sizes are ALREADY affected in London and mostly in affordable rent properties and in the private rented sector.

The figures in both tables also show black and white end columns and this is the households which are affected in mainstream social rent properties – your common or garden council and housing association properties by the reduced caps.  Again as you can see more social rent household will be affected in the regions than in London too.

Overall this means that:

(a) More social rent household types and numbers will be hit in the regions than in London

(b) All affordable rent households in the regions who are largely unaffected now will be affected by the £115.32 per week overall reduction in the cap in the regions while those in London are already affected in the main

(c) All London PRS households are affected now yet very few PRS households in the regions are currently affected yet the reduced cap will affect ALL PRS properties across the regions due to the severity of the 23% reduction to £20,000 per year from £26000.

All of the reasons above demonstrate why the regions will have 31 in every 40 benefit cap affected households after next April and London just 9 in every 40 households affected when the reductions take place whereas now the regions have 22 in every 40 affected and London has 18 in every 40 cases.

Currently Table 1 (The Regions) also shows that to be affected currently the household is one that has 4 children or more.  This drops to the households with just 2 children in the regions and that represents a huge increase in the numbers affected.

  1. Official DWP date reveals that just 4% of all households receiving housing benefit have 4 children or more and so the benefit cap at £500 per week can only affect a maximum of 4% of benefit households.
  2. The same same DWP data reveals that over 27% of all households have 2 or more children so the reduced cap of £384 pw in the regions can now affect 27% of households there rather than a maximum of 4% now.

That is a 6.5 fold increase (from 4% – 27%) and it has to be applied on the vast majority of housing benefit households in the regions, the 83% of all claimants who live in the regions and not in London.

There are 977,914 households of working-age with 2 or more children receiving housing benefit who make up the maximum number of household who can be affected by the reduced caps before we subtract those households who receive DLA or PIP or ESA and in the Support Group and those who are working and qualify for working tax credits.

My total of 255,000 households assumes 74% will be on an exempt welfare benefit or be working and is a very cautious figure indeed.  The reality is likely to be more than 255,000 households affected.

The numbers when calculated give a average of 3.31 children per household which projects 844,000 or so children living in the newly affected benefit capped households and with an average reduction of £75.73 per week meaning these families are at severe risk of eviction and homelessness in social housing and guaranteed eviction and homelessness from privately rented housing.

My figure of 255,000 households is just over 5% of all households in receipt of housing benefit and means 19 in 20 households will not be capped.  The figures when stated that why do not read as sensational whereas 255,000 households containing 339,000 adults and 844,000 children making a total of 1,183,000 men, women and children all at severe risk of homelessness does.

Yet those are one and the same and the evidence base for that projection is a extremely detailed and factual one however people simply choose not to believe simply because the figures read so incredulous and they often start from the errantly superficial assumption that London must be worst hit because of the higher rent levels there.

London is only one-sixth of all rented housing that can be affected by the benefit cap and it largely has borne the brunt of benefit capped households because of its higher rents….to date!  That changes dramatically with the imposition of the £20,000 per year cap as explained above.

The DWP, the MPs of all parties and the usual social policy commentators such as JRF, Shelter and the rest simply have not considered the benefit cap reduction in anywhere near the detail they need to.  My crude and simplistic example above is an attempt to demonstrate the massive difference this makes to the regions and to the widest of audiences.

In the simplest terms families with 4 children are pretty rare but families with two children are not and that is precisely what the benefit cap reductions mean – these smaller families with 2 children will be hit by the benefit cap when it reduces to £20k per year in the lowest areas of the North East and in Scotland and in the valleys in Wales.

Bizarrely in Surrey and in many parts of the Home Counties we see higher rent levels than London yet have a £3000 per year lower cap of £20,000 per year to London’s £23,000 per year cap.

That last point shows just how ill-considered this policy is and why it needs to be highlighted to any and everyone who has the ability to get it changed.

Finally, and I will keep on hammering this point the current benefit cap and other welfare reforms that all directly sought to reduce the housing benefit spend, all, collectively, INCREASED the housing benefit spend and in real terms.  The policy does NOT save a penny to the taxpayer but increases the taxes all have to pay.  Here is yet again the Institute of Fiscal Studies analysis from March this year:

ifs hb real terms

£1 billion per year higher in real terms – £2.8 million MORE PER DAY is the added cost of these welfare reforms and no saving to the public purse, the taxpayer, the Treasury or anyone else!

 

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