Within 5 minutes of yesterday’s budget documents being made available I revealed that the LHA maxima cut was £1 billion over this parliament. Now I can reveal that the budget documents reveal that council tenants will be paying £1 billion more this parliament through the pay MORE to stay policy… or at least Osborne believes that yet will he be paying out £2bn more instead?
Here are those budget figures:
As you should know the additional rent charged through Pay MORE to Stay by housing associations stays with housing associations – they keep it in other words – and it is a voluntary policy for HAs.
HOWEVER – for council landlords the policy is mandatory AND any excess rent charged through pay (MORE) to stay is not kept by the council landlord it has to be returned to central government and this is what the above shows.
So the above official budget data means that in 2017/18 local councils will charge their tenants at least £260 million per year more in rent – I say at least because councils first deduct their admin costs in applying the pay MORE to stay policy and so if this is say 10% then councils will have increased their rents and taken an additional £286 million from council tenants.
In 2018/19 this is £205 million and then £260 million more in 2019/20 and then a further £305 million in 2020/21 making a total of £1.03 billion pounds returned to government and if admin costs are 10% a total of £1.13 billion more in rent from council tenants.
What is interesting here is that the pay MORE to stay policy was announced in the “Summer Budget” in July and had similar cuts in aggregate terms of £1.03 billion YET after the July 2015 budget the government issued a consultation paper on the £30,000 threshold limits for households which government call high earners and other factors … yet nothing has changed in the estimate.
YET in the July budget there as no mention whatsoever of tapers it was a penny over the threshold and move straight to full market rent as the July 2015 official budget data states:
Yet recently we have heard the government say it will NOT be a cliff edge of a penny over moving to gross market rent, it will be a taper and for example – a couple working 40 hours each @£7.20 have a £30,034 pa wage income – will only pay a few pounds per week more and NOT go to full gross market rent.
So how come the claimed additional rent charged to council tenants still be the same £1.03 billion total? Either the government had this in mind back in July, which we know was rumoured but nothing was stated anywhere, or yesterday’s figures are a false estimate, or we are being misled over assurances of a taper of which we have had no detail whatsoever.
Or, far more likely, this bag of a fag packet policy is unravelling like all the rest and the government don’t have a clue what they are doing!!
More seriously than that is Osborne has included this £1.03 billion saving in his figures which if it does not materialise means another £1.03 billion hole in his calculations and he needs to find yet another policy in which to take £1 billion from!
Digging a bit deeper… Is it a £2b billion black hole for Osborne?
Looked at from the council tenant’s perspective it could see the average £84 per week 3 bed council rent paid will increase to the average 3 bed private rent of £100 per week more at £184 per week – an increase of over £5000 per year in rent.
Of that extra £100 that councils will be forced to charge just £10 is kept by the local council to cover its costs and the other £90 per week goes to central government coffers while local councils will get blamed for it by their tenants!! A cunning plan indeed by Osborne.
However, what Osborne has not factored in is the amount of Housing Benefit that goes unclaimed each year and this is up to £4.27 billion as I reported on back in June 2015 in the DWP official figures
Statistically, council tenants make up around 17% of all renting tenants (social and private) so statistically this means council tenants fail to claim about £726 million per year in Housing Benefit.
Can anyone see all local councils persuading all council tenants to claim all the housing benefit they are entitled to – this £726 million per year – as (a) it has recently also been announced that those claiming Housing Benefit will be exempt from pay (MORE) to stay; and (b) as this means £726 million more in HB will be paid to council tenants then the claimed savings of £260 million per year from pay MORE to stay will in reality see the savings be – £466 million per year – and yet another black hole in Osborne’s calculations!!
I can see all LA’s running such a campaign of HB maximisation resulting in council tenants receiving £726 million more in HB per year as it cuts down local council admin costs of implementing the pay MORE to stay policy which the idiots in government believe will save them £260 million per year yet cost them £466 million MORE per year!
If so – and note this non uptake of HB will eventually have to be paid in UC anyway – then instead of Osborne and HM Treasury saving £1 billion in HB this parliament, they will actually spend £2 billion more in HB because of the idiotic back of a fag packet pay MORE to stay policy!
Finally and linked to this is a general point. All councils should be encouraging all tenants to go through a benefit maximisation programme to ensure they get what they are entitled to. So should all social landlords and so should all social tenants.
The DWP’s official figures as restated above show that up to £16 billion per year of welfare benefits people are entitled to go unclaimed and everyone should claim and receive what they are entitled to – not a penny more not a penny less. That will eventually happen with Universal Credit anyway and why UC even in theory cannot work and will cost up to £16bn more per year in welfare benefit paid out and a further £8bn+ that goes unclaimed in tax credits.
When will all the advocates and promoters of Universal Credit realise that UC is going to cost at least £24 billion more per year because of the entitled to but now unclaimed welfare benefits and tax credits that UC will pay out.
The pay MORE to stay charade outlined above is just one element of this government’s stupidity and ignorance of how ‘welfare’ works and how despite all of their claims that they are cutting ‘welfare’ the reality is their policies are so ill-conceived that the ‘welfare’ bill must increase dramatically to create at least a £24 billion black hole in Osborne’s figures.
Time we all stopped focusing on IDS as a heartless bastard and a pantomime villain which merely deflects the reality and instead focus on what he really is – a bigger incompetent innumerate than George Osborne and his ‘welfare’ revolution of Universal Credit is so incompetent that simply cannot work even in theory, yet when it is found out the country will have already lapsed into recession because of it.
In short, dear taxpayer, you are going to have to pay a bucket load more in tax because IDS ‘believes he is right’ despite all the facts proving he must be wrong . Keep perceiving him as a pantomime caricature and not an incompetent buffoon and that is what we will all get!