Reducing Overall Benefit Cap – some alarming details

From November, just three months away, the overall benefit cap level is reducing from £26,000 per year nationally to £23,000 in London and to £20,000 outside of the capital.

I have been researching this policy, its impacts to date and its inevitable future impacts for almost 5 years and have always said it is THE worst policy of all of the reforms to Housing Benefit since they began immediately after the 2010 election.

In a long and detailed series of posts which begin here I will expand on why it is the most damaging and dangerous HB reform policy and I apologise in advance for the number of figures this will involve which is the only way to explain its consequences; but let me start with a simple ten statements I have made so far with some brief comments.

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4. The simplest way to get your head around it is currently the £26000 per year cap mainly affects families with 4 or 5 or more children and 90% of those outside London have 4, 5 or more children .  The new reduced cap will affect families with 2 or more children right across the country from November and it is no longer a large family / high rent area issue but a national one.

5. The DWP has issued estimates of how many households they expect to be affected in each local authority area.  Those DWP estimates are woeful and bear little relevance to reality as I detailed here with figures for Wirral council received from FOI requests.

6. Currently the DWP figures reveal 20,144 households are affected by the £26000 cap level.  It’s extremely and perversely low estimates for households hit by the reduced caps is between 94,799 and 177,513.  Just from those wholly unreliable DWP estimates the reduced caps will see between a 470% to 880% increase in families affected.

7. The OBC targets and largely only cuts Housing Benefit (HB and LHA) and the current 20,144 households see a yearly total of £60 million deducted in housing benefit.  The DWP unreliable estimate has a mid-point of 136,156 households affected and would mean the amount of Housing Benefit cut would increase from £60 million to £541 million per year using the mid-point.

8. The DWP unreliable estimate range is £377 million to £704 million of Housing Benefit cut in benefit cap.

9. The bedroom tax cuts Housing Benefit by £357 million and so cuts £6 for every £1 the benefit cap cuts currently, yet from November the overall benefit cap even on the unreliable underestimate of the DWP will cut £1.50 for every £1 the bedroom tax now cuts.  In short the overall benefit cap will cut 50% more than the bedroom tax using the DWP mid-point and almost double the bedroom tax HB cut at the DWP top-point.

10. The current DHP budget – leaving aside other purposes -has to cope with a combined Housing Benefit cut of £357 million in bedroom tax and a further £60 million in benefit cap making £417 million of HB cuts to ameliorate. Using the unreliably low DWP estimates at its mid point the same DHP pot will have to ameliorate £357 million in bedroom tax and up to £704 million in benefit cap making £1,061 million (£1.06 billion) that local councils have to deal with compared to £417 million today.

The wholly unreliable DWP estimate(s)

Prior to the overall benefit caps implementation the DWP impact assessment said it would affect 56,000 households and is now just over 20,000 and its highest ever figure has been 28,434 in December 2013 or halve that DWP estimated figure (and so halve the anticipated saving too by consequence that no doubt led some imbecilic policy wonk to say cut the cap further!)

The impact assessment of 16 July 2012 saying “At the outset, it is estimated that 56,000 households will have their benefits reduced by the policy, losing on average around £93 per week.”  The average current cut per week arrived at by taking the mid-points of the DWP cut bands is also £57.67 per week and also significantly below the original estimate.

The DWP also said that the bedroom tax would affect 670,000 households yet its first figures revealed 524,000 some 22% below and the latest reliable figure (the released figures now only include HB and not those on Universal Credit) hovered around 460,000 consistently which is 31% below the DWP estimate.

The pre 1996 loophole (cock-up is more accurate) in the bedroom tax saw IDS and Freud say only between 3,000 to 5,000 would be affected by this yet as I correctly forecast it turned out to be over 40,000 or ten times the DWP estimate.

In short the DWP’s accuracy when it comes to projecting Housing Benefit changes is and always has been woeful.

Earlier this week I detailed the case of MBC Wirral as I had accurate figures of the numbers of each type of household by way of single parent or couple and by numbers of children and by private and social landlord and all of working-age and excluding the benefit cap exempt pensioners.  The DWP estimate for Wirral was 483 and I explained why it was risible in enough detail to prove the point, such as the DWP estimate would see over 96% of couples with 3 children in Wirral somehow not affected by the reduced cap!

The DWP estimate for Wirral is so alarmingly and dangerous wrong and chronically underestimate  My absolute minimum estimate for Wirral is 1445 and almost 1000 more households affected and three times the latest DWP estimate.

However you obviously cannot extrapolate that and say the actual number affected is going to be three times the pitiful DWP estimate and  I went back over all my figures to check them again (about the 20th time in the past year alone) and compared them to the DWP estimated figures.

My overall minimum number of benefit cap households affected is 210,334 which is 18.5% above the DWP top end estimate (see 6 above) and it could easily be 20% highly than that 210,334 figure too.

Every local authority will see a huge increase in households affected and there are a number of local authorities currently with no households affected who will suddenly have to deal with the benefit cap implications for homelessness and DHP and other consequences for the first time and they will be ill equipped to do so especially in terms of temporary homeless accommodation.

What may surprise is that my overall low end figures for inner London comes to 16,114 and is remarkably close to the DWP estimate mid-point of 15,893 which confirms my view that London is largely at a tipping point already at the £26,000 cap figure due to its perversely high rent levels.

To local councils in Westminster and Kensington and Chelsea the DWP mid point estimates are far more than my figures suggest while to those in Lambeth, Lewisham and Southwark my figures are much higher than the DWP top end figures you have and I mean much much higher!  Yet my overall figures come into the DWP estimate range for inner London.

In outer London my figures are below the DWP low-end estimate for Brent yet Croydon is significantly above the DWP top-end estimate – while much of the rest of outer London boroughs my figures are very similar to DWP mid-point estimates.

The real issues are for those councils where my figures show startlingly more than the DWP mid point estimates and above that. The North East region I estimate will have 2 to 2.5 times more affected on average than the DWP midpoint estimates.

There are so many similar regions and sub regions with startling increases in numbers and in Devon of all places my figures reveal huge increases and North Devon will have more than triple the DWP top end estimate!

To the following English councils you really should be looking at your DWP estimates as I suggest they are dangerously low:  North Norfolk, NE Derbyshire, Rossendale, Warrington, Selby, High Peak, Lincoln, Bassetlaw, Newcastle-under-Lyme, Stratford, Isle of Wight, Eastbourne, Thanet and Bath among literally scores of other English councils many of whom have a 25-fold or greater increase in benefit capped households that the current numbers and some over a 40-fold increase.

The English examples above are not (necessarily) the typical towns or places you would associate with an issue such as this and media attention is always on the big towns and cities and the same goes for Wales in Powys, Wrexham and Blaenau Gwent and in Scotland for Dumfries, East Lothian, Falkirk and Inverclyde whose councils all urgently need to look at their similarly dangerous DWP estimates.

Every local authority needs to urgently conduct their own investigation into the overall benefit cap reduced levels and cannot afford to rely on the DWP estimates and my point 1 above is the reason – the number of children who will be evicted and made homeless directly because of the reduced OBC levels.

Statistically, each household will have 4.64 men women and children of which 3.3 will be children all of whom will be at acute risk of eviction given the average £76 per week cut to their HB or LHA.  That average weekly HB cut does and can only mean that anyone who believes social landlords will not evict its tenants is living in cloud cuckoo land.  It is 5 times the bedroom tax average cut of £15.29 and social landlords whether the most social council landlord to the most asocial housing association have no option but to evict.

This means that local authority homeless departments will be bombarded with evicted families and children (and also means that DHP will not prevent these inevitable evictions) and councils will have inescapable duties towards these families.

 

Even if the reduced benefit cap policy is phased in like UC has been in some areas first the numbers affected and my projected average £76 per week cut to housing benefit will see those LA homeless departments bombarded at the same time with evictions and homeless cases and does anyone know any council who can cope with a 5-fold increase in homeless families let alone a 25-fold increase?!

Even if I am wholly wrong and the DWP estimates are 100% correct then how can Gateshead go from 29 current cases to 400 cases which is the DWP estimate?? Not a hope in hells chance is there … and lots more details in new blogs to come soon of this hellish reduced overall benefit cap.

 

 

 

 

 

 

 

 

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8 thoughts on “Reducing Overall Benefit Cap – some alarming details

  1. I follow your posts (most, not all) regularly and agree with most of your arguments/points, but the situation on a macro scale is difficult to reconcile on an individual household scale, e.g. how will this affect the HB entitlement of a family (2 adults, 3 children) renting a 3 bedroom house in (for example) Bassetlaw? (private sector rent of £530 pcm, or council rent of £400 pcm).

    Although I realise that you cannot really do a whole list of examples for various household compositions in various LA areas, it does seem to me that individual landlords (councils, HAs, or private) are not really grasping the impact on their tenant’s HB entitlements.

    It also appears that nobody is addressing what actions the tenants themselves will have to take in order to continue paying their rent (and thus avoiding eviction), e.g. will tenants on benefits all get up and go get a job (as Government appears to think!!!), or will they turn to crime (the black market), or will they simply live in appalling poverty (with the consequential malnourishment, and reduction in life expectancy, etc).

    1. All households are fairly easy to predict and the 2 parent 3 child household get £333.94 pw in JSA, CTC and CHILD Benefit across the country making their maximum HB £50.68 per week or £219.44 pcm. Hence £310 pcm shortfall in PRS or £180 pcm shortfall in SRS

  2. Apologies but I’m a bit slow on these things particularly as figures scramble my brain.

    How does this affect council tenants? And do we call them council tenants or something else as I’m presuming “social housing” is just affordable (HA) housing which is obviously a lot more expensive so lots more would be affected by the cap..

    1. As I say above, the family of a couple with 3 children for example will get a maximum housing benefit of £50.68 per week so whether they live in council or HA or private rented they will not be able to meet the rent.

      If the tenant is on an exempt benefit (DLA / PIP / ESA (support group only) or WTC then they are exempt from the benefit cap and its consequences

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