The overall benefit cap policy, or OBC, reduces from November and will place up to 592,893 children at acute risk of eviction and homelessness according to DWP figures as their parents face an average £76 per week cut in housing benefit.
I maintain it will be at least 700,000 children and as many as 900,000 as the DWP figures are a chronic underestimate (see here and here and I will be posting a specific post later in this series) although even if I am wrong this Conservative policy that, note well, was also in the Labour manifesto at the 2015 general election is alarming and will have devastating consequences.
I have been researching and writing about the OBC for over 5 years since the policy was first raised and have presented numerous speeches at housing conferences over this to no avail in that time and the literally dozens of blogs previously released all dismissed as scaremongering.
Finally over the weekend this alarming policy caught attention with my blog called No job No house released Saturday afternoon had over 100,000 views by Sunday night. It reached some of the families who will be affected by it and most of them have no idea about this as they have not been informed by the DWP, their local council or their landlord, and in part due to the woeful DWP estimate.
That 100,000+ figure is a huge figure by any standards and it detailed some of the impacts including that even council landlords will have no choice but to evict given the average £76 per week cut to housing benefit and here I elaborate on some more impacts and also why this OBC policy has slipped under the radar.
The current situation
There are currently 8,790 households affected in the 33 London Boroughs and out of 20,124 nationally this means London now has 44% of all benefit capped households, which means 56% of households capped are in the regions.
The DWP estimates place each council into bands such as between 600 and 799 and 800 to 999 and so on. Extrapolating the DWP estimate …
The national picture changes dramatically with 4 in every 5 benefit capped households NOT being in London.
The reason I have chosen to start with the above is that many wrongly believe the overall benefit cap policy only affects London, only impacts high rent areas and high private rent areas when the above simple pie charts show that the overall benefit cap reductions sees the policy evicting children everywhere in the UK from November.
The OBC is no longer a London only policy if it ever was, it is a national policy and with the risibly low DWP estimate alone revealing it could evict 592,983 children it is a national scandal and emergency. The OBC is the London, London, Bloody London syndrome personified as the media lazily and wrongly focus on the capital in the OBC as they do with every other ‘welfare’ and housing policy and despite 87% of UK housing being outside of the capital.
My figures say London will have 36,426 households affected which is remarkably close to the DWP top-end figure of 35,567 … yet my 36,426 figure is out of a national total of 210,334 and sees London have just 17.32% of all benefit capped households which is London having just 1 in 6 and 5 in ever 6 benefit capped families will NOT be in London.
Back to Basics – How the OBC works
The simple process is that from the cap figures all other ‘welfare’ income is subtracted leaving a maximum amount that can be paid in housing benefit. It is important to note that this other ‘welfare’ income is at the same levels nationally as JSA and IS is £73.10 per week for a single person and £114.85 per week for a couple right across the country as are Child Tax Credit and Child Benefit rates. Thus we know what a couple with 3 children and all other household compositions receive anywhere in the UK and hence also know very precisely how much they can receive in housing benefit.
Figure 1 Couple with 3 children at current £500 per week cap
As you can see the current position is that a couple with three children can now receive up to £166.06 per week in housing benefit which is the rightmost column which is arrived at by deducting the JSA and CTC and CB from the cap figure, in this case the current £500 per week limit. That family is entitled to a 3 bed property in housing need terms and the £166.06 maximum HB will cover a 3 bed property at social rent anywhere in the UK
Now look at what happens in the regions when the OBC reduces from £500 per week to £384.62 per week from 7 November in Figure 2 below
Figure 2 Couple with 3 children with regional cap of £384.62
The maximum amount of Housing Benefit falls to just £50.68 per week!
The £115.38 per week cut – from £500 per week to £384.62 per week – when the OBC level reduces from 7 November ALL comes off Housing Benefit leaving the couple with three children just £50.68 per week towards the rent of a 3 bed property.
I commented on the housing impacts briefly on this and I will elaborate on this in another separate post as this has seismic consequences not just that ALL landlords have no option but to evict and ALL landlords will no longer take families with 3 children who are on ‘benefits’ including social landlords too!
I’ve provisionally titled that blog as Where the f*ck will people live!!
My weekend post did scare the living daylights out of tenants on social media and rightly so BUT please make sure you read who is exempt from the OBC and who is not which were included in that post which you can access by clicking here.
It only hits working age households and if you or your partner receive DLA or PIP or ESA (and in support group) or Carers allowance or Guardians Allowance then you will NOT be affected. You only have to receive 1 of these benefits or receive Working Tax Credit and you are not affected
HOWEVER also note the woefully low DWP figures even say the OBC will affect up to 177,513 households when it now affects 20,124 which is an 882% increase in families affected or nearly 9 times as many as are affected now.
My very detailed and researched figures suggest a minimum of 210,334 families will be affected which is a 1000%+ increase or over ten times as many as now and this post has two key purposes. The first is to show that the OBC is a national issue and not just a London matter which even the risibly low DWP estimates confirm. The second is that the DWP estimates are incredibly low and have no credibility and to which I now turn.
The risible DWP estimates
In March 2015 I published a post outlining the methodology I used to arrive at my figures and the starting point was and has to be the number of HB recipients of working-age as (a) the pensioner household is exempt, and (b) the working-age recipients of HB become the maximum affected cohort before (c) we deduct how many are exempt.
Those who are exempt are then deducted from the maximum possible cohort to give an estimate of those who will be affected. As you can see from the following I was very cautious in my figures and I exempted far more than the likely figure as my comments show in this:
You can see I deducted 49% of the theoretical number of working-age social tenants affected (and 21% of PRS tenants) by receipt of Pension Credit, ESA, DLA and Working Tax Credit and so on when a more likely deduction would by 37.4%
Despite the numbers in the ESA support group increasing and the government also exempting Carers Allowance and Guardians Allowance the 49% exempted by ‘welfare’ receipt is still too high a figure.
Then in July 2015 I received a FOI response from Wirral council which broke down HB recipients by SRS and PRS and by household type. To simplify it said that Wirral has:
- 286 households of a couple with 3 children in the PRS, and
- 297 households of a couple with 3 children in social housing
We see from the charts above that a couple with 3 children from November will only receive a maximum of £50.68 in housing benefit and the typical 3 bed social rent in Wirral is around £93 per week and the typical PRS 3 bed rent is not less than £130 per week (as the 3 bed LHA rate is £126 per week.)
In short the SRS couple with 3 children will have a £43 per week cut in HB and the PRS one a cut of around £80 per week … unless they are exempt.
Last week I received a further FOI response from Wirral which said that just 25 of the 286 couples with 3 children in the PRS will be affected and thus over 91% or 261 will be exempt or not affected according to the DWP actual figures supplied to Wirral MBC!!
The DWP estimate also said just 12 of the 297 SRS couples with 3 children would be affected, just 4% and 96% of them or 285 out of 297 will not be affected!!!
The DWP estimates and actually provided figures would seem perverse in Cloud Cuckoo Land never mind Wirral!
Wirral is not a statistical aberrant area in terms of housing benefit and its percentages of households with children both collectively and individually, eg lone parent with 1, 2, 3, 4 children etc and couples with 1, 2, 3, 4 children are very similar to the national figures for receipt of housing benefit.
My figures for Wirral overall suggest at least 1454 households affected yet the DWP actual estimate is 483 a huge difference. Are my calculations or methodology just wrong then? No because (for one reason) as I say above my figures for London at a total of 36,426 are remarkably close to the DWP figures of 35,567.
Could it be that the overall DWP estimate that I say is risibly low is based upon a simple but critical mistake in using the overall benefit cap at £23k per year across ALL the country and not just in London? That would explain much of the above as for example the 297 social housing families and the 286 PRS ones with 3 children would receive not £50.68 per week but a maximum of £108.37 per week in housing benefit and account for the overall figure of just 37 out of 583 families being affected which is just 6.35% of all of them.
Yet my principal concern is not with how the DWP came up with such risible estimates, my concern is for the huge numbers of tenants and especially children who are all at acute and immediate risk of eviction given the average £76 per week cut to their housing benefit.
The Wirral FOI said what it happening there and presumably in every other council area that the council has been notified of the risibly low number of affected in the DWP estimates and has simply passed these details onto social landlords in each area – which a data protocol allows information sharing between LA and social landlords though note not for private sector landlords.
Wirral has a number of social landlords with the former council housing department now known as Magenta has around 70% of all social housing in the council area according to the SDR from the housing regulator or official figures.
Magenta will receive the DWP data and assume that they have just 102 tenants affected which is (statistically) 70% of the 145 social tenant households the DWP say are affected in Wirral. Yet I strongly maintain that Wirral will have a minimum of 407 SRS tenants affected which statistically means that Magenta will have 285 of their tenants affected and not the 102.
These additional 183 tenants will mean that the arrears risk the OBC poses to them will be £982k per year and £723k per year more than the DWP estimate of an arrears risk of £259k. Oh dear something is going to hit that fan from November 7!
Wirral council’s homeless department will be expecting the reduced OBC to hit the DWP cohort estimate of 483 families which is already a huge increase on the 55 families now affected and a huge problem and huge additional cost for the council in temporary homeless provision when they are evicted. Yet if the real figure is 1454 and not 483 then the proverbial is really going to hit the fan for the council … and landlords and of course most importantly the families.
Even worse is the private tenant in Wirral and I expect that private landlords will evict post haste all tenants who have their housing benefit (LHA) cut which will be all families with two or more children as a PRS couple with two children will only receive £117.88 in LHA which is around £10 below the 3 bed LHA rate there and around £20 – £25 per week below the average 3 bed PRS rent in Wirral. Note too from November 2016 until April 2017 if those families get ESA and in the work related activities group, a non-exempt OBC bnefit, then they will have £29.05 more in income per week and so they can receive £29.05 per week LESS in LHA.
The couple with 2 children on ESA will only be allowed a maximum of £88.83 per week in LHA from November to set against a private rent of £130 – £145 per week – and there is no doubt such households cannot afford to pay this £40 to £65 per week shortfall in rent and no doubt that PRS landlords will be issuing s21 notices like confetti come November if not before.
The actual figures for Wirral reveal that the lone parent with 3 child household number 611 in the PRS and 505 in the SRS and that household type on JSA or IS will be permitted a maximum £92.43 in housing benefit. If on ESA (wrag) then the maximum is £63.38 per week in housing benefit from November 7 to March 31 2017 – a period of 21 weeks.
In the PRS all will be evicted as the £92.43 maximum is around £40 – £50 per week less than the rent charged and this is a huge risk too far for the private landlord.
So and even the risible DWP estimate says 172 such families will be affected in the PRS alone and so Wirral will have 172 homeless presentations (my figures suggest around 370) of families with 3 children and a lone parent who will either get £92.43 per week in maximum housing benefit or if on ESA just £63.38 per week.
This ESA cohort will be in temporary homeless accommodation permanently as they cannot afford any 3 bed property (or even 1 bed property!) in low rent Wirral. If the council has to place them in a large family room of a local B&B the cost of which will not be less than £65 per night in Wirral or £455 per week which the local council will have to pay and only receive back the £63.38 per week maximum housing benefit.
So what now costs the national taxpayer £130 per week in housing benefit before the OBC will cost the local taxpayer £391.62 per week more – which is £20,420 per year MORE!!!!
If the lone parent has 1, 2 or all 3 of those children under the age of 3 then the parent cannot escape the OBC trap until the youngest reached 3 and so the local taxpayer and Wirral council will have to pay up to £60,000 or so MORE in ‘welfare’ to house this family than they do now!
An extra £20,400 per year for Wirral Council for the risible DWP estimate of 172 families is an additional £3.5 million per year cost to the council just for the lone parent with 3 children households! (Reader do you know how hard it is not to write the words ‘fuck, fuck, fuck!’ here!)
Yet the real issue for me is that a social landlord cannot afford to let any new property to a household that has 3 children as it is too high a financial risk. Even if that household is now working the financial risk is too high for ALL landlords even in the cheapest rented properties in Wirral and across the whole of the United Kingdom.
All social (?) landlords tightened their allocation criteria when the bedroom tax came in. They would not under occupy vacant properties due to the average £15.29 bedroom tax as that financial risk was too high. We then see Severn Vale Housing Association banning all those under 36 years of age from being allocated a property due to the LHA maxima cap.
What we will now see is purportedly social landlords refusing to accept any family with 2 or more children as they are too high a financial risk due to the average overall benefit cap reduction of £76 per week for all claimants, which for social housing is an average of circa £66.51 per week (and £82.47 in PRS) – which is more than 4 times the financial risk they would not take with the bedroom tax.
That is not a slight on ‘social’ landlords, it is regrettably the reality of the overall benefit cap impact and consequence as, without apologising for landlords, they simply cannot afford this financial risk.
Where will people live?!
The table showing how much the maximum housing benefit (HB in SRS, LHA in PRS) that each household type are permitting to receive after the overall benefit cap reduces is below.
Finally as an aside to the main points above if you really want to know just how much the OBC reduction is a back of a fag packet policy then look at the official target rents for social housing and then ask …
How come the overall benefit cap limit is £3000 less in Guildford and St. Albans at £20,000 per year when their social rent levels are higher than those in central London who have a £23,000 per year limit?!
Figures above from Housing Regulators Statistical Data Return – Sept 2015
If you are really a nerd or geek you can also use the SDR to factor in what percentage of 2, 3, 4 and larger bedroomed properties there are in each local authority and then cross refer them with the proportion of HB claimants by PRS and SRS landlord in each area and a number of other significant and relevant variables that the risible DWP estimates failed to consider … as this nerdy geek of a housing researcher has done and come up with far more reliable figures …
… just as I did when I said that the pre 1996 housing benefit cock-up of the DWP in the bedroom tax would affect 40,000 households and the DWP said it would be between 3,000 and no more than 5,000. It was at least 40,000 and my figures on housing benefit and predictions on it have always been far more accurate than the DWP have ever released.
For UK social housing professionals the 100,000 blog view figure the original post received in less than 48 hours is four time the weekly circulation of Inside Housing … so your tenants will soon be asking why you have not told them about the impact of the overall benefit cap and also time you got clued up about its horrific impacts too. You may also ask why Inside Housing and the NHF and the CIH and even Shelter and Crisis have been so silent on this matter … just another part of the London, London, Bloody London fixation?