The Benefit Cap in Leeds – a £93k PER DAY added cost to the council

Last week I received details of the DWP scan from May 2016 which are the actual figures the DWP expects to be hit by the reducing overall benefit cap in Leeds.

I strongly maintain the DWP figures are incredulously low and the actual number of households affected could double in Leeds and indeed nationally from the 120,000 households the DWP estimates.

Yet in this post I assume the DWP figures are correct as the most important issue is the impacts of the policy which very quickly become apparent and indeed fantastical.

Existing Benefit Cap in Leeds:

  • Sees latest (May 2016) DWP figures say 260 households are affected which DWP scan says will increase to 1409 – a 542% increase
  • The average amount of housing benefit that is cut is £57 per week – arrived at using the midpoints of the DWP figures which say for example 64 households lose between £50 and £99.99 per week for which I use £75 per week
  • The total yearly housing benefit cut is thus £773k per year and note well this increases to a yearly cut on the risible DWP figures of £7.4 million of housing benefit cut by the overall benefit cap – an increase of 957%
  • Leeds (DWP May 2016 released 17 August 2016) has a £4.48 million bedroom tax HB cut (6577 households at £13.06 per week) which gives a current DHP demand with the £773k overall benefit cap of £5.25 million for which Leeds City Council is allocated £1.89 million in DHP.

The DWP scan figures were given by Leeds City Council to Hands Off Our Homes (HOOH) in a meeting held 1 August 2016.

Figure 1 – DWP scan for Leeds (May 2016)

obcleeds1

The total 1409 figures were broken down by landlord type and I have merely added the “Children per household” column on the right hand side.

This children per household is the average family unit and says the average council household affected will have 4.03 children.  This tells us how much the maximum housing benefit this council household will receive and how much their shortfall will be given the way the overall benefit cap works.

However, the household with 4 children could be a lone parent or a two parent household so we first need to break this down which I have done using average national DWP figures which show that 66% of households with children claiming HB are lone parent and 34% are two parent households.

Figure 2 – Council tenants affected

obcleeds2

The table breaks the 520 council household cohort into 1 parent and 2 parent households and uses 4 children and assumes a council rent for what will either be a 3 or 4 bed property of £90 per week.

  • It reveals 344 council households will have a HB cut of £64.77 per week and,
  • A further 176 council households will have a HB cut of £89.50 per week.
  • The average cut for council households will be the £73.14 per week figure in blue.
  • The overall yearly amount of housing benefit cut is £1,984,501

It needs no comment that the council tenants cannot afford to pay these weekly shortfalls or that the council cannot afford to have these households as tenants if they remain on benefit and do not become exempt through employment.

The £1.98 million cut in housing benefit just for council tenants also becomes a £1.98 million per year demand on the council’s DHP budget which is £1.89 million for 2016/17.

In short Leeds City Council’s entire DHP budget of £1.89m per year could not cover the HB cut in the overall benefit cap just to council tenants.

Figure 3 – Housing Association Tenants hit by reducing cap

obcleeds3 ha

I have used £100 per week as the average HA rent in Leeds for a 3 bed that will be the minimum property size for the average family with 3.72 children in the DWP scan.  The average cut is £70.13 per week and lower than council households due to the lower average number of children.

Figure 4 – Private Rented Sector Tenants hit by reducing cap

obcleeds4 prs

I have used £160 per week as the average rent and as the 3 bed LHA rate in Leeds is £151.50 per week (and some of the cohort may receive the 4 bed rate of £199.94) which gives an average weekly cut of £126.81 per week.  As such PRS landlords will be evicting the benefit capped tenant and probably all benefit tenants en masse as the financial risks are so great.

Overall, the risibly low DWP scan figure sees a housing benefit cut of the £7.4 million per year detailed and en masse eviction and homelessness as the councils DHP budget of £1.89 million per year now has to meet a HB cut of £12.9 million with just the bedroom tax and overall benefit cap cuts alone.

I would strongly argue the DWP’s figure of 5120 children and 1409 households is incredulously low and many more households and children will be evicted and made homeless than the total of these figures for so many reasons.

Imagine you are a private landlord and find that the lone parent with 2 children you have as tenants in your 3 bed property let at £160 per week will from 7 November 2016 receive just £130.58 per week in LHA if the parent is on ESA and in the work related activity group. That is a £29.42 per week top-up or £127.48 per month top up from the tenants Universal Credit or existing benefit and a yearly NEW risk of £1530.

The financial risk is too great and a s21 eviction notice will be served, which you will also likely do to all lone parent 2 child households as even though they may not be affected and, logically, you will no longer take any benefit tenant as your view becomes all are too financially risky.

Leeds currently has just under 18,000 PRS tenants who receive housing benefit and the DWP scan figures represent just 4% of them (in itself a statistical joke!) yet private landlords will flee the LHA tenant market and will evict far more than this claimed 730 affected cohort only.

If just 10% flee the market this is 1800 evictions not 730 and is one practical consequence that a simple point-in-time scan from the DWP can never encapsulate – and for a DWP who is so beset with behavioural change of tenants in its housing benefit reforms has clearly not looked at inevitable landlord behavioural change!!

Any council who believes the DWP scan figures give a realistic maximum figure for evictions and homelessness is living in cloud cuckoo land

The Council landlord with the average HB cut of £73.14 per week and £3814 per year will have no option but to evict.

The HA landlord with the average tenant having a HB cut of £70.13 per week and £3657 per year will also have no option but to evict.  In practical terms the use of Ground 8 evictions will logically become the norm for all housing associations as 8 weeks arrears in this case would be £800 which will take the average benefit capped household just 12 weeks to attain.  As this begins on 7 November 2016 it will be as early as Monday 23rd January 2017 when HA tenants could be hit with Ground 8 mandatory arrears evictions … and note that assumes no arrears now or when the policy begins on 7 November too.

While Ground 8 is abhorrent and frowned upon the fact remains that HA’s will have little choice but to use it given the level of housing benefit that is cut and even the most social of social landlords has no choice but to use Ground 8.  Any HA housing professional who says we will never use Ground 8 – a view I perfectly understand – is living in cloud cuckoo land if they maintain that view.  There is no choice but to use Ground 8.

All landlords will also refuse to take any benefit tenant household as a new tenant if they are to be capped by the £20k per year or £384.62 per week overall benefit cap from November – even the council landlord with a prospective tenant who receives ESA and in the support group and thus exempt because they could easily be moved to the ESA WRAG and become liable for the overall benefit cap to impact.

Just as all social landlords tightened allocation criteria with the bedroom tax they will also do so with the overall benefit cap impacts and no longer be able to afford to house the benefit tenant household which fully occupies a 3 bed property.

The homeless figures in Leeds as in every other town and city will rocket due to the reducing overall benefit cap that begins in 10 weeks time.  Existing households in council, HA and PRS properties will be evicted and become the responsibility of the councils homeless team and/or social services.

The households that all landlords now take with children as the amount of housing benefit is up to £115.38 per week higher will also have to go straight to the homeless section as no landlord will accommodate.

In summary, at this point, Leeds City Council’s homeless team will be bombarded with homeless families and way in excess of the alleged maximum affected households that they errantly correlate with the DWP scan figure.  The same applies to every council across the country when we consider the practical and inevitable impacts the overall benefit cap policy has in terms of landlord behavioural change.

I maintain the 1409 maximum DWP figure to be so bad to be a joke and my cautious estimate for Leeds was 2787 households which will reduce slightly as the government has made Carers Allowance and Guardians allowance exempted benefits yet will only reduce that very cautious minimum figure to no less than 2500 and at least 75% higher than the DWP scan.

Yet my estimate is largely irrelevant as the huge increase in children being evicted and made homeless and having their life chances well and truly f*cked; and the exorbitant cost the overall benefit cap transfers from central government to local government are both staggering.

The transfer of cost from Central to Local Government

Let’s look again at the Housing Association figures to explain:

obcleeds3 ha

When this minimum number get evicted and become the responsibility of the council to put up in temporary homeless accommodation the council pays the cost of that less the amount of HB in the table above.

If the homeless department are really lucky they will be able to squeeze the above into two rooms of a B&B at a cost of £70 per night or £490 per week or £25,480 per family per year.  The council will get the average £29.87 per week per family (£1553 per year) which is the average housing benefit of B(i) and B(ii) above, so the council’s actual cost from council budgets is £460.13 per evicted OBC-HA family per week which is £23,927 per year per family!

That comes to an additional local council cost of £3.8 million per year just for housing associations tenants evicted.  A similar calculation for evicted OBC – council tenants would be £12.83 million per year and for evicted OBC-PRS tenants would be £17.39 million in temporary homeless costs – a total of £34.02 million per year extra cost of temporary homeless provision or an added weekly cost to Leeds City Council of £652,000 or so!

That weekly transfer of additional cost to Leeds City Council of £652k is also based on the 1409 DWP scan figure.

All of my figures I use above are cautiously low yet they will appear fantastical to any reader whether tenant, landlord, council, politician or the general public and they are all based on the excessively low DWP scan figure too.

Quite how no politician of any party has considered what the reduced overall benefit cap means is staggering also, though while it is a Tory policy I say again the reduced OBC policy was also in the Labour 2015 manifesto (when the Labour Party’s Shadow Secretary of State for DWP was Rachel Reeves – the MP for Leeds West I note with extreme irony!) and so the points I argue above are not political they merely stem from a sense of basic humanity …excepting the blithe ignorance of Rachel Reeves in this case.

Rachel Reeves had a well stated policy of not challenging any ‘welfare’ reform as Miliband Labour were petrified of being labelled the party OF welfare and so this state of play that will impact from 7 November is very much to do with that apathetic policy stance of Rachel Reeves who said:

rachel reeves not party of welfare

Even if the risible DWP figure of 120,000 households is correct and they have the average 3.69 children per household this gives for Leeds then that is an additional 442,800 children at extreme risk of eviction, homelessness and irreparable damage to their life chances and the policy has gone unchallenged and slipped under the political radar and even been proposed as policy by Rachel Reeves MP for Leeds West!

We currently have a scandalously high 100,000 children living in temporary homeless accommodation which is going to rocket with the overall benefit cap policy and so quickly as I state above even for housing associations this could be January 2017 and even quicker for private landlord evictions.

If you want to delve a bit deeper then will council homeless teams:

– only house parent(s) and children under 18 in temporary homeless accommodation and claim a 18 year old is an adult for whom they have no responsibility? (or even 16) That is break up families?

– yet as those under 21 won’t be able to claim housing benefit where can an 18, 19, 20 year old live?

– try to place the Leeds family in a lower priced area (eg Bradford) and claim that this is a suitable offer they must take despite forcing children to change schools?

There are so many more aspects in terms of homelessness that could happen that will impact more generally on community, society, education, health, criminal justice an just about every other area.

And the reduction in the benefit cap will also see more households affected by the bedroom tax as well as the overall benefit cap for example the 2 parent 2 child household on ESA (wrag) will get an additional cut of £14 per week in bedroom tax if in a 3 bed and children of same sex taking their maximum HB down to £68.83 in a housing association property and to £78.83 in a council property.

Quite where Leeds will find 2818 B&B or other rooms (1409 families x 2 rooms each) is another obvious question and accepting the risibly low DWP scan figure.

I could go on and on but I will leave it there except to say that please have the smelling salts handy if you intend to put this under the nose of the Director of Finance at Leeds City Council as when he realises the overall benefit cap means that an additional £93,000 PER DAY will need to be found just to pay the added costs of temporary homeless provision …

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5 thoughts on “The Benefit Cap in Leeds – a £93k PER DAY added cost to the council

    1. The overall benefit cap has a 78% general public approval rating is one key reason as the public were led to believe everyone on benefit gets £500 per week by the Tories (and poverty porn TV). So when Labour fail to challenge and even have the same policy in their manifesto then all and sundry think the policy is merited?

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