Benefit Cap – a £30 million per year added cost to Liverpool City Council

We have a housing crisis in the UK, a crisis of affordability not of under supply.

At every turn we hear social landlords say we need more housing to deal with the crisis yet what is the point of more housing if they are not affordable?  There is and cannot be any point – and anyone who is naive enough to believe that increased supply of housing will lead to reduced cost and greater affordability needs to get their head out of the basic economic theory book they have once read.

Below I focus on what affordability means in terms of social housing and the overall benefit cap (OBC) to my home city of Liverpool to explain.

Affordability is the main issue and by that I mean housing which is affordable to the 73% of social housing tenants who now receive housing benefit.

Every democracy has an absolute duty to house its poorest and by definition these are those who qualify for housing benefit whether in work, retired, out of work, sick or disabled.  These groups of people are those that social landlords house, the overwhelming majority of those who social landlords house claim and receive housing benefit, almost 3 in every 4.

So when a policy comes along and cuts housing benefit an in drastic measure you guarantee eviction and homelessness – and that policy is the overall benefit cap.

It means the country cannot house those most in housing need except in high-cost and unsuitable temporary homeless accommodation. This is often dingy privately owned bed and breakfast accommodation whose owners can charge each local council whatever they like for this cramped unsuitable housing because local councils cannot escape their homeless duties to accommodate … regardless of the cost!

Temporary homeless provision is demand led.  Local authorities have to pay the cost whatever that cost is and they get a fraction of that cost back from central government which means the overall benefit cap policy is a transfer of cost from central to local government.  It is a huge cost too and I can give a rational costed argument that the overall benefit cap will cost Liverpool City Council an extra £30 million per year.

That is a cautious figure and of course means because councils cannot legally escape its homelessness duties that Liverpool City Council will need to find £30 million of additional cuts to pay for it!  That is £30 million per year, each and every year…and that £30 million is a deliberately cautious estimate.

What’s more is that Liverpool City Council has not factored in this additional cost that it will have no option to pay out in its figures; figures that saw its Mayor have a very valid piece in the Guardian in November 2015 (pre OBC) which said that Liverpool could go bankrupt in 2017 according to independent auditors. Now add in the additional £30 million of cuts the OBC adds to Liverpool City Council’s dire financial straits!!

I use Liverpool a lot in my projections and not just because it is my home city but because it has national average social housing rent levels and its proportion of housing benefit recipients is bang on the national 68% social housing 32% private housing split … and of course it has a housing market that is as much removed from the truly perverse London housing market for which national policy is made and why national housing policy never works regardless of a Tory or Labour government in Westminster.

Liverpool is a very good barometer of housing policies and especially as social housing is dependent on housing benefit it gives a very reliable picture of what each change to housing benefit will mean by impact and consequence … and even when the housing commentariat mistakenly call all of the housing benefit cuts in entitlement welfare reforms.

The bedroom tax (2013), benefit cap (2013), SAR age increase (2012), LHA cap (2012), LHA freeze (2014/5/6), LHA maxima cap (2018/19), SAR applying to social housing (2017) and the rest of the HB cuts are NOT welfare reforms they are all cuts in HB entitlement.

The overall benefit cap sees the couple with three children receive a maximum of £50 per week in housing benefit.  Existing tenants will be hit hard yet prospective social tenants will be refused social housing due to the affordability the OBC makes systemic and that is the real issue.

Every housing association and council landlord will say sorry chum we can’t give you a 3 bed property as you can’t afford and will signpost them to the homeless department of their local council.  Landlords have no choice as they cannot accommodate them due to the financial risk the OBC gives.

In the past NO DSS was limited to the private landlord who refused to accommodate, a process we are all familiar with.  As a result those families went to and were accommodated by the safety net of social housing yet the OBC takes away that safety net due to its systemic non-affordability which means 100% guaranteed homelessness.

Social landlords in England alone have 385,000 newly created tenancies each year and a significant proportion of them will now be denied to the benefit household because of the OBC.  Nationally 36% of all social housing is the 3 bed and larger property that is now unaffordable to the fully occupying benefit tenant due to the OBC policy.  It is reasonable to assume that 36% of all new tenancies each year, some 139,000, are the 3 bed or larger property – properties which are financially toxic as the landlord cannot afford to let to the benefit tenant and the benefit tenant can’t afford because of the OBC policy.

This is where Liverpool diverges from national norms as it has 56% of all its properties being the financially toxic 3 bed+ property.  Liverpool will see many more prospective tenants who pre OBC would have been allocated a housing association property will now be refused and thus become a financial cost to the city council as they are homeless.

Liverpool has 56% more than the national average of 3 bed+ properties – 56% to 36% – and thus will see a much sharper increase in homeless presentations and acceptances … and will need to procure 56% more temporary homeless provision at whatever cost the private owners of B&Bs, hotels and HMOs wish to charge the council!

Liverpool also diverges from national figures – as indeed does the entire North West region which contains 39 local authorities – as it has only housing association landlords and in the 39 LAs in the North West only 3 have council landlords.

A pertinent issue is that social landlord evictions have been surging in Liverpool and the North West and buck the national trend which is hugely skewed with London data and leads to fundamentally wrong posits that social landlord evictions are falling when in Liverpool they are at their highest level and have been rising since 2011 significantly and this year to date are 113% higher than in 2011 and at the highest level they have been since at least 2002.

liverpool-srs-eviction-2003-to-2016

 

Housing Associations are much more inclined to evict than council landlords and the data from Liverpool all adds into the mix of a perfect storm of homelessness for prospective tenants as well as existing ones.  Liverpool has also seen a greater take up of the much higher affordable (sic) rent model than other areas which adds to the 25-fold increase in benefit cap affected households and then we have the council itself setting up its own private renting company that will operate at this ‘affordable (sic) rent’ model only that has been agreed.

All of these factors slip under the London, London, Bloody London sole focus of the housing commentariat and never more so than with the OBC.

We know about the OBC they say as 44% of all capped households are in London yet that will change to see London have just 1 in 6 or 17% of all affected (and even just 15% in the errant CIH estimate) as the OBC hits every city, town, village and hamlet in the UK.

This is what the OBC will see in terms of who is affected and where

obcbyregion

Even the DWP say London will fall to having just 21% of all capped households and note every London household will get £57.69 more per week in housing benefit than a family in the regions and London 3 bed LA social rents are only £27 per week higher than social rent levels in Liverpool and the rest of the regions.

The sole focus on London, London, Bloody London once again misleads as to what will inevitably happen in housing in the regions which make up 87% of all housing in the UK.  While the housing commentariat concentrate on the 13% of UK housing in the capital the other 87% get ignored and shafted!  It is this superficial analysis and holding onto misconceptions that sees the like of social housings great and good, every political party and the likes of Shelter and the Guardian totally miss the real impacts of the OBC policy – they are stuck in their London, London, Bloody London housing silo.

Liverpool is a barometer for how the OBC and all other cuts to Housing Benefit impact in the 87% of the UK that we call the regions and the aforementioned social landlord evictions since 2003 are represented below with figures for Q1 to Q3 only in each year to compare like-for-like with the first 3 quarters of 2016 which are the latest official figures released by the Ministry of Justice.

Here is that graph again

liverpool-srs-eviction-2003-to-2016

As it is plain to see social landlord evictions are surging and when we consider that housing associations have been refusing to allocate to the bedroom tax due to the £14.74 per week Liverpool bedroom tax average (nationally £15.21 per week cut) then be in no doubt the benefit-capped families with 3 – 5 times this level of HB cut will be refused social housing and go directly to the homeless department of the council.

You can also put your shirt on Liverpool City Council no longer paying bedroom tax DHP as the amount of HB cut in the benefit cap increases from £0.3 million per year to over £7 million per year to avoid higher homeless costs to the council … which in turn will see many more bedroom tax evictions taking place in Liverpool by consequence.

Rest assured what I am describing in Liverpool will happen in your city, town, village of hamlet if you reside in the 87% of UK housing that is not in London, London, Bloody London!

How much is your council tax going to have to increase by?  A hell of a lot more than it needs to increase to pay for adult social care!  Yes seriously!!  And if you take the time to read the Liverpool Mayor’s piece in the Guardian I referenced above you will see then, prior to OBC and prior to the 2% adult (only) social care precept that Mayor Joe Anderson was then saying he would cut the number of care cases in Liverpool from 15,000 down to 9,000 …

When Anderson became leader of the authority in 2010, two years before he became mayor, it was spending £222m a year on adult social care services. Today, it spends £172m. By 2017, it will be £150m – a further cut that, he says, will mean reducing the number of people receiving care packages from 15,000 now to 9,000.

So what is going to be cut in Liverpool on top of the 40% cut in the number of adult social care cases due to the OBC impact?  Will the bins be collected once a fortnight rather than once a week? Will all the libraries close?  Will the street lights not come on till midnight?  All of the above and more perhaps?  Probably!

I raise that as all taxpayers (and many of them couldn’t give a flying fig about the OBC and how it will see half a million children made homeless each year) will see the impact in their council tax rising and far far fewer council services which is not seen and it is this disconnect that needs to be highlighted too.

Liverpool is already stating it needs to make £30 million of cuts per year and this is before the OBC cost to them.  This is Liverpool who told the House of Commons APWG at the DWP in October 2015 that 1950 households would be affected by the OBC in Liverpool as Hansard records yet now say it is just 810!

Those figures however perverse and understated only concern existing tenants and take no account whatsoever of the prospective tenants who WILL be refused social housing each year and become the responsibility of and massive cost to the City Council!

For every 2 existing families affected by the OBC there will be at least 5 prospective families who will be refused social housing due to affordability – and all of them will become homeless and cost the city council.  So even if the joke figure of 810 existing families to be benefit capped the LCC claim is right, at least 2000 additional families that would pre OBC have been allocated a social housing property will be accommodated by it as homeless families.

Strange how I litter all of these dystopian posts with facts (all official facts too) and how they are so dystopian that they all materialise isn’t it!

Have you got the gist yet that the OBC has slipped under the radar because of the London London Bloody London focus that the housing commentariat solely focus upon?  Perhaps they are the embodiment of the post-truth society … or perhaps they are just incompetent?

Or the gist that the OBC impacts will be unlike all previous cuts to Housing Benefit as they will impact almost immediately when the bedroom tax et al are all slow burners?

Do you yet see the link between ideological bullshit policies such as the OBC which are easily sold to the general public as being right and fair yet when you barely scratch under the surface they lay waste to the social fabric of the 1948 Welfare State and how cuts and caps end up costing so much more?

Perhaps making a minimum of 500,000 children per year homeless is British Values writ large?

Anyone think that Liverpool’s surging social landlord eviction rate is going to fall in the near future or ever again?

Anyone still think selling off council housing and placing what was once public sector ownership into the hands of PRIVATE Registered Providers – the correct official name of housing associations?  Anyone now see how this public to private sector ownership is coming to bite your city, town, village and hamlet on its arse!

Anyone still believe that the market can ever possibly work for any democracy’s need to house its most vulnerable?

Anyone not yet see that punishing children for the ‘sins’ of their parents is not de facto child abuse?

Happy Christmas!

_______________________________________

Sources:

hb-new-srs-lets

average-rent-srs-201516

table3c-social-housing-201516

obc2p3cmonthlyshortfalls

You gotta love the London London Bloody London focus on equating this with just the private landlord when social landlord can and will refuse yet the usually very good HoC Library did not even consider it!!

ehs-%beds

Liverppol HA stock profile 2014/15 – names change stock % doesn’t! Note Cobalt, LMH and SLH are the LSVTs in Liverpool for the former council stock

obc-liverpool-3bed

Advertisements

4 thoughts on “Benefit Cap – a £30 million per year added cost to Liverpool City Council

  1. every amalgamation of areas example Liverpool halton etc will all be sucked in to cover Liverpool costs as they will all have there own costs as well which drags the whole of Merseyside into poverty councils cannot cover the huge costs involved the time will come anyone over 18 will not be helped what then of the children
    I read everything you have put to paper Joe since you first flagged the issue up it depresses me so much has you have always said when will people wake up

    1. No. The other 4 Merseyside councils and Halton will have proportionate additional costs similar to Liverpool with the OBC do they won’t be sucked dry to pay Liverpool costs as they will have their own

Please leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s