Monday, 21 April 2014

Tangled web

From: Inside edge

Happy though I am to have played a part in getting Iain Duncan Smith to clarify what he said about rents and housing benefit, the whole affair raises more important issues than the fact that he told parliament that something found on the internet was an official statistic.

The work and pensions secretary said in a debate that last week that ‘according to the Office for National Statistics’ private rents fell by around 5% between November 2008 and February 2010 whereas the local housing allowance went up 3%. In fact, as I blogged on Tuesday, the ONS produces no such stats and the source was the property website findaproperty.com

Now he has written to the parliamentary authorities with a ‘clarification’. The BBC quotes sources close to Duncan Smith as saying that he made a minor error and actually meant to say ‘according to national statistics’. 

The sources ‘say the website’s figures are “robust” and its statistics have been used in submissions to parliamentary committees without complaint and argue that statistics from local authorities show a similar trend.’ 

Hmm. Let’s give IDS the benefit of the doubt for getting his sources mixed up while he was speaking without notes in a parliamentary debate but why not just admit it rather than come up with such a weasly form of words? And what exactly are these statistics from local authorities about private rents?

Moving on, the BBC quotes a DWP spokesman as saying that the row over the origin of the statistics is ‘a distraction from the important point the secretary of state was making’.

However, as I argued on Tuesday, the source of the 5% stat is not the only problem with the comparison he drew. Remember that it has been one of the key soundbites used by the coalition to justify the cuts. I’ve also heard it used by DWP ministers Steve Webb and Lord Freud. Housing minister Grant Shapps used it to argue the cuts would simply bring LHA rates back to the market norm on the Today programme on Thursday.  It was a key part of a DWP briefing to journalists two weeks ago and it’s subsequently been repeated in just about every broadsheet newspaper and even in last week’s Economist.

However, it does not compare like with like. The average findaproperty rent is double the average local housing allowance payment so they are looking at very different markets. And findaproperty measures asking rents for new lettings not the actual rents of all tenancies. 

And it is out of date. If ministers had bothered to look at findaproperty.com recently, they would have found a rather different picture. The latest survey in September showed rents had risen 3.8% since February, the rather arbitrary cut-off point they chose - whereas the DWP’s own figures show that LHA payments rose just 0.05% between February and July.

They also might have noticed that its property analyst Nigel Lewis was saying that: ‘Average rental prices are back up to where they were two years ago and I can only see them going up even more.’

And that he went on: ‘Stock levels in both the home buyer and rental markets are dwindling, and would-be buyers are still having a hard time getting mortgages. This is all putting increased pressure on the available rental stock which pretty much makes it a landlord’s market at the moment as they can effectively name their price.’

The implication behind the 5%-3% comparison is that landlords hiked up their rents when the LHA was introduced and that the cuts will result in rent reductions rather than shortfalls for tenants. 

But here is the very website that sources close to Duncan Smith say is ‘robust’ pointing out that rents are going to rise even more at the same time as the cuts in the local housing allowance kick in. 

And it’s not just findaproperty. Another survey reported on Friday that rents are up 4.5% since October last year (although its average rent of £691 a month is significantly less than findaproperty’s £850).  

Meanwhile, the Rightmove consumer rental forecast published today says that 42% of renters expect rents to be higher a year from now, against 45% who expect them to be the same and just 7% who expect them to be lower (6% don’t know). 

I’ll finish by going back to the supposed source, the Office for National Statistics. Here is its description of why it does what it does. For once it’s something I found on the internet that is definitely true: ‘Reliable and impartial statistics are vital for planning the proper allocation of resources, policy-making and decision-making to ensure a fair society.’ 

Readers' comments (2)

  • Sidney Webb

    Purpose of the Office for National Statistics: to provide reliable and impartial statistics that are vital for planning the proper allocation of resources, policy-making and decision-making to ensure a fair society.’

    - and so Pickles will have it scrapped, without consultation, advice, nor replacement being in place - after all, there is always the Daily Mail to rely on for facts!

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  • Hi Jules, spot on - I was baffled by IDS's comments on rents and blogged about it last week. He doesn't understand the underlying dynamics of the market - that tighter lending, high prices, student debt etc make it impossible for many to buy. They have to rent and this drives up prices. Also, lack of new homes increases the pressure. Total lack of joined up thinking here (ie: Uni fees will mean many more people renting privately for much longer, scrapping RSS cuts housing starts etc) Fap's index is pretty robust - done by the same company who do the Land Reg index - and does indeed show rising rents, as do many other rental reports (Savills, a very reputable research outfit recently predicted rental market would rise to 20% of all homes because of these factors).

    cheers

    Planet Property
    http://planetproperty.wordpress.com/2010/11/19/iain-duncan-smith-is-he-right-about-rents-2/

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