All posts from: July 2011
The change of tack on five-year tenancies is a welcome development but one that also confirms yet again the extent to which the government is making things up as it goes along with its social housing reforms.
In the last month ministers have managed to first signal that two-year tenancies would only be used in exceptional circumstances, then publish draft directions that failed to mention this, then amend that to say that the norm will be at least five years. The directions were already three weeks into a 12-week consultation when this change was made.
While I was away on holiday, the Localism BIll was moving slowly through its committee stage in the House of Lords. Based on what happened with, for example, the housing benefit cuts, that seemed like a great opportunity for peers of vast experience to move amendments on issues such as the suitability of private rented accommodation for homeless families, gatekeeping by local authorities, the security of tenure of existing social tenants who move and extra protection for elderly and vulnerable households.
In the event, after four weeks of committee stage deliberations, the debate on the housing sections of the Bill was crammed into just two and a half hours on the final day before the Summer recess.
Remarkably, even government minister Baroness Hanham seemed annoyed by the lack of time for debate. ‘My Lords, this is clearly a debate that needs a lot more time than we have got tonight,’ she said. ‘I have listened to some very moving and knowledgeable speeches on the amendments and I understand fully the points that people have been making. The trouble is the time constraints—the way these have been grouped in this large bunch makes it almost impossible for me to deal with all the many points that have been raised in the manner in which I would have wished to do so.’
That bunching meant that amendments on issues such as gatekeeping did not even make it beyond the order paper. And even those that were debated were withdrawn without being put to a debate vote [EDIT - blog in haste....].
The issue of the suitability of private rented accommodation where local authorities have discharged their homelessness duty had been covered in a worryingly thin DCLG document deposited in the House of Lords library (see July 11).
And a whole range of issues including the security of tenure of existing social tenants will they move will be left at the door of a social housing regulator with fewer resources than before but an increased role in telling landlords what to do.
The Bill is now formally at the report stage in the Lords so there will be one more opportunity once parliament reconvenes but it’s hard not to think that the best chance for the Lords to use its collective expertise to improve the legislation for landlords, tenants and homeless families alike has already gone.
However, none of this rush and muddle should should come as much of a surprise to anyone who's followed the reforms from their inception.
Proclaimed as the most radical for a generation when proposals were published last December, the consultation on them was squeezed into just eight weeks including Christmas to fit in with the timetable for the Localism Bill. This was in breach of the government’s own code of practice that says the minimum should be 12 weeks and meant that the consultation ended on the same day as MPs gave the Bill its second reading in the Commons.
As I said at the time, if governments or anyone else acts in haste they tend to repent at leisure. What’s happened while I’ve been away makes that point yet again. That does not bode well for the workability let alone the fairness of the reforms in the long term.
The Council of Mortgage Lenders (CML) is posing a scary question with fundamental implications for landlords, tenants and the government: can lenders continue to fund social housing?
I just got back from holiday to see that alarming question posed in the organisation’s latest online news and views.
In part it’s a continuation of the CML’s previous warnings about welfare reform in general and direct payment of housing benefit in particular. And it would be easy to dismiss the phrasing of the question as a negotiating position in discussions with the government.
But the worrying thing is that comes after a meeting with work and pensions minister Lord Freud that was supposed to resolve many of the outstanding issues. It’s now clear that it didn’t.
‘We have urged the minister to give assurances on these issues as quickly as possible,’ says the CML. ‘We have also re-iterated our concern that removing direct payments of rent – one of the basic pillars supporting private finance of social housing – will result in higher funding costs. Bond market investors already showing signs of reduced confidence.’
The minister was apparently keen to assure lenders that he was ‘fully aware of the importance of protecting the flow of income for social housing providers and retaining lender confidence’.
He agreed that direct payment to landlord should continue for the elderly and other vulnerable groups but gave no clear definition of what vulnerable means.
He also discussed a range of different options including the trigger mechanism for direct payment when a tenant falls into arrears, how the DWP could contribute to repaying debt caused by arrears, jam-jar accounts, greater provision of debt advice and a clearer definition of ‘vulnerable’.
Most crucially, perhaps, the CML said Freud agreed with its suggestion that any new system ‘should be pilot-tested before being fully implemented’.
The CML will also contribute to financial modelling to test how effectively each of those ideas would help to guarantee income streams. And more discussions are planned that will also involve the Tenant Services Authority and some of the largest individual lenders.
Some promising signs perhaps that the government is taking seriously the case made by lenders and landlords about direct payment?
Perhaps, but it doesn’t seem to be enough for the CML. ‘Although we will continue to discuss, and consider, alternative payment arrangements, we believe that direct payments of rent should remain as an option for any tenant who wants this arrangement.’
And it’s not just direct payment that’s worrying the organisation. It’s concerned too that wider plans for the introduction of the universal credit (‘we are sceptical that they will be cost-effective’) and affordable rent (‘increasing the likelihood of arrears for those households unable to manage their finances effectively’) will make maintaining existing arrangements even more important.
At the same time, as I argued in a feature for Inside Housing last month, the government seems committed to the universal credit to increase work incentives both by simplifying the benefits system and giving claimants more personal financial responsibility. It’s hard to see where direct payment to landlords fits with that.
On the face it, the government, lenders and landlords would seem to have too much at stake to fail to find a compromise. But the longer the impasse on direct payment continues the greater the chances will be of some lenders deciding that their answer to the question posed by the CML is no.
There was an intriguing glimpse into the Labour rethink of the welfare state on Newsnight last night, one dominated by images of something that was barely mentioned by anyone in the programme.
No prizes for guessing that I’m talking about housing but maybe a few small ones for guessing that the rethink in question is by James Purnell, the former work and pensions secretary who now seems to be positioning himself as the party’s answer to Iain Duncan Smith.
IDS used the long years of Tory opposition to be moved by life on the Easterhouse estate, found the Centre for Social Justice think-tank and develop ideas on welfare reform that led to the universal credit currently going through parliament.
Purnell stood down as an MP at the last election and is now chair of the trustees of an existing think-tank, the IPPR, but seems equally determined to influence the agenda for the next Labour government.
HIs central idea (see also here and here) is that people can learn to love the welfare state - or rather a protection state - as much as they did when it was founded after the second world war and a bit like they still love the NHS.
As he explained in a Newsnight film: ‘We should have a smaller number of protections which people would really value, but ones that people would really value, things of which people would say “that’s why I pay my taxes”, a bit like they do for the NHS.’
It’s a system that seems to draw partly on Beveridge and his vision of a contributory principle at the heart of a system of social security and partly on the New Labour rights and responsibilities agenda.
Everyone unemployed for more than 12 months would be guaranteed a job but would lose their benefits if they didn’t take it up. You would get more out of the system if you paid more in - perhaps wage protection while you looked for another job.
There would be free childcare to enable more people to work. If you contributed to the system all your life you might get a higher pension.
So far, so controversial - but the system would be paid for by cutting a whole range of things like higher-rate tax relief for pensions, free bus passes, free tv licenses and parts of TV licenses.
According to Purnell, only by scrapping the current system and starting from a clean sheet of paper can we hope to create a welfare system with genuine popular support.
And yet the location for his film, as he opened his laptop to play footage of Gillian Duffy and sat to interview influential Labour MPs Jon Cruddas and Liam Byrne, was the middle of a council estate.
The camera repeatedly swept over the estate and its residents, making council housing a visual reference point for welfare in general, and yet the talking heads had nothing to say about housing apart from the odd reference to the post-war construction programme all around them.
That’s hardly surprising since it’s not at all clear how social housing and housing benefit would fit with Purnell’s system - just as it wasn’t with the Beveridge reports and still isn’t with the universal credit.
But until welfare reform answers the big questions about housing and how to pay for housing costs it can only ever be a partial fix.
Lib Dem peers Baroness Doocey and Lord Shipley are moving an amendment to the Localism Bill in the House of Lords that would require councils to assess the housing needs of all applicants before advice and assistance is provided and to give them a written record of the assessment.
It would also make it clear that applicants are not obliged to accept any particular housing option and can proceed with a homelessness application.
The amendment was rejected at the committee stage of the Bill in the House of Commons with housing minister Andrew Stunell arguing that it would be overly bureaucratic.
The move follows longstanding concern among homelessness organisations that some local authorities are using housing options work to prevent homelessness applications than prevent homelessness itself.
A report by Crisis last month found that many vulnerable homeless people are being left without advice and assistance as a result of the way the system is applied.
And, as I blogged last week, a report by the Local Government Ombudsman found that councils were failing in their duty to homeless people and applying ‘inappropriate gatekeeping’ as the number of people sleeping rough starts to rise.
The ombudsman also raised concern that more people could suffer injustice as budget pressures on local authorities intensify.
Two sessions of the committee stage of the Localism Bill in the Lords are scheduled for this week with more to come next week.
Ministers have given their most detailed response yet to the warnings about the consequences of benefit cuts in the Pickles letter.
Housing minister Grant Shapps and (when he could get a word in edgeways) work and pensions minister Steve Webb were appearing last Wednesday afternoon at a communities and local government committee hearing on localisation issues in welfare reform.
That gave MPs the chance to ask the questions about the warnings in the letter from the private office of communities secretary Eric Pickles to Downing Street that they were denied in the Commons earlier in the week. As I explained then, the letter said that internal modelling at the DWP suggested that the overall benefit cut risked making 20,000 people homeless and costing more money, that other housing benefit cuts risked making another 20,000 homeless, and that almost half of the affordable rent programme, including all of the larger, family accommodation, might not go ahead.
Shapps and Webb were asked (I think by committee chair Clive Betts) whether ministers in the DWP were aware of the internal modelling at DCLG.
The housing minister was quick to jump in first. ‘There was no internal modelling that suggested this,’ he said. ‘There’s nothing that’s been externally validated at all. This was a line from a civil servant that was written and sent across to No 10 and DWP. But it was an internal office-level exercise. These are not representations that we made as ministers at all because we didn’t believe them to be at all accurate and they weren’t based on any evidence base at all. In fact the two impact assessments published in February and March make it clear that it’s actually impossible to model this because there are so many different possible lifestyle changes that people could make by 2013 it would be impossible to do.
‘So no we don’t recognise those figures at all. And in addition the central thrust of that letter was about whether the universal cap would damage the affordable housing programme and speculated that it would again with were off the top of whoever’s head’s figures. Again we now know that six months it hasn’t and that programme has been over-subscribed and I’m shortly going to be able to deliver some rather good news about the affordable rent programme which was completely and utterly known about by all those bidding on it and is going to deliver for the country. So I’m trying to point out that the assumptions in that letter have already been proved to be inaccurate and some other assumptions in there are just not internal modelling in the way that you describe it at all.’
But if that was the case, why had Pickles felt strongly enough to write to the prime minister about it?
‘Just to clarify, this was an official level piece of correspondence,’ said Shapps. ‘This wasn’t ministers raising it with other ministers it was somebody within private office. When you are discussing policy you have a perfect right to discuss policy ideas and of course normally as even the shadow secretary of state acknowledges and when she was in government you have the perfect right. When you come to publish the best possible evidence on it you do that through impact assessments. They are rigorously put together they use scientific data, they are externally checked and the impact assessments are very clear that you can’t come to those conclusions. Those are the facts.’
(Shapps was talking about shadow communities secretary Caroline Flint, who made the mistake when she was in government of carrying her briefing papers face up on the way to a Cabinet meeting. Photographs revealed an internal briefing on the state of the housing market and a note that ‘we can’t know how bad it will get’.)
If that was the case, asked Betts, why had Pickles written to Flint saying that the warning drew on some initial internal modelling?
Shapps: ‘Which has turned out to be inaccurate when it comes to the housing numbers.’
Webb: ‘The letter was copied into DWP and DWP as the lead department on the policy has been evolving its modelling work and what DCLG and we did was agreed an impact assessment. What we do is we evolve the policy, six months ago it was exactly what will it look like, we firmed up the policy and we agreed on the impact.’
Did that mean ministers in the DWP saw the initial modelling which showed the potential for 40,000 people being made homeless?
Webb: ‘We saw the letter because we were copied in on the letter.’
When were ministers in the DWP aware of that?
Shapps: ‘Can I just cut in here? I can do no better than to quote Caroline Flint when she inadvertently exposed an internal briefing to Cabinet and said it’s generally not disclosed because to do so could harm the frankness and candour of internal discussion and I think she’s quite right to say that govt has a perfect right to discuss and debate policy. As Steve says this was six months ago and we’ve already seen one of the main [elements] of that letter completely disproved. We correctly came to the decision that these figures which are not what you describe as internal modelling, there is no, there was no, this was a sort of speculative “we are concerned that level” and actually part of it’s been disproved.
‘And just to make it clear we are absolutely 100% signed up to the principle that work should always pay and if you are going to get to that position then there is a quid quo pro which is that a life on benefit is unfair on the person on benefit, it locks them in and you therefore have to make changes to the system and a smooth tapered universal credit is something DCLG is every bit as supportive of as DWP. We stand shoulder to shoulder. The system needs to change. And by the way for reference it used to be what the opposition also believed. It was in the manifesto on page 2 and 3.’
Betts: ‘It’s not me describing it as internal modelling, it’s your secretary of state that calls it internal modelling in a letter to Caroline Flint.’
Shapps: ‘I didn’t want to confuse that as being some sort of big computer modelling within the department.’
Betts: ‘It’s helpful that we know that ministers at the DWP were aware of the possibility according to the DCLG that there was the potential for 40,000 people being made homeless.’
Shapps: ‘That’s absolutely wrong and you’re putting words into both of our mouths.’
Webb: ‘No is the answer to that question.’
Betts then asked how any extra costs to local authorities of homelessness services and temporary accommodation would be compensated.
Webb: ‘One of the things that gets conflated in all this is there are different caps at work here. There is the LHA cap which has already come in from this April for new claims, existing claims from next January and one of the things that’s been done for that is, and the same applies for the overall benefit cap, is first of all discretionary housing payments to local authorities for the most difficult cases and secondly additional funding for local authorities to deal with that transition and that’s the approach that’s adopted for the overall benefit cap.’
Shapps: ‘Again I want to put on record that no we don’t accept what you’re saying about ministers It’s abolsutely not true, not the case…this was formulation of policy. As Caroline Flint points out, if you can’t have a candid discussion internally about various different formulations which were at a different stage in their development at the time the letter was written from now, then you can’t do government. It’s misleading for everybody and unhelpful for everybody, as she points out, if things can’t be discussed properly and privately. What we do know is that the response will be complex and different because some people will make up the difference, some people will have the rent lowered, some people will get discretionary payments, and yes some people will have to move.
‘Let’s be clear, moving is not being homeless. There is a complete difference and in my view as somebody who cares passionately about homelessness and has been out today launching the No Second Night Out pledge this government has just made I would not support policies that I thought were going to lead to homelessness. Will it lead to some people moving? Yes, we can’t all live in the street we want to live in. That’s a completely different case.’
So there we have it. The Pickles letter is 1) out of date, 2) just from a civil servant, 3) demonstrably wrong on affordable rent, 4) part of internal policy discussions that should stay private and 5) wrong on homelessness.
Apologies for the length of this post but having covered the letter in detail I thought it was worth quoting the explanation in full too. Does it hold up? You decide.
For my money, yes, the letter is six months old. Yes, it’s from a civil servant but it’s from not just from any civil servant and private secretaries to Cabinet ministers tend not to act on their own initiative. Yes, affordable rent seems to have been over-subscribed but it will be interesting to see how many four-bedroom homes are included. Yes, it was part of internal discussions but the Flint ‘we can’t know how bad it will get’ precedent is maybe not the best one to choose since it was also correct.
As for the warnings about homelessness and the cost of the overall benefit cap exceeding the savings, there is no way of telling for sure just yet.
So is the immediate problem over for the government? Perhaps it is. The affair began last week on the front pages, one of the more remarkable leaks of recent times, only to driven off them by the momentous events at the News of the World.
On Thursday shadow leader of the house Hilary Benn was still pressing for a statement from Pickles in the Commons but this was turned down by his opposite number Sir George Young on the grounds that he had explained it all in the letter to Flint.
Meanwhile the summer recess of parliament is rapidly approaching. However, the government could still face some questions in the Lords as several committee stage sessions of the Localism Bill and the second reading of the Welfare Reform Bill are both due before then.
There’s a well-timed warning about council homelessness services from the Local Government Ombudsman today that should also be a wake-up call.
It’s a response to consistent criticism from campaigners that the priority of some councils is the prevention of homelessness applications rather than homelessness itself. And the ombudsman, Jane Martin, says they must do more to stop ‘inappropriate gatekeeping’.
The report quotes the case one one family who approached their local authority once when they were about to repossessed and a second time when they had moved and could not pay their private rent.
The council said it had tried to take action to prevent homelessness by liaising with the landlord and giving advice but failed to treat the family as homeless despite them clearly being under threat of homelessness and in priority need.
Another council failed to accept a homelessness application from a single mother with a young son who was being evicted from her private rented flat.
An inexperienced officer assumed that when she moved in with a friend’s family as an emergency measure that her homelessness had been prevented.
In a third case the ombudsman ruled that a London borough had made ‘a deliberate attempt to prevent access to housing assistance’ to a pregnant woman in her 20s.
It had refused to take her homelessness application and told her to go to another borough.For the ombudsman, the point of highlighting this and other cases is to identify good practice in the way councils make decisions, inform applicants, administer their systems and liaise with other departments.
And it says it will criticise councils that use homelessness prevention to prevent applications or use other means to delay or deny applications.
Many will see those conclusions as long overdue but they have a particular resonance in the current financial mess.’I am concerned that more people could now suffer injustice because of the combined impact of a tough economic climate and the serious budget pressures on councils,’ says Jane Martin.
‘It’s really important that councils are alert to this very significant risk. We want to help them understand the dangers and take action to avoid mistakes.’
However, that seems like an understatement at a time when even Eric Pickles is warning that housing benefit cuts and the overall benefit cap will make 40,000 households homeless.
As Patrick Butler notes on his Guardian blog, Westminster, the council most in the firing line from the first round of cuts, is expecting a glut of homelessness applications from January 2012 and that it will have to house 300 households in temporary accommodation.
He quotes Westminster’s risk assessment as saying this is affordable as long as only four out of the 40 applications it expects a month are accepted.
An acceptance rate of 40% would mean 1,500 units of temporary accommodation at a cost of £18m. That is just the effect in one borough of the bedroom size caps and the cut to the 30th percentile.
Take that effect around the country, add the cuts still to come such as extending the shared room rate to the under-35s and all sorts of cuts in the housing benefit of social tenants, and the pressures on homelessness services are going to be severe - to put it mildly.
So costs from demand for assistance will be soaring just as funding is plummeting (in his leaked letter Pickles warned that the overall benefit cap will save central government £270m but cost local authorities £300m in homelessness assistance).
The removal of ringfencing for supporting people and homelessness prevention will make things even worse - even in authorities determined to do the right thing.
As one housing options manager comments on Inside Housing’s news story on the report: ‘I have witnessed other councils taking the gatekeeping approach approach referred to in the article and I have to say I am struggling to fend off the urge or requirement to act in the same manner due to the financial constraints against a backdrop of increased demand.’
Finally, add new flexibilities under the Localism Bill for local authorities to discharge their homelessness duty into the private rented sector. Grant Shapps argues in this week’s Inside Housing: ‘They are best placed to weigh up the needs of individuals in their area, and to provide the appropriate accommodation that balances their duty to house against the local demand for social housing.
Few of us would argue that. Nor would anyone think that they are going to desert their responsibility to those in greatest need by abandoning them in unsuitable accommodation.’
Fine words but the sort of problems revealed by the ombudsman happened at a time when services were relatively well-funded. Combine severe cuts in funding, benefits and advice services and a surge in demand for assistance with that local flexibility and we could have a scandal waiting to happen.
Rarely can a housing minister have been so far on the wrong side of the argument as Grant Shapps appeared to be on Landlords from Hell last night.
If you didn’t see the Channel 4 documentary by Jon Snow you should make sure you catch it on 4OD because it was the most powerful piece of television about housing that I can remember for years.
What made it so good was not just the truly appalling case studies of an unscrupulous landlord that is (incredibly) a charity in the North West and the tenants living a whole street of rat-infested garden sheds in west London, but the personal engagement of Jon Snow. Time and again he would mention the conditions he’d encountered when he worked for a day centre for homeless young people before he became a journalist and his shock at finding the same thing was back 40 years on.
‘I had no idea that such widespread abuse and exploitation still plays such a role in the private rented sector,’ he said - and you could almost feel the TV audience opening their eyes too.
But not Shapps. In this context his standard lines about too much bureaucracy and a small minority of rogues came across as woefully detached from the fact that people are living in sheds on his watch.
So far, so bad but things got even worse for him during the programme. As the debate raged on Twitter about the issues and his own performance he was tweeting to welcome his 25,000th follower rather than respond to the programme. Cue lots of Twitter abuse.
In fairness to Shapps he’s recovered some ground this morning by tweeting ‘shocking - we’re determined to stamp out bad landlords’. It also wasn’t him that created the conditions that led to a massive increase in the number of private tenants over the last five years.
But it is him who came into the job rejecting a modest package of regulation as too bureaucratic. And it’s him who’s housing minister at the time when it has become blindingly obvious that something has to change.
Ask any landlord or letting agent who runs their business properly and they will agree with the need for action. They know that the rogues are dragging down the reputation of the whole sector and that they can undercut them through poor standards and unscrupulous management practices. Getting agreement on exactly what should change has always been the problem.
And the tragedy is that something else is changing in the meantime - and not for the better.
Local authorities that already seem unwilling or unable to enforce the existing legislation (Ealing, the borough with the street of sheds, has made just one prosecution in the last year) are seeing their funding cut. Thousands more homeless people will be forced into the private rented sector under plans to change the homelessness legislation. And tenants’ chances of enforcing what’s left of their rights will get even slimmer once Legal Aid is cut.
The leak of the Pickles letter comes after a year of claim and counter-claim about the impact of benefit cuts on homelessness. Here’s what the government has said so far.
Budget announces cuts in housing allowance including caps on local housing allowance by bedroom size.
George Osborne tells Conservative conference that families’ total benefits will be capped at £26,000 a year – ‘the level that the average working family earns’.
Grant Shapps writes in The Guardian: ‘People like me – who set up a homelessness foundation, worked with all the homeless charities, authored probably six of seven homelessness papers – don’t make changes without thinking through the impact of them on the homeless. It is ludicrous to suggest that we would ever do things that would end with people living on our streets.’
Lib Dem MP Bob Russell asks DCLG in written question: ‘(1) what assessment he has made of the effects on the number of people declared homeless of the proposed changes to housing benefit entitlement in each of the next four years; and if he will make a statement; (2) what estimate he has made of the effect on local authority costs of fulfilling their statutory obligation to provide accommodation for families who have been made homeless of a reduction in housing benefit entitlements.
Shapps replies: ‘The Department for Work and Pensions (DWP) has published estimates of the numbers of households that will be affected by the changes to local housing allowance rates in 2011-12. However, it is not possible to estimate the number of households that will move as a consequence of the changes.’
DWP impact assessment of cuts to local housing allowance:‘There is also a risk of households falling into rent arrears leading to eviction and an increase in the numbers of households that present themselves as homeless.’
‘The overall economic impact of the measures cannot be quantified with any degree of certainty as it is not possible to predict the behavioural effects of tenants or their landlords. However the impact assessment recognises that there are a number or risks as follows: increases in the number of households with rent arrears, eviction and households presenting themselves as homeless…’
Government response to Social Security Advisory Committee report on first round of housing benefit cuts: ‘The Government does not expect tenants to be made homeless as a result of its reform of Housing Benefit.’
Welfare minister Lord Freud gives evidence to work and pensions select committee on housing benefit cuts: ‘I must put on the record that we are not expecting any significant increase in homelessness as a result of these changes; we do not expect that at all. We are expecting transitional costs but not a substantial increase in homelessness.’
‘it is immensely unhelpful when people and commentators stir up fears using somewhat arbitrary figures about potential homelessness, because it frightens people.’
Glenda Jackson MP asks him: ‘If [the] evaluation [of the policy] shows that homelessness has vastly increased, will the Government be changing their policy?
Freud replies: This is the kind of thing where if things come up, clearly one reacts to them, but at the moment that is a hypothetical question and impossible to answer at this stage.
Jackson: ‘Not as hypothetical as you think.’
Iain Duncan Smith, says in House of Commons debate: ‘The facts are exaggerated. For example, there is the ridiculous fact that we might have to spend an additional £120 million to provide temporary accommodation. That is ludicrous. […] The reality is that this is not going to happen. There should be no need, with the discretionary allowance, for people to be made homeless.’
Private secretary to Eric Pickles writes to private secretary to David Cameron: ‘We are concerned that the savings from this measure, currently estimated ay £270m savings p.a from 2014-2015 does not take account of the additional costs to local authorities (through homelessness and temporary accommodation). In fact we think it is likely that the policy as it stands will generate a net cost.’
‘Our modelling indicates that we could see an additional 20,000 homelessness acceptances as a result of the total benefit cap. This on top of the of the 20,000 additional acceptances already anticipated as a result of other changes to Housing Benefit.’
DWP impact assessment of household benefit cap: ‘Some households are likely to present as homeless, and may as a result need to move into more expensive temporary accommodation, at a cost to the local authority. It is not possible to quantify these costs because they are based on behavioural changes which are difficult to assess robustly.’
Government response to DWP select committee report on local housing allowance cuts in 2011: ‘The Government acknowledges the concerns raised by the Committee regarding the estimates produced by some of the witnesses of a substantial increase in homelessness as a result of the measures being introduced in 2011. However, the Government considers that these estimates have been exaggerated.’
During debate in Welfare Reform Bill committee, Lib Dem MP Jenny Willott asks: ‘Is the Minister able to confirm what I have heard, which is that the DCLG estimates that the cap will lead to an increase in homelessness of around 20,000 people? That would cost local authorities some £300 million in emergency housing for those families, which would totally cancel out the £270 million estimated savings.’
Work and pensions minister Chris Grayling responds: ‘My hon. Friend…alsoasked about the figures for the increased cost ofhomelessness. She cited figures that she had been toldwere Department for Communities and Local Governmentestimates. Our impact assessment stated that the costscould not be quantified because of the behaviouraleffects of the introduction of the cap, and that remainsthe case. I have no clear evidence that further informationis available, but am happy to provide my hon. Friendwith more background on the information that we have.At the moment we do not recognise any further figuresbeyond the detail in the impact assessment because wesimply do not believe, yet we can understand fully, thebehavioural effects of the measure in terms of costs.’
Iain Duncan Smith, responding in Commons to reports of amendments to the household benefit cap, says: ‘The reality is that this policy is not changing because it is a good policy. The reality is that nearly half of those of working age who are working earn less than £26,000 a year, and they pay taxes to see some people on benefits earning much more than that amount.’
Welfare Reform Bill gets third reading in House of Commons.
Pickles letter leaks to The Observer.
The leaked letter from Eric Pickles is shocking on so many levels that it’s hard to know where to begin.
Ironically, the least shocking level is the warning that 40,000 families will be made homeless as a result of benefit cuts. It’s exactly what housing organisations have been arguing for months after all.
More shocking is the fact that the government has accused them of scaremongering or claimed the effects cannot be quantified.
Yet here is a letter from the Pickles’s private secretary warning Cameron’s office that DCLG modelling suggests that the £26,000 household benefit cap will make 20,000 families homeless and will cost more than it saves.
Another 20,000 will be made homeless as a result of the housing benefit cuts, according to the letter.
And the affordable rent programme will be fatally undermined: ‘initial analysis’ suggests 23,000 of the 56,000 homes will not be built and that it will be ‘extremely difficult to fund any four-bed properties….anywhere in the country’.
The minor change suggested by Pickles, removing child benefit from the cap, was not adopted. But even if had been the whole of London and the South East would still have been unaffordable for families with four children.
The DCLG is arguing that because the letter is six months old it is old news and therefore irrelevant.
However, to my mind, that makes it even more relevant and even more shocking. It means the government knew full well what the effect of the household benefit cap would be – and then went ahead and introduced it anyway.
Shadow work and pensions secretary Liam Byrne is expected to argue in the Commons later today that ministers repeatedly misled parliament about the evidence that was available.
So what are we to make of a policy that increases homelessness and costs more money? It seems complete nonsense in terms of housing policy and deficit reduction.
We know that Eric Pickles was calling for changes but apparently did not even raise the small matter of spending more money to make 20,000 homeless in Cabinet . We strongly suspect that even Iain Duncan Smith himself is opposed to the cap and the Centre for Social Justice, the think-tank he founded and which dreamt up most of his welfare reform agenda, has called it ‘devastating’ and ‘highly damaging’.
But we also know that the cap was first proposed at the Conservative Party conference by the chancellor George Osborne.
The truth is that this is a political and ideological decision, one based on spurious ‘fairness’ to ‘hard-working families’, and the (probably correct) calculation that it will play well with the voters, never mind the blatant lack of evidence and misuse of statistics.
So maybe, at the most basic level, the leaked letter and the (lack of) government response to it, are not so shocking at all and simply confirm all our most cynical prejudices about politics?
That would be true were it not for the fact that a bad policy that increases homelessness and costs more money has already completed all of its stages in the House of Commons.
In the face of well-argued criticism from Labour and some Liberal Democrat MPs, ministers have simply been able to steamroller that bad policy through.
Despite arguing against it, even the official opposition tacitly acquiesced at Third Reading when the Labour frontbench failed to move any amendments to the cap so that it could concentrate on arguments that were more winnable. Backbencher John McDonnell tried but tweeted yesterday: ‘Two weeks ago I tried to amend Bill to scrap cap but Labour frontbench refused to support. Now?
The affair raises all sorts of questions about what’s going on in Whitehall too.
The supposedly neutral impact assessment of the benefit cap published by the DWP in February said: ‘Some households are likely to present as homeless, and may as a result need to move into more expensive temporary accommodation, at a cost to the local authority. It is not possible to quantify these costs because they are based on behavioural changes which are difficult to assess robustly.’
But we now know that the costs had been modeled and quantified by the DCLG and conveniently not mentioned by the DWP.
That in turn undermines the neutrality and the findings of all the other impact assessments published by the government.
What, for example, are we to make of the fact that the DCLG assessment of affordable rent claimed to have taken account of the cap yet conveniently neglected to mention that its own modeling suggests it will stymie almost half of the programme and all of the larger family homes?
So the most shocking thing about the Pickles letter is not the increase in homelessness, not the increase in costs, not the revelation that one government policy completely undermines another, not even the fact that ideology and political calculation trumps the human and financial consequences of a policy. It is the collective failure of the political and policy-making process.
There is still a chance of extra concessions in the secondary legislation to follow the Bill, However, three weeks ago the welfare reform minister Lord Freud was slapped down by Downing Street for a mild suggestion of that and Iain Duncan Smith told MPs: ‘The reality is that this policy is not changing because it is a good policy.’
And so, following one of the most remarkable leaks of recent times, only the House of Lords can now change one of the worst policies of recent times before it reaches the statute book.