Benefit cuts risk eviction and homelessness

23 June 2010 | By Carl Brown

The government’s decision to cut housing benefit has been criticised by homelessness charities and housing associations.

In his first Budget speech as chancellor George Osborne announced a package to cut housing benefit by £1.8 billion a year by 2014/15.

He also announced a package of measures to the housing benefit system, which he said was in “dire need of reform.”

Local housing allowance will be limited to between £280 and £400 a week depending on house size and housing benefit will be reduced by 10 per cent if a claimant has claimed jobseeker’s allowance for 12 months.

Housing benefit payments will be restricted for those of working age who are in a larger property ‘than their household size warrants’.

Mr Osborne said: ‘Costs are completely out of control.

‘We now spend more on housing benefit than we do on the police and on universities combined.’

Mr Osborne said some families are receiving £104,000 a year in housing benefit.

Campbell Robb, chief executive of Shelter, said the debate should not be muddied by using extreme examples of claims.

He said: ‘Nearly half of housing benefit claimants are making up a shortfall of £100 to meet their rent.

‘If this support is ripped out suddenly from under their feet it will push many households over the edge, triggering a spiral of debt, eviction and homelessness.’

Liz Peace, chief executive of the British Property Foundation, said that it was vital that those living in the more expensive areas of the country are not forced out of their homes by the housing benefit limits.

She said: ‘This would create more problems than it would solve, as it is vital that we do not end up creating more ghettos or forcing people to travel miles to work.’

The chancellor announced an increase in the Budget for discretionary housing payments, paid to councils for those benefit claimants who need further help with costs, of £10 million in 2011/12 and £40 million a year from 2012/13.

Budget at a glance

£61 billion to be cut across all departments by 2014/2015.
Unprotected departments cut by 25 per cent over four years.
Two year public sector pay freeze for all workers earning over £21,000 – those on lower incomes to get £250 a year pay rise.
Maximum limits for local housing allowance- £280 a week for one bedroom, £290 for two bedroom, £340 for three bedroom and £400 a week for four-bedroom.
Housing benefit cut by £1.8 billion by 2014/15 – 7 per cent of total.
Housing benefit awards to be reduced by 10 per cent after claimant has claimed jobseekers for 12 months.
Discretionary housing payments increased by £10 million in 2011/12 and £40 million a year from 2012/13.
Capital gains tax to remain at 18 per cent for basic rate taxpayers, rising to 28 per cent for higher rate taxpayers.
Capital gains exempt amount to remain at £10,100.
Capital gains rate for entrepreneurs extended to the first £5 million of gains.
VAT to rise from 17.5 per cent to 20 per cent.
Support for Mortgage Interest to be paid at Bank of England’s average mortgage rate.
Restricting housing benefit for those in a larger property than ‘their household size warrants’.

Readers' comments (40)

Junior | 23/06/2010 9:12 am
Will this not put people on jobseekers in debt with rent. Wouldn't this make a interesting case with a Solicitor. If person was going to lose home.

I like to hear what other's think
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Anonymous | 23/06/2010 9:37 am
Yes if they are on jobseekers for more than a year, they will then have to pay 10% of the rent themselves. Maybe it will encourage people to go where the work is rather than expected to be funded endlessly by the taxpayer to wait for the work to come to them, the world has changed and we need to move with it. Sorry but I dont see that as a bad thing, we need the skills and workers where the work is, rather than pockets of unemployed in one area and jobs in another waiting to be filled, its basic economics and common sense.

Has anyone worked out how the underocupying benefit cuts will work? The Budget states "social housing tenants of working age will have their housing benefit restricted from Aprill 2011 where they are occupying a larger property than their household size warrants"? So a 50 year old couple on HB in a 3 bed house will have less benefit paid than the rent?

Do we know what a "larger property than their household warrants" means? At present they can have one extra bedroom but on LHA this is not the case, will social tenants be brought in line with LHA?

This could be a massive problem as it applies to all of working age, not just those eligible to work. So parents whose children have flown the nest on HB or those disabled in a bigger property will either have to move to a smaller property or pay part of the rent themselves is how I read it. Any ideas?

Whatever happens, I can see rent arrears teams getting busier over the coming years!
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Richard Colledge | 23/06/2010 9:39 am
We need to see the small print before we can know just how bleak things will be. There might just be one silver lining in the dark clouds though. My landlord never lifts a finger to deal with ASB but they are very quick to act on rent arrears. If some of my bad neighbours fall into arrears maybe they will be evicted.
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Anonymous | 23/06/2010 9:43 am
I am in agreement with the anon post at 9.37am. We can not go on like this.
People who are fit and able to work should do so. Why should anyone who is capable sit at home and recieve full houisng benefits, even part time working would be something and would I am sure make up the difference between the capped and amount and the full rent.
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michael barratt | 23/06/2010 10:45 am
Cut disabled benefits - he would wouldn't he?

Cut benefits for non doms - he wouldn't would he?

Increased VAT is an unequally burden falling on the poor.

"It's the same the whole world over,
It's the poor what gets the blame,
It's the rich what gets the pleasure,
Isn't it a blooming shame?"
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Anonymous | 23/06/2010 11:10 am
‘If this support is ripped out suddenly from under their feet it will push many households over the edge, triggering a spiral of debt, eviction and homelessness.’

or, alternatively:

'If this handout is taken away it will push many households to get up off the sofa, get a job, and join the real world (where the unfortunate taxpayers who fund the handouts live), triggering an upward spiral of self-respect and contribution to society'
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Anonymous | 23/06/2010 11:22 am
"Go where the work is" Do you not need a huge deposit to do this? Where there is work there is high rent. Open the doors to a two tier society - if you have money you can have the housing. If you haven't, clear off!
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Anonymous | 23/06/2010 11:25 am
Liz Pearce states in the story ‘This would create more problems than it would solve, as it is vital that we do not end up creating more ghettos or forcing people to travel miles to work.’ I apprecitate the ghetto point, but has she got a commuter train recently? They're packed with people travelling to and from their place of work. I commute three hours a day, totally my choice but I don't see why somebody on housing benefit should feel entitled to something the vast majority of London/other big city workers don't have.

Perhaps making subsidised/free public transport available to those on or around minimum wage would be a better solution to this problem rather than insisting they live in expensive areas at a high cost to the taxpayer.
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Joe Halewood | 23/06/2010 12:16 pm
The English National Survey states (2008) that only 1 in 8 HB claimants are on JSA.

Hence to subtantiate the claims and blame culture spin that is emerging rapidly on here - thats is workshy people are responsible for HB rise and should get off their arses etc - this line only affects 12% of HB claimants. The other 87/88% or so tend to be on disability benefits or pensions.

All private landlords will be even more reluctant to take on HB claimants now in the capital due to the HB cap. As such existing HB claimants in private lets will likely see their ASTs come to an end creating more homeless cases and the cost of temporary accommodation being used more (and needed more) will make the HB bill soar as more and more 'leases' for HMO temp accommodation will be agreed by councils to deal with this surge in demand for homeless accommodation.

"Housing benefit payments will be restricted for those of working age who are in a larger property ‘than their household size warrants’" - Well if there was ever a policy designed to make people have more children!!!!!!

The manifestations of this naive knee-jerk HB policy will become more and more apparent as time moves on and we get the full detail and the full reaction (will RSLs increase possession claims due to 10% shortfall etc)

No doubt the blame will be heaped upon the alleged 'workshy' and the government spin machine will push this sentiment even more as they realise that their intent to reduce the HB bill wont work and the HB bill will continue to increase at a faster rate than ever before.
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Bernard Townroe | 23/06/2010 12:38 pm
Thanks are due to Joe Halewood for restoring sanity to the debate! The lazy, stupid cliches about those in receipt of any form of benefit repeated here are sickening. Odd that the tax relief on items such as pensions enjoyed by the rather better off don't seem to come under the same kind of spotlight.
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