Thursday, 21 August 2014

Benefit cut for underoccupiers 'will not save money'

The government will spend more money than it saves by cutting housing benefit for social tenants who underoccupy their homes, Labour’s housing benefit spokesperson has warned.

Karen Buck told a committee of MPs working on the Welfare Reform Bill that the cut, which is intended to encourage social tenants to leave houses that are too large for their needs, could lead to a rise in homelessness.

She also said that as there are not enough smaller housing association and council properties to move the tenants into, demand would rise for housing benefit to cover more expensive private sector rents.

From April 2013, housing benefit will only be paid for the number of bedrooms that a tenant actually uses. The cut, which will affect 670,000 social tenants, will save £490 million.

Speaking on Thursday as the committee considered support for housing costs within the bill, Ms Buck said: ‘I suspect that the government’s proposed savings in the universal credit will be reduced the more under-occupation is tackled. It will cost more money when tenants downsize into newer, smaller housing association properties, because the rents are higher.

‘The impact assessment explicitly states that moving into the private rented sector is an option for people to downsize. In my understanding of social and market rents across the country, invariably market rents are higher, so such moves will end up costing more.’

She added that if households became homeless, local authorities would be obliged to house them, which would not save money either.

Housing associations and councils have already told the committee that there are not enough smaller properties to accommodate claimants who will need to move.

Readers' comments (11)

  • Sidney Webb

    This is just another cynical mechanism for privatisation by stealth and to launder money into the pockets of private landlords. The answer is to Regulate Rents and Build Homes not to Inflate LHA Receipts and Sell Homes.

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  • If, as it often stated, 'overoccupation' is older persons whose families have flown the coop, then these will see an arrears position accumulate whilst they are waiting for a reduced size property. This was seemingly missed by Karen Bucks analysis and means that we may see the prospect of older persons being evictedd for arrears by their landlord.

    As usual, the grey vote is politically very important, and this policy aside from its seeming financial madness will create a huge political stink for this government.

    If we then see these 'older persons' having to use the private sector with the greater likelihood of having to top-up their rent (and inferior repairs and quality of accommodation) then that stink will get even greater.

    Will, I wonder, we then see homeless departments making intentionally homeless decisions as these older persons have been evicted twice for arrears

    Oh the joys of making dogmatic policy on the fly!!

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  • ps - of course i meant under not over occupiers

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  • Housing Associations and Councils often claim there is no sustainable demand for smaller dwellings. Could this be about to change?

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  • Under occupation only applies to working age people so won't apply to old dears occupying their 4 bed former family home. This seems to undermine the very nature of this initiative and a cynic (PSR) may even suggest the the Conservative party are protecting a backlash against a significant proportion of their vote as well as avoiding a more serious examination of their moral conduct.

    A point not really raised is how in future we will develop the exact right number of properties to suit demand. We can't intentionally overcrowd and your penalised for under occupation. In some areas this could lead to some properties being empty.

    In addition, in the North smaller properties don't raise enough additional rent through the AR system to make them viable whereas in the South the suggestion is that developing new larger properties through AR would make them completely unaffordable once the universal credit cap kicks in.

    So, there you have it. If you need a big property move north, if your single move south and if your old stay put.

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  • Sorry, "backlash BY a significant..."

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  • Chris

    The answer is simple Bonola, and was successfully used in the development of the New Towns. Providing a proportionate mix of properties in terms of size and tenure allows for flexibility and movement throughout a person's lifetime.
    Obviously we do not have the luxury of socialist planned approaches anymore because for some reason the successful New Town examples are anathema to the prevailing doctrines. Personally, if it is OK for the current Tories to suggest a return to workhouses or even feudalism then surely we can cast back to more recent and succesful times for inspiration.

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  • Gavin Rider

    PSR - there seems to be a fair amount of that going on in the RPSH sector too, with housing association chiefs getting up to £400k p.a. in salary and bonus.

    The solution is to abandon ALMOs and quangos and bring social housing back under local authority management, with regulated salary scales to ensure that those who are working in the sector are not milking a cash cow for their own ends.

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  • Christopher - splendid suggestion! So obviously right! And those garden towns and new towns are, by and large, still functioning as working communities. The aesthetics may not have been brilliant and there were some mistakes (Radborne layouts for example) but the principle, of planning, building and providing genuinely mixed communities is surely right. Telford, Milton Keynes and Peterborough may be derided but they had the right idea - homes for all and jobs for all. And I am sure if we did it now, we could make them look a lot better and avoid the mistakes (e.g. over reliance on the car, divorcing retail from residential).

    Now if we can see that, we have to ask why the Con/LibDem/NewLab coalition can't see it? Ah ha!!!! That's because they don't want to see it.

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  • Sidney Webb

    The Irony Gresley and CW is that the Housing Minister is MP for a New Town in the same County where the New Town ideal was born - if only he could see what was around him and understand.

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