What's the benefit?
All posts tagged: housing benefit
Alan Ward, chairman of the Residential Landlords Association, claims the government’s housing benefit policy will hurt private landlords and their tenants.
In their foreword to the coalition agreement, David Cameron and Nick Clegg committed the government to enabling people to ‘make better choices for themselves’.
This is a principle which the Residential Landlords Association supports, which is why it is calling on the government to remain true to its word and extend the principle of choice to private sector tenants in receipt of housing benefits. This would enable them to decide who should receive their benefit, themselves or their landlord.
According to the government, paying housing benefits direct to tenants works to support and promote financial responsibility. The only problem with this is that many tenants feel it would be more responsible to have their benefits paid directly to their landlord. In 2009, for example, data from a survey of LHA claimants by Shelter found that of those claimants who would choose for payments to be made directly to their landlord, 95 per cent were struggling to manage their finances.
The government’s decision to allow councils to pay housing benefit direct to landlords who cut their rents fails to take account of the real world in which cuts are simply not viable. Landlords have seen average yields fall from 6.8 per cent in 2002 to 5 per cent currently. They also now pay tax on their rental income at 40 per cent.
Small-scale landlords constitute the life-blood of the private rented sector. If we are to grow the sector to meet increasing demand, forcing further cuts through the benefits system will do little to attract new investment from landlords.
Surely the people who should make the decision as to how best they are able to manage their finances are the tenants themselves.
More broadly, the government’s changes to housing benefits are beginning to show a worrying lack of joined-up thinking across Whitehall, and we urge DCLG and DWP to work more coherently together better to support the private rented sector to meet the needs of those for whom the sector provides the only hope of meeting their housing needs and aspirations.
Take for example the decision to increase the age limit at which benefit recipients can claim only for a room in a shared house from 25 to 35. Government estimates suggest that this could affect 88,000 tenants, although the RLA believes this is a gross underestimate given there are 1.16 million private tenants between 25 and 34.
At the same time as DWP is forcing many more people into shared accommodation, many local authorities are using new planning powers to restrict the growth of houses of multiple occupation. A recent survey found there is already a shortage of suitable shared accommodation.
Implementing tenant choice is a cost-free move that would help many tenants to avoid rent arrears and, if it is not willing to reconsider the increase in the age threshold for the shared accommodation rate, the government should repeal the article four regulations that enable councils to restrict the growth of shared housing.
Iain Duncan Smith has taken quite a dramatic u-turn on housing benefit today. Only last week he was trumpeting the virtues of a 10 per cent cut in jobseeker’s allowance for unemployed people, claiming it created an incentive to return to work. But this morning, on the Today programme, he said: ‘The more we looked at this, the more I reviewed the interplay between that reduction at 12 months and the universal credit and work programme meant that all of these people were going to move into the work programme anyway, so they would be having intensive help to get back to work.
‘What I want to do is to make sure there are no disincentives for the unemployed.’
This will not come as a huge surprise to anyone who has been following the housing benefit cuts. Ever since George Osborne unveiled this particular cut in the emergency budget, charities and MPs have condemned it as indiscriminate, as it would punish anyone who had the bad luck to be unemployed for more than a year, regardless of whether they were doing everything they possibly could to get a job.
Dropping this cut formed one of the key demands in the alternative offer that Inside Housing presented to ministers at the end of 2010. It was also at the centre of a rebellion from backbench Lib Dem MPs including deputy leader Simon Hughes, Bob Russell and Mike Hancock, and members of the House of Lords. In the past few months it had become clear that this cut would not make it through Parliament unscathed.
So the last-minute decision to drop the cut is a massive victory for our ‘What’s the Benefit?’ campaign, and for those campaigning both inside and outside Parliament. But this still doesn’t make the government’s housing benefit reforms fair. The coalition laid legislation last year which brought in damaging cuts to the benefit which the Work and Pensions department itself warns will lead to families leaving their communities and support networks for cheaper areas with fewer job opportunities. These cuts still stand.
Today Richard Capie, deputy chief executive of the Chartered Institute of Housing, said: ‘We do however remain deeply concerned about other aspects of the welfare reform programme. CIH recognises the importance of reducing the welfare and housing benefit bills and has supported reform in this area for some time.
‘However, as with the JSA decision, we hope that parliament and government in particular will revisit some important aspects of the legislation, which for all their good intentions, remain deeply flawed and unsustainable.’
Campbell Robb, chief executive of Shelter, added: ‘While Shelter supports the aim to simplify the benefits system and make work pay, there is a real concern that we will see a further rise in homelessness if these changes go ahead.’
We reported two weeks ago that peers hope to use an independent review of these cuts, which start for new claimants renting privately in April, to persuade the government to think again. And members of the public bill committee that will examine the bill line by line have told me they are keen to seek amendments on another cut which will link housing benefit to the consumer price index rather than the retail price index.
So although today’s concession is very welcome, it isn’t enough. There is quite a fight ahead before the housing benefit reforms are fair to vulnerable tenants.
Sir Robin Wales, elected Mayor of Newham, attacks the housing benefit cuts.
The best thing about being British is the values we live by. I’m talking about values like tolerance, fairness and freedom; the very values which keep our communities together. So if our great country is underpinned by these values, why then do we suddenly have a situation which is intolerant, unfair and restricting?
The announcement that housing benefit may be capped to essentially remove poorer families and individuals out of rich areas and dump them into already overcrowded and heavily strained boroughs is outrageous. What has happened to our values? Yes it is unfair on the majority who struggle to make ends meet to see other living in five or six bedroom houses at taxpayers’ expense but can a few sensational stories about families in mansions living on the taxpayers’ tab really have us believing that all poor families live a life of luxury?
The new cap will effectively make it impossible for low income households to rent in the private sector in inner London, effectively pricing them out of central and west London. These households will increasingly look to areas where rents are cheaper. This will affect many areas with affordable rents including east London and in particular, Newham. We already have very high proportions and high concentrations of low income households; our already over-burdened private rented sector still struggles to keep up with the high demand for affordable housing.
For those of you who are unfamiliar with the London Borough of Newham, you may better recognise it as the main host borough for the 2012 Olympic Games, or as home to London City Airport and West Ham Football Club. What you may not know is that despite the huge amounts of regeneration and rising opportunity in the borough, we are the third most deprived borough in London which means we already have huge pressure on housing and other public services.
Our new Chancellor made a promise to promote fairness but I am yet to see how a policy which blatantly contradicts this pledge can in any way promote fairness. Just recently, the Institute for Fiscal Studies described Osborne’s ‘progressive’ budget as ‘regressive’, hitting the poorest hardest.
I believe that work is the most sustainable route out of poverty; it is unfair to punish those who work but cannot afford to pay the full cost of living in the capital. Reducing the level of local housing allowance to 30 per cent level of rents will make it even more difficult for those in low paid work and continuing to require support with housing costs through benefits, to find affordable accommodation. This will disincentivise people from work.
We want to create strong communities where people mix with others from different backgrounds, where people feel they have a stake in society and where people are proud to call home and bring up their families.
This policy will undermine our efforts.
By displacing people, we concentrate them all into one areas; we create ghettos, remove them from their jobs their children’s schools and their local communities.
That is not just un-fair. It is very un-British.
The debate on housing benefit has grown even more confusing in the last week. Not only do both sides have very different views on who deserves to live in expensive areas of the country, they also seem to be using entirely different figures.
This morning at the Work and Pensions select committee, welfare reform minister Lord Freud argued the cuts to housing benefit are not going to cause a rise in homelessness. He said: ‘We are not expecting any significant increase in homelessness as a result of the changes.’ His colleague in the Communities and Local Government department, housing minister Grant Shapps, said the same when he appeared on Newsnight last week. Both are of the view that the talk about large numbers of people becoming homeless is hysterical and will frighten people unnecessarily.
That’s not the view of many organisations working in the sector. The National Housing Federation said back in July that the cuts announced in the emergency budget could make 200,000 people homeless. Meanwhile housing charity Shelter predicts that increased homelessness costs will leave local authorities with a £120 million bill.
It’s not just the increased pressure on local authorities’ statutory obligation to house homeless people that’s up for debate: Lord Freud also sparked a row when he said the rising benefit bill was due to landlords setting their rents at the maximum payable under local housing allowance.
The British Property Federation and the Residential Landlords Association hit back as soon as the committee had ended. They said the Work and Pensions department’s own analysis showed that almost 70 per cent of growth in the benefit bill is as a result of an increase in claimants. Just 13 per cent of the rise is due to an increase in the private rented sector.
Ian Fletcher, director of policy at the British Property Federation, says: ‘Landlords and their representatives support benefit reform, but are not prepared to take the rap for the government’s unpopular policies.
‘Constant spinning and fiddling with the statistics just embarrasses the department of Work and Pensions and has no place in the Coalition’s politics.’
So who is telling the truth about housing benefit? Certainly local authorities in London seem to believe the predictions of an increase in the number of people presenting as homeless: as we reported two weeks ago, they are block-booking bed and breakfast accommodation in cheaper towns as far away as Hastings. This is something Lord Freud also denies, saying the Communities and Local Government department has ‘no evidence’ to support claims of an increase in temporary accommodation bookings.
It might be that we have to wait until the cuts come into effect to see whether Lord Freud is right - although this seems unfair on the hundreds of thousands of families who the NHF predicts will find themselves homeless. Though he also told the committee that he would consider looking again at the reforms if they do turn out to increase homelessness, that will be cold comfort for the many people who, depending on who you choose to believe, are set to suffer from next April.
Don’t forget to sign our petition expressing concerns about the cuts to housing benefit. We’ve got over 1,500 signatures now.
Last week, homelessness charity Crisis released some figures detailing the spread of the housing benefit cuts across the country. These figures are part of Crisis’ analysis of the Work and Pensions department’s impact assessment on local housing allowance reforms, which came out last month, but they do show that the blow will be felt across the country.
Here are the ten local authority areas which will be hit hardest by the cuts:
• 18,870 households in Birmingham
• 15,610 in Leeds
• 12,620 in Liverpool
• 12,550 in Brighton
• 12,420 in Blackpool
• 11,180 in Cornwall
• 10,470 in Bradford
• 10,210 in Manchester
• 9,660 in City of Edinburgh
• 9,650 in Brent
Crisis has broken the figures for London down into boroughs, as with the rest of the country, which means the strength of the impact across the city as a whole is not clear, but what this analysis does demonstrate is that housing benefit is not just a concern for tenants in London.
Over the past few weeks, we’ve seen MPs in London come together to fight the reforms, while Boris Johnson is coming up with his own plans to present to ministers. We’ve had two London councils sign up to our campaign as well. But outside of London, feelings are running just as high.
New Labour MP for Houghton and Sunderland South Bridget Phillipson has spoken out against the effect of the reforms in her own constituency. In a piece for progressive political website Progress Online, she said: ‘The ConDem government’s aim is not to support families in this situation; its measures will simply push families and the most vulnerable in our society into poverty, debt and unemployment.’
In Scotland, Labour MSP for Glasgow Central Anas Sarwar has also called for the DWP to change its plans to cut housing benefit payments, and when I spoke to Grimsby MP Austin Mitchell about a tenant in his constituency a few weeks ago, he blasted the changes. The Liberal Democrat MP for Colchester, Bob Russell, started a campaign in his party against the reforms when he realised the impact that the reforms would have on major cities across the country. And Green Party MP Caroline Lucas is furious about what will happen to tenants in her Brighton constituency.
Even though it is great news that a movement against the reforms is galvanising in London, tenants in the rest of the country mustn’t be forgotten. There are families facing homelessness from seaside towns on the South coast to Sunderland, which is why the alternative offer that our What’s the Benefit? campaign will develop must look at the whole country.
If you’ve got any bright ideas for fairer reforms to housing benefit which will protect tenants across the country, email them to email@example.com or post them in the comments below. And make sure that you sign our petition expressing concerns about the changes.
There are lots of exciting developments this week in our What’s the Benefit? campaign.
First up, after just five weeks, we’ve passed 1,000 signatures on our online petition expressing concern about the impact of the reforms. Then there’s the announcement from the Social Security Advisory Committee, which advises the Work and Pensions secretary on changes to legislation, that it is launching an inquiry into the impact of the coalition government’s reforms to housing benefit . That’s in addition to the Work and Pensions select committee’s own inquiry into housing benefit, announced a few weeks ago.
Meanwhile, Lib Dem deputy leader Simon Hughes has revealed to Inside Housing that he is working with a cross-party group of MPs to come up with alternative reforms to housing benefit in London. He’s not the only politician concerned about the impact of the reforms in London: we also report this week that Boris Johnson has come up with his own plans to prevent a sharp rise in homelessness next April.
This is all very pleasing, but even though our campaign is gaining momentum, there is no change of plan from the government. So we’re now looking for suggestions for alternative reforms to the housing benefit bill. These ideas will form our alternative offer to government, which we plan to present to ministers ahead of October’s comprehensive spending review.
If you’ve got a brilliant idea for cutting the bill without putting quite so many people at risk of homelessness, send it to firstname.lastname@example.org, or post it in the comments below.
Grahame Hindes, chief executive of Octavia Housing, outlines why he supports the What’s the Benefit? campaign for fairer reforms to the housing benefit bill.
A great deal of rubbish has been written since the budget about the proposed caps on housing benefit. Reading much of it you would think that it was a system designed by imbeciles and prayed upon by the feckless. Neither is true. While the costs of the current system are significant and short term savings can be made by limiting benefits the simple fact is that in doing so there is a whole group of decent people, with real local connections and close community ties who have been affected for some genuine reason of homelessness that are about to see their lives turned over.
Octavia Housing supports Kensington and Chelsea with a scheme that houses a minority of those accepted as homeless each year in private leased properties in the borough. But it is at a cost. There has been pressure on the system for a long time and the inner London authorities have all responded conscientiously to government pressure over the last few years to minimise costs. In fact the current housing benefit cost is in part a product of the last Government’s focus on reducing the numbers in Bed and Breakfast which has been unmatched by sufficient funding to build new homes. There is so little in the way of development opportunities in Central London that the use of the private sector has been the only realistic route. Even so many of those that are accepted as homeless are already housed outside the borough but the current legislation recognises that some families genuinely need to be housed locally. And accommodation in central London is expensive. Indeed it was just two years ago that Westminster Council were in the High Court seeking judicial review against Labour proposals to reduce the levels of Local Housing Allowance in Inner London. How times have changed.
The simple fact is that behind the tabloid headlines with their usual mix of a mite of truth and a large dollop of spin lies the reality of more complicated stories of people with lives in inner London, many of whom feel they are being driven out of areas such as Notting Hill by the incoming affluent classes.
And if the human stories are not sufficient cause for reflection and perhaps a slowing down of the rush for reform, then perhaps the economic consequences are also worth thinking about. Maybe, just maybe, it is the rich inner boroughs of London that at a time of austerity should be bearing their share of some of the costs of homelessness related social provision. To suggest that exporting a significant number of the poorest families from inner London where the cost may be higher but the systems are in place to manage them, and replace this approach by increasing the social deprivation in some of the poorer outskirts, is short sighted. There really is a benefit in mixed communities and central London can, and should, take its fair share of those in most housing need.
In the current cost cutting environment where gestures of savings seem to be what count then change may be inevitable. But let’s please show some compassion in making the change. This is about people as well as well as cash.
BME tenants are particularly concerned about the impact of the reforms to housing benefit announced in the emergency budget. Sheron Carter, chief executive of Arhag Housing Association and Chair of London BME Directors, explains why the cuts are such bad news.
I no longer get hot under the collar each time one of the red-top newspapers pulls out some sensationalised story about some ‘feckless’ immigrant living large on the welfare state. It is a predictably easy target to get the juices flowing from the community at large, which faces ever-increasing house-prices and few affordable options.
In the 1990s I worked with BME homeless households and I found the majority living in worse-than-dire bed and breakfast accommodation or extremely overcrowded conditions, in homes that were poorly maintained and with the constant threat of end of term eviction.
Even with the move away from bed and breakfast to private sector leasing, the Kensington story isn’t at all typical of most people’s housing experience, immigrant or otherwise. In fact, it is more likely that black and minority ethnic communities may end up bearing the brunt of this new age of austerity.
It is commonly known that BME households have a greater need for larger accommodation. Local authorities have sold off most of the good stuff and the social housing sector has failed to build enough large homes to meet their needs. If living arrangements break down for any reason, may BME households have no choice but to consider private rented accommodation.
Capping the local housing allowance will force people to live in homes much smaller than their needs and result in state sponsored overcrowding with all the inherent health and social problems it generates.
The proposed housing benefit cuts provide even more bad news for BME communities. Amongst the out-of-work, BME people are twice as likely to be unemployed, which means the HB cuts will disproportionately affect these groups. It is naïve to put this down to fecklessness and to assume discrimination in employment no longer exists when there have been many studies which show that out of equally equally qualified candidates, a BME candidate is less likely to get the job. And that’s in the good times.
As a small ethical business I worry about the burden of carrying increasing debt and all the associated risks that brings. Most people on benefits will find it difficult to pay 10 per cent of their rent and I have found that courts are often reluctant to grant an eviction for people in difficult circumstances. This will leave associations to carry losses compounded by ever-reducing grant rates. Over the long-term this will not be sustainable no matter what the size of the association.
At Arhag we charge affordable rents for all tenures including temporary social housing which enables around 60 per cent of our tenants to be in work. Steadier house prices and affordable rents are better for the Treasury and for those trying to get on the property ladder. But there is money to be made and like those bankers’ bonuses I suspect no-one will want to give up what has been a nice little earner, regardless of the consequences.
So far in the What’s the Benefit? campaign, we have focused a great deal of attention on the direct impact that the government’s reforms to housing benefit will have on tenants themselves.
Those immediate drops in income from housing benefit are obviously the most pressing concern for private tenants who are terrified that as of April next year, they may have to leave their homes and communities because they can no longer afford their rent.
But there is another aspect to these reforms that housing organisations are concerned about: some of the plans may threaten social landlords’ viability. The National Housing Federation and Chartered Institute of Housing have warned that plans to dock housing benefit by 10 per cent for claimants who have been on jobseekers’ allowance for more than 12 months will cause a rise in arrears.
This will come into effect from April 2013, along with links between the amount of housing benefit paid and family size for social tenants.
Around 65 per cent of housing associations’ income is from housing benefit, and any drop in that income and subsequent rise in arrears could mean they have to cut back on key aspects of their work. Many have started conducting sensitivity testing, and have told Inside Housing that they may have to cut back on their development programme or on work on improving neighbourhoods. That’s not good news when one of the reasons the bill for housing benefit in the private sector is so high is a lack of available affordable housing.
More worrying still, the Tenant Services Authority warned back in February that attempts to cut the housing benefit bill could increase the risk of bad debt and undermine housing associations’ stability.
Talking about business plans isn’t as immediately emotive as families facing eviction within months, but if social landlords suffer as a result of these reforms, then their tenants will be the ultimate victims.
Housing minister Grant Shapps told Inside Housing shortly after the emergency budget that there was little chance of damage to housing associations. He insisted that because the changes would not come online until April 2013, the economy will have recovered by then and housing associations will not be in such a tight situation.
That remains to be seen, and it would be nice to be able to say so confidently that the economy will definitely be fighting fit in three years’ time. But anything that threatens the way landlords carry out their work for vulnerable tenants is a very serious business indeed.
Don’t forget to sign our petition expressing concern about the government’s plans for housing benefit, and to email your suggestions for other ways of reforming the benefit to email@example.com
Helen Williams, assistant director of the National Housing Federation, offers alternative suggestions for reforming the housing benefit bill.
Of the 4.7 million households claiming housing benefit, 76 per cent are retired or not expected to work due to illness, disability, or caring commitments. The remaining 24 per cent of claimants are of working age and expected to work, with 540,000 (50 per cent) in employment.
Supporting households with their housing avoids the massive social costs of squalid, overcrowded housing conditions. The Federation is convinced about the need for reform but very worried about the piecemeal range of reforms announced in the budget.
The system would be more effective in helping people back into work if housing benefit for working families was integrated within a tax credit system – this would remove the double impact of benefit tapers, reducing the worst marginal tax rates by over 20 per cent.
It would help make progress towards the Government’s long-term objective of creating a single working-age benefit and give people a wider choice of ways to meet their housing requirements.
The most effective way of reducing the burgeoning housing benefit bill is to invest in more affordable housing. This will secure savings for years to come. We are calling in our joint CSR submission for investment to provide 150,000 new affordable homes; had these been in place today, the annualised saving to the taxpayer could have been as much as £250 million in lower benefit bills.
We are calling for no further cuts to the amount available for spending on housing benefit until a public review of help with housing costs has been held and reform ideas tested.
Shelter chief executive Campbell Robb explains why he is backing the What’s the Benefit? campaign.
A month on from the emergency budget and extreme examples of housing benefit claims continue to dominate some elements of the media.
Yet those in the housing sector know only too well the reality of the impact these cuts will have, delivering a series of devastating blows to over a million households and striking at some of the most vulnerable in our society.
Over the last few weeks, Shelter has been one of many organisations working hard to demonstrate the scale of this impact, which will cause widespread social and personal upheaval and inevitably lead to greater costs to government further down the line.
When the proposed changes come into effect next year, we’re likely to see hundreds of thousands of households priced out of the areas where they live and work, forcing them to migrate to areas with the cheapest housing and pushing them into the bottom end of the private rented sector.
This could spell an end to the mixed communities Britain holds so dear, creating clusters of poverty and inequality on the outskirts of our towns. It certainly seems at odds with the coalition’s aim to move people off benefits and into work, if they cannot afford to live in those areas where work is available.
And what of the fates of those households who, faced with an even greater shortfall to make up their rent, are pushed into a spiral of debt, rising rent arrears, eviction and homelessness?
Undoubtedly we will see a rise in households presenting to their local authorities as homeless. Yet without any additional resources, councils will find it even harder to find affordable accommodation to place them in. This could mean pushing households into substandard housing or into overcrowded conditions.
It’s because of massive repercussions such as these that Inside Housing’s campaign, ‘What’s the Benefit?’, is so important.
There’s no doubt we must do more to demonstrate the long term cost-savings that could be delivered if these plans are reconsidered. But this is not enough. If we are to really convince the government, we must deliver concrete alternatives for housing benefit reform. This campaign is the first step.
There’s nothing quite like a good story about a housing benefit claimant living in a classy mansion at taxpayers’ expense. Which is why there is another clutch of such stories in the newspapers this week.
A number of papers chose to introduce their readers to Somalian Abdi and Sayruq Nur, who are living in a £8000-a-month house in Kensington with their seven children. Mr Nur is an unemployed former bus conductor who apparently decided to ‘upgrade’ his accommodation from a five-bedroom housing Brent, which cost £900 a week, to the townhouse, worth £2.1 million.
Stories like this always provoke neighbours, leader writers and readers to outrage, and are generally accompanied by photos of the claimant standing next to a gigantic television which they have supposedly funded by having their palatial accommodation paid for by the council.
But they’re not the true face of housing benefit, and shouldn’t be the reason why the government is moving to cap payments of local housing allowance. There are only 100 households claiming more than £1000 a week. That’s 100 out of 1 million LHA claimants. They might make 100 good stories, but the 999,900 other claimants are not living this luxury lifestyle. The majority are retired, have disabilities, are caring for a sick or disabled relative or families who work but earn too little to afford the rents in the areas where their jobs are. This is what The Independent had to say about this yesterday.
For these people, the caps on local housing allowance won’t be the end of living in a beautiful house in what The Mirror calls ‘posh Kensington’. It means not being able to afford living in the area where they have lived for decades, and having to move further away from jobs and the support network they rely on. When you look at the real face of housing benefit, the caps don’t seem so fair, do they?