Wednesday, November 17, 2010

How IDS misled parliament about housing benefit cuts

I've said for a while that Iain Duncan Smith and his team at the DWP are weak on the detail of their policies and have a preference for "policy based evidence", ignoring any data which doesn't support their view of how the world should work. I think this is a fatal weakness when it comes to the intricacies of the welfare state, where any changes which haven't been fully analysed and considered have the potential to hurt huge numbers of people.

Here's a great example.

Inside Housing
have been doing some excellent investigations, and found that a key fact which IDS and his Tory and Lib Dem allies quoted to justify their housing benefit policies was inaccurate, based not on the Office of National Statistics (as they claimed), but on a property website owned by Associated Newspapers, and that the real stats demolish the claims of government ministers about the likely effect of housing benefit cuts.

IDS claimed, in parliament:

‘We now know that, according to the Office for National Statistics, the private marketplace in housing - Labour Members are completely wrong about this - fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%. There is thus a 7% gap with what is going on in the marketplace.’

Here's the facts, from John Birch at Inside Housing:

"His reference to the ONS puzzled many people as they were unaware that it produced any statistics on private sector rents. And the Department for Work and Pensions has now confirmed to me that the source of the 5% figure was in fact the rental index set up by (now, a website owned by Daily Mail publisher Associated Newspapers.

However, the problem with the figures goes way beyond the issue of what I am sure was IDS inadvertently misleading parliament about their source...

First off, rents for advertised new lettings are not a guide to rents in the market as a whole and especially to the rents of tenants who remain in the same property.

Second, findaproperty records asking rents rather than actual rents in its quarterly survey. Although its methodology adjusts for weightings by region, property type and number of bedrooms, that needs to be borne in mind because asking rents (just like asking prices in the for sale market) tend to be more volatile go up more in booms and down more in busts.

Third, findaproperty appears to cover a different part of the market to the local housing allowance. The average findaproperty rent in March 2010 was £820 a month - almost double the average amount of LHA paid.

Fourth, the comparison fails to consider what’s happened since February 2010. Between March and September 2010, findaproperty’s index rose 3.8% from £820 a month to £851 a month. In June the website’s property analyst Nigel Lewis said: ‘Rents have gone from strength to strength during the first half of 2010. The resurgence of the sales market has left tenants short of options and the result has been increasing rental prices.’

And in September he said: ‘Average rental prices are back up to where they were two years ago and I can only see them going up even more.

‘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.’

However, if it’s a landlord’s market and landlords are taking advantage of housing benefit, why did the average weekly award for LHA tenants only rise by 0.05% (from £112.85 to £113.43) between February and July 2010?

Fifth, as I blogged on Friday, the DWP’s own stats do not seem to support the view that the LHA somehow distorted the market. LHA awards only rose by a little more than non-LHA private rents in the period quoted by ministers and awards paid to private regulated tenants and housing association tenants both rose by more."


The key thing here is not that IDS is using incorrect stats to mislead Parliament (although he did, and should apologise), and it is not even that his analysis that LHA is distorting the housing market is incorrect (though it is).

It is that the real stats show that landlords have no need to drop their rents if benefits are cut, they can receive the same income by evicting LHA recipients and replacing them with other tenants. And if that is the case, then the government's housing benefit cuts will lead to mass evictions of people who rely on LHA to pay the rent.

Rather than twisting the facts to fit his argument, IDS should adjust his policies to fit the evidence. And in this case, that means avoiding a social catastrophe by dropping the plans to cut Local Housing Allowance.


At 1:17 pm , Blogger CharlieMcMenamin said...

Yes, I noticed this @ IH as well- well done for bringing it to wider attention.


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