Thursday, October 28, 2010

Housing Benefit: the facts

1. The vast majority of housing benefit claimants are either pensioners, disabled people, those caring for a relative or hardworking people on low incomes, and only 1 in 8 people who receive housing benefit is unemployed.

2. The cap on housing benefits - which the discussion in the media has focused on - saves £65 million. This is less than 3% of the total which is being cut from housing benefits.

3. The government plans to save £100 million by cutting housing benefits payments by 10% for people who are unemployed for more than one year.

4. The amount paid in housing benefits will be reduced in every area of the country, not just in London. You can see the reductions in your local area here.

5. The government has acknowledged that there will be negative consequences as a result of these changes - for example on homelessness, overcrowding, and child poverty - no proposals have been put forward for mitigating these effects.

6. A survey of landlords who currently rent properties to housing benefit tenants in London showed that very few would be prepared to lower their rents when changes to Local Housing Allowance (LHA) come into effect next year. Using the results from the survey, London Councils can estimate that more than 82,000 households – well over a quarter of a million people - could be priced out of their homes and the communities where they live and work.

7. The government is cutting housing-related support for people at risk of homelessness, even though a national evaluation has estimated that the £1.6bn spent annually on housing-related support through the Supporting People programme generates savings of £3.41bn to the public purse – by intervening earlier to prevent more severe problems arising, helping people live more independently and avoiding more costly acute services.

8. Single homeless people use around four times more acute hospital services than the general population, costing at least £85 million in total per year, according to Department of Health. That figure is likely to rise sharply if support is withdrawn to prevent homelessness. Research also shows that having stable accommodation reduces the risk of re-offending by a fifth.

9. Over time, the government is planning to reduce the value of Local Housing Allowance by raising it more slowly than inflation. This will reduce the amount of affordable housing every year.

10. In June, the government scrapped regulations which would have given tenants greater protection against being exploited by bad landlords.

11. A government impact assessment on the changes has concluded 936,960 of the 939,220 local housing allowance claimants will lose out. The average loss will be £12 per week.


Government ministers will only talk about the benefits cap, hence David Cameron making the claim that "If you are prepared to pay £20,000 in housing benefit, there is no reason why anyone should be left without a home." But this is just one small element of a set of cuts which will take money away from pensioners, carers and people in low paid jobs, as well as people who are out of work.

Everyone who has looked in detail at the cumulative effects of these cuts - from the Citizens Advice Bureaux to charities which work with homeless people, to Lib Dem housing experts to the Mayor of London - have concluded that they will be a disaster which will increase homelessness.


At 4:48 pm , Anonymous Rob said...

"6. A survey of landlords who currently rent properties to housing benefit tenants in London showed that very few would be prepared to lower their rents when changes to Local Housing Allowance (LHA) come into effect next year."

This raises an interesting question. Surely landlords would rather drop their rents than leave the properties empty, if they believed that the properties lying empty were a realistic prospect. So, landlords believe (and may well be right) that there is no shortage of other people willing to pay similar or slightly lower rent for the properties currently occupied by HB recipients. The gains to these people can't be ignored entirely.

Secondly, if the landlords are wrong, then rents will fall. This is a good thing and may help to puncture some unsustainable housing bubbles in certain regions, which has the long-run effect of making housing more affordable for more people. What's missing from your picture is the fact that plenty of people are already priced out of living in certain areas, because HB is propping up rents. Remove the prop and plenty of people stand to gain.

I'm not saying this outweighs the harms done by HB cuts, but the combination of lower rents and the benefit to those non-recipients who can now rent in areas where previously they could not, are not to be dismissed.

At 4:13 pm , Blogger Unknown said...

As far as London is concerned I don't see how rents will go down. People on housing benefits have little choice when renting as only a minority of landlords accepts them, those that do often have very rundown properties at very inflated prices. (see the latest BBC's Panorama for some examples).Demand for properties accepting claimants will not go down.
Excluding the tiny minority of tenants in Central London affected by the cap. Most people will have to find £10-20 a week to cover for the HB shortfall as the system moves from the 50th to the 30th percentile. As the alternative is eviction and potentially homelessness most people will find the extra money often by cutting down on other essential expenses(we are talking of people with very limited budgets and often special needs). Therefore our lovely landlords will continue to see their rents while many vulnerable people will be considerably poorer. Unfortunately I do not think most people have understood what the changes imply as everyone goes on about how unfair it is that families rent mansions in Chelsea with their money.

At 6:42 pm , Blogger Phil Walker said...

I wouldn't rely on an opinion poll to determine what will happen in the housing market: landlords have an incentive to say they won't change rents in order to dissuade a change which would certainly result in less money in their pockets. Chris Dillow, in June, cited studies which show that the majority of a marginal change in the benefit, with a 'best guess' of about 80%, falls on landlords (src). If the precise figure (from France, admittedly) holds true, then cutting housing benefit by 10%, therefore, should cut rents by about 7.8%.

It is a fair debate as to whether it is worth spending a pound of taxpayers' money to obtain twenty pence for a benefits recipient. But that's the debate we should be having. When it happens, I'll be all ears!

At 2:10 am , Anonymous keith said...

Let me summarise your excellent post donpaskini

Cameron and Clegg = Thatcher = SCUM

No surprise for me.

Same old Nasty Tory party of the very rich for the very rich.

At 8:00 am , Anonymous James said...

I am a social landlord. I will NOT be cutting my rents but I will be selling all of my property and investing the money elsewhere.

Don't you people understand that you cannot "negotiate" from a position of weakness? How on earth can anybody believe that cutting the money renters receive to pay their rents will make landlords reduce those rents when the demand for housing far outstrips supply?

I will be evicting all of my tenants over the next six months and putting my houses on the market.


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