It’s time that the coalition’s rhetoric on housing benefit was challenged. They continually repeat that the housing benefit bill is out of control, and use the anecdotal evidence of Mayfair residents (usually immigrants to boot) receiving more in housing benefit alone than most people earn altogether as some sort of “proof”. That proves only that the government would rather pander to popular prejudices than deal in the facts. And the facts are a lot less sensational, a lot more troubling, and very much less easy to deal with than the “how unfair is that?” justifications would imply.
So, the facts. In the period 1996-2010, the cost of housing benefit grew on average by 4.8% per year. Of that total figure, 2.8% was a result of inflation, so the real terms increase was 2%. The actual number of claimants rose by only 0.7% per year. If that is out of control, then a lot of other things are out of control as well. A major contribution to increasing housing benefit costs is made by rent increases. Another myth is that private landlords have been profiteering out of the system. Unfortunately once again, the facts do not paint so simple a picture. Across the same period, council rents increased on average at 5.1% per year, housing association rents by 3.2%, and private rents by 4.2%. The increases in the first two categories were directly the result of government policy as all social housing rents are regulated. The Labour government wanted council rents to rise more quickly than housing association ones because housing association rents were generally higher and they wanted to close the gap.
Thus a rising housing benefit bill was actually a deliberate part of government policy, both Labour and Conservative, over a quarter of a century. Sir George Young, who now pops up again as Leader of the Commons and a member of a cabinet fixated on the “out of control” benefits bill, presided in the early 1990s over a deliberate policy of encouraging housing associations to manage property on behalf of private landlords (a policy called HAMA) in order to compensate for the lack of progress on building new properties for social rent to make up for the losses arising from his own government’s right to buy policy. Housing benefit was intentionally used as a way of funding the problems arising from increasing homelessness. In other words, this is not about a system out of control, but rather a system that has been used as a deliberate arm of government policy, but which is now deemed to be too expensive. Sir George of course knows a lot about how expensive it is to maintain a property in London: he claimed expenses of £127,159 between 2001 and 2008 to cover the £1,400 a month interest charges on his mortgage. Quite a bit more than the average wage, don’t you think?
But in truth, individual cases of excess, whether they are of politicians milking the expenses system, or a few large families living in swanky areas on housing benefit, are not a good guide to policy-making. What is important is the impact on average claimants in average places. Many of the changes being proposed are in fact not to housing benefit (paid to social housing tenants) but to the local housing allowance (paid to tenants renting in the private sector). To give a typical example: a single unemployed person on job-seekers’ allowance, paying a private sector rent of £100 per week in an area where the local housing allowance (LHA) is £109. Under current rules the LHA is set at the median rent, and if that is higher than the actual rent the claimant may keep the difference (this was introduced as an incentive for claimants to find lower rented properties). So in this case the person is keeping £9 per week to help pay for other living expenses. Next year that will go, so that person will only get benefit for housing of the actual rent. In 2012, the LHA will be based on the 30th percentile, which in this area is set at £98, thus losing the claimant a further £2 per week. If in 2013 that person is still unemployed, their LHA payment will be reduced by a further 10%, losing them another £9.80. This is what the benefit reforms mean in practice. This individual will lose over £20 per week in benefits, and will most likely eventually be evicted. If that job-seeker is under 35 years old, they will also be hit by the imposition of the shared room rate, and will lose a whopping £40 per week. It is poor people losing what might seem like small absolute sums (but for them huge relative sums) and tipping them from just about surviving to plain destitution and potential homelessness. It is hardly much comfort to say to such people, “Well, find a job then” at a time when jobs are almost impossible to find.
The changes to housing benefit and local housing allowances are going to hit lots of people who are already at the margins of our society. It’s not housing benefits that are out of control – rather it’s politicians’ cavalier disregard for the consequences of their policies which needs controlling.