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Coffee House

EXCLUSIVE: What about those who aren’t pulling a housing benefit scam?

3 November 2010

6:16 PM

3 November 2010

6:16 PM

Most sensible taxpayers think Britain’s current housing benefit costs to be a
terrific scam. In the last five years the bill has risen by 25 percent. We now pay £21billion each year, a good chunk of which flows private landlords turning a healthy profit from the
state’s responsibility to the poor. We all know by now that a slew of reforms designed to cut the bill by at least £2bn will stop the indefensible abuses of taxpayers’ money like
this and this. That’s why Danny Alexander, among others, claims that the coalition must
be ‘brave’ on housing benefit.

But cast aside the most extreme exploiters of the system and ask what happens to the rest. The effects of the reform will to be much more widespread. Here is a little more detail on some figures I
refer to in this week’s Spectator which give the best possible estimates of what the post-2011 benefit landscape will look like.

They’re not fag-packet calculations of the kind offered by some opposition MPs. These numbers come from Alex Fenton, a researcher at Cambridge University’s Department of Land Economy.
In September, he published a report on the effect of new housing benefit rules for private tenants – it was an independent report paid for by housing charity Shelter. This week he was kind
enough to run a few numbers for me which lay out, for the first time, estimates of how many working households and pensioners will be forced out of their homes following the reform:

[Alt-Text]


The figures are conservative and are based on the DWP assumption that half of the poorest households will do exactly what the coalition say they will and negotiate lower rents else make up the
shortfall from other income. But the sheer number of vulnerable people cast out of their homes is, I suggest, a significant political liability for the Government.

Ministers will find it very difficult to answer questions from those forced to move into temporary accommodation when they start telling their stories on Question Time.

Of course, David Cameron is quite right to point out the unfairness of the unemployed living in homes and areas that are beyond the means of most heiresses let alone most workers. But this not
simply a Zone 1 issue.

In reality, very few benefit recipients live a life of luxury. Last week, I spoke to a 50 year-old Londoner fighting to get retrained and back into work and one Grimsby pensioner living on the
bread line. Both receive housing benefit and are terrified by the cuts. Both , incidentally, already make up the shortfall in their Local Housing Allowance from other benefits. The pensioner,
Patricia Wright, described how she’d used her winter fuel payments to buy food and spent last winter wrapped in a blanket. “I am pray for a mild weather,” she said. Her household
finances, and those of thousands like her, are already on a knife-edge and a cut of only a few pounds income each week will be devastating. Can the ‘discretionary fund’ made available
to councils to limit this kind of hardship stretch and be fairly administered by local councils? I doubt it.

So the Government is left with a tricky proposition: a policy that punishes the elderly and the working poor for a hike in a benefit bill that they did not cause. We know who did. Since 1997
private rents have jumped by nearly 60 percent. Labour’s housing policy failures – not enough was built, speculation was encouraged, council housing waiting lists now stretch across
decades – must bear the underlying responsibility.

Without tackling all this, I don’t really think the Government can lay claim to being ‘brave’ about housing benefit but they may yet be proven foolhardy.

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