A Very British Dude and I have been debating housing benefit. The Dude and I often disagree, but he's a pleasure to debate with as he listens to the opinions of others, is willing to answer questions and, crucially, moderate his opinions if presented with evidence. Anyone who wants to join the debate here or over at The Dude's place please play by the same rules.
The Dude directed me to his post and one by Wat Tyler at the Burning Our Money blog to support his beliefs that housing benefit is fundamentally distorting the price of housing in the UK. I agree with both bloggers that is the case, but don't share their faith that cutting housing benefit will automatically lead to cuts in the price of rental properties. I also agree with The Dude and BOM that the planning system is far too restrictive and needs to be altered. As The Dude details, this is a particular problem for people with disabilities as only a tiny proportion of available properties either in the private or social sector are actually accessible and most disabled people do not have the financial resources to build their own properties and battle with planning departments.
The rates of housing benefit and Local Housing Allowance* outside of London and limited inner city areas bear no relation to those quoted in the media. In my very pleasant, leafy and affluent Northern suburban area the maximum rate currently paid by LHA for a 5 bedroom property is £172.60 per week. That's a long way short of the maximum £400 a week limit Osborne is capping LHA to for four bedroom properties. Single claimants aged over 25, such as myself are already capped to a maximum of £90.90 a week for a 1 bedroom property. Despite the benefits of a grammar school education I can't add up past the number of fingers and toes I have, which is why I want to know what people who can do more complex sums, like, say long division think of the situation. I'm wondering where the proposed savings of £4.2billion will actually come from if most of the country is not being provided with the kind of amounts of HB and LHA found in parts of London and beloved by The Daily Mail? That people should simply move to cheaper areas ignores the reality that moving is an expensive process, far beyond the means of most people on low incomes, and can overall be costlier to the state if, for example, I as a disabled person have to move to a different area I would lose all the informal support and care provided by various people within my community and be forced to turn to the local authority for a care package far more expensive than the potential savings in housing benefit. The same applies to working parents, particularly single parents who often rely on informal caring arrangements for their children and would be forced out of work and onto benefits should they move to new areas of cheaper housing.
The big problem from a tenant's perspective is that there are very few local authority owned properties available to rent. Even if changes are made to ensure LA housing is occupied by the appropriate number of tenants at the appropriate times the majority of tenants funded by the social sector will still be spending that funding in the private sector. Both The Dude and BOM are right in their assertions that the government should not be funding such high rental profits to private landlords, but I do not share their faith that cutting the rate of HB will alter that situation as dramatically or rapidly as will need to happen to keep private landlords renting to HB tenants. Whilst private landlords may well eventually come to understand they have to reduce their rents, it will only be after an initial period of evictions and homelessness, something which will ultimately cost the state more money as local authorities still have a duty to house those made homeless.
The majority of private landlords, especially those who use a third party such as an estate agent to manage their properties already refuse to rent to what they describe as DSS tenants. It's normal to see private rentals explicitly state No DSS when they are advertised, and the vast costs associated with renting through an estate agency mean it is prohibitive to the majority of HB claimants. In practice that discrimination doesn't always apply, I tend to find as a polite, well spoken disabled applicant a 'we didn't mean the likes of you' attitude from landlords. I'm not even going to comment upon the wrongs or rights of such attitudes as this debate about HB is focusing on the economics and practicalities, but it merits inclusion as such restrictions further skew the options of claimants to shop elsewhere for a better deal and drive down rental prices, which as I understand it is a fundamental part of the proposed reforms.
Another issue I can't quite grasp is the desire to ensure tenants in receipt of housing benefit are all renting in particular areas. Whilst I agree that it is fundamentally unjust for those in receipt of HB to live in considerably more expensive housing than working people can afford, I don't understand how this fits with the desire to deal with the social problems already existing on large estates or in areas of cheap housing. Surely funneling more low income tenants into these areas will only add to the existing pressures and create a vicious cycle of slum dwelling and behaviour?
I agree with The Dude that a move to simplify the benefits system and replace it with a universal benefit is a good one. I'd keep the existing system of Disability Living Allowance alongside any universal benefits as it's actually an excellent way of providing for the additional costs of disability, allowing those who can and want to to work and pay taxes whilst simultaenously protecting those who can't work. It is also vastly underclaimed with a fraud rate of below 0.5%, and overall rate of fraud AND error of only 1.9% so should not be an immediate priority for reform in the way that Housing Benefit with it's fraud rate of 1.5% and overall rate of fraud AND error of 4.9% should be. What I don't understand is how a system of universal benefits can be affordable. If an assumption is made that an adult over 25 receives approxinately £65 a week in Job Seekers Allowance and, for simplicity £100 a week in Housing Benefit and maybe £15 in Council Tax Benefit a universal benefit would need to be in the region of £180 per week, which would sound like a dramatic increase in benefits to the likes of The Daily Mail.
But like I said...once I'm out of fingers and toes I can't add up any further, so what would I know?
*due I think to be scrapped under Osborne's reforms?