Sunday, 13 March 2011

Welfare Reform Bill and Housing Benefit

The dreaded letter has dropped through my letter box. Housing Benefit is changing. The letter says that "What the change means to you is the amount of Housing Benefit you get may go down". MAY? This reminds me of those infuriating road works signs on major trunk roads, when two lanes are turned into one, and the sign says, "May be subject to POSSIBLE delays". Of course there are going to be delays, there's nothing possible about it. Similarly, Housing Benefit is going down, there's no MAY about it, otherwise there would be no changes.

In a speech on the 17th February 2011, David Cameron launched the new Welfare Reform Bill, saying that, "It brings the most ambitious, fundamental and radical changes to the welfare system since it began". He continued with, "I passionately believe that the welfare system should be there to support the needy and most vulnerable in our society and provide security and dignity for those in old age.... We're introducing tougher sanctions and limits on what people can receive. When it comes to limits, we're going to restrict Housing Benefit rents so that they will only cover the cheapest 30% of properties in a local area".

This is a drop from the 50% of properties in a local area. The Prime Minister says that the Welfare Reform Bill is not driven by money, but by fairness - and a pig has just flown past my window. The government is planning at least six separate changes to Housing Benefit, which it says will save £1.8 billion by 2014/15.

I happen to agree in principle with the need for welfare reform, as it is hugely complicated with over 50 different types of benefits. I also don't have a major problem with capping Local Housing Allowance weekly rates in any area for one, two, three and four bedroom properties, as the figures will affect very few areas of the country. Though if I was living in London or other high cost areas, I may be thinking differently. However, I do have a few problems.
  1. The government is still using what is called 'median' rents, which means that the whole premise is still built on what the Landlords charge, not what is a reasonable rent. Why can't that be reformed?
  2. In my opinion, some of the Housing Benefit changes have been driven by the revelation, and reaction to it, of a few excessive payments to families of over £1000 a week. But everyone is being punished. This is like one child in school who commits a misdemeanour, and the whole class end up being punished. In the view of Labour MP, Helen Goodman, "The government has used the small number of exceptionally high benefit payments as a 'ruse' to cut Housing Benefit. The truth is that only 100 households in the entire country receive Housing Benefit of more than £1000 a week".
  3. There is undoubtedly a doomsday scenario that the government refuses to acknowledge. This is seen in comments from such experts in the field as The Chartered Institute of Housing; Shelter; The Joseph Rountree Foundation and the Building and Social Housing Foundation.
The Chartered Institute of Housing says, "In the long term there will come a point at which the cheapest property which is available in a given market area is more expensive than the full local housing allowance rate. Within a generation there will be towns and cities all over the country where there is no accommodation with a rent level within the reach of people whose income is supported by benefits".

According to the UK homeless Charity Shelter, up to nearly half of current claimants are already making up a shortfall in rent (not paid by Housing Benefit) of nearly £100 a month. The Chief Executive says, "If this support is ripped out suddenly from under their feet, it will push many households over the edge, triggering a spiral of debt, eviction and homelessness".

The Building and Social Housing Foundation comments, "In the longer term, concerns will centre on the potential for the creation of Parisian-style 'banlieues', areas on the outskirts of the city with concentrations of deprivation, while the city centre becomes exclusively for the very well off ...... the potential for the total exclusion of the poor from large areas is clearly present".

I have argued for years that the focus on 'minimum', ie minimum wage or minimum income is wrong. The focus should be on 'living', ie a living wage or a living income. The two are quite different, but if I was honest, I cannot see it happening in my lifetime.

It's time to own up as to why I am so personally passionate and worried. I have a vested interest in the changes being made to Housing Benefit, as I rely on it, and Pension Credit Benefit to live. I have chosen to rent a two bedroom flat, so that there is space for family and friends to sleep when they visit. For this I top up my Housing Benefit by about £100 a month to pay the rent. Members of my family help me to do this, and though I will be eternally grateful, it can't last for ever. I have a lovely flat, in a great area which aids quality of life.

As I'm already on Housing Benefit, the changes for me may still be about nine months away. It looks as if my Housing Benefit will be reduced by about £8 per week, which equates to around £35 per month. That will be added to my existing top up, and doesn't take account of an increase in the rent in the meantime. I could move to a one bedroom flat, but they are few and far between in this area, and none of them would be fully covered by the Local Housing Allowance, so there would still be some top up, albeit smaller. The other alternative would be to move to another area where property is cheaper, but that often means cheap in financial and quality terms. This is exactly what the experts mentioned earlier were talking of.

We must remember that in all of the talk about reform and money predictions, it's real people who are at the end of it all. Thousands are at this moment struggling with life, and their worries will increase in the coming months. Many do not have the family support that I have, and they will not know which way to turn.

I sense that legislators will feel good about the reforms, but will the people?

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