The Real Changes to Housing Benefit

In Autumn 2010, the newspapers were full of stories about a new cap on Housing Benefit (HB), we were told that from now on no one would be given more than £400 pounds a week to spend on rent.

The public, on the whole, were indifferent, after all £400 is a lot of money for a week’s worth of rent and if you don’t live in London it sounds ridiculous. Then Boris Johnson stormed out of his office to declare that the cap would cause “Kosovo-style social cleansing” because those on benefits would no longer be able to live in the richest parts of London. The public were still uninterested, after all why should people claiming benefits be allowed to live where those who are working cannot afford to live?

I just found it all very odd, why would Johnson, a man not known for his compassion towards benefit claimants, be defending them? And why defend them over a new rule that sounds moderately reasonable while ignoring a number of other quite unpleasant changes?

Since finding out more I have come to suspect (perhaps unfairly) that Johnson’s outburst was a clever piece of misdirection, a way of drawing attention away from the real story, because I believe the new Housing Benefit limits are a serious problem, but not because of the £400 cap he shouted about:

  • The £400 cap was not the only limit placed on housing benefit, it is actually the highest and arguably the least concerning.
  • It is not only large families living in rich areas of London, like Westminster, that have a Housing Benefit limit. Every borough in London, every council in England and Wales has one, there are limits on those living alone, those living with friends and those with families.
  •  The limits go down as low as £43 a week for one person sharing in Sunderland, £95 for a 3 bedroom house in West Pennine or £126 for a 4 bedroom house in Hull.

The Basics

Who claims housing benefit? Anyone on Jobseekers, Income Support, Incapacity Benefit or ESA can claim Housing Benefit, plus anyone earning wages too low to cover rent. Asylum Seekers, students and anyone not actually paying rent (eg living for free with family) are not eligible. So essentially claimants include the long term ill, those who are permanently or temporarily disabled, the unemployed and the low waged.

What is LHA?

  • LHA stands for Local Housing Allowance and was brought in by the labour government in 2008 as a new way of calculating the amount of Housing Benefit allowed for those renting privately.
  • It involved limits on the number of bedrooms available per adult/child – 1 bedroom per adult, unless in a couple, 1 bedroom for any 2 children the same sex under 16, 1 bedroom for any 2 children regardless of sex under ten.
  • It divided Britain into areas and had rent limits that varied depending on the average private rents in that area.

What changes occurred in April 2011? From here

  • Previously LHA was placed at a level so that in each area (district or borough) about 50% of all properties were affordable to those on Housing Benefit. From this point on only 30% would be available. This is called the 30th Percentile.
  • Claimants could no longer claim for more than 4 bedrooms.
  • Although LHAs varied depending on the area these amounts could no longer go above maximum weekly rates. These were: £250 a week for a one bedroom property, £290 for a two bedroom property, £340 for a three bedroom property, £400 for a four bedroom property.

The government’s proposed changes were harsh, especially for those who were settled in their homes, had children or severe disabilities that would make moving difficult, and had moved into those homes under the 50% rule, but now found them not covered by LHA. However I can see the argument that long term this will save the country money, especially for non-Keynesians who believe that an economic crisis should be dealt with by making cuts. (Personally, I disagree, more on that here.)

The focus of this blog is not whether these changes are fair or not, but whether they were adhered to:

Is at least 30% of housing available across England and Wales to those claiming HB under the new LHA guidelines?

To answer this question I found out the LHA rate for a number of local authorities, used the rates for 2 bedroom and 4 bedroom properties (for simplicity) and then used an estate agent comparison site (rightmove.co.uk) to see what percentage of properties to rent were available for each area.

Websites and information used:

  • The LHA rents map, allows search by local authority. Figures for LHA tend to vary from one government site to another, but this site seemed to have the most reliable figures (after phoning some councils to check) so I used these for my data. Under each area there are maps which I used to ascertain a more detailed view of the LHA.
  • Estate agent comparison site, I used this site because it had the greatest flexibility when making searches, allowing me to search by boroughs, districts and towns for properties with 2 or 4 bedrooms.
  • Government site about LHA changes, this site helpfully shows all local authorities and their proposed LHA changes on one page, less helpfully some of the LHA rates are wrong. I used this to get a general idea, but didn’t use the figures in my calculations.

Other notes:

  • Scotland isn’t yet part of the new LHA system and the 30th Percentile won’t be brought in until October. Here is a list of the proposed LHA figures for Scotland. All of Wales and England have the new LHA limits, I’m just focussing on them for this blog.
  • The number of houses available for rent is liable to change from day to day. All figures in this blog were collected between the 16th and the 23rd of May 2011. I’ll probably do a follow up blog in the future, which may be useful when looking for patterns of availability.
  • When talking about two, three or four bedroom properties (eg £400 per week for a four bedroom house) this may be accommodation for a large family, but it may also be claimed in part for an adult sharing with other adults (eg one person on benefit receives £100 for his share of the £400 rent, while the other three adults do not receive HB).
  • In the charts below there is the category “Shared Accommodation Rate”, this is for people who are renting one room only and do not have a joint contract with housemates for the whole property. This amount is usually a significant amount lower than a one bedroom flat and roughly the same as the one third share of a three bedroom property (although this can vary quite a lot from area to area). Until recently people under 25 could only claim the Shared accommodation Rate, but in April 2011 this rule was extended to anyone under 35.

LONDON

Table to Show LHA Limits for London (£ per week)

Note: for each London borough there are often two, even three different rates, the ones I’ve shown are the highest rates, usually for the inner part of each borough. I will focus more on the different rates later, for the moment, to stop this blog getting wild and unweildy, I will use the highest rates.

I have put the boroughs in order of the rates, lowest to highest, I did this because what struck me with these figures is how similar they all are, out of 33 boroughs only Hillingdon and Hounslow have unique rates. Looking at a map of the boroughs, I realised that this is because the rates have not been worked out by boroughs at all, but according to areas – inner South London, outer West London and so on. More on this later.

Expensive London

Table to show the number of properties with rent less than LHA compared with all properties and the percentage that can be afforded with LHA:

I decided to focus first on four of the eight boroughs of London that have the maximum caps (£126.92 for shared accomodation, £400 for a four bedroom property and so on). The 8 are: Islington, Hackney, Tower Hamlets, Camden, City of Westminster, Kensington, Hammersmith, City of London.

People not living in London have felt understandibly indignant that Housing Benefit can pay for expensive areas of London, however while City of Westminster and Camden are certainly rich areas that few people could afford, Hackney and Islington aren’t, many poor people live there (site to show rich and poor boroughs).

The overall percentage of houses available in this sample are Kensington – 0.3%, Islington – 1.9%, Hackney – 10.6% and Tower Hamlets – 12.65%, none of these is even close to a 30% availability. Clearly the maximum caps make living in Kensington AND Islington almost impossible, but even poorer Hackney is largely out of reach to those on benefits.

Inner South East London

Bromley, Croydon, Greenwich, Lambeth, Lewisham and Southwark are all defined (in part) as ‘inner South East London’ and have the same LHA rates, but while these areas are all close together they are all quite different and I was curious to see how it easy it was to rent in each borough using the same rates.

Table to show the number of properties with rent less than LHA, compared with all properties and the percentage that can be afforded with LHA:

So in Lewisham and Croydon the availability is well above 30%, while in Southwark and Lambeth availability is less than 3%. While Southwark and Lambeth are close to the city centre, Southwark includes places like Peckham and Camberwell, hardly expensive zones where only the rich can live.

To simplify this investigation, I used only one set of LHA rates, but most London boroughs are divided into two: ‘inner’ and ‘outer’. For the table above I used only the higher rates which usually corresponded to the ‘inner London’ area. However looking at the map of Bromley divided into inner and outer, it seemed that the majority of Bromley was in the outer section. Concerned that my figures would be misleading, I did a quick search for properties for two areas definitely in the outer area, Bromley (the town, not the borough) and Beckenham, using the outer figures. The results give a very different  view.

In Bromley only 7 out of 98 two bedroom properties were available (7%) and 1 out of 32 four bedrooms (3%); in Beckenham 2 out of 63 (3%) two bedroom properties and none of the 12 four bedroom properties (0%).

London Overview

I’m aware that these figures are a bit confusing, so decided to focus on something simple. Using the areas that divide up the rates (eg Outer South London, Outer West London, Outer North East London) I investigated 34 towns in the areas not already covered (the North and South West) and then checked how many properties were available for relevant LHAs for 2 and 4 bedroom properties. The complete table of information can be found here under ‘Availability in London Towns’.

The government promised that each town would have at least 30% availability, but the following pie chart shows the number of towns with less than that in red, and the number with more in blue.

And this pie chart shows more exactly how many properties were available.

Three quarters of the towns I looked at have less than 20% availability, a third have less than ten.

BRITAIN

Next I looked at fifty-nine districts in England and Wales out of a total of 428. I ignored any districts that had more than one set of LHA rates and any that only had a few houses to rent.

Table to show LHA per week, per district and the number of properties that can be rented by those on benefit compared to all properties can be found here.

The districts with the lowest availability are Guildford (0.9%), Wokingham (4.2%), Reigate (5.7%), Middlesbrough (6.7%), Canterbury (6.9%), Exeter (7.2%), York (8.6%) and Cambridge (8.7%).

While the districts with the highest availability are Hastings (66.3%), Hartlepool (42.8%), Blackpool (42.7%), Dudley (40.9%), Cheltenham (40.5%), Kings Lynn (38%), Gateshead (36.6%) and Wakefield (36.5%).

Pie Charts to Show % Availability (Blue = districts that meet the promised 30th Percentile)

These pie charts show that the districts in England and Wales that actually meet the government’s 30th Percentile rule make up less than a quarter of all the districts investigated. About as many areas have less than 10% of houses that can be rented by people claiming Housing Benefit.

The Newspapers

There has been little national press coverage of the actual changes to Local Housing Allowance, however, in October last year The Guardian and The Mail both wrote about a government report showing the average of how much the LHA would fall short of covering rent in each district.

Guardian report here.

The government report here.

The report shows that claimants will be affected in almost every district in England and Wales. Understandably the shortfall is highest for 5 bedroom properties, since LHA no longer covers for them. For most other properties the average seems to fall between £10 and £20 a week, which is quite drastic for those on Jobseekers who only get £50.95 a week if under 25 and £64.30 if over (ESA and Incapacity Benefit are not much higher, they vary, but are usually below £100).

The Daily Mail responded to these figures with:

End this housing benefits hysteria: Figures demolish claims that cities will be ‘cleansed’ of the poor, say ministers

“The official figures seen by the Mail show that 32 per cent of housing benefit claimants – 297,100 people – will be completely unaffected by the reforms, and 65 per cent will face a shortfall of less than £20.”

And at the bottom of the page

“IN CASE YOU’D FORGOTTEN THE FAMILIES MILKING THE SYSTEM”

Accompanied by pictures from six front page stories about families claiming Housing Benefit while living in expensive houses.

A year and half’s worth of angry stories about people claiming large amounts of Housing Benefit and Boris Johnson making hysterical comments about Kosovo have given the public quite a distorted view about the Housing Benefit situation.

Here’s a few Daily mail comments, cherry picked to show how the press reports of this story have misled some people.

(I say cherry picked because even on the comments section of The Daily Mail, not all people were supportive of the changes to LHA). I haven’t included the names of these commenters, but have stated where they write from when relevant. Most comments were made in October 2010 when the story was being reported and not all the details about the changes to LHA had come to light, however from speaking to people about this and looking around on the Internet, most are no better informed now than they were then.

 “£400 a week for rent – just for being out of work? My son is on a minimum wage (under £13000 a year) and he can only afford a bedsit at £300 a month out of his wages. That is all he can afford with working for a living……………..and the terminally workshy are still being given £400 a week for their accomodation???? My sons taxes are helping pay for this ‘expected lifestyle’ for the unemployed, while he himself has to make do. This is exactly what David Cameron is looking to put right………..the sooner the better. BRING IT ON!” (Yorkshire)

Assuming Angela’s son is living somewhere in Yorkshire and is under 35, his £300 a month would not be covered by Housing Benefit. He could claim only the shared accommodation rate, which in Leeds is £255 a month, in Bradford £207 a month and in York £270 a month. From here.

“How on earth can it be wrong to try and reduce housing benefit modestly when it will still be at £20,000 pa. On the south coast in Southampton you can rent a very nice three bedroom family home in a very nice area near the town centre for £800 pm and this example is repeated accross the country, I totally agree with this proposal. Everyone SEEMS to agree for the need for cuts but then object to every suggestion as to where the cuts will be made. Get real!”

The benefit cap in Southampton is £750 a month for a three bedroom property.

“I fully applaud Mr Cameron in taking a tough line with regards to this, why should the taxpayer be burdened with this.. £400 a week is still a hell of alot of money. For that amount of money you could easily rent a 5 bed room house in an affluent part of Cheshire – something i can only dream of as Mr Cameron points out.”

No five bedroom house could be claimed on Housing Benefit. I’m not sure what he considers an affluent part of Cheshire, but I’ll take Nantwich as an example. In Nantwich the limit for a four bedroom property is £162 per week. There are 15 four bedroom properties to rent there at the moment, of those only one costs less than £162 pw.

“Be steadfast,and resolute Cameron…….it is an absolute disgrace that huge sums of taxpayers money are being used to subsidise people who have no right in most cases of occupying expensive property. I live in a modest semi that I bought eighteen years ago.It was certainly NOT what i would have wanted to live in-but it was all that I could afford. I hate having neighbours,and I wish I could afford to live in a country lane with none…….but I can’t.. Nobody subsidises me to go and live in my country lane…….why is there such a thing as housing benefit anyway ?? The simple fact of life is that if you can’t afford something-you can’t have it.” (Southport)

In Southport the LHA is £144.23 per week for  four bedrooms and £136.93 for three. None of the 11 four bedroom properties can be rented for that amount, of the three bedroom properties only 2 out of 26 are covered by LHA.

“There should be a second cap based on the number of bedrooms, and it should be assumed that married adults and children of the same sex will always sleep in a double bedroom. It is ridiculous that the taxpayer is funding separate bedrooms for every member of a family.”

There is, it is and they don’t.

“I’d love to live the village where I grew up, but hey we CAN’T AFFORD TO! so, we don’t! we had to move away, we work hard for our money and to look after our house and children – £400 a WEEK? something HAS got to change! for a start why should people be “entitled ” to live in a house if they don’t earn it? surely the provision should be for warm shelter – a modest flat would fit that bill – I’m not talking slum conditions, but space isn’t luxury a lot of working people can’t afford either! should be capped at £800 per month for a family – move where you can rent for that level £400 a week is sickening!”

I found this an interesting idea and did a quick count, out of 136 districts in Britain 88 have a LHA of £800 a month and that’s for a four bedroom house, a family of six would only be allowed a three bedroom place and, aside from London, most areas have an LHA for a three bedroom place well below £800.

Aside from a few comments which simply call for the death or exile of all those claiming benefits, or those who don’t believe that a society should care for its most vulnerable members, most Daily Mail readers are asking for limits that are more lenient than the ones put in place – unfortunately due to the unreliability of information they are not aware of this.

Conclusion

Is at least 30% of housing available across England and Wales to those claiming HB under the new LHA guidelines?

No. Only a quarter of areas looked at meet the 30th Percentile rule.

It is still early days with these changes to the LHA, for the moment only new claims are affected, so most people on Housing Benefit will not be aware of the changes until early 2012. The government states that it expects landlords to lower their rents to accommodate their tenants and thereby bring down the cost of renting and perhaps this will happen.

If not, I am concerned for the short term situation where a large number of vulnerable people, often already in crisis, have to leave not only their homes, but also the town/city they live in.

I can’t really speculate about the long term situation until I understand more about why some areas fall so far below the 30th Percentile. Maybe it is due to unpredictability in the renting market, maybe due to flaws in the LHA system, or maybe (as some have declared) there is a disturbing intention to clear benefit claimants out of certain areas of Britain and create a more divided nation, if so then it may not be Kosovo-style social cleansing wrong, but it is still very wrong.

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