Back to workPosted: August 31, 2016 Filed under: Benefit cap, Pay to stay 2 Comments
Government resumes this week after a summer in limbo following the Brexit vote and change of prime minister. The unanswered questions for housing are stacking up.
The Cabinet met to discuss Brexit and parliament returns on Monday for two weeks before MPs take another break for the party conferences.
And the next few months should bring answers to some of the questions that have been hanging over housing ever since the referendum result and change of government.
What part will housing investment play in the fiscal ‘reset’ expected in the Autumn Statement? Will the new government offer any flexibility in the spending review settlement?
Is Theresa May’s vision of ‘a country that works for everyone’ and ‘giving people more opportunity’ just rhetoric or does she want a housing system that works for everyone too?
Will Sajid Javid and Gavin Barwell offer a change of approach at the DCLG? Will they be any less obsessed with home ownership? Or any less willing to devolve funding and decision making? Will they give full government backing to the private member’s Homelessness Reduction Bill?
But the more you look beyond the big picture and look at the detail the fuller the ministerial Pending and In trays become.
What of the decisions that were put on hold for the summer on the future funding of supported housing, the LHA cap and the implementation of the Housing and Planning Act including forced council house sales?
And all of these questions were put into perspective by news over the Bank Holiday weekend about issues that seemed more or less settled: the overall benefit cap and Pay to Stay.
The cap will be cut to £20,000 (£23,000 in London) for and is set to save money, promote fairness and set claimants on the path to salvation through work. Or at least it will if you believe the updated impact assessment slipped out by the DWP last week.
As one indication of the content, the assessment outlines two new exemptions for households in receipt of Guardian’s Allowance and Carer’s Allowance. We are told that ‘this change fits in with the wider Government strategy to do more to support and invest in carers’. This so-called ‘strategy’ was actually forced on ministers after the High Court ruled that the cap unfairly discriminated against disabled people with the judge commenting that DWP claims that carers are ‘workless’ were ‘somewhat insulting’.
But the key claim in the assessment is that 88,000 households will be affected by the lower cap and that 64,000 of those will be additional (not affected by the £26,000 cap). That is substantially lower than the 126,000 (92,000 additional) in the original impact assessment in 2015 and so are the forecast savings for the DWP.
Several things have changed since, including the new exemptions and the 1% a year rent cut in the social housing sector, and the new assessment does make clear that more than 88,000 will be affected as people go on and off the cap. However, it still seems on the low side: a capped couple with three or more children will not get enough housing benefit to cover even a social sector rent anywhere in Britain; and smaller families in affordable and private rent tenancies will be in the same position. See Joe Halewood’s blog for forceful arguments on this.
On Pay to Stay, the Local Government Association published estimates on Monday that 70,000 ‘high income social tenants’ could face a rent increase averaging just over £1,000 a year from April 2017. Pay to Stay will be compulsory for council tenants in households earning more than £31,000 (or £40,000 in London) who will be charged 15p for each additional £1 they earn above the thresholds.
Rent increases averaging £72 a month outside and £132 a month inside London are significant but not as great as they could have been thanks to amendments passed in the House of Lords and eventually accepted by the government. However, the LGA also raised the bureaucratic complexities of a system that will require councils to check the incomes of all their tenants once a year.
Its estimates suggest that Pay to Stay will raise just £75m a year, which in theory goes straight to the Treasury. The LGA argues by the time councils have deducted reasonable administrative costs the government will get little or no extra money.
Pay to Stay raises issue of principle that should be of concern to the new government. On the one hand, the Conservatives want to reduce the higher rate of tax (an extra 20p in the £ on incomes above £43,000) but on the other they want to introduce a new one (an extra 15p in the £ on incomes above £31,000) that only applies to council tenants.
On the one hand, it’s unfair to give council tenants on ‘high incomes’ a ‘subsidised’ rent. On the other it’s perfectly reasonable to give them a Right to Buy discount of up to £100,000.
But beyond the doublespeak it’s the sheer pointlessness of Pay to Stay that should prompt a rethink: it will cost as much, if not more than it raises; and even the government’s own assessment was that it only stacks up if the thresholds are not increased with inflation.
The list of measures still to come and detail yet to be settled goes on and on. The end of housing support for 18 to 21 year olds and more cuts in tax credits loom from April. And, elsewhere on IH, John Perry raises the question of what happens to the proceeds of forced council house sales if there are fewer housing association right to buy sales than expected.
As we emerge from the post-Brexit limbo it’s back to work with a vengeance.
Unless the objective of Pay2Stay is that tenants buy where they live, this must surely lead to further reducing the social mix in council housing and lead to ghettoisation.
Think you’re right that it may be a not too subtle hint to buy if you can. If you can’t though would you have much choice but to pay higher rent – if alternative is even higher?