Smoke, mirrors and broken promises

Originally written as a column for Inside Housing.

This is definitely not the first government to hype up its policies, break its promises and sneak out inconvenient announcements as quietly as possible but it is one that has taken its game to a new level.

Anyone in housing has become wearily familiar with the semantics of ‘affordable’ housing and the ‘spare room subsidy’ but the trend is now evident across government.

The thought was prompted by watching Boris Johnson bluster his way through a TV interview in which he denied he was breaking his repeated pledge to build Northern Powerhouse Rail between Liverpool and Leeds.

That scheme, plus the eastern leg of HS2, have indeed been scrapped in the Integrated Rail Plan but the prime minister’s dodgy claim was based on small sections of them going ahead.

Boris Johnson pulled a similar trick with his promise to build ’40 new hospitals’. Most of them are merely new buildings at existing hospitals – and the infrastructure watchdog now says most are ‘unachievable’ in any case -but that has not stopped the hype.

Aside from the transport issues, the importance of (take your pick) ‘the biggest ever public investment in Britain’s rail network’ or the ‘Great Train Robbery’ is of course the link with levelling up.

That policy is due to be fleshed out in a white paper before Christmas but its success as a slogan is based on the implication that everyone can be a winner without anyone losing out.

That was also the claim implicit in the policy on social care that Boris Johnson (him again) promised would mean that nobody will have to sell their home.

Based on a package proposed by Sir Andrew Dilnot but abandoned under the coalition, this would balance a cap on lifetime contributions to care costs with more generous means-tested support once your assets fall below £100,000 to ensure that the benefits do not just go to the rich.

The plan announced in September came with all sorts of caveats attached but the detailed policy quietly announced last week does something very different.

There will still be a cap of £86,000 on care contributions but any means-tested support will not count towards it, meaning all assets except for £20,000 get wiped out until private contributions to care hit the cap.

Sir Andrew told the Treasury select committee on Thursday that this meant ‘a central element of progressivity’ had been removed and that anyone with assets of less than £186,000 would be worse off.

Most of those assets will of course consist of housing wealth and estimates by the Financial Times suggest that someone in Surrey with a house worth £500,000 who gets dementia and faces £500,000 in care costs would currently have to pay £485,750 towards them. Under the new plan, even as amended, they would only have to pay £86,000.

Contrast that with someone with a £100,000 house in Derbyshire facing the same costs. They would currently have to pay £87,750 but that would have fallen to £44,000 under the original reform. Under the new rules they would have to pay £80,000.

Effectively, the reform will protect the property wealth of people with expensive houses in the South East but do next to nothing for those with cheaper homes in the North and Midlands.

If sounds like the opposite of levelling up, even as Sir Andrew was giving his evidence, Boris Johnson was boasting that for the first time in history ‘we’re stopping people having to pay unlimited quantities for their care’.  

Even closer to home, my final exhibit comes from a written answer about a policy that was buried in the small print of the Autumn Budget and Spending Review: the assumption built into the sums that Local Housing Allowance (LHA) will be frozen in 2022/23.

LHA rates was restored to the 30th percentile of local rents in 2020 after cuts and a four-year freeze that meant tenants faced ever-increasing shortfalls that had to be made up from other benefits.

However, rates were frozen again for this year and unless the Budget assumption is reversed those shortfalls will rise for the second year in succession, meaning more money to find from benefits that no longer have the £20 a week uplift.

Further information came in a written answer last week (thanks to @Z2K_trust on Twitter for pointing this out to me).

Labour MP Karen Buck asked what estimates the Department of Work and Pensions had made about how many tenants will lose out, how much the government will save and whether it will reintroduce the Targeted Affordabilty Fund (TAF) that partially mitigated the impact of the previous four-year freeze.

The answer from junior work and pensions secretary David Rutley came in three parts. First up was the familiar one that we have provided over £1bn in Discretionary Housing Payments – this is vintage 2013-era spin used repeatedly to defend cuts worth many times more than that.

Next came confirmation that the decision will be confirmed at the annual uprating review ‘in due course’ and that there are no plans for targeted funding.

Finally came this jaw-dropping statement from the minister: ‘The baseline for costings is that rates will be maintained at the elevated cash rates agreed for 2020/21, an investment which cost around £1 billion per year. This means maintaining rates in cash terms would not provide any savings for the Department, nor would it reduce any claimant’s benefit entitlement.’

The ‘investment’ he’s talking about is the cost of bringing LHA rates back up the 30th percentile after the four-year freeze. Hey presto, the savings to the Treasury from another freeze have disappeared and the growing shortfalls faced by tenants must be a figment of their imagination.

OK, these smoke and mirrors are not quite on the scale of non-existent train lines and hospitals but you almost have to admire the way a cut has become an ‘investment’. This man will surely go far.


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