Hunt’s statement of intent

Posted: November 18, 2022 | Author: | Filed under: Benefit cap, Cost of living, Energy efficiency, Housing market, Local housing allowance, Social housing | Leave a comment

Originally written as a column for Inside Housing.

Eight weeks after Liz Truss and Kwasi Kwarteng shrank the economy with their growth plan, chancellor Jeremy Hunt completed his reversal of almost all of their plans in his Autumn Statement.

He was speaking against a backdrop of dire forecasts of recession, unemployment, falling living standards and rising taxes that spoke of bad news to come for housing and tenants and landlords alike.

The complete rewrite of the Autumn Statement leaves a long list of tax increases and spending cuts in its wake, even if many of them will not take effect until after the next election and so may not happen. However, there was still a little hope amidst the gloom.

Here are five points I picked up from the statement itself and the background documents.

The cap and the freeze

Perhaps the most surprising thing about the statement – with a nod to expectations management by the Treasury – is that there is also some good news. The announcement that the government will stick to previous pledges to increase benefits (and pensions and the minimum wage) in line with prices was not completely unexpected but will still come as a relief to tenants and landlords alike.

But Jeremy Hunt’s decision to increase the overall benefit caps by the same amount is much more of a surprise. Without this, thousands more households faced being capped as their benefits rose to hit thresholds that have been frozen since they were cut in 2016. The main thresholds for families will now increase to £22,020 a year outside London and £25,323 in the capital. The cost is estimated at £315 million in 2023/24 and almost £2 billion over the next five years.

And yet… these are still far below the average earnings figures that were misleadingly used to justify the cap in the first place. And they leave people who are already capped facing rent increases with no extra income to pay for them.

Finally, buried deep in the background documents is more gloom: the assumption that Local Housing Allowance rates for private renters will remain at 2022/23 levels, which have themselves been frozen since April 2020. This despite rapidly rising rents. If confirmed, the result will inevitably be rising rent arrears and homelessness.

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The legacy of the Clay Cross rebellion

Posted: September 30, 2022 | Author: | Filed under: Cost of living, Council housing | Leave a comment

Originally written as a column for Inside Housing.

This Saturday marks the 50th anniversary of legislation that triggered one of the most famous rebellions in the history of housing – and it is a story with a contemporary twist.

October 1, 1972 was the date that ‘fair’ rents were imposed on council housing by Edward Heath’s Conservative government. Under the Housing Finance Act 1972 all local authorities were forced to increase their rents by £1 a week (around 50 per cent).

Many in England, Wales and Scotland resisted interference by central government in their right to set their own rents but, threatened with the appointment of a Housing Commissioner, all but one eventually complied.

Clay Cross Urban District Council in Derbyshire refused point blank to increase rents that were the lowest in the country at around £1.65 a week.

The Labour-controlled council had a long track record of going its own way and finding loopholes in legislation it did not like: there were rebellions not just over rents but also over free school milk and pay for council staff.

Led by Dennis Skinner until he became the MP for nearby Bolsover, Clay Cross saw housing as one its top priorities as it replaced slums that had been built by the mine owners before nationalisation with new council houses at low rents.

As one councillor put it: ‘On this council we like to think of ourselves as basic socialists. We regard housing here as a social service, not as something the private sector can profit from.’

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Kwarteng’s plan causes growing pains

Posted: September 23, 2022 | Author: | Filed under: Budget, Cost of living, Housing market, Stamp duty | Tags: , | Leave a comment

Originally written as a column for Inside Housing.

So, after 10 years of redistribution and socialism under David Cameron, Theresa May and Boris Johnson, now we know what a proper Conservative government looks like.

The biggest package of tax cuts seen in 50 years will cost a cool £45bn and overwhelmingly benefit the highest earners: someone on £1m a year will be around £55,000 better off next year.

The benefits get progressively smaller the less you earn: someone on £20,000 a year will gain just £218 while someone on £200,000 will gain £4,333.

And there is nothing so far for the very poorest: no more help for renters and no boost to Universal Credit.

Instead around 120,000 claimants face having their benefits cut unless they find more part-time hours from January.

There may be some announcements still to come in an actual Budget to follow this Growth Plan, including vital decisions on whether to unfreeze Local Housing Allowance and the benefit cap, but the contrast could hardly be more stark.

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Action for now, solutions not yet

Posted: May 26, 2022 | Author: | Filed under: Benefit cap, Cost of living, Energy efficiency, Local housing allowance | Leave a comment

The £15 billion energy cost support package announced by Rishi Sunak rightly benefits the poorest households most but it remains to be seen what it will do about the cost of living in general and the cost of housing in particular. 

Under the package announced by the chancellor on Thursday, 8 million households on benefits will get a one-off payment of £650 paid in two lump sums in July and the Autumn. Add that to the £400 energy support payment (rather than a loan) that will go to everyone and the £150 payment already made (at least in theory) to those in Bands A-D for the council tax, and the Treasury says this amounts to £1,200 help towards the cost of living for the most vulnerable.

Background documents confirm the one-off payment will not count towards the benefit cap, unlike the £20 a week uplift to universal credit during the pandemic. That should avoid many more households seeing the help disappear as fast as it arrives.

Sunak had been under pressure to do more on benefits not just because of energy costs but also because of the large gap between the 3.1 per cent uprating of benefits in April (based on last September’s inflation rate) and the current 9 per cent rate of CPI inflation.

He said his one-off payment would be worth more than bringing forward next year’s uprating of benefits, as some had suggested. 

And he also confirmed that the April 2023 uprating will be based on next September’s inflation rate, which could easily be more than 10 per cent, rather than retaining the option of declaring it to be unaffordable.

So far, so good, then and this is probably the package that the chancellor should have delivered in a Spring Statementthat looked inadequate at the time and has seemed even weeker with each passing week. This package looks to be both more generous and more redistributive than many people were expecting.

However, that also reflects the scale of the cost of living crisis. Add the £800 increase in the energy price cap expected in October to the £700 increase already seen in April and that is already more than the chancellor’s £1,200 for the most vulnerable and that is before you get to large increases in the price of food, fuel and other essentials. 

And there was one major cost that was as absent from Sunak’s statement this week as it was from the one he made in March and the Queen’s Speech earlier this month. No prizes for guessing it must be housing. 

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