A statement of lack of intent from Sunak
Posted: March 28, 2022 Filed under: Housing benefit, Poverty, Welfare state | Tags: Rishi Sunak, Spring Statement Leave a commentRishi Sunak was always going to have to tackle the cost of living crisis in his Spring Statement and the big questions were how and who would benefit.
Faced with a choice between measures that would benefit the well-off, those on middle incomes and the least well-off, the chancellor did a bit for the first and second groups but more or less ignored the third.
He chose to increase the threshold for National Insurance at a cost of around £25bn over the next five years and followed that up with a 1p cut in the standard rate of income tax at a cost of more than £17bn over the three years from just before the next election in 2024 – though his previous decisions to freeze the tax thresholds and increase NI rates mean these tax ‘cuts’ were really tax rises.
Of the three new measures that he billed as ‘helping families with the cost of living’, the temporary 5p cut in fuel duty (£2.4bn next year) and cut in VAT on energy efficiency materials (£280m over the next five years) are good news if you can afford a car or improvements to your home but not much use otherwise.
The £500m increase in the Household Support Fund in 2022/23 will enable local authorities to help the most vulnerable households with the cost of essentials but it is a drop in the ocean compared to his action (or lack of it) on benefits in general.
To put this in perspective, the Office for Budget Responsibility (OBR) forecasts that average real disposable incomes will fall by 2.2 per cent next year, the most since records began.
However, the squeeze on benefits will be much greater than that.
Read the rest of this entry »The ‘problem of rent’ has just got worse
Posted: January 25, 2022 Filed under: Housing benefit, Welfare state | Tags: Beveridge, Joseph Rowntree Foundation, Resolution Foundation Leave a commentOriginally written as a column for Inside Housing.
The UK has among the lowest levels of basic benefits in the developed world but spends more than any other country on housing benefits.
The two statements, which come from a new report by the Resolution Foundation, are of course connected and they are the result of deliberate policy choices over decades.
The first relates to the way that the benefits system evolved in the wake of the Beveridge report with low levels of working-age benefits supplemented by extra support for housing, children and ill-health.
Beveridge had confessed that he was unable to solve what he called ‘the problem of rent’ – how you account for housing costs that vary between different areas – in his blueprint for social security after the Second World War.
His fudged solution was to add a flat rate housing allowance to contributory unemployment benefit but that was rejected in favour of means testing in the scheme that was introduced.
However, his whole report was written on the assumptions that full employment, mass council housebuilding and private sector rent control would continue.
By contrast, most European countries have more generous contributory and earnings-related benefits supplemented by a means-tested safety net.
This graph from the report shows the difference:
For clarity it’s worth pointing out that this is based on the OECD definition of housing benefits in kind, which includes payments for housing costs but not mortgage tax relief (still paid in some countries) or capital investment in social housing or the ‘subsidy’ of the lower rents it produces.
The second policy choice dates back to the deregulation of rents and decline of social housing in the 80s and 90s – reversing those assumptions made by Beveridge – and more recent falls in home ownership among low-income households that have left them paying higher rents.
Read the rest of this entry »The long-term consequences of falling home ownership
Posted: November 12, 2017 Filed under: Home ownership, Housing benefit, Private renting, Welfare state | Tags: Generation Rent 4 CommentsA report today from Generation Rent predicts that the number of pensioner private renters will increase by 169% in England over the next 20 years at a cost of an extra £3.5bn in housing benefit.
The increase will come as a result of trends already hard-baked into the housing system and they have nothing to do with the people in their 20s and 30s that we are used to thinking of as Generation Rent.
Successive editions of the English Housing Survey (EHS) have shown that falls in home ownership are rippling up through the age bands as existing private renters get older and find themselves unable to buy.
The report by David Adler of Oxford University and Dan Wilson-Craw of Generation Rent looks at the current EHS, Office for National Statistics and housing benefit data to forecast what will happen by 2035/36.
There are currently 1.1 million private renter households aged between 45 and 64 who will reach retirement age in the next 20 years. Some of them will still be able to buy but on current trends 947,000 will be private renters into retirement.
Add another 50,000 current retiree households who will live into their 80s and you have a million who could be reliant on insecure short-term tenancies and potentially dependent on housing benefit. That could translate into an extra £3.5bn on top of the current housing benefit bill.
Blue skies: Part one
Posted: May 22, 2015 Filed under: Home ownership, Welfare state | Tags: Conservatives, Greg Clark, Macmillan Leave a commentIs all the talk of One Nation Conservatism just spin or is there some substance that could mean good news for housing?
In the wake of their surprise election victory, and with the opposition in disarray, senior Tories have moved to claim the centre ground: David Cameron wants ‘blue collar Conservatism’; Robert Halfon says the Tories are the true Workers Party; and it’s full steam ahead for George Osborne’s Northern Powerhouse. Even Cameron’s guru Steve Hilton is back in town calling the Living Wage a ‘moral absolute’.
It’s easy to be cynical about all of this when the party ended the campaign seemingly committed to taxing less and spending more at the same time as it runs a budget surplus. As things stand, expect lots of references to cutting tax for people on the minimum wage and rather fewer to cutting their tax credits and housing benefit. Those £12 billion cuts in welfare spending, plus another £13 billion of cuts in departmental budgets are yet to be spelt out.
Shrinking the state
Posted: December 7, 2014 Filed under: Health, History, Welfare state | Tags: Autumn Statement, George Osborne, OBR 1 CommentWhat would it mean if George Osborne succeeds in cutting public spending to its lowest level since the 1930s?
The scale of the cuts for the rest of this decade implied by the deficit reduction targets in the Autumn Statement takes us into territory uncharted since the war. Many people believe Osborne has moved from the realms of the unlikely to the realms of fantasy and it’s not hard to see why. If the chancellor missed the deficit targets he set out in 2010 by a wide margin, why should we accept what he says in 2014? Especially when he says he can cut taxes at the same time.
Osborne must have hoped that all the headlines would be about stamp duty reform. Instead, news coverage has instead been dominated by the Office for Budget Responsibility’s projections of what further austerity would mean for the public sector. This graph on government consumption as a proportion of GDP sums it up:
Discretion and discrimination
Posted: May 9, 2014 Filed under: Housing benefit, Local government, Welfare state 3 CommentsShocking new figures published by Inside Housing reveal yet again the holes in the safety net provided by discretionary housing payments (DHPs).
On one level it beggars belief that in the last financial year councils turned down 70,000 requests for help from tenants facing cuts in their housing benefit and returned £9 million of DHP funding to central government.
On another, it’s no surprise that a system devolved to local authorities facing their own budget cuts has experienced problems or that one based on local discretion has varied so much between different areas.
-> Read the rest of this post on Inside Edge, my blog for Inside Housing
Housing nations
Posted: March 28, 2014 Filed under: Scotland, Wales, Welfare state | Tags: Scottish independence Leave a commentWhat would a Yes vote to Scottish independence mean for housing in the rest of the UK?
With less than six months to go until the referendum, it’s not just in Scotland that the issues are being debated. While England may feel it can mostly ignore what’s happening north of the Tweed the question is perhaps felt more deeply in the other UK nations.
In Northern Ireland, a research institute has just warned of ‘substantial’ political, economic and social effects. And in Wales the issues were addressed directly this week in a debate at the TAI 2014 conference in Cardiff on the motion ‘This house believes an independent Scotland would be good for Wales.’
Read the rest of this post on Inside Edge, my blog for Inside Housing
Budget 2014: the next five years
Posted: March 20, 2014 Filed under: Budget, Economics, Housing market, Private renting, Welfare state | Tags: housing benefit Leave a commentNever mind today and tomorrow: what does the Budget mean for housing over the longer term?
As usual, some of the most revealing information comes not in the speech or the Treasury’s background documents but in the Economic and Fiscal Outlook published by the Office for Budget Responsibility. This time around the detail and the forecasts for the next five years have a lot to say about housing benefit, the welfare cap and the housing market.
Read the rest of this post on Inside Edge, my blog for Inside Housing
Benefits Street, The Spongers and welfare reality
Posted: February 9, 2014 Filed under: Poverty, Television, Welfare state | Tags: Benefits Street, The Spongers 6 CommentsThis week’s final episode of Benefits Street made me go back and rewatch another programme with a provocative title about life on social security.
I was 17 when The Spongers was first transmitted in January 1978 and I still remember it as the single most stunning and harrowing piece of television I have ever seen. The 90-minute programme was a Play for Today – the famous series of one-off dramas that ran on the BBC in the 1970s and 1980s – and tells the story of Pauline, a single mother from a council estate near Manchester. It opens with the bailiffs arriving to seize her furniture because she is in rent arrears and upsetting her eldest daughter, Paula, who has Down’s Syndrome. That’s swiftly followed by a scene outside where workers are erecting giant heads of the Queen and Prince Philip ready for the Silver Jubilee celebrations. Cue the opening titles. You can watch it here:
Benefit baseline
Posted: January 7, 2014 Filed under: Homelessness, Housing benefit, Welfare state | Tags: Council housing, George Osborne, housing benefit, welfare Leave a commentThe ‘hard truths’ about welfare outlined by George Osborne beg far more questions than answers when it comes to housing.
In a speech yesterday the chancellor set out plans for £12 billion worth of cuts in welfare and £13 billion cuts in departmental budgets in 2016/17 and 2017/18 if the Conservatives win the next election.
And he singled out housing as the target of two specific cuts: housing benefit for the under-25s; and council housing for people earning more than £60,000 a year.
However, a quick look at the detail of those proposals raises real doubt about how much they would really save and what else might be on the Tory agenda.
Jules Birch 