I'd like to draw your attention to a couple of headlines that the mainstream press haven't really covered.
Labour politicians attempt to block Localism Bill. I hope they succeed in getting a longer consultation period, at least. This bill is actively centralist, has nowhere near enough safeguards, and will make the planning system impossible to navigate. I find it hilarious that the government's method of cutting the undoubted surfeit of red tape in planning is to remove the strategic and predictable layer of regional plans, and replace it with an atomised, unwieldy, and capricious neighbourhood layer. Much more work is needed on the Localism Bill, otherwise it'll prove in parts destructive but mostly just chaotic. Since it is meant to have such a huge impact on local communities, shouldn't they get the chance to have a say in what it contains?
'Affordable rent' could add £1 billion to benefit bill. I am so glad that someone has pointed this out to the Department of Work and Pensions. Surely it cannot have been hard to infer that if you increase social rents, housing benefit would have to rise, as the people living in social housing are the poorest and most vulnerable. Incidentally, the headline is slightly misleading - the rise could actually amount to £1.56 billion per annum. If the government intends to chop billions off the benefits bill, this is clearly not the way to go about it. Tellingly, no government impact assessment of the new 'affordable rent' (up to 80% of market rent) system has been published. Perhaps not even undertaken, if an independent research organsisation has to point out this glaring discrepancy.
I'm disappointed that this hasn't been more widely reported. There are two potential implications. Either:
The government has miscalculated the future benefits bill by one and a half billion pounds by not taking into account a shift in social housing policy. That would be an extraordinary failure of communication, planning, accounting, and indeed common sense. It is not a small mistake. With numbers like that, the responsible ministers should be getting serious questions from parliament, at the very least.
Or,
The government didn't factor the additional rent into the benefit bill because they don't intend housing benefit to cover it. That would result in that same one and a half billion a year apparently being paid by social tenants - the poorest, most vulnerable people. The elderly, disabled, carers, low-paid parents, and the like. It does not seem remotely realistic to expect them to be able to afford such rent increases. The average income of a social renting household is £14,800 per annum; 65% have incomes of less than £15,000.
The result would be vulnerable people in their thousands being priced out of housing, all housing. The purpose of social homes is to give those who cannot afford private rent or ownership a roof over their head. If this policy isn't reconsidered, the housing benefit bill will have to rise by billions or endemic homelessness will be the inevitable result. What a choice.
The epithet 'affordable rent' is doubly ironic; either the tenants can't afford it or the treasury can't. The higher rents are supposed to pay for investment in more social housing, to make up for the cuts to the Department of Communities and Local Government's budget. There's a certain cunning about channelling money from the Department of Work and Pensions into affordable housing, I'll admit. Unfortunately, the policy's success relies on DWP not noticing an annual one and a half billion pound overspend.
By the way, just in case you might somehow have temporarily forgotten, we are all in this together.
Showing posts with label dwp. Show all posts
Showing posts with label dwp. Show all posts
Tuesday, 18 January 2011
Monday, 25 October 2010
Just Keep Moving
On Friday Iain Duncan Smith advised the unemployed to 'get on a bus' to find work. As well as being incredibly patronising, this talk of the 'flexible labour market' ignores both economic theory and observable reality.
For a start, there is no economic rule that there will ever be enough jobs for everyone. At the moment, jobseekers outnumber vacancies to an almost farcical degree in economically weaker areas of the country. In the area of Wales Iain was discussing in his speech, for instance, there are approximately nine unemployed people for every vacancy. Presumably Mr. Duncan Smith would suggest that all those unable to get a job either commute further or move out of Wales.
Helpfully, the government will be making both options much more expensive in coming months and years. The costs of road, rail and bus travel will all rise. Petrol prices are creeping up again, VAT hits 20% in January, and the fuel escalator kicks back in next year. Road pricing is back on the cards. Bus subsidies are being cut by 20%. Rail fares will rise by 3% plus the Retail Price Index (currently 4.6%) each of the next three years. In fact, it looks like the best option will indeed be to get on your bike, as Norman Tebbit so famously suggested. Unfortunately, cycling from Wales to London on a daily basis is scarcely practical.
Moving house to get a job, though, would be even harder. Housing benefit is being substantially cut, the affordable housing budget has been hung, drawn and quartered (post on this to follow), and those in social housing have a newly created massive disincentive to move. New social tenancies will be on a novel and deceptively named 'affordable rent' basis, constituting 80% of market rent. That might sound reasonable, but in London would result in rents tripling. In Cambridge, I gather social rent would double under the new terms. Existing tenancies will remain on the same terms as they were created. If moving house would inevitably result in a vast increase in your rent, it would take a very attractive job to get you packing.
As with all the policy currently being made, Iain Duncan Smith's approach is entirely predicated on reducing spending, in this case on welfare. The Department of Work and Pensions isn't trying to strengthen the economy, reduce regional inequality, tackle long-term unemployment, or improve business confidence. It is assumed that swiftly reducing the deficit will cause these things to magically occur all by themselves. A number of nobel prize winning economists are sceptical of this.
Crudely cutting benefits, especially housing benefit, isn't going to make the labour market more flexible or create jobs. Indeed, jobs will be rapidly lost as the cuts bite. Encouraging people to move, or indeed forcing them to, is useless when there aren't jobs available. In the UK, housing costs strongly correlate with job availability, as house building has failed to keep up with demand in successful areas. Cuts to housing benefit and the affordable housing budget will move the unemployed away from jobs. Further away than they can commute, even if travel costs weren't rising steeply.
There's another significant problem here, and it concerns the Big Society. If communities are to unite in order to provide their own public services, as the coalition expects, they will need to be stable and cohesive. Housing benefit cuts will force hundreds of thousands of people to move, causing huge social upheaval. What hope have unsettled and precarious communities of successfully running libraries, community centres, and schools?
High levels of spending on welfare are a symptom of a geographically unbalanced economy and hugely dysfunctional housing market. Coalition policy is ignoring these causes in favour of the idea that anyone without a job just isn't trying hard enough. Again, it's hard to reconcile this insistence on believing the worst of people with a sudden flowering of voluntary work and community enterprise. All I can conclude is the government doesn't understand that things are connected, things like jobs and housing and transport. I wouldn't have thought that was too complex an idea to grasp, but unfortunately the Diary of a Civil Servant confirms that it is.
For a start, there is no economic rule that there will ever be enough jobs for everyone. At the moment, jobseekers outnumber vacancies to an almost farcical degree in economically weaker areas of the country. In the area of Wales Iain was discussing in his speech, for instance, there are approximately nine unemployed people for every vacancy. Presumably Mr. Duncan Smith would suggest that all those unable to get a job either commute further or move out of Wales.
Helpfully, the government will be making both options much more expensive in coming months and years. The costs of road, rail and bus travel will all rise. Petrol prices are creeping up again, VAT hits 20% in January, and the fuel escalator kicks back in next year. Road pricing is back on the cards. Bus subsidies are being cut by 20%. Rail fares will rise by 3% plus the Retail Price Index (currently 4.6%) each of the next three years. In fact, it looks like the best option will indeed be to get on your bike, as Norman Tebbit so famously suggested. Unfortunately, cycling from Wales to London on a daily basis is scarcely practical.
Moving house to get a job, though, would be even harder. Housing benefit is being substantially cut, the affordable housing budget has been hung, drawn and quartered (post on this to follow), and those in social housing have a newly created massive disincentive to move. New social tenancies will be on a novel and deceptively named 'affordable rent' basis, constituting 80% of market rent. That might sound reasonable, but in London would result in rents tripling. In Cambridge, I gather social rent would double under the new terms. Existing tenancies will remain on the same terms as they were created. If moving house would inevitably result in a vast increase in your rent, it would take a very attractive job to get you packing.
As with all the policy currently being made, Iain Duncan Smith's approach is entirely predicated on reducing spending, in this case on welfare. The Department of Work and Pensions isn't trying to strengthen the economy, reduce regional inequality, tackle long-term unemployment, or improve business confidence. It is assumed that swiftly reducing the deficit will cause these things to magically occur all by themselves. A number of nobel prize winning economists are sceptical of this.
Crudely cutting benefits, especially housing benefit, isn't going to make the labour market more flexible or create jobs. Indeed, jobs will be rapidly lost as the cuts bite. Encouraging people to move, or indeed forcing them to, is useless when there aren't jobs available. In the UK, housing costs strongly correlate with job availability, as house building has failed to keep up with demand in successful areas. Cuts to housing benefit and the affordable housing budget will move the unemployed away from jobs. Further away than they can commute, even if travel costs weren't rising steeply.
There's another significant problem here, and it concerns the Big Society. If communities are to unite in order to provide their own public services, as the coalition expects, they will need to be stable and cohesive. Housing benefit cuts will force hundreds of thousands of people to move, causing huge social upheaval. What hope have unsettled and precarious communities of successfully running libraries, community centres, and schools?
High levels of spending on welfare are a symptom of a geographically unbalanced economy and hugely dysfunctional housing market. Coalition policy is ignoring these causes in favour of the idea that anyone without a job just isn't trying hard enough. Again, it's hard to reconcile this insistence on believing the worst of people with a sudden flowering of voluntary work and community enterprise. All I can conclude is the government doesn't understand that things are connected, things like jobs and housing and transport. I wouldn't have thought that was too complex an idea to grasp, but unfortunately the Diary of a Civil Servant confirms that it is.
Monday, 26 July 2010
No Comment
This afternoon I've had the interesting experience of emailing a friend to say 'You know that a press release has gone out saying your agency is being abolished, right?' As it turns out, it looks more to be reorganisation, with the term 'abolish' used merely for spin. Still, something of a sign of the times. I have friends working all over the public sector; in teaching, health, central government departments, government agencies and the army. I wonder how many of us will still be thus employed in two years time?
Two interesting links have surfaced today. Firstly, someone has worked out the effects of the housing benefit cuts, area by area. In Cambridge, the changes will result in a reduction of £25.32 per week. That's £113.94 less every month, an unmanageable sum for a pensioner, family on a low income or unemployed person to find elsewhere.
The Guardian continues to cover the story of housing benefits cuts, and the government's response continues to be scandalously offhand. The Department of Work and Pensions stated,
'What these reforms mean is that people receiving housing benefit may not be able to live in expensive city centres, but the same applies to most working families who do not receive benefit'.
That's a vast understatement. Currently most people are priced out of city centres; these reforms will price people receiving housing benefit out of the entire South-East of the country.
The other link is a somewhat surreal interview with Eric Pickles, minister for Communities and Local Government.
For your convenience, I have extracted Mr. Pickles' choice quotes below:
'This building was the Balkans until I arrived.'
'...if we let the system take over before we stop in any way, then the cigar-chomping Commies take over again. The cigar-chomping Commies are not going to take over on my watch.'
'Basically, I'm not mad keen on reports longer than two pages because after that most things are just word processing.'
'You cannot see things in shades of grey. Labour is wrong, the Lib Dems are wrong, we are right.'
'I see myself as a diamond geezer.'
This man is in control of a multibillion pound departmental budget, and the future of local government is in his hands. Words actually fail me.
Friday, 16 July 2010
Why does this government have a Housing Minister?
The June Budget announced a number of changes to Housing Benefit, aiming to save £1.8 billion from the £21 billion a year spent on it. Yes, that's twenty-one billion pounds every year, between 4.7 million claimants. Why so high, you might wonder. That would be because it rose with housing costs, which have vastly inflated in recent decades as supply fell further and further behind demand. To reduce this burden on the public purse, say the coalition, we will make these changes:
The more that I think about these changes, the more outrageously regressive I find them. The reason that the government pays Housing Benefit is that in the UK we supposedly believe that shelter is a human right. The proposed reforms will cause Housing Benefit to trail further and further behind housing costs. It will no longer be a safety net. Homelessness is going to rise, and fast.
If people can't get into social housing, and Housing Benefit isn't sufficient for them to afford private rental, what are they supposed to do? Where are they supposed to go? In effect, those entitled to Housing Benefit (working on a low income, unemployed, retired, or unable to work) will be priced entirely out of the South-East of the United Kingdom.
I am not exaggerating. The Chartered Institute of Housing calculates that these reforms will price Housing Benefit claimants out of all private housing within a decade. They are so concerned that they've started a campaign against the changes.
The National Housing Federation calculates that just the proposal to cut Housing Benefit by 10% for people on Job Seeker's Allowance for more than a year will cause 202,000 people to face almost inevitable homelessness.
And what is the response to this from our Housing Minister, Grant Shapps?
I refer you to the excellent theyworkforyou.com, which keeps track of what our representatives in parliament are talking to each other about.
The Labour MP for Westminster asked Mr Shapps What discussions he has had with the Secretary of State for Work and Pensions on the effect on housing and levels of homelessness of the proposed reduction in housing benefit levels?
His response is that he has set up a cross-ministerial working group and has increased the existing discretionary fund to tackle homelessness.
That is a shockingly brief, offhand, weak, and ineffectual answer. It is clear that the Housing Minister has no conception of the disasterous effects that Housing Benefit reforms will have. Those on low incomes will be excluded from London and much of the South-East, effectively forced to migrate North-West, where lower employment and economic stagnation have kept house prices low. Keyworkers like nurses, carers and firefighters will be priced out of half the country.
Has there been any consultation on these changes? No.
Has the government conducted an assessment of the impacts? No. I can't find it, and I've got a lot of experience locating things on government websites. In any case, the month between election and budget was insufficient to properly examine the impacts of huge changes like this.
Undoubtedly the Housing Benefit system inherited by the coalition was in need of reform, to reduce costs and make it fairer. These reforms, however, will penalise the most vulnerable people in society, worsen poverty, and further entrench regional wealth disparities. They mark a return to Victorian notions of the undeserving poor, who are merely lazy rather than trapped by economic circumstances. The changes will increase the number of homeless people and drive others to crime in order to pay their rent.
4.7 million people are going to struggle to keep a roof over their heads. I am enraged that a Housing Minister who claims to be a long-term campaigner for the homeless is so unconcerned about this that he thinks setting up a working group is an adequate response.
Why does this government have a housing minister? I honestly don't know. At the moment the post looks like a complete waste of public money.
- Capping Housing Benefit payments to £250 a week for a one-bedroom flat, £290 for a two bed, £340 for a three bed and £400 a week for a four-bedroom property. This is a maximum, not the amount that most people will get. For much of the UK, the caps are reasonable (at the moment anyway), but in almost all of London rents are far higher than that.
- Changing the way that payments are calculated, using the lowest 30% of rents rather than 50% as is currently the case. This amounts to an absolute cut in Housing Benefit.
- Adjusting Housing Benefit to inflation using the Consumer Price Index rather than the Retail Price Index. The difference - the former doesn't include housing costs, which have caused the Retail Price Index to be consistently higher. Levels of Housing Benefit will no longer have any connection to rises in actual rents.
- Cutting Housing Benefit by 10% for people on Job Seekers Allowance for more than 12 months. Presumably to 'encourage' them to find employment.
The more that I think about these changes, the more outrageously regressive I find them. The reason that the government pays Housing Benefit is that in the UK we supposedly believe that shelter is a human right. The proposed reforms will cause Housing Benefit to trail further and further behind housing costs. It will no longer be a safety net. Homelessness is going to rise, and fast.
If people can't get into social housing, and Housing Benefit isn't sufficient for them to afford private rental, what are they supposed to do? Where are they supposed to go? In effect, those entitled to Housing Benefit (working on a low income, unemployed, retired, or unable to work) will be priced entirely out of the South-East of the United Kingdom.
I am not exaggerating. The Chartered Institute of Housing calculates that these reforms will price Housing Benefit claimants out of all private housing within a decade. They are so concerned that they've started a campaign against the changes.
The National Housing Federation calculates that just the proposal to cut Housing Benefit by 10% for people on Job Seeker's Allowance for more than a year will cause 202,000 people to face almost inevitable homelessness.
And what is the response to this from our Housing Minister, Grant Shapps?
I refer you to the excellent theyworkforyou.com, which keeps track of what our representatives in parliament are talking to each other about.
The Labour MP for Westminster asked Mr Shapps What discussions he has had with the Secretary of State for Work and Pensions on the effect on housing and levels of homelessness of the proposed reduction in housing benefit levels?
His response is that he has set up a cross-ministerial working group and has increased the existing discretionary fund to tackle homelessness.
That is a shockingly brief, offhand, weak, and ineffectual answer. It is clear that the Housing Minister has no conception of the disasterous effects that Housing Benefit reforms will have. Those on low incomes will be excluded from London and much of the South-East, effectively forced to migrate North-West, where lower employment and economic stagnation have kept house prices low. Keyworkers like nurses, carers and firefighters will be priced out of half the country.
Has there been any consultation on these changes? No.
Has the government conducted an assessment of the impacts? No. I can't find it, and I've got a lot of experience locating things on government websites. In any case, the month between election and budget was insufficient to properly examine the impacts of huge changes like this.
Undoubtedly the Housing Benefit system inherited by the coalition was in need of reform, to reduce costs and make it fairer. These reforms, however, will penalise the most vulnerable people in society, worsen poverty, and further entrench regional wealth disparities. They mark a return to Victorian notions of the undeserving poor, who are merely lazy rather than trapped by economic circumstances. The changes will increase the number of homeless people and drive others to crime in order to pay their rent.
4.7 million people are going to struggle to keep a roof over their heads. I am enraged that a Housing Minister who claims to be a long-term campaigner for the homeless is so unconcerned about this that he thinks setting up a working group is an adequate response.
Why does this government have a housing minister? I honestly don't know. At the moment the post looks like a complete waste of public money.
Thursday, 15 July 2010
Sociable Homes
Social housing can be a rather emotive topic, and is strongly linked in many people's minds with feckless unemployment and teenage single mothers. For what its worth, this is what I know about it.
- Social housing is not free; tenants pay rent. The level of rent is lower than in the private rental market, by approximately 50% in Cambridgeshire.
- On average, social housing is of higher quality than private rented (see this post). It is also much more secure, as the landlord is not profit motivated.
- Some social housing is managed directly by local councils, some by not-for-profit 'registered providers'. These are usually charities.
- Thanks to the 1980s 'Right to Buy' policy, the level of social housing in the UK is far below that needed. The result is that many people in poverty are living in overcrowded, poor quality private rented accommodation supported by Housing Benefit. Right to Buy allowed many people to purchase a home, but also removed the better quality social housing stock.
- Social housing is allocated on the basis of need, using a waiting list system. Anyone can be added to the list. In my area, those on the list then receive details of available properties and 'bid' for them if interested. The bidder judged to be in the greatest need gets the home. Levels of need are expressed in four bands, A to D, of which A is most acute.
- On the 1st July 2010, Cambridge's waiting list had 6299 people on it, of which 147 were in band A. The total population of Cambridge is approximately 117,700 (including around 16,000 students). The most recent figure I can find for total social housing stock in Cambridge is 11,049 (2007-8). That same year turnover was 4%, which is typical. Once in social housing, tenants are understandably reluctant to leave.
- In Cambridge and the surrounding districts, 40% of social renting households have at least one person in work. 11% are retired and another 11% unable to work due to ill-health or disability. A quarter are not seeking work; the majority of single parents understandably fall into this category.
- The total number of people on waiting lists for social housing in England stands at 1,800,000, the longest the list has ever been.
- Although some still call it 'council housing', councils haven't built social housing for decades. Recently there have been some efforts to get local authorities back into social housebuilding, but these have had very limited impact. For the most part, new social housing is provided through private housebuilding. Local councils have planning policies requiring developers to make a percentage of their housing 'affordable'. This definition includes but is not limited to social housing. As a result, when housebuilding slows down as it has on the back of the credit crunch, social housing is hit too. In Cambridge and its environs, the affordable housing target is 40%.
- Central government supports and subsidises social housing through grants. When the credit crunch arrived, the then government introduced a range of new schemes to encourage housebuilding in general and social housing in particular. As a result, 75% of new housing starts in 2009 received some sort of public subsidy. Although it would be foolish to assume that none of them would have gone ahead without support, it's fair to say that most wouldn't. For all their faults, the Labour government put significant effort and money into social housing. Not enough, but significant amounts.
What changes is the Age of Austerity bringing?
The coalition are saying that there is no more money for affordable housing. Without government subsidy, social housing will not be built. Registered Providers could borrow money to build, except for the little problem that we're in a credit crunch. Loan availability for housebuilders is limited and not improving. Meanwhile, unemployment is increasing the number of households unable to afford to own or privately rent a home. There is already a shortage of social housing, and it will get worse.
The Department of Work and Pensions (DWP) are also mooting the idea of somehow encouraging jobless social tenants to move in order to find work. This seems to me an extraordinary misunderstanding of the nature of 21st century poverty. If I lived in a socially rented house, I wouldn't want to move to find work! Social housing is hugely difficult to get and extremely sought-after. Why would you want to move from such a preferable tenure into vastly more expensive private rental, with only the potential of a job as an incentive? If the DWP think that people will just be able to move from one social home to another in a more sought-after area, they clearly haven't seen the waiting list numbers recently. Nor have they seen that many social tenants either already work or cannot.
The problem at issue here is that economically successful areas of the UK have huge shortages of owned, rented and social housing. This has made them fundamentally unaffordable to live in unless you already have a reasonably-paid job. The DWP's tacit assumption is that people in social housing are choosing not to move to find work, because they are lazy, feckless, etc. There's no choice about it; the unemployed cannot afford to move. The government seems to think that social housing = appalling poverty ghetto. Not a helpful assumption.
Diane Abbot, the Labour leadership candidate, has written an excellent critique of this policy here. She picks up on the human cost - loss of social capital through splitting families and breaking up support networks.
Sorry, this is not the end of the woeful tale of housing. Still to consider is Housing Benefit reform, plus my suggestions for trying to fix this mess.
(Meanwhile at the Department of Communities and Local Government, regional targets for house-building have been abolished. Again. This has been announced at least four times now. How much more abolished can they get?)
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