Who benefits?

For people renting privately, housing benefit is broken.

“The safety net once provided by Housing Benefit, whereby post housing incomes were protected from erosion below basic benefit levels, has now effectively ended for the bulk of private tenants in receipt of benefit across the country”

Homelessness Monitor: England 2019

We spend c.£22 billion per year on housing benefit

Which is around 1% of GDP

But the amount going to people renting from private landlords has decreased in recent years

Even as the number of households renting privately has increased, meaning a smaller pot is being spread thinly.

If this continues, we will see more and more people experiencing homelessness.

Housing benefit is not well loved. Labour wants to talk about Council housing and the Tories want to talk about owning your own house. But it’s an important part of our safety net.

We only have to look at the situation in America to see how bad things can get.

In the States the Housing Choice Voucher (HCV) program (formerly known as Section 8) helps only 2.2 million low-income households with the cost of their rent. 3 in 4 households who are eligible for the voucher do not receive it because the fund is starved of cash.

This goes a large part of the way to explaining why there are 60,000 homeless people in LA.

We must insure we do not move in this direction.

References:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/833200/benefit-expenditure-by-country-and-region-2018-19.xlsx

https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/abmi/qna

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/758610/housing-benefit-tables-2016-17.ods

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/796963/outturn-and-forecast-spring-statement-2019.xlsx

3 thoughts on “Who benefits?

  1. Principal comparison is of chalk and cheese. The housing benefit total when compared between 1996 and 2000 with today needs to include UC housing cost payments not just Housing Benefit.

    Additionally, less in monetary terms and in % terms of housing benefit going to the private sector is NOT just the LHA freezes which began in 2012. It is also the case that housing benefit in the social rented sector has increased due to the affordable (sic) rent system that sees average housing benefit increase by 44.6% overnight compared with the previously charged social rent level.

    There are now 230,000+ affordable rent properties in HAs in England and over 10% of all English HA properties are rented at this 44.6% average higher rent and 100% of those rent levels can receive 100% housing benefit even when they are much higher than the maximum LHA rate of housing benefit that the private landlord can receive.

    In summary, to focus ONLY on the LHA freeze fails to address many other just as important issues concerning the total and tenure proportion of housing benefit

    • Thanks Joe. Do you agree with me that the government have made efforts to reduce the amount of housing benefit going to private renters and this has had negative consequences including more people experiencing homelessness?

      • Thomas, multipart question. 1) Yes govt made ‘efforts’ to switch private renters to social housing AR by freezing LHA from 2012. However, their thinking as stated by Shapps in 2011 was this would reduce the overall HB cost which was fundamentally flawed as the AR maximum of 80% of gross market rent was then and is still higher than the maximum LHA. 2) One consequence of that is the PRS have increased refusals to allocate to benefit claimants, as indeed have SRS landlords … which 3) leads to even greater HB cost of temporary homeless accommodation. Thus there is not a simple or simplistic correlation that equates to LHA freeze = greater homelessness alone.

        Then other so-called welfare reforms such as bedroom tax and overall benefit cap policies target a reduction in HB and thus also lead to greater refusals by PRS and SRS – and these will only increase with government rent policy in SRS of increasing rents by CPI+1%.

        Many more examples of direct correlation and yet we see the ‘great and good’ of housing (CIH, NHF, Shelter, Crisis, JRF et al) ONLY focus on the LHA freeze and do NOT consider the many other factors mentioned

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