A shocking story in the Guardian this week that, not content with driving the poor out of Kensington and Chelsea, the Coalition’s cap on housing benefit would force them out of southern England altogether. Worse, this came from the Chartered Institute of Housing (CIH), who sound like they ought to know what they are talking about.
I rang up the CIH and asked how I could get hold of a copy of the study and was surprised to hear that there has been not actually been one. They are apparently ‘doing some work for a Select Committee’ which may be released some time in the future.
So I went back to the story in the Guardian. What the CIH have done is to assume that rents increase by 5% a year over the next 30 years and that the housing benefit caps will increase only by the CPI measure of inflation. They look at the number of Broad Rental Market Areas (BRMA) within each region of the UK and see how many of these will be above the HB Cap based on these extrapolations.
Even on this data there is only 1 (out of 14) BRMAs in London currently affected, while in 10 years time outside London (which would be severely affected) only one area in the east and 3 in the SE (out of 18 and 29 respectively) are affected. After 20 years, though, most of southern England is affected, and by 30 years virtually the whole country.
The key assumption is that rents increase 5% a year (presumably over CPI, although this is not clear). The Guardian says that 5% has been used ‘because rents rise at an average of 5% a year’ as if this is an immutable law of nature. I have no idea if this figure is accurate but let’s suppose it is. Why should the next 10, 15 or 30 years be like the last?
In the last 10 years we have had a (mostly) booming economy, large-scale immigration from eastern Europe and more people living alone. There seems no reason to assume that these factors will continue to influence rent levels in future, nor does the assumption that rent levels increase evenly across the country seem likely to be true. It is also, of course, possible the HB Cap might be raised in future by more than CPI.
This is also a completely static analysis. If rents have risen by 63% in 10 years, who will be paying these rents? Is it not likely that an increase in rents of this level would encourage more rental housing to be made available? If poor people are moving out, who is taking their places?
It would be possible to have used exactly the same ludicrous projections to write an entirely different piece for, say, the Daily Mail. One could take the current HB cost (£21.5bn) and project forward using the same 5% annual growth. This would produce the story that within 30 years housing benefit will be costing nearly £100bn — clearly showing the need for reform of the HB system!
There is nothing unusual in the Guardian having stories attacking Coalition policies so one can understand why they ran this story (which was picked up and got extensive coverage elsewhere). But this is a particularly egregious example of a complete lack of any critical thought being given to a story which fitted their political agenda.
There clearly is a debate to be had about the Coalition’s housing benefit reforms – but it will not be helped by absurd analysis which mainly show that if you put nonsense into a spreadsheet you will get nonsense out.
* Simon McGrath is a Lib Dem member.
40 Comments
Well said.
thats all right then. A price worth paying.
Very well said. Good piece, Simon. Will you be sending it to said Guardian journlaist?
An excellent critique, although I would aim the main fire not on the press, the nature of which is to be biased, but the Chartered Institute of Housing; presumably the CIH wishes itself to be seen as an objective commentator on such matters, not a body hawking itself around to lazy hacks.
The trouble is that whilst the Guardian piece is clearly rubbish, (OK maybe not rubbish but a worst case scenario). Some of the figures the government are using have been shown to be equally dodgy…
My point is who cares? or are we thinking that those regions outside London/SE are 2nd class citizens?
It is NOT Government and the taxpayer’s job description to pay rents for people to live in a house or area where they cannot afford too.
We would all love to live in the most affluent areas of the city/country but if we cannot afford to we will rent or purchase property where we can.
This is another tactic of the labour party to buy votes. It is absolutely absurd that people who do not work, or immigrants coming into the country who have never paid a penny of national insurace, are living in huge expensive houses and drawing almost £100 K of housing benefit – not to mention the tranche of other benefit largesse they receive.
Now there is no money, the mindset of the subsidised must change and instead of never ending rent subsidy to keep them in comfort when working people cannot afford the same, they move to somewhere they can afford to live. Why should the taxpayer continue to pay this iniquitous benefit?
2 other quick points are: just because the rent is more than a housing benefit cap doesn’t *automatically* mean the person will be made homeless – how many families currently ownly get part of their rent paid by housing benefit?; and the cap affects housing benefit paid to those in private rental accomodation – the poorest families claiming housing benefit tend to live in social housing.
Interesting.
Looks like the coalition parties are trying to cler the poor out of Brighton as well.
http://www.theargus.co.uk/news/8632127.Employed_people_will__jump__Brighton_housing_waiting_list/
Very moral.
@Grammar Police
“and the cap affects housing benefit paid to those in private rental accomodation – the poorest families claiming housing benefit tend to live in social housing”
Where is the evidence to support your claim that the poorest families tend to live in social housing?
Remember there is a shortage of social housing, due to the vast numbers that where sold off under the right to buy scheme.
There are more claimants of Housing Benefit, from people in Low Paid work, than there is from those on Unemployment Benefit.
Single people with No Dependants who are on benefits are not seen as needy for social housing as those with children and so are forced to rent in the Private sector.
What you said, simply is not true
@littleangussie;
“It is NOT Government and the taxpayer’s job description to pay rents for people to live in a house or area where they cannot afford too.”
That’s an argument for abolishing Housing Benefit entirely.
Think about it. The benefit is for people who live in a town where they cannot afford to pay the local market rent. If you withdraw it from those who cannot afford to pay the local rent, then that’s everyone living locally who cannot afford to rent.
So they remain/become homeless.
Either that or they have to move to a cheaper town… which is what simon mcgrath article is trying to deny.
Simon McGrath says that the CIH experts are making crazy assumptions. Well, perhaps they are. As a non-specialist, I wouldn’t know. What I do know is that the CIH (and also Shelter) seem to have been quite happy to let the Guardian publish their very detailed results. I don’t hear CIH jumping up and down complaining that the Guardian have misrepresented them, do I?
So when Simon says “I rang up the CIH and asked how I could get hold of a copy of the study and was surprised to hear that there has been not actually been one. They are apparently ‘doing some work for a Select Committee’ which may be released some time in the future.” Well, ten out of ten for spin doctoring skills, Simon!
@SImon
“The key assumption is that rents increase 5% a year (presumably over CPI, although this is not clear).”
Rents in this Country have fallen slightly in relation to wage inflation over the last three decades, but they are quite stable – this would tend to suggest that (any increase in?) HB has had no effect on pushing up average rents during that period. Why on earth would you, or they, presume that rents would rise at 5% above CPI??!! – I can only assume they mean what they say: 5% a year, nominally, although quite why they think this is anyone’s guess and I’m guessing they’ve based it on rent rises in the South East in recent years. This does sound like a slightly exaggerated prediction though, given that wage inflation is now much lower than 5%.
House prices rose well above CPI in the last decade, but that was entirely due to the credit bubble.
This whole issue really is typical tory Daily Mail tosh though. They tories are cherry-picking examples of a small minority who receive large amounts of HB to subsidise private landlords in slums that happen to be located in posh postcodes. Quite why the Lib Dems have turned into Daily Mailites is beyond my comprehension.
The problem’s easy to solve – just build more council houses – they generate a profit for local councils anyway. 90% of land in this Country is undeveloped – it’s not like we’re short of the stuff. But why bother with something sensible like that when you can lay into the poor, rather than the rent-seeking slumlords.
@David Allen: So when Simon says “I rang up the CIH and asked how I could get hold of a copy of the study and was surprised to hear that there has been not actually been one. They are apparently ‘doing some work for a Select Committee’ which may be released some time in the future.” Well, ten out of ten for spin doctoring skills, Simon!
Er, so phoning them up and writing up their reply before writing a blog post is spin doctoring? Aren’t we stretching definitions here?
If you look at the Guardian article linked to in the post it clearly refers to a “new study” when there wasn’t one, but clearly the CIH doesn’t like the housing benefit cap (otherwise why is their head of policy Sam Lister criticising it in the article?). They’d hardly be unhappy with coverage that agrees with their position. What I would like to know – and what we still haven’t been told by CIH or the Guardian – is a) Is the 5% annual growth in rent real or nominal (makes a hell of a difference when the inflation target is 2% and current inflation even higher), and b) What is the justification behind the assumption of continued 5% per annum growth.
One reason to doubt that rents will grow significantly in real terms over 20-30 years is that over the long run house prices barely outperform inflation. Since house prices, just like share prices, should grow at about the same rate as rents (or dividends) that would suggest that 5% annual growth is too high a prediction.
I agree entirely with Sarah that we should build more. The trouble is that both the Conservatives and, I regret to say, the Lib Dems have been captured by the NIMBY (or even BANANA) lobby. Otherwise why did both parties have a commitment to restrict the building of houses in gardens in their manifestos? As so often happens the interests of young people are second best to the interests of middle-aged homeowners.
Building houses in gardens is a short-termist profiteering practice which not only harms the local environment and quality of life (Gardens are a good thing! We should be encouraging better use of them!) but places all kinds of extra strains on infrastructure, services and even things like parking.
I do totally agree, though, that the answer to the long-term problem is to build more homes and build them in sustainable (in all senses) communities. In large towns and cities councils should be insisting that new developments include large numbers of social rented homes and that large-scale commercial developments include housing as well as business use. After all, in a tall office building, the majority of the office space will never be occupied anyway. Outside the big cities, forget so-called ecotowns and car-only estates. So many small towns and villages ate struggling to stay alive, so why can we not identify places with underused facilities or scope for expansion, maybe even places with little-used railway stations or lines which can be reopened which could provide excellent locations for new commuter housing and provide a real benefit.
One thing is certain, meeting our housing needs will never be something private developers will do for us, it is not in their interests for the gap between supply and demand to shrink. We must have a plan to build our way out of this country’s housing crisis town by town, county by county and we have to do it sustainably both for the planet and for the communities we live in.
@ Matt
“There are more claimants of Housing Benefit, from people in Low Paid work, than there is from those on Unemployment Benefit.
Single people with No Dependants who are on benefits are not seen as needy for social housing as those with children and so are forced to rent in the Private sector.”
This doesn’t contradict what I said in any way.
@ Matt
[sorry, pressed return before had properly finished]
This doesn’t contradict what I said in any way, which was “the poorest *families* claiming housing benefit *tend* to live in social housing.” [emphasis added].
You simply pointed out that single people with no dependents are less likely to get social housing.
You might be interested to read that according to DWP figures, “Just over 69 per cent of Housing Benefit recipients were tenants of Social Sector landlords and almost 31 per cent were tenants of Private Sector landlords. “
No one seems to answer the 64 million dollar question – the cap only affects LONDON. Why shouldn’t London then subsidise the rents over and above the average by its own taxpayers, businesses or hotels (tourist tax). Why should those that do not benefit from London’s prestige or opportunities subsidise them?
The Spectator ( not a pinko publication) thinks that between 70,000 and 135,000 wil be moved out of their home and location…
“They’re not fag-packet calculations of the kind offered by some opposition MPs. These numbers come from Alex Fenton, a researcher at Cambridge University’s Department of Land Economy. ”
See article here….http://www.spectator.co.uk/coffeehouse/6440888/exclusive-what-about-those-who-arent-pulling-a-housing-benefit-scam.thtml
@Grammar Police
You might be interested to read that according to DWP figures, “Just over 69 per cent of Housing Benefit recipients were tenants of Social Sector landlords and almost 31 per cent were tenants of Private Sector landlords. “
(slightly off topic)
So if I read that right, the argument that social housing should be for the most worthy (vulnerable, low waged, disabled etc) is basically proven especially when you consider that social housing rents are less than the private sector rents but the HB payments are higher, pointing to the conclusion that the majority of social tenants deserve to be there (or, if your a heartless Tory, they are all workshy scrounging parasites)
@Bravheart
In that link you’ve provided it states, “Since 1997 private rents have jumped by nearly 60 percent”. I presume that’s a 60% nominal increase, which works out at 3.68% a year. Rents tend to increase with wage inflation, as do house prices over the long run – the only difference being that house prices go through huge deviations from their long term trend known as bubbles thanks to land price speculation. House prices still have a way to fall to get back to where they should be imho.
@Benjamin
“One thing is certain, meeting our housing needs will never be something private developers will do for us, it is not in their interests for the gap between supply and demand to shrink.”
The shortage of land with planning permission keeps land prices high. I’m not sure that developers profit from high land values, given they have to buy the land to be able to build on it and then sell it.
A compulsory purchase of agricultural land (which is a fraction of the price of land with planning consent) to build new towns/developments would help solve the problem. However, it is the current owners of land – homeowners – that are the biggest objectors to expanding their towns. I don’t think their objections are based solely on trying to preserve Britain’s green and pleasant land.
@Grammar Police
Even if you figures are correct, there are still over 30% of families on welfare that are renting in the Private sector and will be effected by these changes to housing benefit LHA
(These families are not renting in the private sector by choice, It’s because there is no social housing for them to live in)
30% of welfare claimants, who are at risk of having to move house and lose benefit.
Then there are the many thousands of people on low wages, who are also reliant on HB to meet their rents.
These changes to HB & LHA puts hundreds of thousands homes and families at risk and it is not right.
@John
“No one seems to answer the 64 million dollar question – the cap only affects LONDON. Why shouldn’t London then subsidise the rents over and above the average by its own taxpayers, businesses or hotels (tourist tax). Why should those that do not benefit from London’s prestige or opportunities subsidise them?”
John you are totally misinformed and you should arm yourself with the facts before posting your arguments.
some people mistakenly think that the £400 a week is the maximum HB that can be claimed all over the uk.
That is not the case, Every City, District has its own “Cap” Local Housing Allowance, At the moment this LHA is calculated by taking the costs of rents in the private sector and is calculated by making 50th percentile of houses affordable under housing benefit, (5 out of every 10 houses) This is about to be reduced to the 30th Percentile, so that only 3 out of 10 houses are affordable.
This means the LHA for every city and district across the uk will now fall, meaning hundreds of thousands of people are now going to face a shortfall in their rents.
There is no guarantee that the Landlords will take the loss, and if they expect the tenants to make up the shortfall, it is going to hit a lot of families real hard.
This is a problem that effects the whole of the uk and not just London, and could force a lot of families out of their homes
What will happen is all the rich will stay in the nice house,s with gardens and anyone who needs HB will go into high rise flats .These will be within a mile or two and they will not have to leave the area this will please the Tories and Simon Hughes . Please remember there is 2million OAP,s getting HB,and lots of very vulnerable people the papers say £2000 a week in HB gets paid left right and centre but that goes to a tiny amount of big families.The good rental houses up here in Edinburgh don,t take DSS and they want a months rent plus one month deposit .Rents for the good area will not go down as there is to much demand for these houses.
Andrew Edinburgh
@Liberal neil & Dominic – thanks.
@john ‘My point is who cares? or are we thinking that those regions outside London/SE are 2nd class citizens?’
Not sure I understand what point you are making
@Sarah I don’t have a view on the rate of rent increases. If the CIH assume 5% not CPI +5% then they must also have a view on the likley rate of CPI – again they don’t tell us what they have assumed here.
Are you sure that Council houses generate a profit for councils? If so why don’t they simply get private firms to build them for the councils?
@Braveheart – the Spectator article is an interesting one. I am all in favour of an informed debate on the changes, I just don’t think the CIH figure are right.
Thats the other sad part of the this policy that everyone is overlooking,
If you are currently in a private rented house and the LHA is reduced for your area and the landlord will not accept the lower rent, He is entitled to give you Notice.
Faced with having to move home, lets say you manage to find a new property a £120 a week rent
Removal costs £200
Months rent in advance £480.00
Months Rent Security Deposit £480.00
Total moving costs £1160
you can get a budgeting loan to help you with the costs, as long as you have no budgeting loans outstanding
These loans have to paid back though in a max of 104 weeks this would mean losing £11.15 a week out of your benefit, if you where to be given £1160.
http://www.adviceguide.org.uk/index/life/benefits/help_for_people_on_a_low_income_-_the_social_fund.htm#help_for_one_off_expenses
chucking people out of homes, and making them borrow thousand pound from the social fund, for a new house and then make them pay that back at £11.15 a week, is totally unacceptable in my opinion.
And to then have the prospect of a 10% cut in their HB as they have been unemployed for 12 months as well,
That would be another £12 Taken from someone’s benefit.
You could potentially have a young guy, under 25 only receiving £50.80 a week JSA
out of that benefit he is paying
£12 Housing Benefit Sanction
£11.15 Social Funs
Leaving him with a grand total of £35.65 a week
Then that person needs to find out of that money
£10 a week water
£5 Gas
£10 Elecrtic
£2.75 TV Licence
Thats another £27.75 a week
now leaving him with £7.90 a week, to by food, clothes, toiletries and be active enough to be able to look for work
£7.90 a week, that’s £1.12 a Day, we see shocking stories on the news, of poor homeless children living in 3rd world countries and they are living on a pound day.
We have ring fenced our overseas foreign aid, as Britain and Cameron, wants to be able to hold its head up and stand Proud, Sorry But Fu@K that,
People will up and smell the coffee and see what’s happening to our own.
Prevention is better than cure, and were slipping down, 1 ugly slope as far as what I can see 🙁
sorry that should say wake up and smell the coffee, damn i had to many rums, tonight,i better make it a night lol
@matt 10.23…
… v. good post…IMHO
@simon 10.14pm
“@Braveheart – the Spectator article is an interesting one. I am all in favour of an informed debate on the changes, I just don’t think the CIH figure are right.”
Simon, aren’t you worried that the discussion is all about just how bad it will be..not so bad, bad, very bad and disastrous… and none about how good it wil be.
No-one is saying it will be good……not even you.
@ matt
great post m8 ,
Someone should send your point to IDS ,how could someone think £1 a day is a lifestyle choice
Andrew Edinburgh
@Matt – you misunderstand my point – the maximum figures are totally amazing to people that live outside London and the SE. I’m talking about the cap. In Stockport we already have a cap of £650 – as does Manchester – the Labour run council was asked how many would have to leave their homes – the answer came `none`.
Simon McGrath wrote:
“One could take the current HB cost (£21.5bn) and project forward using the same 5% annual growth. This would produce the story that within 30 years housing benefit will be costing nearly £100bn — clearly showing the need for reform of the HB system!”
But it wouldn’t show any such need, because GDP (unadjusted for inflation, as is presumably the projected rate of increase of rents since it’s being compared with an inflation measure) would be expected to rise in like proportion.
Rents are almost certain to outstrip inflation, because with the best will in the world the supply of housing will remain limited while the number of households outstrips population growth, itself expected to remain buoyant. That’s why people like “bricks and mortar”: it’s a sound long-term investment, with good reason. In the absence of extensive new public provision, housing values are far likelier to reflect income growth than inflation.
If rents weren’t expected to rise faster than inflation, there’d be no reason to link LHA to the CPI. The whole exercise is being undertaken as a cost-cutting measure. But Simon reckons he knows better even than the government he supports – all on the basis of an entirely unfounded assumption that would have rents halving relative to incomes over a few decades, when plentiful experience indicates nothing of the sort.
Coupled with the likely 25% drop in housing benefit limits when the new allowances start, the de-linking from actual local rent increases means massive suffering for claimants across the country. Many will be forced to move, and even when they re-locate to cheaper areas the limitation to the cheapest 30% of lets – often unavailable to claimants in any case – means most will eventually be left without enough to pay for the roof over their head, should they still have one as ever more landlords specify “No DSS”.
It’s a malicious and barbarous policy contrary to human decency. No unsubstantiated waffling about implausible future scenarios can disguise that. People will suffer. Hundreds of thousands – perhaps eventually millions- will be moved from socially mixed to deprived areas. And that isn’t good news for LibDems who tend to benefit from just the kind of mix that’s under threat.
I think people may be going over the top on this. I earn £14,000 per annum, and pay £550 a month rent for 1 bed flat in Milton Keynes in Bucks. I get no housing benefit for it (haven’t tried to get it so don’t know if I’m eligible), so I don’t think there will be that many people like me who will be effected by this.
I’m also pretty sure that £1600 a month would be enough for a family to get a decent 4 bed house in MK, so especially if one of the parents is working there shouldn’t be too many problems.
I don’t really know the rental situation in London, but certainly in Milton Keynes, people should still be able to live in decent accommodation. The only people who should have to move house are probably the people living in accommodation that couldn’t be afforded by the average lower earner, and they can still live in a decent place, albeit not in a middle class street.
(It’s a malicious and barbarous policy contrary to human decency. No unsubstantiated waffling about implausible future scenarios can disguise that. People will suffer. Hundreds of thousands – perhaps eventually millions- will be moved from socially mixed to deprived areas. And that isn’t good news for LibDems who tend to benefit from just the kind of mix that’s under threat.)
I’d wager you a fiver that that won’t happen.
That’s the trouble with the left these days. They see the economy as a `static` situation. By all means don’t cut anything – tell me how much extra tax the ordinary person will pay, the very strict regime on benefits (will make your eyes water) and the need to cut back personal lending – that’s the trouble all the upsides are talked about but none of the `downsides`.
Another point – why should ordinary taxpayers say in Reading or Milton Keynes or Stockport subsidise the exacerbation of an international city with all its prestige and opportunities. It’s pretty obvious there’s a two-tier rental market – London and bits of the SE and the rest of Britain. The answer is for London to find within its own borders by taxation of any sort to supplement the amount it gets from Government in the way of average HB. It’s not for others to keep the trough going so that one part of the UK is allowed to `live the luxury it’s become accustomed to`.
As for the 30th percentile – a lot of hard-working people can only afford to buy in such places (like me). Why should I subsidise others who simply want to live in a particular street rather than round the corner. Yes it’s tough for people in London – the real person you should be targeting is Boris Johnson who will have to dig into his own pockets (or those of tourists, corporations or taxpayers) to fund the gap.
As I understand it there are discretionary grants for London councils (notice only London ones – I wonder why?).
Sure it’s disconcerting – that’s life. Until we get this deficit under control there are no political choices anyway. Nobody owes the UK a living and in a global economy it has to be earnt – ask a German.
And before someone goes on about the banks that’s just a way of infantilising the situation. Basically Labour colluded with the banks to provide a housing boom and over easy credit for electoral gain. Many were seduced into borrowing more than they could earn and now we’re all paying the price INCLUDING people who were never to blame. That’s still not an excuse not to change the system unless of course you think that the economy is just a playground and never-ending HB is something ordinary people have to subsidise.
@Dave Parker:
A few points:
1) There is no shortage of land in Britain. There is a shortage of land that has planning permission or can easily get it. That is a political constraint, not a geographical one – and it is a restraint that should be removed. As Paul Krugman (among others) has pointed out, the only areas of America that saw a house-price bubble before the crash were those with strict planning rules; in the middle states which have nothing against urban sprawl a lot of houses were built (probably too many) but the prices did not rocket.
2) Historically house prices (I’m afraid I don’t have statistics for rents, but the two should broadly move together as I explained in my earlier comment) have not risen much faster than inflation and are not correlated with population growth – have a look at Robert Schiller’s graph in this pdf (page 6).
3) The utility someone gets from having a roof over their head and an insulated building to keep them warm does not change over time – we all need shelter. The only reason rents would rise faster than inflation is either a) the quality of the housing has increased (e.g. better insulation) or b) its quantity has increased (you’re renting a larger house than your grandparents did, or you are sharing the same-sized house with fewer people).
@Benjamin: I agreed with much of your post but quibble with two things. The point about developers not being interested in building houses was dealt with by Sarah. The other point is this one:
By definition gardens (unlike parks) are private. I am strongly opposed to building on public parks, because that takes away a valuable public amenity. But gardens are a private amenity that only benefit their owners. If they prefer to have a smaller garden and more money in the bank from selling half of the garden for development why should we say arbitrarily that they are reducing their own quality of life?
And I would argue that dense development puts less strain on a lot of infrastructure than the sort of sprawling suburbs that have been the standard British approach for decades: denser population means that public transport is more viable and can run more frequently, which reduces the need for cars (and thus to some extent alleviates the car parking problem). Denser population also means that more shops and workplaces are within walking or cycling distance, which means people get more exercise and reduce their carbon emissions. Go to any decent-sized European city and you’ll see what I mean.
Sam – the LHA rate for a 4 bedroom house in Milton Keynes is £241.64 a week or £1047.11 per month at the moment and that’ll go down when LHA rates are taken from the 30th percentile in October 2011 rather than the 50th percentile taken now.
The LHA rate for your 1 bed flat by the way is £120.82 at the moment or £523.53 per month. Though this will go down to the 30th percentile too in October 2011.
But if your under 35 years old from April 2012 you’ll only be entitled to the shared room rate which at the moment for Milton Keynes is £72.50 per week or £314.16 per month, this will go down, again when taken from the 30th percentile in October 2011.
But if your unlucky enough to be unemployed and on JSA for 12 months from April 2013 you’re going to have another 10% of that deducted.
Not having a go at you in anyway, just sharing information. But you can check the LHA figures for any number of bedrooms/areas/authority at
https://lha-direct.voa.gov.uk/Secure/Default.aspx
They are adjusted up and down every month. If people checked this they would see that rents are already capped at a local level at no where near the the London levels that are getting all the headlines.
Regards
Tony
HB Tone
Raises some good points
I think it would do everyone some good to look at this website
http://www.voa.gov.uk/LHADirect/Documents/LHA_percentile_rates_Oct_2010.html
It shows what the LHA rates are currently for every part of the uk at the 50th Percentile, and it also shows what the rate will be when reduced to the 30th Percentile.
Before making judgements, people should consider their own circumstances, whether you are renting or buying, please remember this.
No Business is 100% safe and no Job is 100% secure.
Anybody can fall on hard times, and find themselves in need of welfare, even if only temporary.
Think what your own rents are now, and look at the amount of Housing benefit Support you can expect if you need it.
Will LHA cover all your rent? I very much doubt it
Think what your mortgage repayments currently are and at what % interest rate you are paying at.
If you do have a mortgage and find yourself all of a sudden out of work and in need of help, Support for Mortgage Interest Payments is only 3.07%. And that support is limited to your “initial Mortgage”, those of you who have taken out 2nd mortgages do not get any assistant on those
Most peoples mortgages are at least 6% and would quickly find out, there is little sympathy from the mortgage companies on this and you will have to make up the shortfall or face arrears and repossessions.
People find it to easy to judge others, We need to stop and think, how will WE be effected by these changes, if WE where to fall on hard times.
Considering the economic climate and the amount of jobs about to go in the public sector, which will effect the private sector as well, can WE really afford to be so blind sighted and Judgemental
In these hard times, everyone needs a financial cushion – like UK Universal Inheritance. £2,000 for 25 year olds in 2011, £4,000 for 25 year olds in 2012, £6,000 for 25 year olds in 2013, £8,000 for 25 year olds in 2014, £10,000 (less than 10 per cent of average wealth of every adult and child in the UK) for 25 year olds in 2015 and thereafter.
Finance this, over and above the present Inheritance Tax take, by converting the latter into a recording flat 10 per cent Capital Donor Tax (40 per cent for giving to non-UK tax payers) DEDUCTIBLE FROM a progressive (10 per cent up to 40 per cent – or more if necessary) Lifetime Unearned Capital Receipts Tax (with minimal exemptions except between partners, spouses and cohabiting siblings).
Banks could lend to those over 18 against the certain receipt at 25. Government could subsidise interest rates on such loans for business start up, education, home ownership or relocation.
There is nothing wrong with taxing the luxury expenditure of giving and bequeathing capital at less than the rate of VAT on ordinary expenditure. Capital Donor Tax is of course double taxation, but then so is VAT. Lifetime Unearned Capital Receipts ought to be taxed progressively, just as earned income is, instead of being tax free for many. Inheritance Tax is at too high a starting rate but with too many unilimited exemptions for great fortunes from lifetime gifts and agricultural, business and shareholding assets.
@Matt 7.57pm 13th Nov (and earlier comments) – You provide an important reminder of the reality of the impact of these cuts, and also a reminder of why we have these systems in the first place. While the estimates of the precise numbers of households who will be displaced by this policy are highly debateable it is definitionally true that it is going to impact adversely on many households who receive housing benefit.
The dominant current in the discussion of this issue seems to proceed roughly along the lines that something needs to be done about ‘them over there’ [choose preferred target] who are clearly taking the rest of us for a ride and are an unjustified drain on resources.
That sort of “us and them” strategy allows us to dehumanise “them” and therefore impair their standard of living and life chances without feeling too bad about it. It’s a strategy I would fully expect from the Tories. But not from the LibDems. It’s a strategy that rests on a lot of people believing that they’ll always be “us” and never be “them”. Yet, an adverse life event such as unemployment or long term limiting illness can happen to anyone, and in recessionary times more people will inevitably be affected, if only temporarily. Many who are fortunate enough not to have ever experienced what it is like to be one of “them” can nonetheless emphathise and recognise the value of an adequate safety net (and arguable the British safety net is barely adequate by international standards). And most people don’t need to call on that safety net for more than temporary periods. The main reason that the welfare bill has increased dramatically in the last few years is that there are a lot more people claiming, not that it is massively generous. That shouldn’t come as a surprise in a recession.
If empathy were somewhat more widespread then the idea that the benefit recipient receiving tens of thousands of pounds from the tax-payer as a lifestyle choice would be recognised for what it is – a creation of the poltical right and the right wing media to advance an agenda of vilification.
That isn’t to deny that it is impossible to find people who receive a lot of money in housing benefit. Of course you can. Or that there are not some people who are choosing to live on benefit. Clearly there are. And it isn’t an argument against reform. But it is an argument that those few households who do not take their responsibilities to society seriously should not be used as an excuse for pursuing spiteful policies that will inflict great hardship on many who are simply unfortunate.