The Bank of England monetary policy committee report (May 2022) published a few weeks ago says that the UK has sustained high inflation. Despite a target rate of 2% the BoE projected CPI inflation this September to be 9.9%, then 7.2% in September 2023, then 4.3% in September 2024 before nearing its target rate with 2.1% in September 2025.
The social rented sector is the audience for these figures as the September CPI rate forms the social housing rent rises the following April. The 9.9% CPI projection for September 2022 sees April 2023 rent rises of 10.9% as the rent increase formula is CPI+1%.
Discussion across the social housing sector over whether rents will increase by the full CPI+1% is fraught yet the major issue missed is that CPI inflation according to the Bank of England is sustained over a few years and not a one-off issue. It is neglected as any objective reading of the numeric facts reveals that the social housing model is defunct and the oft-heard cry of just build more social housing is a purposeless and futile myth when it comes to rehousing those in objective housing need.
Notions of SRS landlord boards having discussions over just next years rent increases alone is a fundamentally errant premise and does not reflect the sustained level of inflation or its consequences for social landlords and social tenants. Inflation is NOT a one-off aberrant figure that will quickly fall back to its normal 2% average, it is a sustained high level of inflation over the next few years assuming the Bank of England projections are accurate.
The shorter June MPC overview report (26 pp) has already increased its May projection report (110pp) for this years inflation too and the BoE predicted as recently as October 2021 that CPI inflation would peak this year at 7% and now say that will be 11%.
It is also noteworthy that government purported mitigations to soaring inflation are one-off payments to deal with the ‘cost of living crisis’ yet the soaring inflation is over three years and not a one-off so £650 energy payments which is around £1000 less than the energy cap increase this year are not as yet planned for 2023 or 2024 or 2025 and nobody expects yearly domestic gas and electricity bills to fall back from their projected £2800+ per year this October down to the £1278 average of March 2022 anytime soon, if at all.
Many existing SRS tenants will have housing benefit shortfall and greater rent top-up positions which (a) they cannot afford; and (b) they have to feed the prepayment meter first as 46% of council tenants and the 41% of HA tenants who have them need to keep the lights and the fridge on first, before assessing the misinformed heat or eat narrative! This fact revealed in the English Housing Survey (Annex Table 3.28) is strangely missing from the superficial concern SRS landlords portray they have over the heat or eat debate!
The tenant affordability of the cheapest possible social housing rent levels becomes a seismic and structural issue for social landlords for the next few years. Seismic is warranted as is unprecedented to describe this reality of the affordability crisis in social housing as the numbers reveal yet the national and housing media, as is their want, are focusing just on private rented sector rent affordability in chronic ignorance and/or negligence as to the social rented sector rent affordability catastrophe that is imminent.
In three years time the figures reveal that a woman fleeing domestic abuse with three children will not get a penny in housing benefit (UC Housing Cost Element) due to the overall benefit cap (OBC) policy. No social landlord will rehouse that lone parent 3 child household on benefit. In a years time that same domestic abuse survivor and her three children will get a maximum of £199 per month in housing benefit so wont be rehoused then or even today. The out of control inflation meeting this governments OBC policy means NO DSS will apply to every 2 bed social rent property up and down the country today and the 2 bed and larger sized SRS property accounts for 76% of England’s entire social housing stock that has today become a NO DSS reality and benefit household free zone.
So even if social housing boards limit rent increases to half of the 10.9% rent increase next April that some are mooting or if government change the rent increase formula to reflect this then the same NO DSS reality will happen as the social landlord cannot afford the benefit tenant and vice versa. That analogy would also see SRS landlords in England forego some £1.25 billion of income next year so those who are arguing that boards will somehow rediscover their social purpose and impose a CPI minus 5% increase will need to also argue that the SRS are willing to forego this £1.25 billion of increased income just in 2023/24.
I find these arguments to be innumerate delusion. In simplistic overview, the SRS turnover in England is circa £25 billion per year. The 10.9% rent increase in April 23 takes this to £27.73 billion per year which increases to £29.99 billion per year from April 2024 with the 8.2% rent increase the BoE figures are projecting. Social housing rent inflation over the next two years imputing the BoE inflation figures is a 20% rent increase for social housing tenants.
One argument I have heard from SRS professionals is there is no way government will allow the housing benefit budget to increase so much and citing the correct fact (EHS) that 65% of SRS tenants are in receipt of housing benefit. However, the OBC finite limit on overall household benefit which includes housing benefit means this wont happen and could even see an overall reduction in housing benefit expenditure as the domestic abuse example above explains. Hundreds of thousands more SRS tenants will face cuts to their maximum housing benefit each year due to the out-of-control inflation we have and tens if not hundreds of thousands more existing SRS tenants will be evicted due to the arrears to eviction to homeless pathway this creates. That is what the objective numbers say. It means that the core target tenant of social housing is no longer the benefit household of working-age who know become familia non grata to purportedly social landlords of councils and housing associations.
I am far from over-egging the pudding here. This is scary as hell yet not scaremongering and with the assumptions being the Bank of England inflation forecasts are broadly accurate and the Overall Benefit Cap policy remains.
It is time the social rented sector landlords and their boards woke up to the reality of the affordability crisis of social housing rent levels. It is way past time that homeless lobbies and supposed think tanks woke up too and crunched the numbers in a simple ‘what if’ spreadsheet that a 7 year old could do. The “Housing Crisis” term that has been bandied about for a number of years is seen as a crisis of social housing undersupply ONLY and that simply developing more social housing will solve. That is and always has been a classic non sequitur (aka superficial twaddle) when the target client for social housing of those out of work or on low pay – the 65% who now receive housing benefit – will not be able to afford any new social housing so prospective households will be turned away as they fail SRS landlord affordability assessments (aka NO DSS) and existing SRS households in receipt of ever dwindling levels of housing benefit will be evicted into homelessness. These same ‘experts’ are currently focused on ending homelessness or ending rough sleeping and both of these are going to rocket to unprecedented levels as that is what the objective numbers say.
A direct set of questions to Polly Neate, the current chief executive of Shelter (England) and previously the chief executive of Womens Aid Federation of England. You constantly maintain that building more social housing is the key to reducing homelessness yet my example of a women with three children fleeing domestic violence sees the objective numbers say she will not receive a penny in housing benefit (UC-HCE) in 2026 and next year less than £200 per month in housing benefit.
Q1) Please advise how she can ever leave a DVA refuge?
Q2) Please advise how many more women will be refused refuge provision because they can’t move any existing residents out?
Q3) Please advise how many more refuges and refuge rooms England alone needs next year?
Finally, Q4 – Just how the hell will more social housing reduce all forms of homelessness when the DVA or any other homeless cohort cannot afford the cheapest social rent levels around?
That last question goes out to every social housing lobby, every homeless lobby, every DVA lobby, every politician, every think tank, every social housing activist and every member of the public that has a grasp of the basic laws of arithmetic!
The current government policy is do not flee domestic violence and abuse unless you can afford to do so as that is what the overall benefit cap policy manifests. Stay at home and have even more physical, emotional, financial and psychological abuse as you cannot afford to flee from it … even if you could find any refuge rooms available to flee to! Stay at ‘home’ and die is the government policy toward domestic violence and abuse.
Polly Neate has accused me of mansplaining over this issue on Twitter because I report that the refuge and every other homeless resettlement model is now defunct due to the OBC meeting rampant out-of-control and sustained inflation. There is no affordable homeless-escape properties for homeless families to be able to leave refuges or other temporary homeless accommodation. That is what the objective numbers say. The ‘great and the good’ the ‘experts’ and the ‘leaders’ never like to be challenged and held to scrutiny do they?
I could just as easily have singled-out the rent-a-gob politician Jess Phillips who crusades for her own self-advancement on DVA issues yet is strangely silent on the objective realities that women fleeing it now face at the hands of the political party she claims to be in opposition to.
I have just as much personal and professional scorn for the myriad of social rented sector lobbies who launch superficial upon superficial DVA campaigns such as Make A Stand or fart about in talking shops such as the Cathy Come Home group yet whose SRS rent levels mean they will not rehouse DVA families out of affordability and NO DSS.
The social purpose of the social housing model is defunct and unfit for purpose and the country needs a new housing and rehousing vehicle as council and housing association landlords and their purportedly social constructs are no longer viable. It doesn’t need Dominic Raab to remove the Human Rights Act for social (sic) landlords to refuse the claimed right to housing as that purported right has never existed when it comes to housing and rehousing those in objective housing need in England.
Affordability has always won out over alleged altruism in social (sic) housing just as it will with double-digit rent increases being approved by social (sic) landlords next year as they cannot afford to forego any of the £2.7 billion per year increase this will provide to their coffers….
PS I was toying with the idea of renting a stand at the many social housing conferences this year and putting myself in the stocks so I could be pelted by rotten fruit by the social housing ‘experts’ for daring to say that there is no point in building any new social housing which is what the objective numbers say! However, even the many fat cats who do attend such jamborees couldn’t afford the rotting fruit to vent their spleen at my reporting such anathema (aka pesky facts)
PPS I did consult Dominic Raab to see whether his new ‘rights’ legislation would allow a standard SRS tenancy clause of evicting a tenant if they became pregnant would fly and/or whether every social landlord could lawfully employ a modern-day child catcher from Chitty Chitty Bang Bang but even he rejected the ideas though suggested his colleague Priti Patel was looking into new UK social housing developments and homeless-escape properties in Kigali and I should contact her …