Reduce the overall benefit cap to £15k per year Chancellor … You what!!??

Chancellor, do yourself a huge political and economic favour in your budget next week and reduce the Overall benefit Cap limit to £15,000 per household per year from its current limits of £20,000 in the regions and £23,000 in London … as long as you take housing benefit out of Universal Credit and the Overall Benefit Cap policy.

It is easy to criticise Tory housing and housing benefit policy. There is so much to moan about / constructively criticise after all. Rarely do we see a solution offered fro the great many ills as it is so so easy just to moan so how about a campaign asking government to take the paying of rent costs out of Universal Credit and the Overall Benefit Cap policies? 

To be frank I am amazed that all the social housing lobbies with whom the Tories have had endless behind closed doors meetings have not come up with the same solution as it really is stating the bloody obvious and mutually beneficial. 

So two simple points in this solution:

Government should reduce the overall household benefit cap limit to £15,000 per year and pay Housing Benefit as they always have.  

Universal Credit without housing costs would be 5 benefits into 1 rather than 6 and UC administration would flow much better and allow an increased roll out and save the entire UC project in which the Tories have so much political face invested.

Note that UC claimants still have to go to their local councils already for council tax relief (CTR) so a precedent exists to go outside that what UC does not cover. It would simply mean the UC tenant claims HB and CTR together rather than just CTR as now.

The effects would need to be modelled accurately of course yet it is likely to be cost neutral for central government as the £5k and £8k pa reductions are above the average SRS respective rents in the regions and London. The reduction in arrears to eviction to homeless pathway that UC and OBC systemically create would be removed while keeping the theory of benefit scroungers cutting their cloth and not simply dropping sprogs to get more in welfare. My apologies for that phraseology yet it avoids any confusion as to what is the reality of the Government intent.

The systemic pathway to homelessness for existing tenants and the huge increase in the refusal of future benefit tenants from social housing – which has 400,000 new vacancies to fill each year and each year will have to refuse more due to any ‘welfare’ or rent increase will be abated.

That is a huge issue as my undisputed figures over the proposed CPI+1% sanctioned social rent level increases from 2020 interacting with the static OBC limit will see social landlords refusing the benefit household with two children and in some cases with just one child due to affordability issues created by rent increases interacting with OBC limits. The original OBC introduced in 2013 limited these refusal rates to families with 4 and mostly 5 or more children by comparison.

The cheapest rents in the UK will not be affordable to the small sized family and the UK under the Conservatives will have created a democracy that cannot even house its most marginalised citizens and thus not meet any semblance of the basic democratic function of providing shelter for its most vulnerable citizens. 

Social landlords could afford the working age benefit tenant household if – and ONLY if – the OBC is reduced and housing benefit continues as before outside of this policy.  If this does not happen (and I’m ruling out any probability of a CPI+1% inflationary uplift to the OBC each year) an ever higher percentage of these 400,000 per year prospective households will be refused the allocation of social housing and go direct to the burgeoning homeless queue and at hugely increased financial and political cost to your government

None of the above is speculative it is simply what those pesky facts called numbers mean and given you as Chancellor have not attracted the same label that the Daily Telegraph gave to your predecessor of the ‘incompetent innumerate’ and I presume you do not wish for that to happen as you are by all accounts aspiring to replace the current PM then using facts as evidence further differentiates you from the aforementioned incompetent innumerate.

Welfare scroungers cutting their cloth?

(a) OBC

The way the overall benefit cap works is to subtract the total amount of base benefit (IS/JSA/ESA) plus child tax credits and child benefit from the cap figure. This leaves a maximum amount that can be paid in housing benefit. It means that the only benefit to be cut is housing benefit and this systemically creates the arrears to eviction to homeless pathway. 

I wonder whether that simple explanation and obvious consequence has passed your purview before or have you alongside your party colleagues simply sold the extreme ideological superficiality of this cut in isolation to an electorate that used to (a key phrase) believe austerity was a necessity and not a political choice.

In essence get a job, any job or you lose the roof over your head and that of your children. That goes way beyond harsh and outrageous in terms of morality. You can also argue this systemically creates a continuous cohort of workers who have to accept minimum wage and hours at the behest of low paying employers yet that is just morality.  However morality is never a good reason as you know in politics – yet after deceiving the electorate for 7 years with austerity and superficial ideology the current political climate is one of scrutiny and you and your party risk being found out – the gravest of political sins.

The economic aspect of this is that when the OBC household does take up the minimum working hours at minimum wage the overall welfare bill increases through working tax credits and child care costs the exchequer pays out more in welfare. In short this incentive to compel work in the OBC policy actually costs the country much more and is a perverse incentive in welfare and taxation terms.

Reduce the OBC limit and the benefit household still has the incentive to work as the benefit income is capped and the children of that household do not pay for the ‘sins’ of the parent(s). Note here that the parent(s) who formerly received the £29.05 more per week in ESA for being placed in the work related activity group (WRAG) and what we formerly called Incapacity Benefit are already £1500 per year worse off and they far outnumber those in receipt of dole yet have to work from day one by being placed in the ESA WRAG despite this benefit meaning they are ready for work if they receive support and ready for work with that support in up to two years time.  The benefit freeze also compels those out of work to seek employment.

That support to JSA / ESA / UC claimants does not exist in all reality – another thing the current rush to scrutinise welfare policies will find out – despite the Government statements that this support is done by the job centre work coach who each have a case load of 300 persons. 

Basic arithmetic equates to 7 minutes per person per week to include ‘support’ as well as all other work functions each job coach has! With the huge media attention on Universal Credit and ‘welfare reform’ generally it is only a matter of time before the electorate finds out this Tory claim of ‘support’ is blatant deceit for which the usual inevitable political consequences will flow.

The OBC thus compels many who are not ready for work to take up employment else they lose the roof over their heads. That is not clever politics and as I say it actually costs more in welfare if the Tory incentives are taken up in this nudge theory superficial nonsense.

(b) Universal Credit

We see UC act as above for the OBC but in much greater severity and with additional factors. The systemic delays for the first payment which arrives no earlier than six weeks directly creates rent arrears and hastens on the arrears to eviction to homeless pathway.

Secondly, UC is wholly inflexible and rigidly stick to a one month payment period of the same date each month. So if you are paid every fourth Friday and the month has 5 Fridays UC states you have been paid double and thus it fails to pay the correct amount and instead pays a much reduced amount which further accentuates the arrears to eviction to homeless pathway.

Thirdly, if the tenant (working or not) has a monthly tenancy and all tenancies require payment in advance then by the time the first payment reaches the tenant after 6 weeks then they are 10 weeks in arrears.

After 8 weeks and thus before the tenant receives any UC payment the social landlord issues an APA to UC and the rent plus 20% off the UC standard payment (up to 6 times more than court allows) is taken as source from the tenants UC by the landlord. For a couple this is £97 per month and for a single person / lone person £64 per month and throws the tenant into poverty (and increases all social and health care cost including longer NHS waiting times, blah, blah, blah.)

The rent and (theoretical) arrears are paid first and thus the tenant (working or not) has less money to pay all other bills and is much more likely to have to borrow in order to survive. That creates further costs of interest to the tenant and often exorbitant rates of interest too and systemically creates greater poverty.

All of these issues would be taken away IF the payment of housing costs is taken out of UC and is paid by housing benefit.

Chancellor, if you want to score huge political points which I take as read and if you want to reduce homelessness for which you will be blamed as truth and fact win out if you do not, and if you actually want to reduce the welfare bill and save the huge political face you have invested in Universal Credit, then the solution is above. 

You can always sell these changes and score political brownie points in doing that.  We didn’t get it quite right in the past and we are changing things for the better is always easier to sell for you as the new Chancellor as your previous roles were so far removed from the mess your colleagues have made of ‘welfare reform’ which you know as Chancellor have not worked as the welfare bill continues to increase as does its inevitable impacts on increased homelessness which we have.

Note too that the electorate have huge sympathy for ‘the homeless’ in the six-week run up period to Christmas (and the opposite the other 46 weeks of the year) so your decision, Chancellor, to only hold one budget per year and in late November has to take that very much into account. 

You must admit that blend of ‘caring Conservatism’ coupled with the removal of the perverse incentives of OBC and UC which if the nudge theory works costs more in welfare and so if fiscally prudent is a compelling blend for any future PM candidature. 

More importantly for me it is the no-brainer stating the bloody obvious right thing to do.  However appealing to a Tory Chancellor along those lines is something I have resisted for some reason … reasons which escape me …

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