Amber Rudd the DWP Minister announced a U turn on benefit / welfare for the family with more than 2 children. The national media view is that this is a good change.
The reality is that it is a disgraceful change that amounts to NO JOB NO HOME and an increase in poverty and homelessness and the detail which is not hyperbole but fact I discuss below.
The U turn
The DWP is allowing families with for example 3 children to keep the £53.50 per week they get for the third child instead of taking this away from them when they move to Universal Credit (assuming third child born before April 2017.) What all of the media reports have missed is that the DWP will take away £53.50 per week by reducing the household’s maximum housing benefit by £53.50 per week per child over the first 2 instead in the policy called Overall Benefit Cap or OBC.
This actually places the families at much greater risk of eviction and is a much worse form of poverty. It is better to be in your own home and be skint than to be homeless and skint is the reality and why this change is much worse and why this change creates an added and worse form of poverty in homelessness.
Overall Benefit Cap and how it works
The OBC is a policy that sets an overall limit or cap on the amount of ‘welfare’ (social security benefits plus child tax credits) a household can receive. This cap limit is £442.31 per week in London and £384.62 per week in the rest of the UK.
The MOST critical point is how this OBC cap works, its process, which is simple yet not widely known as the primary and often only benefit that is cut is housing benefit. The process is the cap figure is taken and from it is deducted the total amounts of IS / JSA / ESA + all Child Benefit + all Child Tax Credits. What is left over, if anything becomes the maximum amount of housing benefit that the household can receive to pay their rent.
A worked example for a 2 parent with 3 child household (weekly)
- Couple rate of base benefit £114.85
- 1st Child amount of Child Benefit £ 20.70
- Child Benefit for 2nd & 3rd child £ 27.40
- Child Tax Credit for 3 children £160.50
This total of £323.45 is subtracted from the OBC limit and gives a maximum amount of housing benefit received at £61.17 per week in the regions [£384.62 cap less £323.45]; and in London a maximum housing benefit figure of £118.86 per week [£442.31 less £323.45.]
A couple with 3 children have a housing need for a 3 bedroom property yet nowhere outside of London can this be afforded with a maximum HB of £61.17 per week. Similarly this household could not afford any 3 bed property in London with a maximum HB of £118.86 per week!
This creates NO JOB NO HOME and that includes the cheapest council housing.
Because housing benefit or its UC equivalent of housing costs payment does not cover the cheapest council rents then social landlords will have to evict existing social tenants and will refuse to rehouse new applicants because housing benefit does not cover the rent.
Those affected by the U turn announcement get no more money.
The £53.50 for the 3rd child that the government is saying is an increase results in a £53.50 deduction in the maximum housing benefit payable. If the household has 4 children and 2 more than the old 2-child limit then the £107 per week ‘extra’ in child tax credits is met with a £107 reduction in the maximum housing benefit they will receive.
I mean no slight on council and housing association landlords I am merely stating the obvious. Social landlords stopped renting to those who would under occupy as a result of bedroom tax policy and stopped renting to the larger families who couldn’t afford the rent due to the Overall Benefit Cap policy.
The University of Sheffield / CIH report of 2017 Tackling Homelessness Together revealed that social landlords are refusing to accommodate those for whom HB does not cover the rent – a point I presented to a CIH conference back in early 2014 as being inevitable – and that refusal to accommodate which is in lay terms a policy of NO DSS that will continue and indeed worsen because of Rudd’s U-turn.
Every change in any welfare benefit policy has a domino effect and because Universal Credit is a replacement for six separate ‘benefits’ we find that UC changes have even more impacts.
Another example was the announcement that the ‘benefit freeze’ will be lifted and which means social security benefits will increase. IF benefits increase by the CPI rate of inflation, currently 2.2%, and which is highly probable then the £323.45 figure I use to illustrate above will increase by 2.2% to become £330.57 per week … yet the OBC limit remains a constant at the £384.62 … which means the maximum housing benefit payable per week falls from £61.17 to £54.05 in Year 1.
The following year the same process continues and the £330.57 becomes £337.84 which means the maximum housing benefit payable falls to £46.78 per week – and keeps reducing each and every year = more and more NO DSS operated by council and housing association landlord and more homelessness.
Yet there is a double whammy effect of rents increasing and the Tories have announced that social housing rents will increase by the CPI rate of inflation PLUS a further 1%. So imagine today the two parent three child household who now receives a maximum £61.17 in housing benefit and the 3 bed social housing property is £102.57 per week which is the average figure.
The simple table below explains the systemic flaw in the Overall Benefit Cap policy that I developed back in 2012. Because the cap limit remains a constant figure AND social security benefit increases by inflation AND because social housing rents increase by more than inflation the impact on the maximum housing benefit a tenant can receive reduces markedly each year.
In the above worked illustration we see in just 3 years the amount of the housing benefit shortfall each week has doubled and the policy of NO DSS being operated by council and housing associations is an inevitable one not a slight on their social purpose.
When the Overall Benefit Cap policy began in 2013 it affected the households in social housing with 5 children or more in the regions. It now affect families with 3 children in the lowest rent areas and shortly will see NO DSS policies affecting families with 2 children and a few years later the family with 1 child will not get enough in housing benefit to cover the cheapest council rent!
This is what the ignorant media and ignorant politicians missed with the Amber Rudd announcement and U turn on child tax credits and it does mean NO JOB then NO HOME