A woman with two children leaving a refuge today will see Universal Credit housing cost element (aka housing benefit) cover the rent in a 2 bed social housing property at its cheapest social rent level.
In April 2024 and just 18 months away due to out of control inflation the shortfall will average £1,540 per year and the same will be the case for any lone parent two child (LP2C) household.
In the cheapest English region of the North East the shortfall between the maximum housing benefit payable and the cheapest social rent will be £482pa, in London it will be £537pa and in the highest rent area the South East the shortfall will be £2,523. These figures come from applying the Bank of England August MPC report inflations predicted at 9.96% in September 22 and 10.92% in September 23 and how they interact with the overall benefit cap policy.
The OBC works by deducting all other UC benefits from the overall cap limit which then leaves a maximum monthly amount that is payable in UC housing cost element, aka housing benefit.
An equation of CAP minus OTHER equals MAX HB is the process
The overall limit or cap is a constant figure that has never been increased in actual terms or by yearly inflation so the OBC is a zero sum policy that sees every increase in UC benefit mean a corresponding reduction in the maximum housing benefit (UCHCE) payable.
Table 1 below illustrates the impact of inflation on the LP2C household in the Yorks and Humber region on the average 2 bed HA property rent of £94 per week and £409 per month.
|YEAR||OBC CAP||OTHER UC||2 BED SR||MAX HB||SHORTFALL|
The £94 per month shortfall in the maximum housing benefit (UC Housing Cost Element) payable means the LP2C will have to find £1,122 per year from their other subsistence-level UC benefits just to meet the rent from April 24 which is not possible.
Q) Why would a social landlord offer a 2 bed property TODAY to the lone parent two child household when they know that household won’t be able to afford it in 18 months time and a costly arrears eviction is almost inevitable?
That is a genuine and highly pertinent question. We know the OBC limit does not need to be reviewed until 2027 so it won’t be and definitely won’t be reviewed in this parliament that is scheduled to end in 2024. We know the Bank of England inflation projections (below) are the best we have so we must assume they are likely. We know the rent increase formula until 2024 is CPI+1% and these three issues have been factored into Table 1 above.
A few years ago Shelter (England) estimated the average all-found cost to a landlord of eviction is around £8,000 and Shelter (Scotland) put the overall eviction cost to the public purse at circa £15,000 here so both these figures are likely to have increased.
We know from official EHS data the average length of stay in a social housing property is approaching 14 years (the churn is 7.3%) so the business plans of all SRS landlords factor the cost of a replacement tenant on this basis and will have a varying percentage of how many tenancies will be the much higher cost evictions. Yet the out of control inflation we have means that a great many more costly evictions will have to take place and a higher percentage of all housing ‘moves’ will be these costly evictions.
I could expand on these points and other relevant ones such as factoring in the £2000+ yearly increase in the cost of domestic gas and electricity in their affordability testing matrices yet they mean it is wholly uneconomic for a social landlord to allocate even their cheapest rented properties TODAY to the LP2C household so they will not do so and is perfectly lawful for social landlords to operate their allocation policy this way.
The woman with two children in a refuge has no affordable exit route from that refuge as even the cheapest social rent level social housing properties will not be covered by housing benefit. That means they will stay longer at the refuge which in turn means fewer women fleeing domestic violence and abuse can access refuge which in turn means far greater domestic abuse and far more deaths from it and far more children witnessing it.
The same irrefutable numbers and lack of affordability applies to any household of a lone parent with two children and all larger sized ones who have been placed in temporary accommodation by every local authority in England. Whether that temporary homeless provision is a dingy hotel, dingy B&B or even dingier office conversion, the homeless families placed in such unsuitable provisions called temporary accommodation or TA will have to stay there longer.
In short the homeless resettlement model of refuges and TA which depend on the availability of the homeless-escape property such as the 2 bed cheapest social housing property used here is defunct due to the non-affordability of the cheapest social housing and the OBC policy meeting rampant inflations.
It also means that all of the social housing properties that are 2 bed or larger, which is 76% across England, become the NO DSS properties and the social housing model created to slay the giant of squalor in the 1948 Welfare State is also defunct and cannot meet its claimed social purpose of housing and re-housing those who can’t afford to buy or rent privately.
We don’t have a mere crisis in social housing and homelessness we have a monumental and structural catastrophe that will see homeless household numbers increase every year and means that the ending of homelessness is less likely than going for a ride on a unicorn and exchanging greetings with ET as he rides the sky on his bike
In terms of social housing allocation this is not just new tenants it applies to all (working-age) existing tenants who are in receipt of housing benefit which is 60% of them in official figures and also applies to all current and future tenants at risk of being affected by the OBC policy as they have lost their job or lost their incapacity or disability benefit which means they lose the OBC exemptions. In short all of the tenants who receive Universal Credit become a financial risk too far for council and housing association landlords – and we know from the one-off ‘cost of living payments’ that the 8.5 million working-age households out of circa 20m working-age households in the UK and 43% receive Universal Credit.
Councils and housing associations, the purportedly social landlords, can no longer afford to take the risk of accommodating the tenant on benefit or the low paid … just as the Bank of England is forecasting a prolonged recession!
When I posit that the social housing model is dead and TODAY it is facing a monumental structural catastrophe not just a mere housing crisis it is informed by the above pertinent factors of which there are many more. This is scary yet not in any way scaremongering. By all means shoot this messenger, if you feel you must as it salves your rose-tinted spectacle view, but even when you do the facts do not go away and the social housing model and the homeless resettlement model including the domestic abuse refuge model are dead as any Dodo or any Norwegian Blue parrot pining for the fjords.
The Resolution Foundation has produced a tweeted a graph below showing that inflation is higher and for a longer period than previously thought below:
Nice graph and this replicates the Bank of England data found in its August MPC report released last week which is below and I have highlighted and used in the above of how it relates to SRS rents and affordability.
Note too that the rampaging 9.96% and 10.92% inflation rates are dependent on the interest rate staying at 1.75% when the BoE MPC report of May 2022 stated it may rise to 4% by the end of 2023 and which will see these inflation projections increase further?