FactCheck: Housing benefits row can’t afford slip ups
The claim
“It is also important we end the sensationalist myths about the local housing allowance reforms in 2011…In London around 750,000 private rental homes will still be affordable.”
Lord Freud, minister for welfare reform, South London Press, January 11, 2011.
The analysis
The housing benefit bill has ballooned from £14bn a decade ago to £21bn. George Osborne’s answer is to cap housing benefits – at a maximum £21,000, or £400 a week for a four-bedroom house.
This would see off the last government’s ‘local housing allowance’ which pays housing benefit directly to tenants. It’s based on the average market rent of the area, so some families – in pricey parts of the country – are raking in tens of thousands of pounds a year in benefits.
Who could forget The Daily Mail’s assault on families “milking the system” last year? Top of the roll call was Somali refugee Abdi Nur who, with his wife and seven children, cost the taxpayer £2,000 a week in rent for the £2.1m Notting Hill townhouse.
But the reforms have caused a lot of controversy – even among the Tories.
London Mayor Boris Johnson has warned that people would be forced out of their London homes in a bout of “Kosovo-style social cleansing”.
So as the charity Shelter pointed out, Lord Freud’s defence that 750,000 private homes will still be affordable seemed too good to be true.
It was.
It prompted an immediate cross-examination from Labour’s Lord Knight of Weymouth – who questioned the figures.
And an instant back-down from Lord Freud in response.
He admitted it was an error, but then – without citing a source – said there are “fewer than 700,000 private rented sector homes in total in London, and a conservative estimate is that about 250,000 of these will still be affordable after the housing benefit reforms have been implemented”.
The Department for Work and Pensions insisted to FactCheck that research from the Department for Communities and Local Government showed that during the financial year 2008-10 there were 670,000 privately rented properties in London. About 30 per cent of them will be affordable after the benefits cuts come in, the DWP said.
The verdict
Lord Freud got his numbers in a muddle – confusing available properties with affordable properties.
And this isn’t the first time that the Work and Pensions Secretary’s efforts to calm fears over benefits cuts have been undermined by some “serious deficiencies” in his department’s use of statistics.
The last time, the DWP was caught out dressing up statistics from Find a Property as official figures from the Office for National Statistics (ONS).
If the government wants to deal with what Iain Duncan Smith calls “hysterical scaremongering” about the benefit cut, it needs to be a bit more careful.
There are 11 comments on this post
I would like to live in a £2.1m Notting Hill townhouse free of charge and at taxpayers expense costing them £2000 per week.
Unfortunately I have to make do on £17,000 pa income on which I have to pay Income Tax, Council Tax and have to pay my own way in life without any welfare support. There is no way I could ever afford housing costs of £2000 per week and that someone should be subsidised to that level of comfort by MY taxes is immoral.
That IS the inequality of the Housing Benefits program and the unfairness that someone on welfare support can lead a more comfortable life than someone on low wages outweighs any decency in finding fault with IDS and inaccuracies defending changes to the Welfare Benefits payments against ‘hysterical scaremongering’.
It would be good if FactCheck could look at the deficiencies in Welfare provision rather than defend the status quo of the workless receiving higher income through welfare than people who are barred from welfare because they earn slightly higher than £16,000 pa – the whole point of IDS’s battle for fairness.
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The point of factcheck is to check statements made by Ministers & opposition politicians – not to either defend or criticise the status quo. The fact that the media have found some extreme cases of what most of us would regard as abuse of HB doesn’t alter the fact that the changes are likely to hurt many people & possibly make it more difficult for them to get jobs & housing.
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I would say that in this instance the two wrongs do not make it right.
Because my taxable income is 17k and have no dependents I am not entitled to ANY welfare benefits – EVER. That’s my lot and I accept that BUT … someone of my age, with NO income and no dependents will actually receive welfare support up to twice what I earn.
Their income and financial support (exemption from Council Tax and paid Housing Benefits, etc.) is susbsidised by me and my income is net of tax so I am unfairly worse off.
The welfare System has become corrupted and benefits people to the point where it now pays people not to have any earned income and stay reliant on their welfare benefits.
That is the importance of the changes being driven by IDS to rebalance the System so that low paid & taxed workers do not actually pay tax to subsidise others to have a better lifestyle than they can ever expect themselves.
This is an essential and really fair reform.
Criticising a stupid Lord for being confused (as described by FactCheck above) becomes a part of the ‘hysterical scaremongering’ IDS declaims.
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They also seem to have forgotten that affordable properties does not equal properties which housing benefit claimaints will be able to rent. Landlords dsicriminate against HB claimants, and the vast majority have an outright ban on them. “No DSS” is an all too familiar sight. To a certain extent you can understand this, as many people have prejudices about people who live off benefits as a career. However, that is not the only type of housing benefit claimant.
I myself am shortly to become homeless, as my fixed-term contract job is coming to an end. There are very few jobs out there, but I have applied for what there is, and have an interview lined up. However, an interview does not a job offer make. No landlord or letting agency will let me rent anywhere to live, despite the fact that I am a good tenant and would be able to pay the rent with HB if I do not get the job. And as I have no children, the council do not care if I sleep on the streets. This is not an assumption, this is actually the case.
Landlords shouldn’t ban HB claimants outright – it is discrimination and is making a lot of people homeless.
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As a private landlord currently advertising my former home to let, after failing to sell, for a low-ish rent that seems to fall within standard housing benefit rates, I can offer one landlord’s perspective.
While I’m sure the prejudice you describe exists, I think the common ‘no DSS’ line is more about reluctance to deal with the benefits system than with their recipients. Housing benefit is always paid in arrears and, apparently, not always reliably.
A private tenant will always pay rent in advance. They also pay a deposit, so have a personal stake in good maintenance of the property. I see that as important.
Housing Aid runs a scheme offering a ‘rent guarantee’ covering up to four weeks rent but not payable against damage. By the time an HB tenant has failed to pay, they are already four weeks in arrears but need to be given a month’s notice – for which no rent might be paid. Payment for damage could only be recovered through court action – a ridiculous hassle.
Housing Aid here runs a ‘bond scheme’, for selected, reliable HB tenants, with a first month’s rent in advance and a deposit bond covering rent and damage. HB payment is still in…
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Cathy,
You could usefully further expand this FactCheck by following Freud’s (should it be “Fraud’s”?) statement to its root.
As minister of state he should not get such a fundamental fact wrong. Either he is mistaken or he lied.
If he is mistaken because he didn’t read his brief then he is incompetent and should go. If his brief was wrong, then responsible civil servants are incompetent or lying and should go. And of course if he just outright lied then he is dishonest and should go.
So WHO DID get this so badly wrong and why? “Fraud” or the civil servants? Isn’t it about time they had the guts to stand up and be honest?
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The coalition could ease the situation by moving the bulk of government out of London and persuading other companies to follow them. In our tchnological age where, for example, city financiers deal all round the world via touch screen computers, they could do that in Huddersfield or Oldham as easily as London.
That would not only create jobs in places that need them but also mean that people on low incomes would be renting in areas where housing is cheaper.
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There is second fundamental myth being peddled. That Housing benefit is only for the workless (and by implication or assertion workshy). In fact HB is available on pretty well the same basis to those on low pay, and those who are now workless, having worked and paid their NI and taxes for forty years.
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Just because you might be claiming housing benefit, does not mean you will damage property. Are you saying you would damage property if you were claiming housing benefit?! Being in unfortunate circumstances does NOT turn you into a bad person.
Furthermore, someone with no dependents does NOT get more benefits than someone earning £17k. I am 25, an currently earn £17k before tax. If I claimed housing and council tax benefit and jobseekers allowance, I would be FAR worse off than I am currently. I know this as I have been forced to claim previously.
Claiming benefits because you don’t have family who can help you out when things get tough does not make you a bad person who will flee without paying rent, or damage property, and most certainly will not allow you to live a halfway decent life. The only way to do that is to be cheating the system and getting extra money on the sly.
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If you are referring here to my earlier comments then I’d suggest you re-read them, as I did not for a moment suggest that someone on benefits is more likely to withhold rent or cause damage to a property than a private tenant. Any tenant might do this and damage almost always happens unintentionally.
However, if I have a private tenant I can recover the cost of unpaid rent and/or repairs easily from their deposit. With a tenant funded by HB I would have to take court action (this was Housing Aid’s answer when I recently asked them this question).
That combined with payment in arrears makes Housing Benefit, as a method of payment, unattractive to landlords – less reliable, potentially more hassle.
My very point was that it is the benefits system, not the tenants, that is unattractive (in contrast to the view you express, tarring with one brush all landlords, as simply prejudiced).
I was of course agreeing with you on the pertinent statistical point that the number of properties available to tenants on benefits is far lower than the number of affordable properties on the rental market. This would be an interesting statistic to see.
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I USED TO BE PROUD TO BE ENGLISH, NOT ANY MORE THE POLITICIANS IN THIS COUNTRY HAVE CAUSED MORE DAMAGE THAN ANY TERRORISTS COULD EVER WISH TO, I HAVE BEEN A TRUE ENGLISHMAN WORKING HARD FOR MY FAMILY ALL MY LIFE RECEIVING VERY LITTLE HELP WITH ANY BENEFITS. I SUFFERED FROM A BRAIN HEAMORAGE IN 2007, MY FAMILY GOT VERY LITTLE HELP FROM MY GOVERNMENT FINANCIALLY WHEN WE NEEDED IT MOST, MY SON WAS DIAGNOSED WITH DOUBLE KIDNEY FAILURE IN APRIL THIS YEAR GUESS WHAT , I AM NOT ENTITLED TO ANY FINANCIAL HELP TAKING HIM TO LEEDS FROM SCARBOROUGH EVERY MONTH LOSING A DAYS PAY AS WELL HAHA ISN,T IT GOOD TO BE ENGLISH, I AM SICK AND TIRED OF READING ABOUT BENEFITS HANDED OUT TO THOSE WHO PLAY THE SYSTEM WHO THINK THEY HAVE A RIGHT TO FREELOADING WEARING THE LATEST CLOTHES WITH THEIR LATEST GADGETS AND BEFORE ANYBODY SAYS ANYTHING TO DEFEND THEM DONT BOTHER I SEE IT EVERY DAY AND IT MAKES ME SICK,ITS BAD ENOUGH READING ABOUT OUR OWN PEOPLE DRAINING THE COFFERS NOW WE HAVE THOSE WHO DONT BELONG HERE DARE I SAY IT FOREIGNERS WHO COME HERE SCROUNGING OFF THE SYSTEM THAT I HAVE PAYED INTO ALL THESE YEARS,ITS NOT A WELFARE SYSTEM ANYMORE ITS A WELL UNFAIR SYSTEM SHAME ON YOU FATCAT POLITICIANS.
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