False Economy ran from 2010-2015. This site is no longer being updated, but the False Economy research team continue to report at Sentinel News.
Skip navigation


The overall benefit cap should be abandoned, not just delayed

From Joe Halewood:

I spent much of 2012 arguing successfully that the overall benefit cap (OBC):

It will have many other impacts - including the breaking up of families.

Now, the April 2013 introduction of the OBC will be delayed until the summer (it’s as vague as that). From April 2013, it will be piloted in four London boroughs. We are told that these boroughs are where it will impact the most. That last statement has to be false and there are many more London boroughs where the OBC will impact much more severely as I explain below.

The four London Boroughs chosen include one in Inner London, which is Haringey (39% – 14,480) and three in outer London, namely Bromley (30.61% – 5,960), Croydon (48.16% – 17,450) and Enfield (53.74% – 18.470). The numbers are the percentage of all housing benefit claims in payment in those areas and the numbers in the private sector. The national average from the official housing benefit statistics (see Table 3) is 32.7%, with 67.3% being paid to social landlords. It can be as high as 72% private landlords in Blackpool.

The outer London boroughs simply cannot hold the most affected by the OBC, because many other boroughs have (a) a higher percentage of private rental sector claimants and (b) a higher number of PRS claimants.

For example:

Brent is (45.04% - 17,290) in the private sector. Compare that with Bromley with 30.61% and 5,960 claims. Brent must have far more claimants likely to be affected by the OBC than Bromley. Apart from a 50% higher percentage of private sector LHA claims, it has three times the number of claimants at 17,290:5,960

Merton at (58.4% - 7,820) Ealing at (43.14% – 13,970) and Harrow (58% – 9,630) must also have a higher likelihood of PRS tenants caught by the OBC. There are a few more, but the point is made and begs the question…how can those first four be the four London boroughs most likely to be adversely affected by the OBC?

What is also evident from the above - and that I have never seen in any analyses of any of the ‘welfare reforms’ - is the social and private rented split.

This is important. Forget the welfare reforms for a second. Imagine you are a housing strategy officer who has worked in Welwyn (Shapps’ constituency) where the split of rented housing is 88% social and 12% private. You move to Blackpool to take a similar post. The split there is 72% private and only 28% social rented housing. All of the strategies you put in place for allocations in Welwyn will not work at all in Blackpool given this fundamental change in the composition of the local housing market. The same of course goes the other way around.

On a more general scale - and this can be seen in the English Housing Survey of London’s housing market - there is an anomaly. It has approximately 50% of property owned or mortgaged, compared with 67% in all other UK areas. It has 25% social housing, which is 50% above the national average of 17%. It has 25% as privately rented, which compares to 17% across the UK - and is also 50% above the national average and housing market composition of every other region in the country.

One of my major bugbears - and not just because I’m a Northerner – is that national housing policy tends to be dictated by the perverse London housing conditions and issues. That is simply madness - yet it doesn’t change at all, even with a new government. In short, it is an apolitical point.

Why not include areas such as Trafford in Greater Manchester?

Trafford is out of kilter with the rest of the Greater Manchester authorities and not because it has a high percentage of PRS claimants. In fact, it only has 26% - but its PRS rent levels are over 45% higher, at £766 pcm, than the Greater Manchester average of £527 pcm. That's a huge disparity. As such, Trafford is the ONLY area - not just in Greater Manchester, but in the entire North West of England - that has average PRS rent levels above the national average. Hence, the OBC will impact there very differently to the rest of the North West.

I could have used Cambridge City compared to Cambridgeshire, or York compared to Yorkshire, and a few others, for the same point. We have a massively complex housing market composition with many distinct variables. So - even if the pilot study for the OBC was not just limited to London – surprise, surprise! – it would still fail to reflect what will happen in many pockets of the country.

I could have used Torbay at 70% instead of Blackpool in the PRS/SRS split, too, or Thanet (61%) or Shepway (57%) in Kent which has 34% PRS claimants overall and is near the national average of 33%. These two areas stick out like sore thumbs in Kent and the same is replicated in many areas across the UK.

In summary - if the OBC pilot areas - like the direct payment pilot areas - show a massive change from the coalition original impact assessments (and those pilots all exclude likely non-payers too and so are contrived), the use of pilot areas needs a lot of caution.

The simple truth is the OBC is so-ill-thought-through that it doesn’t need a pilot study, or a delay. It needs to be halted immediately.

There are so many holes in its theory. What's more - the Pickles letter reveals the coalition knew it would cost more than it could ever save back in July 2011. Yet they are still pressing ahead with it.

As I have argued successfully, it will cost more to the public purse. It will also harm the tenant, harm the landlord (social and private) and harm the economy. It will harm the electoral chances of the Tories who developed it. So why the hell is it going ahead?

There can only be one reason - and that is the coalition thinks Joe Public is gullible and by the next election will still believe that a benefit cap saves money.

Joe Public is not as gullible as you think IDS!


(Abusive or off-topic comments will be deleted)



Play video: Why cuts are the wrong cure
VIDEO: Why cuts are the wrong cure