Housing Benefit – always a difficult area of policy – is going to cause real problems in the coalition government. Boris Johnson has now parked his tanks on the Prime Ministers lawn. So watch this stand off – it could be very interesting. http://www.channel4.com/news/boris-johnson-joins-housing-benefit-row
Where house prices are high Housing Benefit has to be high too if you are not to drive out low income families – hence the comments by Boris about Kosovo. There is no easy answer to this problem but I for one would not want to see the creation of housing ghettos which I had hoped were largely a thing of the past. The Liberal Democrats will find this a very divisive issue within their ranks but then I always thought the coalition was an interesting partnership. The deal is that the Liberals commit political suicide while the Tories watch!
The Government Math in prescribing rent rises in Social Housing is wrong, plain & simple. See my example Lord Knights blog.
This alone will increase the Housing Benefits bill. The cap I feel is fair & necessary although if you are in Social Housing in Knightsbridge this may cause a problem.
As I stated elsewhere we need a fair rents tribunal that caps rents for Landlords that protects the tenants. It`s greedy Landlords that have caused the problems and escalated Housing costs.
Housing is now beyond the ordinary young people and needs looking at urgently. Prices are beyond the normal persons means.
Some of the measures by the Government will only serve to make the problem worse and Housing Benefits bills higher not lower.
I’m generally in favour of reducing the benefit payable because at the moment it directly benefits private landlords who can keep their rents high. Drop the amount that people are able to pay over a period (which is the tricky part) and landlords will either have to drop their rents to match or lose money because people have to move out and no one will move in. If they end up selling property, that will help bring down house prices and more people might be able to buy instead of rent.
Boris is correct to highlight the issue of rents, but most of us would consider that London prices are too high anyway and ought to be lower. The hard part is getting from here to there and it’s going to hurt, just like withdrawal from drugs (free use of money earned by others is a bit like a drug, politicians are always after more).
Regards the Liberals committing political suicide I feel they already have. They wanted Proportional Representation, instead their leader has settled for a referendum on AV which is not the same, infact in my opinion a far worse system than what we have. Constitutional issues are not to be compromised on, they are right or they are wrong it`s that simple and it maybe another century before the issue is bought up again.
I stated before the last election that Nick Clegg was a bad leader for the Lib-Dems because he wasn`t man enough, that is proving true. In my opinion he has sold out the Lib-Dem ideals, turned Judas and is making errors the Party may take decades to recover from. What`s worse is that he has allowed himself to be the frontman for a Party that will be seen in the same light as Thatcher. The fact that the Lib-Dems are colluding in this wanton destruction of the poorer classes will not be forgotten for a very long time. The Welfare system is costly and yes cuts can be made easily to it if we wish to go back to pre-Victorian times, the poor always are the easiest target.
Looking at recent plans by the Government are they disimilar to Ian Duncan Smiths ? The ones that would cost an extra £3.6Bn
http://blogs.wsj.com/iainmartin/2009/09/16/ids-welfare-proposals-wont-fly/
So what are the consequences of Labour’s failure, and things like 300 quid a day, without receipts.
It’s debt and more debt.
Out of the world’s 75 largest economies, the United States has the 20th largest as debt-to-GDP ratio, standing at 94.3%, with a gross external debt of $13.454 trillion and an annual GDP $14.26 trillion. In fact, out of the largest 75 economies, this number is just above the worldwide average of 90.8% Western-European and North American countries dominate the upper end of the spectrum, with Switzerland (422%) and the United Kingdom (408%) at the #2 and #3 spots, respectively, and Ireland representing the most drastic debt-to-GDP ratio. According to the most recent World Bank data, Ireland’s number stands at a staggering 1,267%.
http://www.cnbc.com/id/33506526
What have the Lords done to prevent this? Absolutely nothing, since they are part of the problem.
So that’s why its housing benefit cuts and far more. It’s that the lords have failed to act as any sort of control over the profligate spending.
Now, the debts are being called, with interest, and that’s why the cuts are even larger than they would be otherwise. It’s the interest payments.
Dave.H
Caps on Housing Benefit are already inplace, it`s called Local Allowance and Councils abide by this. They reduce benefit allowed to what they think applicable.
The caps the current Government are introducing will affect some but not the majority. Their policy of allowing rent rises in Social Housing to Private levels will increase Housing Benefit payments enormously without dealing with greedy Landlords. See below which backs up what I stated from the beginning.
http://www.bbc.co.uk/news/uk-11649520
This Government has not done it`s math correctly, if it did it all.
People talk of moving as if it`s an easy thing ” oh just move to a cheaper property” ! It isn`t that easy. For someone on Housing Benefit you have to aquire a months rent in advance, a months deposit and fees. This is a serious amount of money to those on benefit and Councils are mostly unwilling to help you out unless you tell them in finite detail your spending including how much you spend on condoms. Then they MIGHT help you, it doesn`t follow they will and they won`t help you financially with it all.
Landlords are loathe to return deposits, in nearly all cases they will find reason reason to withold it. Not that it would help as you need to find the deposit etc., for the new before leaving the old. Then there`s the removal job, perhaps finding new schools for the kids, transportation, the childrens loss of friends a great rip from everything they know. Have you had a teenage child change schools midway through senior school? It`s heartbreaking I can tell you even if you know it will all turn out ok eventually.
Now let`s look logically at what Government is saying. We`e prepared to pay no more than £400 per week for a 4 bed. That`s fair enough in my opinion, Government doesn`t want Housing Benefit to rise. Well here`s a stunning idea……Invest the £20k a year you`re spending in building homes. £20k a year must be a sizeable mortgage surely…WHY THE H3LL are we giving it to greedy landlords instead of building homes ?
There will always be unemployment, there will always be the poor, there needs to be Housing Benefit. We need control of Housing Benefit not greedy businesses. We control what Telephone Companies are allowed to charge, water companies, gas companies yet the very basic human need of shelter we allow market forces to dictate and the rise in cost will carry on if we do not control rents.
You cannot ask a couple with 3 kids both working on minimum wage, a grand total of less than £25k a year, to pay £400 per week rent. They`re paying tax too. We need control of rents, we need to get rid of the greed of the Landlords some of whom I know avoid paying tax on this lucrative income. Councils have known for years how Landlords (not all) play the system yet the Tories will punish the meek, the tenants.
“The deal is that the Liberals commit political suicide while the Tories watch!”
Polling suggests that the majority of people support caps on housing benefit and that the strongest support is among the young and those in low-middle income work. Both groups Labour needs. Of course if Labour wants to alienate those groups then it is Labour that is committing political suicide.
LS: I sense you are feeling inappropriately smug sat on the opposition benches.
We seem to have a very bizarre situation. Neither the Treasury nor the BoE feel they should have a say in the free market inflation of property assets. Yet any government has to pay through the welfare system monies to the owners of these assets. This is what I call money tree policy rather than monetary policy and socialism is an excellent fertiliser.
The state used to sidestep this by its use and ownership of rented properties but your ex colleagues in the Commons felt it was an excellent voting lure so you sold common sense down the river.
Now we face a more traditional scene. Social housing means slums. Cities that have high immigration are being side stepped on urban regeneration and the myth going around is that the state is setting up and preparing these cities to become Warsaw style ghettos to house those that are dependant on welfare.
The state has a vested interest in property values but popular democracy corrupted by short term thinking means that nobody will be elected to the Commons on an agenda to curb property inflation. Asset values will fall when the next bubble bursts and that may be sooner than you or I would like to contemplate.
Invest the £20k a year you`re spending in building homes.
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Lets see what you get for your cash.
http://en.wikipedia.org/wiki/Heygate_Estate
Built in the Mid 70s, so its not a post war rush job. Within a short period of time it was rotten. It’s now being knocked down.
ie. The public sector can’t do investment. It never has done it.
For example, Gordon “Investment Investment Investment” Brown. What’s the value of his investment? What’s the cash return? You can guess. There isn’t any.
As for sorting it out. You wouldn’t start from here.
100,000 pounds a year is the tops I’ve heard for housing benefit.
How about capping any benefits, housing included at 25,000. Median wage. However, you get taxed on it as well. If you’ve made your choices you have to live with them.
We control what Telephone Companies are allowed to charge, water companies, gas companies
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But we don’t regulate food, and we don’t need to regulate housing.
The reason is that you can go to an alternative supplier for food. You aren’t forced to shop at Tescos. You aren’t forced to rent from “The socialist rental department of Southwark”
But with telephones, hand lines only, you are forced to take part of the service from one particular supplier. Same for Water, same for Gas.
So why aren’t mobile prices regulated? Puts a hole in your argument.
Yet any government has to pay through the welfare system monies to the owners of these assets.
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No it doesn’t. It has a choice. Just say no.
As a non-Londoner I can’t quite understand all the fuss this is causing – surely this is just locking the stable door after the horse has bolted ??
The whole point is surely that Westminster or Kensington and Chelsea are now ‘expensive’ areas because poorer people have migrated out of these areas over decades and been replaced by wealthier people ??
I’m not saying this is a ‘good thing’ but it seems a bit odd to be complaining about the sort of ‘gentrification’ which affects areas like, say, Islington or Clerkenwell now when NOBODY Labour or Tory has had a thing to say about it for years when nurses, teachers and firemen were being priced out of the market for years ??
And Polly Toynbee is regularly slated by the kind of people who support Boris for her talk of caravans – and although she has used some rather ill-advised language of her own recently, at least she isn’t belatedly jumping on a bandwagon generated by the media..
LB: “So that’s why its housing benefit cuts and far more. It’s that the lords have failed to act as any sort of control over the profligate spending.” Exactement!
When it comes to money we have a unicameral system. The people, that’s you and him over there, took away the ability of the Lords to have any real influence over how the Commons spends the Treasuries monies although they are free to comment.
The problem is that the public simply don’t trust the HoL to look after their financial interests that’s why no political party in the Commons will change this. On the other hand it could be a form of abuse?
It’s a bit like cohabitation. You go out to work whilst your partner stays at home, sings to the baby and clears up after you. Your partner says look, “you’re not getting value for our money”. You say “What do you know about money? Nothing! And what’s this about our money, it’s my money?”
Your partner cries out “What!” You reply “Yes, and what’s more you’re illegitimate!”
Hang on! This is getting better than an episode of East Enders? Will the two separate and go their own ways? Don’t miss the next gripping instalment of this historic drama. Keep a keen out for the all new cast in Season 2 of “I once married a Commoner”.
Ofcom forcing change in mobile pricing.
http://www.guardian.co.uk/business/2010/apr/01/ofcom-mobile-phone-charges-questions
“But we don’t regulate food, and we don’t need to regulate housing.”
If there was a shortage of food, regulation would follow quite quickly. There is a shortage of housing, some of which is being controlled by manipulative greedy landlords.
If we don`t need to regulate Housing why should it be necessary to regulate Housing Benefit ?
If there was a shortage of food, regulation would follow quite quickly. There is a shortage of housing, some of which is being controlled by manipulative greedy landlords.
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My point. It’s all local councils and housing authorities. They are the greedy landlords.
Not just content with taking billions from taxpayers, they are borrowing and not paying tax on their borrowings. Combine that with shoddy maintenance, and they are forcing people to live in substandard housing.
Of course, when it comes to regulation, they are the regulator.
Carl – Housing Benefit is a back-door method of regulating housing to some extent. Cut off the supply of tenants who can pay the asking price and private landlords suddenly have empty houses. Then they either drop the rent or sell the house to avoid losing money if the new rent won’t cover the expenses. Enough of the latter and house prices will drop, meaning more tenants will be able to afford a mortgage and therefore not need to rent, further accelerating the change as there are even less tenants prepared to pay the rent.
I jumped on the housing ladder in a previous price crash and held on tight. It’s a sobering thought that the present value of my house is such that I couldn’t get a 75% mortgage on it using sensible 3x income rules, let alone raise a deposit of the other 25%.
Private rental is driven in part by the mortgage being paid on a house, and if too many people are paying too much of their income in rent to support that, they won’t have much left to spend on anything else and the whole retail industry suffers.
One question for Clive.
If you don’t want housing Ghettos, how many receipants of housing benefit are you going to sponsor when its reduced?
Nothing stopping you putting your hand in your own pocket, as opposed to putting your hand in someone else’s pocket, to help out.
Can you afford 20,000 a year to keep a claimant in the style to which they have become accustomed?
Housing Benefit is a back-door method of regulating housing to some extent. Cut off the supply of tenants who can pay the asking price and private landlords suddenly have empty houses.
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Except you’ve drawn the boundary wrong. Tenants get displaced. That drives up the rents of cheaper rents. It reduces the demand for expensive properties.
Getting rid of 1 million illegal immigrants on the other hand does drive down the price. They leave the system.
Dave.H – On paper what you say may look viable.
We`ve had local allowances for a few years now, this determines what a fair rent of a property would be and a family`s needs and how much HB should be paid. So there is regulation already in place. Now the Government intends to raise Council and Housing Association rents to the level of private rented accomodation which kinda screws your concept a bit.
I`ve nothing against the caps, though some damage will be done.
The problem is raising those Council and HA rents, two thirds of people on HB are in social housing. Quite a lot will be in Council Accomodation. So it follows that Housing Benefit costs overall will rise, totally defeating the object of the exercise which is to lower HB totals.
Now on paper as I said your concept may look fine but in reality a lot of people could become homeless. This will put undue pressure on Councils who have by law got to rehome them. First they`ll be put up in B&B or hotels, which will be more expensive than rents. There`s also the humane element, not being able to pay your rent will be extremely stressfull, watch out for some suicides and lots of depression. This will lead to more unemployment, it will also lead to further crime as people try to find a way to keep a roof over their kids heads. Look out for a rise in Prostitution, although figures say this is already occuring and as someone with links I can concur with that.
Overall these plans have not been thought through properly, the cost will be more instead of the cut that is intended. Councils will come under extreme pressure just when they are being told by “Big Society” you cannot put up our rates. Something will have to give, if Government can`t/won`t help the first stop of the desperate is crime.
The National Housing Federation (see BBC link above)backs up my claim the welfare bill will rise. The Government simply haven`t thought the concept through thoroughly. With the predicted cuts in jobs, 1.6 million now in the public sector, due to cuts elsewhere the HB bill will rise dramatically. Worse will be those people put into unemployment that have mortgages to pay and it is this humane side that must be taken into consideration. If this is not taken into consideration I believe we will see a dramatic demise in society as we know it.
There won’t be 1.6 million job cuts. The projection is 0.5 million posts lost, almost all through natural wastage.
That takes us back to levels of public sector employment of a few years. That was hardly a disaster then, so talk of doom and gloom is waffle.
The problem you’re not addressing is who pays. They are having to make vast cuts in their spending. Apparently that’s not a disaster, because its not the cosseted public sector.
We can save 115 million by abolishing the house of lords for a starter. Other lords are reporting large levels of incompentence, on top of the frauds.
http://www.bbc.co.uk/news/business-11671009
“The problem you’re not addressing is who pays. They are having to make vast cuts in their spending.”
Perhaps it`s time to start looking at the levels of Government and the necessity for so many layers.
Reading from top down
EU Government
UK Government
The Assemblies (Welsh, Irish, Scottish).
County Government
District Government
There are probably more layers too, each feeling their importance needs a reasonable level of luxury above that of the people. We can see from present Government, and indeed previous, that their needs/wishes come first. There will be untold spending on moving departments, renaming and revamping but no money it seems for putting our school buildings in order. For instance I believe the DCSF is changing, I expect millions to be spent on new name, websites,headed paper, buildings etc.
How much now is politics costing the Nation with all these levels ? Will politicians soon be more in number than the electorate and what`s more will the cost be more than those in the private sector can pay ?
I certainly think European Government needs a full debate. I`ve no idea who my MEP is, whether he/she even spends much time in this Country. I`m pretty certain they don`t know my views so who are they representing ? Why do we spend so much money on regional assemblies when Europe overrides them ?
I`m all for creating employment but Politicians don`t put anything back into the system.
I`ve no idea who my MEP
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You’ve got lots of them.
On the question of who pays. You’re not told. You will only be told when its too late.
That’s why the government loves doing it all on credit. They don’t have to bill you until its too late for you to protest, because they’ve spent the cash.
Even better they love doing it off the books using fraudulant accounting.
A good example is the civil service pension liabilities. They aren’t on the books even though they are contractual.
1,300 billion GBP worth of debt.
Oversight from the Lords? Zero. Too busy doing their own creative accounting on expenses.