Institute of Fiscal Studies response to the Osborne budget cuts
Housekeeping: bored with blog design

A superb explanation of why the coalition's housing benefit policy is wrong

Did I say wrong? How about immoral.

This comes c/o a Guardian newspaper commenter, by the name of "TexasPete02", who wrote this in response to someone suggesting that he didn't see what all the fuss was about, seems fair enough to me, etc:

" are not paying attention to the full scale of the reforms (understandable given the media focus on the less important £400/week cap, and the unchallenged lies from the Tories that the £400/week applies across London).

There are four parts to the HB reforms which will all be implemented by October 2011. The key reform - which affects 750,000 people and raises half a billion pounds per year - is the first of these.

1. Local Housing Allowance capped at the 30th percentile rent in every local housing market area (i.e. the level which allows - in theory - 30% of houses in the area to be afforded)...

2. ...except in London, where the cap has been set significantly below this level (£250/week for 1 beds, £400/week for 4 beds)

3. A further 10% cut will be applied to those who have been unemployed for 1 year or more, to punish them for the crime of living during a recession

4. Housing Benefit capped at the 4-bed house rate to punish large families

To look at the full impact of this, you need to consult the VOA - the Government Agency responsible for setting Local Housing Allowance rates.

They've helpfully provided a table looking at the median rental rates (the current caps) and the 30 percentile rental rates (the future caps) in each local housing market area

Do have a look.

In Central London, the 30th percentile rent for a 4-bed is £850/week. There is no chance of anyone being able to afford to live in central London on housing benefit - the cap is set at less than half of the 30th percentile level. You could consider the poor to be "cleansed" from the area perhaps.

After moving out, they will not be eligible for the £400/week payment - this is only valid in central London remember. Elsewhere the 30th percentile cap applies. Let's say they move to Outer South London, where their rent would be capped at £299/week. This is not an outragous rent for a 4-bed house - I challenge you to find a 4-bed house at this rate in this area. I live in this area, and I pay £210/week for a very small 2-bed flat in a down-at-heel area (and even then because I got a great deal from moving in when building work was still going on around me, and the landlord had to abandon plans to sell during the recession). Even my flat is £26/week beyond the 2-bed allowance for the area - and I don't understand where all the 2-bed flats for £800/month are around me. I'm lucky - I have a decently-paid job (for now at least) and don't claim HB, but it must be a worrying time for families who work in minimum wage jobs and rely on Housing Benefit to make ends meet.

If they lose their job, they have the further challenge of finding a 4-bed property for £270/week (or a 2-bed for £730/month). Not a chance.

And many, many people lose out beyond London too. Let's imagine a family live in a 5-bed house in Tyneside and both parents lost their jobs in the recession in 2008. They are currently able to claim £207/week housing allowance. After the cap is applied, they are now only able to claim £140/week (£155 minus the £15 penalty for being unemployed). The Government will take £67/week from them. £3,500 taken from the poorest in society, in addition to spending cuts and VAT rises etc etc. This is not sharing the pain fairly is it?

Can you see what the fuss is about now?

The Tories have done a great PR job on getting the focus on the £400/week cap (despite the fact next to no-one will claim this, as it only applies in central London and there are no 4-beds to rent at half the 30th percentile rent) . Maybe a journalist may like to, say, scrutinise the plans and challenge the lies."