Government ‘peddling myths' to sell housing benefit cuts

29 October 2010

The coalition Government is misrepresenting the reality of benefit claimants and the impacts cuts will have according to Crisis, the national charity for single homeless people.

In the emergency budget in June and the Comprehensive Spending Review the coalition Government announced a series of cuts to housing benefit affecting some of the nation's poorest and most vulnerable people.

Coalition ministers have described those reliant on benefits as making a ‘lifestyle choice'. The Prime Minister has said benefit claimants are living off the back of working constituents and living in homes working people "couldn't even dream of".

Leslie Morphy, Chief Executive of Crisis, said: "We are concerned to hear those who are reliant on housing benefit being described as making a 'lifestyle choice'. Nearly half of those on LHA already face a shortfall between their benefit and their rent of an average of £23 per week, meaning tough choices between rent, food, heating or falling into a vicious spiral of debt. More claimants of local housing allowance are actually in work than are unemployed whilst half are pensioners, disabled or have caring responsibilities. And overall the bill is not "out of control" - costs have risen because rents have risen, in the main driven by the huge rise in house prices over the last decade and a lack of social housing. These cuts are huge and deadly serious and will affect people across the country, not just in London. We are calling on the Government to look at the facts and impacts and rethink the cuts now"

Myth:  The main change to Housing Benefit is a cap to the maximum amount people can claim. This is necessary to tackle high benefit pay outs.

Fact:

  • Only 2% (21,060) of households affected by the cuts to housing benefit are affected by the caps
  • The average HB award in the private sector is just £109.25 per week and for social tenants is £72.60.
  • Though losses will be highest in London, all local authority areas will be affected by the first wave of cuts from Cornwall to the Highlands and these average awards will be further reduced. 937,000 households across the UK who claim Local Housing Allowance (LHA - Housing Benefit for private tenants) face average losses of £624 from the first round of cuts alone.

Myth: All Housing Benefit claimants are unemployed

Fact:

  • More households who claim Local Housing Allowance are in low paid employment (26%) than unemployed (22%)
  • 1.6 million people receiving Housing Benefit are pensioners and others are disabled or have caring responsibilities.

Myth: Housing Benefit claimants can live where they like. They should make choices just like the rest of us.

Fact:

  • Nearly half of those on LHA already face a shortfall between their benefit and the rent, of an average of £23 per week, meaning tough choices between rent, food heating or getting into debt.
  • Reducing Housing Benefit rates will move people away from their jobs and future employment opportunities, disrupt children's education and damage local communities. Poorer people will become concentrated in areas with lower rents risking ghettoisation, an increased burden on public services and real implications for mixed communities. 

Myth: Housing Benefit bill is "out of control"

Fact:

  • The main reason the HB bill has grown is higher rents and more claimants in the private accommodation due to a shortage of social housing. Between 97/98 and 07/08 the average private sector rent rose by 63%. Hardly surprising given that house prices rose by 143% during the same period.
  • More recently in the economic downturn the number of claimants has risen by 700,000 as people lose their jobs and are forced to work reduced hours.

 

For further media information or request an interview with Crisis spokespeople, please contact Karim Khan at Crisis on 020 7426 3830 or karim.khan@crisis.org.uk

  

Ends

Notes to editors

CUTS IN FULL: to Local Housing Allowance (LHA - the housing benefit paid to private tenants) and housing benefit in the social sector

LHA rates to be recalculated meaning 774,970 households will lose on average £468 per year. Currently LHA is set by looking at local rents and then matching the benefit levels of the 50th percentile rent. From October 2011 this will come down to the 30th percentile. SIZE OF CUT: £425 million

25 to 35 year-olds to be moved down to a Share Room Rate from a one bed flat rate affecting 88,000 people. Currently anyone under the age of 25 can only claim LHA on a shared room rate basis. Their levels of benefits are calculated to match rents based on sharing a room in a house with other tenants. From April 2012 anyone under the age of 35 will also only be able to claim a shared room rate, in some instances halving the benefits they receive. SIZE OF CUT: £215 million

Cutting housing benefit by 10% after a year on Job Seekers' Allowance (JSA) affecting 200,000 people. This will punish claimants who have not found work for a year or more. From 2013/2014. SIZE OF CUT £110 million

Index linking of LHA affecting 939,220 households to the Consumer Prices Index (CPI) will mean that in real terms LHA levels will fall as rents generally rise faster than inflation. Also as rents rise at different rates in different parts of the country in some areas LHA will very quickly fall behind the cost of meeting rent payments from 2013/2014. SIZE OF CUT: £390 million

LHA caps for 21,060 households will ensure that no one-bedroom property receives more than £250 in LHA, rising to £400 for a four-bedroom property or larger, regardless of how expensive local rents are. This cut comes in from April 2011 and will affect people living in expensive areas such as London. In central London only 7% of properties will be affordable. SIZE OF CUT £65 million

Non-dependent deductions; people living with benefit claimants such as an adult son or daughter, relative or friend; currently reduce housing benefit received by the claimant of the household. These deductions will be increased from 2011. SIZE OF CUT £340 million.

Limiting working age housing benefit to reflect household size will mean working age people people in social housing will no longer be able to claim benefits on a property deemed bigger than their needs. The estimated size of saving suggests a large number of people will be affected with no help being offered to find alternative accommodation. SIZE OF CUT £490 million

Removing excess payment of LHA. As an incentive for LHA claimants to find cheaper properties to rent, currently tenants are allowed to keep up to £15 per week of their LHA money of their rent is under average LHA levels. From April 2011 this money, which can be enormously significant to poorer households, will be cut.

Limiting total benefit claim by household to £500 for the vast majority of claimants will significantly cut housing benefit for larger families or those living in more expensive areas. SIZE OF CUT £270 million

Crisis is the national charity for single homeless people. We are dedicated to ending homelessness by delivering life-changing services and campaigning for change. Our innovative education, employment, housing and well-being services address individual needs and help people to transform their lives. We are determined campaigners, working to prevent people from becoming homeless and advocating solutions informed by research and our direct experience. We have ambitious plans for the future and are committed to help more people in more places across the UK. We know we won't end homelessness overnight or on our own. But we take a lead, collaborate with others and, together, make change happen.

 

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