The case for housing reform

SAMSUNGLefties nationally and locally are trying to stir up controversy over the coalition’s plans to reform housing benefit.  There is plenty of irony here. 

Firstly, it is Labour that left the country bankrupt before the last general election yet they are opposing just about every attempt to cut the huge and burgeoning welfare bill; and

Secondly, it was the last Labour Government that introduced identical changes for those on Housing Benefit living in private rented accommodation that are now proposed for tenants in social housing.   When the Labour Government introduced the Local Housing Allowance, private sector tenants were not paid Housing Benefit for a spare bedroom.

To start with basics, there is a huge shortage of affordable housing, both for rent and for purchase.  The government is proposing to enlarge the supply of rented accommodation by encouraging tenants to consider down-sizing when their circumstances change.  At the moment, a council house is for life and for the life of some dependents after them, regardless of the size of the house and the number of dependents living there.

Of course, it can be argued that house owners can continue to live in a large house long after their family have flown the nest without any penalty.  I am doing just that.  This argument fails on two counts:

  • People living in a large house pay a higher council tax than those living in a small one;
  • Home owners are not being subsidised by the state in the way that social tenants are.

Returning to the rented sector, tenants in private rented accommodation are not entitled to housing benefit for a spare room.  This is the result of legislation by the last Labour government.

However, at the moment, tenants of social housing are entitled to a subsidy for a spare room.  This is illogical and unfair.

There are many working families and people on low incomes who are living in private rented accommodation and I can see no reason why those on Housing Benefit who happen to have a registered social landlord should be treated differently to people in very similar  –  often identical  –  circumstances but who are unable to access social housing and are living in private rented accommodation.

Turning to the supply side, there is and always will be a finite amount of social housing available and it has to make sense to try to ensure – as far as is possible – that people are not living in over-crowded accommodation or under-occupied social housing.

Of course, this will be difficult for many tenants who have become used to living in low-rental accommodation with plenty of space and at a heavily subsidised rent but life is particularly  tough at the moment and one family’s spare room is another family in over-crowding.

There are bound to be hard cases and lefties are clearly lighting upon these as an excuse for writing off any attempt at reform.  The Government has given local authorities a sum of money to use as a discretionary fund where they think it appropriate to continue to give full Housing Benefit support, even if there is under-occupation.  For example, if a family needs to set aside a room for a carer, the local authority can seek to deal with any requests for discretionary Housing Benefit payment sensibly and sympathetically in accordance with the facts.

Looking specifically at Cherwell District Council, some 60,000 households  in  Cherwell  of  which  7,400  are  receiving Housing Benefit, either for social housing or in the private rented sector.  It follows that 88% of households are receiving no help with their housing costs, either because they have already bought their homes or are buying their homes with mortgages paid for out of taxed income or are paying full market rent  –  again out of taxed income – for property in the private rented sector.  While society should be proud to give financial support to  those  who  need  help  with  their  housing costs, that  support  is  effectively coming, in no small part, from others who are already meeting their own housing costs.

I don’t think it is unreasonable to seek to ensure that Housing Benefit is targeted as effectively as possible.  Housing Benefit has increased significantly in recent years.  In 1997, the cost of Housing Benefit was £12.2 billion pa; today it is £23 billion pa.  This is an increase that rate is simply not sustainable.

About Keith R Mitchell CBE

Qualified as a Chartered Accountant in 1967. Pursued a successful career in financial training and publishing until selling his interests in 1990. Elected a County Councillor for the Bloxham Division in 1989. Leader of Oxfordshire County Council 5 November 2001 to 15 May 2012. Chairman of the South East England Regional Planning Committee July 2002 to July 2005. Chairman of the South East England Regional Assembly July 2005 to July 2008. In HM the Queen’s 2007 Birthday Honours, appointed a Commander of the Most Excellent Order of the British Empire in recognition of services to local government.
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