Tagged: Housing Benefit

The DWP misleads tenants about benefit changes

I know that Scottish Housing News may not be everyone’s constant study,  but they’ve been covering an interesting dispute about housing support.  The Director of Angus Housing Association, Bruce Forbes, had talked to the Dundee Evening Telegraph, expressing some criticism of the coming introduction of Local Housing Allowances in social housing, and particularly the ‘horrendous’ effect on younger single people.  The DWP replied with a general justification of the policy:

These changes are about restoring fairness to the system and ensuring that those on benefits face the same choices as everyone else. The reality is, nothing will change until April 2019, and existing tenancies signed before April 1 2016 will be unaffected.

That prompted a furious public response from Mr Forbes.  The DWP statement was irresponsible, “blatantly untrue” and “totally false”. The DWP were “peddling lies and misleading the public”.   Since then, the Scottish Federation of Housing Associations has expressed concern about the inaccurate information.   (I should declare an interest here; I have previously been a consultant with SFHA  and have worked with them on issues about benefits.)

There’s a point at which propaganda tips over into misinformation, and the DWP statement has done that – claiming that existing tenants won’t be affected.  This is not right – everyone coming onto Universal Credit will be subject to the new rules, and in due course that should be everyone of working age.  The main problem here is, of course, that people with very limited resources are suffering further cuts.  The same cuts also threaten the financial security of social landlords, which is another reason that the housing associations are worried about it.  Having said that, it is also worth remarking on the secondary issue.  The DWP has to make sure that the information it gives out to claimants is reliable, and that has to be more important than scoring political points in the local papers.

The joy of the bedroom tax

I read the DWP evaluation report on the underoccupancy penalty or bedroom tax last week, but didn’t bother commenting on it because it didn’t seem to me to say anything new, and it didn’t say it at some length.  It told us that

  • the numbers of people affected have been falling (that follows from generally increased employment, reassessments and challenges)
  • most people who have had the penalty imposed continue to be affected
  • the policy has pushed people into debt, and most of those affected were in rent arrears
  • about 20% of those no longer affected said they had found work or increased earnings (that is probably less than might be expected in the normal course of events)
  • there has been a marked increase in the demand for downsizing, and some people are moving.  The report has two inconsistent figures for moves – 45,000 from survey estimates but only 14,500 from CORE/SCORE, out of 178,000 affected.  Most people have no prospect of moving and have to carry the financial penalty.

It seems, however, that the government is hailing the report’s findings as a triumph.  Lord Freud made a point of it in the Lords yesterday, and Conservative Home is claiming that the policy “continues to deliver benefits” (which it does, just 14% or 25% less than the benefits were before).  Ruth Lister commented in the Lords:  “I think we read different reports”.  I seem to have got hold of the same one that she did.  If anyone comes across the other version, do please let me know.

Removing 'automatic' entitlements

There’s an odd little phrase in the documents from yesterday’s Queen’s Speech, which proposes to stop most young people from claiming Housing Benefit.  The government plans, we’re told, to “Remove automatic entitlement to housing support for 18-21 year olds”.   The word ‘automatic’ conjures a picture of an impersonal, self-operating machinery; it suggests that people don’t have to do anything, or anything much, to get it, and that success is guaranteed.  I’ve seen the word before in old press releases about homelessness, where it was used to the same purpose – implying that all people have to do is turn up and they’ll be received with a bunch of keys, a fanfare and a welcoming hamper to start them off.  It stands markedly in contrast with the experience of anyone who’s actually tried to claim benefits or who’s applied for housing as a homeless person.

Benefits aren’t, in general, ‘automatic’.  Nearly all benefits are ‘subjective rights’, based on a claim – they’re not delivered without it; they are subject to qualifying conditions, of varying degrees of complexity, and many require lots of further information before payment is possible.   (There has been a recent experiment with paying Pension Credit automatically, only checking up on conditions afterwards, but this is very unusual.)  Many vulnerable claimants, not just young people, need lots of support to see them through the process – this is something that most social housing landlords have got to be rather good at.   And to get Housing Benefit, of course, one has to get a place to rent as well.

What is being removed, then, if it’s not getting support ‘automatically’?   There are two possible interpretations.  One is that people are getting the right subject to further conditions – but as there already some  conditions in place, this is largely a matter of having further hoops to jump through.  The other is that the entitlement will be treated as personal, exceptional and defeasible – which may mean that it’s not an entitlement at all.

Errors in Housing Benefit payment: another failure of personalisation

The Public Accounts Committee has been highly critical of the DWP’s failure to deal with ‘fraud and error’ in Housing Benefit, estimated at £1.4 billion last year, 5.8% of total expenditure.  The detailed figures came from a report by the Comptroller and Auditor General last October.  Despite the tag, “fraud and error”, the biggest part of this is error:  £900m is due to mistakes by claimants, £150m mistakes by officials and £340m in fraud.  These figures don’t include the other side of error, which is underpayments:  £370m of the benefit is underpaid, of which £290m is due to mistakes by claimants.

The biggest single source of the mistakes is the mis-statement of earnings, which accounts for a whopping £637m (46%) of the overpayments.  This is what you get with  a ‘flexible’ labour market: people don’t know what they’re being paid or when.  The next main sources of the mistakes, 16% and 11% respectively,  concern people living together – confusion about what makes a household – and residency, where people are no longer living in the property.  In some cases, those run together.  People who are forming relationships often occupy two properties for a period.  They can’t give a definite answer about where they live and whether they are now a household.

We ought to be asking whether it makes sense to try to run a benefit scheme on this basis.   The basic problem lies in the belief that it’s possible to ‘personalise’ benefits and to adjust them as individual circumstances change.  It has never worked properly before, and there’s little reason to suppose it will work  in the future.

Should children be required to share a bedroom?

A report in the Scotsman expresses concern that one child in five has to share a bedroom, with more than half the respondents wishing their children had more space.  Another way of putting that, of course, is that four children in five have their own room; that is now the norm in the UK.  Former Education minister Michael Gove is quoted as saying that every child should have a bedroom of their own.

That might raise the question as to why the government’s ‘underoccupancy penalty’ – the bedroom tax – requires and expects children to share bedrooms up to the age of 10, and children of the same sex to share a room until they are 16, and the government docks people’s benefits if they presume to live as other people live.

Reforming the 'iniquitous' bedroom tax

The Welfare Reform Committee at Holyrood has published an interim report on the bedroom tax, which it condemns as ‘iniquitous’ and a breach of human rights.   (For the avoidance of doubt, I was not involved in this report – my role as adviser to the Committee, which has now finished, was confined to the Draft Budget, where they considered the Scottish Welfare Fund and the Council Tax Reduction.)  The strength of the condemnation reflects a level of cross-party consensus in Scotland.   It’s been condemned by organisations like the Scottish Federation of Housing Associations, who I work with, and Shelter.  The bedroom tax has saved very little money, and getting rid of it shouldn’t in principle cost very much.  Both the Scottish Government  and the Labour opposition have been looking for a way to remove the policy.

The central problem here is that the Scotland Act 1998 reserves social security benefits in general, and help with housing costs in particular, to Westminster.  Scottish authorities are only permitted to administer the finance and delivery of Housing Benefit.  The strategy of the Scottish Government has been to press Westminster for an increased budget for discretionary payments and effective delegation.  The Labour party is currently proposing that the Scottish Government uses a different power, to subsidise the provision of housing through organisations, and to write off debts attributable to  the bedroom tax.  The policies are moved by the best intentions, but there are problems with both mechanisms – both are difficult to administer and open to inequities.  The process of writing off debts threatens a degree of insecurity for tenants and social landlords alike.

I was invited onto Newsnight Scotland yesterday to explain the basic issues – it should be on Iplayer for the next few days.  I’d previously had a longer discussion with a BBC journalist and had expected the bit I’ve just explained here to be in a prologue, so we didn’t get on to the next bit at all.  Housing Benefit was designed to do three things at once, and it doesn’t do any of them particularly well: income maintenance, the finance of social housing provision, and the creation of a market in rented housing.  The benefit is difficult to understand and difficult to administer, and it produces some perverse outcomes.  Despite all that, it’s been made to work, more or less; and tenants, social landlords and benefits administrators are all deeply apprehensive about changes.  There’s every likelihood, then, that whatever happens now, Housing Benefit is going to be locked into something like its current shape. If you were setting to sea in a boat, you wouldn’t want it to leak and list like this one does; but once you’re far out in the water, it’s hard to think of a better alternative.

 

 

 

Defining a bedroom

According to Joe Halewood, there has been a critically important decision by the Upper Tribunal about what a ‘bedroom’ is.  A bedroom is a room with a bed, used for sleeping.  That means that when it comes to the Bedroom Tax, it does not matter how the landlord classifies the property; what matters is how the property is used.  The test is simple – does the room have a bed in it?

This is not the same principle as the one I’d argued for – I think the definition of a minimum size of ‘room’ is very clear in law – but it will probably be more use to tenants.  Joe cites the Upper Tribunal reference as CH/140/2013.  However, the case has not been published yet, and it will have to be publicly available before it could be taken to be authoritative.

Further note, February: The judgment is now available here.  Although it’s a private sector case, the argument for its application to the bedroom tax is highly plausible.

The bedroom tax and the test of unreasonableness

There is another report of a tribunal deciding that the bedroom tax should not apply if the bedroom is not usable, or if it is too small.

The traditional principle in administrative law is that  the courts can only intervene if a decision is very unreasonable – so unreasonable that a decision maker could not have made it.  This is referred to as “Wednesbury unreasonableness”, in Lord Diplock’s words “a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his  mind to the question to be decided could have arrived at it.”  When I first made the argument for applying the statutory standard to room size, I thought the basic case looked like this:  landlords have a reasonable discretion, and no-one can complain that applying a statutory standard isn’t minimally reasonable, so if the landlord can be persuaded to reclassify rooms, their decision can’t really be challenged.

The tribunals, however, are going much further than that.  For an explanation, I’m indebted to another blog, Public law for everyone, which drew my attention to a speech by Lord Carnwath.  Carnwath makes it clear that the courts have left the Wednesbury principle behind.

In 19 years as a judge of administrative law cases I cannot remember ever deciding a case by simply asking myself whether an administrative decision was “beyond the range of reasonable responses” … My approach I suspect has been much closer to the characteristically pragmatic approach suggested by Lord Donaldson …”the ultimate question would, as always, be whether something had gone wrong of a nature and degree which required the intervention of the court and, if so, what form that intervention should take”.  If the answer appears to be yes, then one looks for a legal hook to hang it on. And if there is none suitable, one may need to adapt one.

The position taken in tribunals so far seems to be simple enough: where there are bad decisions, they will change them.  The primary test, Lord Carnwath says, is whether or not a decision is unfair.  In the case of the bedroom tax, too many decisions are.

Devolving Housing Benefit would change Universal Credit

According to today’s Scotland on Sunday, the Conservatives are considering devolving responsibility for Housing Benefit, partly as a means of defusing the ‘toxic’ issue of the bedroom tax.  There are some good arguments.  The first is that Housing Benefit depends on local housing markets.   The second is that local authorities have a long track record of operating Housing Benefit; they have the people and the organisation to do it.  Third, rent policies are different in Scotland from England.  The underoccupancy penalty in Scotland is not removing a ‘spare room subsidy’ – it’s a penalty, taking somewhat more from Housing Benefit than the cost of the rooms in dispute.  Fourth, the flexibility of devolution could make it possible to get around some of the problems that have emerged in the pilots through not paying social landlords direct.

If Housing Benefit was to be devolved,  however, part of the plan for Universal Credit would unravel.  Universal Credit was supposed to produce a unified taper, or ‘marginal rate of deduction’ – the speed at which benefit is withdrawn as income increases.  It is going to be set at 65%.  The figures never quite come out looking like that, because UC will be calculated on net income, after tax, national insurance and some other benefits which are not being integrated in the system.  If a person is paying tax and National Insurance at 32% – there are several variations and possible permutations – UC will take away 65% of the remainder; that comes to 76.2% in total.

At current rates, Housing Benefit is withdrawn at 65% and Council Tax Reduction is withdrawn at 20%.  If tax, NI and UC take away 76% of additional net income and CTR and HB together take away 85% of what’s left,  the combined deduction  would be over 96%.   Even without tax, it’s 95%.  (I’m assuming here that HB and CTR would be calculated after UC, and that income from HB and CTR would be disregarded for UC purposes.  If they weren’t, and  if there were different time frames, the calculations could be bewildering.)    To avoid these problems, either the tapers would have to change, or UC  would have to be calculated differently,  with different rules where Housing Benefit is not part of the scheme.

If Universal Credit was to go forward without Housing Benefit, it would be a move toward a  different model – tying Tax Credits to something that looks a lot like Supplementary Benefit.  I’m not sure that this combination makes any more sense than the rest, but the smaller the pretensions of the scheme, the less scope there is for catastrophe.

Would you abolish the bedroom tax?

One of the questions most favoured by media interviewers interviewing opposition politicians is: would you abolish this measure?   I’ve heard it this week in relationship to the bedroom tax, the privatisation of the Royal Mail and the benefits cap.  It asks people either to say that they would, making a commitment years ahead of any possible measure, or that they would not, assuming consent.

It’s not that easy.   Whenever governments make changes to policy, they change the situation that has to be dealt with.  A new government, reviewing the situation in two or three years’ time, would have to consider not only the cuts that have been made – for example, from working age benefits, Child Benefit, people with disabilities, local government, housing or public sector pay – but also the claims that will be made in the future, such as the claims for a living wage, minimum income standards, housing and  health.  Any policy which gives more to some people – such as the reduction in the top rate of tax – can only be reversed by giving those people less.    Any policy which gives less – such as the cuts in benefits – requires funds to be found from somewhere to give more.  In any allocation of resources, the case has to be made for that allocation rather than others; and what it is possible to allocate depends on the resources available at the time.  And the next government, whatever its colour, will have to do what it can it from an economic base that has been flatlining for several years, and has still not recovered to the level before the crash.

The bedroom tax is awful, stupid and unfair, but it joins a long list of anomalies that need to be addressed in the benefits system.  The model of tapered benefits, currently used in Housing Benefit, Tax Credits and Universal Credit, has never worked well, and as far as I can see it never will.  Reversing the accumulated consequences of a host of bad decisions – such as the bedroom tax, the non-dependant rules, the cap, the adjustment of local housing allowances, the uprating rules, the changes to rent structures or  the limits for younger claimants (and those are only the rules for Housing Benefit) – is going to be painfully difficult.  Policy gets trapped on the tramlines: little can be done to make some people better off without making others worse off.

The way to reform is not to go back, but to move things forward.  The bedroom tax cuts Housing Benefit, but it leaves rents where they were.  I’d rather not build up Housing Benefit at all, which hasn’t worked for forty years.  It would make more sense to control rents (and to guarantee security for tenants), to cap benefit payments to landlords, to relieve housing pressures by moving work to workers, to build houses for rent, to free up building land, to increase minimum wages, to offer direct subsidy to social housing providers and gradually to move to a household allowance rather than a rent allowance.    (Most of these  policies, however unimaginable they look now, were in force when I first worked in housing.)

In more general terms, reforming benefits needs to be considered in terms of the direction of movement.  What we should want to see is a reasonable standard of living achieved with minimum personal intrusion or administrative complexity.  (The effect of the bedroom tax, the cap, reassessments and sanctions has often been to reduce the standard below that minimum.)  That would imply substantial change in the system of support for housing costs, disability and low wages.  We may never agree on just how this ought to be done; there will always be the problem of balancing equity, incentives and personal need. It should be clear, however, that reforms under the last government and the present one have gone in the opposite direction, and the system needs to be rebalanced.