The rise in housing benefit is driven by a rise in need. No more, no less

It's not greed, it's not fraud, it's just more people needing help to live their lives, writes Declan Gaffney.

It’s safe to say that housing benefit has few defenders on any side of the political debate.

All parties agree that spending is out of control and needs to be reined in. The right has ruthlessly promoted the claim that housing subsidises the underserving poor to live in accommodation ordinary workers couldn’t afford. The left responds by saying that it is landlords rather than tenants who are milking the system. Thus Owen Jones writes:

Greedy landlords are fully aware that most cannot afford to pay their extortionate rents. But they also know that the taxpayer will step in and subsidise them with housing benefits… Instead of wasting billions on housing benefit, we could spend it on building housing, creating jobs and stimulating the economy.

What the left and right criticisms have in common is more important than what distinguishes them. Housing benefit exemplifies the gruesome two-step of current welfare debate.

  • Step one: claim that expenditure is at unprecedented and unsustainable levels.
  • Step two: blame this on some unpopular group milking the system—greedy landlords or irresponsible tenants—thus suggesting that expenditure can be cut or redirected to other purposes without pain.

Step two is wishful thinking, as I’ll argue below. Step one is easily dealt with. Look at this chart:

 

The green curve shows expenditure on housing benefit as a share of GDP, indexed to 1978/9, from that year to 2011/12. (It’s the share of GDP that counts when the sustainability of expenditure is at issue.) Spending now, four years after the onset of recession, is at almost exactly the same level as it was in 1995/6 four years after the last recession. In the intervening period it first fell dramatically as the impact of the early 90’s recession receded, then rose sharply when the global financial system collapsed in 2008/9. There has been no long-term upward trend since the early 1990's, so the rhetoric of unsustainability is completely misplaced.

The red curve on the chart, which takes out the effect on expenditure of changes in the number of claimants, shows that the recent rise in expenditure is overwhelmingly driven by the caseload (the dotted blue curve). It also allows us to see the impact of the switch from supply-side to demand-side funding during the late 1980s — that is, the switch from directly subsidising social rents and building homes to giving tenants the money to pay higher rents.

This doesn’t represent a change in overall expenditure but a redirection of subsidy to a different channel.1 The impacts of that switch, particularly on work incentives and poverty traps for lower income groups, have been hotly debated, but the point here is that this step change in housing benefit spending doesn’t represent an additional cost to taxpayers (except in the form of any negative impacts on employment). So even in this long-term perspective the notion that housing benefit represents an increasing burden on the Exchequer is wrong.

What about the other item on the charge sheet—that housing benefit expenditure is wasteful because either landlords or tenants are milking the system on a grand scale? Both these claims, if we are to make sense of them, involve similar economic assumptions.

To see this, consider how landlords might be able to raise rents above market level to capture the subsidy—bearing in mind that if rents aren’t above market level, there is no subsidy (left critics have been surprisingly uninterested in demonstrating this). The private rented market is dominated by small-scale, uncoordinated cottage industry operations, so we can rule out the notion that landlords are using market power to drive up rents. (An exception, but a small element in total spending, may be the market in temporary accommodation for people meeting local authority homelessness criteria).

The other possibility would be if tenants were to some extent indifferent to rent levels. That could allow landlords to use price discrimination (charging more to housing benefit claimants) to extract above-market rents from taxpayers. Alternatively, even if landlords didn’t use price discrimination, tenants might choose more desirable (expensive) properties if they weren’t worried about the rent—the government’s main argument for cutting entitlements. Thus the greedy landlord and irresponsible tenant stories turn on the same explanatory mechanism of tenants failing to respond to prices: they differ only in who is said to be extracting the unfair advantage.

Which raises the question: why would tenants be indifferent to rents? The higher the rent level, the more earned income will be subject to punitive marginal tax rates as housing benefit is withdrawn. You would have to suffer from extreme myopia or have minimal expectations of your future earning capacity not to take this into account in choosing accommodation. Add to this that about half of private rented sector claimants were living in their current accommodation before they made their claim, so they would have been making the same tradeoffs as anybody else when they chose where to live.2

Fortunately, all this can tested empirically.

London has the largest private rented sector in the country, a highly mobile population, substantial variations in rents between areas and (although Londoners hate to admit it) an excellent public transport system.

If housing benefit tenants care about rent levels, we would expect them to be in lower rent areas, subject of course to the availability of accommodation. If they didn’t care, we would expect them to be distributed across areas in accordance with the rental stock.

When a model in which the number of private sector claimants in each borough in 2010-11 is measured against (a) the size of the local private rented sector and (b) the lower 25 per cent of local rents, we find the latter "explains" 66 per cent of the variation in caseload between areas. Overall, a 1 per cent increase in rents implies a 1.7 per cent decrease in the number of claimants.3

Given this strong negative relationship between rent levels and private sector HB claims, the notion that landlords are capturing a large part of the subsidy by charging above market rents looks implausible.

This is even more the case when we look at what’s happened in London since the cuts to housing benefit in April 2011. Using the same model with post-reform data, there is no statistically significant change in the relationship between rents and caseload: even quite dramatic cuts to entitlements don’t seem to have made that much difference to the already very strong propensity for higher rents to drive down the number of claimants.

(This isn’t to say there has been no effect from the changes, but that if there has been, it’s small by comparison with what was already happening before they took place.)

At the same time, between 2011 and 2012, rents rose by 8 per cent in London, and they rose most for the type of larger property where the cuts had the most impact on tenants’ ability to pay—rents for three- and four-bed flats have risen by more than 10 per cent. So much for the government’s claims that rents are falling in response to the cuts

Given how much we spend on housing benefit in the private rented sector it would be surprising if there were no landlords taking advantage. But the hard lesson is that this probably has little impact on overall spending levels. Claims from the left that billions are being wasted "subsidising" private landlords are about as convincing as claims from the right that billions are being wasted subsidising irresponsible tenants to live in mansions.

There’s a longstanding debate about the merits of funding housing through demand rather than supply-side subsidy. (For a fair statement of the argument, see Shelter’s report). But suggesting that there’s a free pot of money available for housing investment in the form of subsidy captured by greedy landlords adds nothing to that debate.

If we want more housing investment, we’re going to have to pay for it some other way: perhaps by borrowing as Jonathan Portes has suggested. Taking that route would also have positive impacts on employment, thus reducing expenditure on housing benefit without hitting the incomes of struggling workers. But the welfare reform two-step is a distraction from the real issues, whether you lead with the right or the left.

1 See page 55 here.

2 See section 6.2 here.

3 Geek note: all variables in logarithms, all p-values <.01. The results are not driven by multi-collinearity between the independent variables.

A housing estate in Lambeth. Photograph: Getty Images

Declan Gaffney is a policy consultant specialising in social security, labour markets and equality. He blogs at l'Art Social

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Should feminists talk about “pregnant people”?

Two writers present the arguments for and against.

NO

“I’m not sure what the public health issue is that would require a focus only on those who become pregnant, as opposed to any of those involved in pregnancy, either becoming pregnant or causing someone else to become pregnant,” Dr Elizabeth Saewyc, a Canadian professor in nursing and adolescent medicine at the University of British Columbia, recently told journalist Jesse Singal when he asked her for clarification on a study she conducted into trans youth and pregnancy.

Her statement is, on the face of it, extraordinary: unlike those who “cause someone else to become pregnant” (males), those who “become pregnant” (females) actually, well, become pregnant, with everything that entails from the risk of varicose veins and pre-eclampsia, to having an abortion or being denied abortion, to miscarriage or giving birth and living with the economic strain and social discrimination that come with motherhood.

As absurd as Saewyc sounded, her position is the logical endpoint of “gender neutral” language about pregnancy. Pressure on reproductive rights groups – especially those in the US – to drop references to “women” and instead address themselves to “people” have been growing over the last few years, and the American body Planned Parenthood now regularly mentions “pregnant people” in its communications. In theory, this is supposed to help transmen and non-binary-identified females who need reproductive health services. In practice, it creates a political void into which the female body, and the way pregnancy specifically affects women, simply disappears.

The obscuring of the female body beneath obscenity and taboo has always been one of the ways patriarchal society controls women. In 2012, Michigan Democratic representative Lisa Brown was prevented from speaking in a debate about abortion after she used the word “vagina”, which Republicans decided “violated the decorum of the house”. Now, that oppressive decorum is maintained in the name of trans inclusion: in 2014, the pro-choice organisation A is For was attacked for “genital policing” and being “exclusionary and harmful” over a fundraiser named Night of a Thousand Vaginas.

Funnily enough, trans inclusion doesn’t require the elimination of the word vagina entirely – only when it’s used in reference to women. A leaflet on safe sex for trans people published by the Human Rights Campaign decrees that “vagina” refers to “the genitals of trans women who have had bottom surgery”; in contrast, unaltered female genitals are designated the “front hole”. And it’s doubtful that any of this careful negation of the female body helps to protect transmen, given the regular occurrence of stories about transmen getting “unexpectedly” pregnant through having penis-in-vagina sex. Such pregnancies are entirely unsurprising to anyone who knows that gender identity is not a contraceptive.

It does, however, protect from scrutiny the entire network of coercion that is cast over the female body: the denial of abortion rights in the Republic of Ireland, for example, affects the same class of people who were subjected to the medical violence of symphysiotomy — a brutal alternative to cesarean, which involves slicing through the cartilage and ligaments of a pelvic joint to widen it and allow a baby to be delivered — the same class of people who were brutalised by Magdalen Laundries (institutions established to house “fallen women” which operated from the late 18th to the 20th centuries), the same class of people who are subject to rape and sexual harassment. That class of people is women. If we give up the right to name ourselves in the service of “inclusion”, we permit the erosion of all our hard-won boundaries.

Sarah Ditum is a journalist who focuses on feminism.

YES

No matter who you are and how straightforwardly things go, pregnancy is never an easy process. It might be a joyous one in many ways, but it’s never comfortable having to lie on your back in a brightly lit room with your legs hitched in stirrups and strangers staring at parts of your anatomy some of them hesitate to name. Then there are the blood tests, the scans, the constant scrutiny of diet and behaviour – it may be good practice for coping with a child, but the invasion of privacy that takes place at this time can have a dehumanising effect. And that’s without having your gender denied in the process.

If you’ve never experienced that denial, it might be difficult to relate to — but many women have, at one time or another, received letters addressing them as “Mr” or turned up at meetings only to discover they were expected to be men. It’s a minor irritation until it happens to you every day. Until people refuse to believe you are who you say you are; until it happens in situations where you’re already vulnerable, and you’re made to feel as if your failure to conform to expectations means you don’t really deserve the same help and respect as everyone else.

There is very little support available for non-binary people and trans men who are happily pregnant, trying to become pregnant or trying to cope with unplanned pregnancies. With everything geared around women, accessing services can be a struggle, and encountering prejudice is not uncommon. We may not even have the option of keeping our heads down and trying to “pass” as female for the duration. Sometimes our bodies are visibly different.

It’s easy for those opposed to trans inclusion to quote selectively from materials making language recommendations that are, or appear to be, extreme – but what they miss is that most trans people going through pregnancy are not asking for anything drastic. We simply want reassurance that the people who are supposed to be helping us recognise that we exist. When that’s achievable simply by using a neutral word like people, does it really hurt to do so? I was always advised that manners cost nothing.

Referring to “people” being pregnant does not mean that we can’t also talk about women’s experiences. It doesn’t require the negation of femaleness – it simply means accepting that women’s rights need not be won at the expense of other people’s. We are stronger when we stand together, whether pushing for better sex education or challenging sexual violence (to which trans men are particularly vulnerable).

When men criticise feminism and complain that it’s eroding their rights, this is usually countered with the argument that it’s better for everyone – that it’s about breaking down barriers and giving people more options. Feminism that is focused on a narrow approach to reproductive biology excludes many women who will never share the experience of pregnancy, and not necessarily through choice. When women set themselves against trans men and non-binary people, it produces a perfect divide and conquer scenario that shores up cis male privilege. There’s no need for any of that. We can respect one another, allow for difference and support the growth of a bigger feminist movement that is truly liberating.

Jennie Kermode is the chair of the charity Trans Media Watch.