How the coalition is turning the screw on housing benefit claimants

The latest round of welfare cuts will accelerate the rise in homelessness and leave low-income families struggling to find rented accomodation.

Child benefit, tax credits and disability allowance have all been at the heart of the political debate on welfare cuts. Housing benefit hasn’t. Yet people are already feeling the pain of the government’s changes and cuts. The Welfare Benefits Uprating Bill presents the opportunity for another turn of the screw on housing benefit, especially on the people who rent from private landlords.

Local housing allowance (LHA) is the housing benefit for those in private rented accommodation whose low incomes mean they rely on help with housing costs. It is an in-work and an out-of-work benefit paid to over 1.3m people. These are not the Chancellor’s "skivers" lying in all morning behind closed curtains. These are people in low-paid jobs, pensioners, disabled people, single parents, couples with kids and young people estranged from their parents. Almost one in five on housing benefit work, and only around one in eight are on Jobseeker's Allowance.

Housing benefit has always had a link to actual rents due to the huge differences in rates around the country. The government broke this link when it decided to uprate LHA only in line with CPI inflation. Under this new bill, the LHA in each area will only rise by either 1 per cent or the change in the level of the lowest third of rents, whichever is lower. But rents have historically risen faster than inflation, and certainly by more than 1 per cent, so many parts of London and many parts of other UK towns and cities will become no-go, no-live areas for those on the local housing allowance. People will be forced into debt, then out of their homes and out of their local areas.

Crisis, the homelessness charity, found in a recent report that fewer than 1 in 50 properties are now accessible to LHA recipients under 35-years-old because rents are already higher than housing benefit rates and landlords are unwilling to let to those who need it. Shelter have calculated that linking the LHA to CPI inflation will mean one third of the country will become unaffordable for low income families within a decade, and the 1 per cent cap will speed up this social exclusion. It will also accelerate the recent rise in homelessness. Rough sleeping was up 23 per cent last year, the number of people going to their council as homeless is up 22 per cent in the last two years and the end of a private tenancy is now the most common cause for those officially classed as homeless.

The real terms-cut imposed by the 1 per cent cap on local housing allowance from 2014 is just the latest in a long list. In April 2011, the government brought in caps on LHA for each property size, scrapped the rate for a five bedroom house and cut all increases from the median rise in local rents to the lower third. Last year, it froze all LHA rates and raised the age below which LHA support is only available for the costs of shared accommodation from 25 to 35. And this year it is bringing in the "bedroom tax" and capping any rise in LHA at CPI, or 2.2 per cent.

It is hurting but it’s not working. The housing benefit bill is up by £2bn since the general election and the total number of people relying on LHA has risen by 35 per cent. Debate in the Commons yesterday was guillotined by the government, so there was no debate or vote on exempting housing benefit from the 1 per cent cap or on a modest amendment I tabled to require the government to publish an annual report on the relationship between rates of LHA and actual rents, and if these become significantly out of step to reconsider the 1 per cent cap policy.

This is only what the welfare minister, Lord Freud, promised during the debate on CPI-linked uprating in the Welfare Reform Bill in December 2011. He said, “if it then becomes apparent that local allowance rates and rents are out of step, they can be reconsidered" and when pressed by Labour’s Lady Hollis he conceded, "on the basis that the noble Baroness is going to be incredibly helpful to me in all the consequent amendments in the Bill, I will change the word 'can' to 'will'".

It will be for Labour lords to pick up the case again next month. If parliament can’t stop the screw being turned ever-tighter on housing benefit claimants, the least it can do is ensure ministers face the facts about who is hurting most and how badly.

John Healey is the Labour MP for Wentworth and Dearne and the former housing minister

Rough sleeping rose by 23 per cent in 2012. Photograph: Getty Images.

John Healey is the Labour MP for Wentworth and Dearne and was formerly housing minister, local government minister and financial secretary to the Treasury

Ben Pruchnie/Getty Images
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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage