RLA trainer and housing benefit expert Bill Irvine, has penned some thoughts after George Osborne was quoted in the Guardian and Sunday Times newspapers recently. Bill considers the pros and cons of proposals for benefit reform and what it could mean for Universal Credit, tenants, and landlords.
Bill responded to a thread on the Property Tribes forum, which provides landlords a space to discuss everything from legislation, consultation proposals, and the everyday dealings of renting in England and Wales.
Dissecting George Osborne’s quotes:
Like some of your members I read, with interest, some of yesterday’s headlines in the Sunday Times & Guardian newspapers. The ST quotes from George Osborne:
“This government was elected with a mandate to implement further savings from the £220bn welfare budget,” the two ministers said. “For a start, we will reduce the benefit cap, and have made clear that we believe we need to make significant savings from other working-age benefits.
“We will set out in detail all the steps we will take to bring about savings totalling £12bn a year in next month’s budget and at the spending review in the autumn.
“It took many years for welfare spending to spiral so far out of control, and it’s a project of a decade or more to return the system to sanity. Reforming the damaging culture of welfare dependency and ensuring that work pays has been central to our mission to make Britain fit for the future.”
Concerns and potential changes:
There is little detail available in the articles about how this will be achieved. There is also a healthy dose of speculation in what parts of the scheme will be targeted. The article suggests “working age” and changes over 10 years, so it might not be as punitive initially as has been suggested in headlines. But based on earlier reports & articles, it’s likely that attention will be focused on:
- Reducing the Benefits Cap to £23,000;
- Reducing eligibility to housing benefit for single under 25’s;
- Limiting Tax credits to 2 children;
- Accelerating the rollout of Universal Credit, which, in many cases, will be less generous than Housing Benefit;
- Increasing “conditionality” for those claiming JSA/ESA/Universal Credit and the knock-on effect this will have on “sanctions”.
The effects of these changes will apply across Great Britain. It’s not surprising Landlords are concerned.
Positive history of changes and ‘transitional protection’:
However, history has shown us, that when changes like this are introduced there is usually “Transitional Protection” (TP) to protect existing claimants from their immediate effect. If you think back to the 2010/11 changes affecting under 35’s; Housing Benefits (HB) being capped at 30th percentile; £400 cap for a bed property in London; the impact was delayed for 9 months following review. In some cases this meant 21 months before the change was implemented.
I would expect some form of TP would apply to these latest proposals, which have also still to be approved by Parliament which might not be easy given the Conservatives’ small majority.
Cuts don’t necessarily prevent growth
Lastly, I would also add that despite a range of cuts since 2010, numbers of Local Housing Allowance (LHA) tenancies have risen, every year since 2008 to 1.7 million; expenditure has also risen to £9.5 Billion. The £26,000 cap on benefits, introduced in 2013 has not had the impact that was first envisaged; only a third of the numbers predicted have been affected. Similar attempts to cut Housing Benefit in the social sector (Bedroom Tax) have failed to deliver.
In other words, the cuts imposed, so far, have not deterred landlords providing accommodation, across Great Britain, even though the returns have not been as good as they were in the past.
Only when we see the detail, will we be able to assess the potential impact.
Bill provides services through his website: www.ucadvice.co.uk