Transcript The benefit cap in London - headaches on the horizon?

THE BENEFIT CAP IN
LONDON - HEADACHES ON
THE HORIZON?
Philip Clifford
London Councils
LSE London Seminar 16 January 2012
BACKGROUND
London Councils
Welfare reform – key changes
• Local Housing Allowance (LHA)
• New caps on the total amount of housing benefit that can be
claimed; max 4 bedrooms.
• Single childless claimants under 35 now subject to single room rate
• Definition of ‘affordable’ changed from median to 30 per cent of
market rent
• Universal Credit
• Proposed introduction in 2013
• Integrates: jobseekers allowance, housing benefit, child benefit and
child tax credit.
• Total benefit cap of £350 per week single person households and
£500 per week for family; only applies to working age workless
households.
Economic context
£ '000
Housing Benefit Expenditure England and London 1997 - 2011
20,000
50%
18,000
45%
16,000
40%
14,000
35%
12,000
30%
10,000
25%
8,000
20%
6,000
15%
4,000
10%
2,000
5%
-
0%
1997-98
1998-99
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
England Total HB Expenditure
London Total HB Expenditure
England pecentage private sector expenditure
London percentage private sector expenditure
2008-2009
2009-2010
2010-2011
Political context
The cap and London
Median Wages 2002-2011
35,000
30,000
25,000
20,000
£
15,000
10,000
5,000
0
2002
2003
2004
2005
London
2006
2007
2008
England Average
2009
2010
2011
DOES THE CAP FIT?
The commission
• Aims
• Determine the impact of the Local Housing Allowance (LHA) and
Universal Credit (total benefit) cap on housing affordability in
London
• Explore the impact of household choices on public services
• Methodology
• Quantitative analysis of 480,000 housing benefit records
• Established ‘living cost benefits’ based on adjusted 2011 cap (£467.26)
• Qualitative research using four ‘task and finish’ groups
• Children and Young People
• Adult Social Care
• Housing
• Community Cohesion
Extent of impact across London
LHA
UC
Westminster
Wandsworth
Waltham Forest
Tower Hamlets
Sutton
Southwark
Richmond upon Thames
Redbridge
Newham
Merton
Lewisham
Lambeth
Kingston upon Thames
Kensington and Chelsea
Islington
Hounslow
Hillingdon
Havering
Harrow
Haringey
Hammersmith and Fulham
Hackney
Greenwich
Enfield
Ealing
Croydon
City of London
Camden
Bromley
Brent
Bexley
Barnet
Barking and Dagenham
% Households Affected
Split between LHA and UC
Percentage of Households Affected by either Universal Credit cap or LHA
35
30
25
20
15
10
5
0
Scale of impact
Modelled impact of Local Housing Allowance and Universal Credit cap on case study boroughs
12,000
Households Affected
10,000
8,000
6,000
4,000
2,000
£0-10
£11-20
£21-40
£41-60
£61-80
£81-100
£101-125
£126-150
£151-200
Shortfall (£/pw )
Local Housing Allow ance
Universal Credit
£201-300
£301-500
£501-1000
£1001+
1a
1b
2a
2b
2c
2d
3c
3d
4a
Household Typology
4b
4c
£1001+
£501-£1001
£301-500
£201-300
£151-200
£126-150
£101-125
£81-100
£61-80
£41-60
£21-40
£11-20
£0-10
Larger workless households
100%
80%
60%
40%
20%
0%
Mitigations
Modelled impact of amendments to Universal Credit cap on case study boroughs
3500
3000
Households Affected
2500
2000
1500
1000
500
0
£0-10
£11-20
£21-40
£41-60
£61-80
£81-100
£101-125
£126-150
£151-200
£201-300
Shortfall (£/pw )
Base Case / UC
London Weighted Cap / UC
Child Benefit Exempted / UC
£301-500
£501-1000
£1001+
Summary of findings
• Over 130,000 households impacted by either LHA or
•
•
•
•
Universal Credit (total benefit) caps
The Universal Credit cap has a much greater impact on
affected households
In particular, it disproportionately impacts on larger
families
Initial assumptions regarding geographic impact not borne
out by evidence
Exemption of child benefit from Universal Credit would
reduce impact, but taking account of London’s higher
median wage has greater effect.
POTENTIAL IMPLICATIONS
People
• Vulnerable households face difficult choices
• Do they…
• Overcrowd?
• Move home?
• Split?
• Enter the labour market?
• Absorb the shortfall?
• Exceptional difficulty in accurately forecasting response of
households…
Borough services
• Housing
• Temporary accommodation
• Housing supply
• Overcrowding
• Adult Social Care
• Labour market flexibility
• Mental health
• Service demand
• Children & Young People
• Child poverty, safeguarding
• Discontinuity of provision
• School
• Community Cohesion
• Displacement
• Competition
• Miscommunication
Borough finances
CONCLUSIONS
Headaches on the horizon?
Lessons…
• The implications of a one-sized cap highlight the tensions
between national policy and the realities of geographic
variation.
• Welfare reform offers an insight into the unfolding process
of politics and its interaction with policy formulation
• Future impact likely to be significant and require long term
measurement
END
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