The affordable rent prospectus came out yesterday – there’s a lot in it and housing associations and councils will be hanging on every word to see what the new regime actually means for them.
One of the things they’ll be grappling with is how the new benefits system interacts with the new higher rents.
I blogged here that I doubted that the benefits system would allow people to pay 80% of market rent in London and other more expensive cities. Steve touches on it in his previous post. That is increasingly clear for those housing associations and councils that are doing the sums.
But it’s interesting how a new logic is entering the system.
There will be a new benefits cap of £500 on the Universal Credit when it comes in after 2013. This will apply to workless families only. For many families and those living in more expensive areas of the country they will have to move out to cheaper areas to still be able to afford their housing.
However, this cap will be lifted for those families entering work. For an individual this will be someone working more than 16 hours a week. For a couple, this will be more than 24 hours a week.
So those in work will potentially be able to claim more benefit than those out of work. Rather than working 16 hours a week being a cut off point for some benefits, it is the way to claim more benefit and potentially allow people to live in ‘affordable’ housing in more expensive areas.
Work, not need, then is the route to state help and in this case being able to afford the new ‘affordable’ rents.
This is a move consistent with the cross-party consensus that people should be better off in work than in out.
However, in an economy which has 2.5million unemployed and isn’t growing or creating jobs, the principle of compelling people into work falls flat. Where is the work for them to be compelled into?
Secondly, there are a myriad of problems with how this will operate in practice. One example: if you are in work and you lose your job, when does the benefits cap kick-in? How long will you have to find cheaper alternative accommodation within the limited social and ‘affordable’ stock? How will it help those who lose their job find an alternative as they rack up rent arrears and may be forced to move home, just at the time when they need to concentrate most on finding employment?
It’s another example of where IDS’s welfare agenda is crashing unpredictably against Shapps’ housing agenda. For either agenda to work, they must work together. And that too is a lesson for Labour as we formulate our future plans.