The National Audit Office does not normally indulge in hyperbole, so when they conclude that the housing benefit reforms ‘will put pressure on the supply of affordable local housing’ they mean what they say.
In their report on the implementation of the housing benefit reforms by the Department of Work and Pensions they show how the changes will lead to shortages of private rented accommodation at or below Local Housing Allowance Rates: ‘on current trends 48 per cent of local authority areas in England could face shortfalls by 2017 ‘.
The report summarises the scale of the cuts the Government is attempting to make in HB. Spending of £23.4 billion in 2011-12 on 5 million households is planned to be reduced to £21.6 bn in real terms by 2014-15, a cut of £2.3bn. 1.4 m private rented sector households and 600,000 social tenants are likely to be affected.
In its understated way the NAO makes it clear that there are major problems with implementation. For example, they say that the administrative burden on local authorities ‘has not been fully assessed’, which means no-one knows, and that DWP ‘clearly has further ground to cover in helping to raise awareness of the effect of the reforms on claimants’, which means tenants are ill-prepared for what is about to hit them. The Government seems to be putting its publicity effort into telling tenants about the right to buy instead.
The Government has tried to deflect criticism of the changes by putting money into a discretionary fund available to local authorities to help deal with transitional issues – £390 m between 2011-12 and 2014-15. NAO show that this fund amounts to 6% of the savings being made and that ‘It is not clear how the overall level of funding has been determined or whether it is likely to be sufficient to tackle the effects of reforms’. In other words, it will be wholly inadequate.
But perhaps their strongest warning lies in the following conclusion: ‘We see the main ‘unplanned’, and perhaps ‘un-plannable’, challenges facing the Department as being those areas where the interaction of local authority funding capacity constraints, social housing stock, rental market conditions and the local economy may produce extreme impacts.’
Note the words. Extreme impacts.
The chair of the public accounts committee, Margaret Hodge MP, said she was ‘astonished that the department of work and pensions still does not understand the wider impact of these changes. There is a real risk of increased homelessness.’
It’s like waiting for Hurrican Sandy: it will be best to prepare for the worst.