Housing policy across the UK is in a right mess. I'm on the management committee of Prospect Community Housing in West Edinburgh so this is having an impact on my everyday life as a committee member.
The committee got a presentation about the changes to the benefits system that is going to start from 2013 and culminate with the introduction of the Universal Credit. I'll be entirely honest, I'm not completely against the Universal Credit - the idea of providing tapered welfare support depending on income and ending the massive increase in marginal tax that occurs when people on housing benefit move into work should be welcomed. And that's about it. To get how stupid these changes are you have to understand that because social housing has become so marginal in the UK the majority of residents get housing benefit. The security of income from housing benefit paid directly to the landlord makes social housing providers very attractive to lenders. This means that grant can be topped up with cheap loans and houses get built. Basically we subsidise our housing in two ways - grant for the house itself, and housing benefit for the tenant who lives there.
The Tories don't like housing benefit, because if you live in a large, privately rented property in London you can get lots of Daily Mail Headline Inducing benefit. So they're trying to cut it. I thought this only really affected London and the south east, but how wrong was I. Firstly, the non-dependent deductions. At the moment, if you have a non-dependent resident (i.e. grown up child, other relative, friend) with you and you receive HB you get a deduction on your HB for the income they should bring in. From April this year this deduction has increased by 28% and will continue to increase until 2014. So, if you have an unemployed dependent living with you, this is an incentive for them to become unemployed and declare themselves homeless and move into a home on their own as this will maximise their benefit. Really clever that one. Next is the cap on benefits to £500 p.w. for a family from April 2013 - likely to effect large families in the social rented sector who will end up homeless if they cannot top-up their benefit to pay their bills and rent.
Now, the really, really stupid ones are under-occupancy and the Universal Credit itself. Firstly under-occupancy. Now if you live on your own you will have to live in a one bedroomed property, for example. If you under-occupy your benefit will be cut. For landlords like the City of Edinburgh Council that have a lot of two-bedroomed flats and routinely under-occupy this will have a massive impact. Tenants will be expected to find the difference to pay the rent, which could be £10 p.w. Also, at the moment the rules define a bedroom as needing a window, so watch this space for people bricking up windows. Unless we have a massive increase in the supply of one-bedroomed properties overnight, this is going to be a homelessness nightmare. What is more, do you recall people squealing about that think tank report that suggested that owner-occupiers should be encouraged not to under-occupy - how could you take my mum's spare bedroom away? I won't be able to come home for Christmas etc. Now, if you happen to be disabled, ill, or out of work, you can't have anyone to stay ever.
The Universal Credit. The problem with this is it will be paid directly to tenants. This sounds good in practice but the sad fact is that when tenants accidentally receive HB themselves due to a mix-up, they always go into arrears and landlords never see that money. And, with the Universal Credit, as it starts to get withdrawn, it will be the housing portion that reduces first.
On top of all this, in both the Westminster and Scottish Governments (see, for example the Adaptations Budget cuts), housing association grant is being massively reduced and social housing providers are expected to provide homes in a much more market-based fashion using loans from banks. For example, the City of Edinburgh Council's 21st Century Homes programme is using the Scottish Futures Trust, National Housing Trust to lever in cheap private finance to build new homes at very low grant levels. Meanwhile the Council is thinking about putting itself forward as one of the authorities to pilot Universal Credit. If their rent income drops and arrears levels rise then the finances of the NHT start looking very ropey indeed.
All in all, the only way this can lead is to increased homelessness, a decrease in the supply of affordable housing and massive increases in relative and absolute poverty. And today it's being reported that the reforms are bringing about yet another perverse incentive. Changes to the way the Housing Revenue Account works in England are actually providing an incentive to Councils to knock down homes.