Government ministers have started to respond to the many criticisms of their Housing Benefit proposals. A key element of their defence is the argument that cutting HB will force landlords to reduce their rents. How does this stand up to scrutiny?
We have been – and continue to be – extremely worried about the effect the cuts in HB are going to have. As Anjum reported yesterday, 82,000 households in London risk losing their homes.
On Wednesday, David Freud was questioned about this when he gave evidence to the Work and Pensions Select Committee. He said that rents had gone up because landlords knew the government would pay claimants’ rents and that most HB claimants would be able to negotiate lower rents when their benefits came down. Since 2007, he said, private rents have gone up 15 per cent overall, but private rents for HB claimants have gone up 25 per cent.
The British Property Federation has responded angrily, accusing Lord Freud of “fiddling figures.” They point to DWP figures showing that 70 per cent of the increase in the cost of HB is due to growth in the number of claimants and another 17.7 per cent to rising rents charged by social landlords. Increases in average rents that HB claimants have to pay only accounts for 13 per cent of the higher HB bill.
Children’s minister Sarah Teather has also been defending the changes. Speaking at a conference on the same day, she said that the purpose was to drive rents down.
It can’t be right that so much money goes into the pockets of private landlords.
I think that the changes probably will have some effect on rents, which probably will come down somewhat – though at the expense of enormous misery and deprivation on the way.
But this means that Ministers are hanging the justification for these reforms on a prediction: rents will come down, so we won’t see a huge increase in poverty. This leads to an immediate response: if the rents don’t come down, or don’t come down enough to avoid an increase in poverty, debt and homelessness, will they promise then to reverse these cuts?