IFS: Rising Affordable Rents Have Driven Increase In Poverty

Rising affordable rents have been “a key driver” in a rise in relative poverty in the UK over recent years, a report from the Institute of Fiscal Studies (IFS) has found. Average housing costs for low-income families with children, it found, have risen four times faster than for middle-income families. The report added that “a key driver” of this change has been the recent increases in what it called “social rents” but which the researchers clarified meant “rents paid by households that live in council housing or housing provided by a housing association”. Read more on the IFS website.

https://www.ifs.org.uk/publications/13075

The Decline Of Homeownership Among Young Adults

The decline in the homeownership rate of young adults in Great Britain is an issue that has risen to the top of the political agenda. In a briefing note, the Institute for Fiscal Studies finds;

·         young adults are significantly less likely to own a home at a given age than those born five or ten years earlier

·         falls in homeownership have been sharpest for young adults with middle incomes.

·         key reason for the decline is the sharp rise in house prices relative to incomes

·         Young adults from more disadvantaged backgrounds are less likely to own their home

Download the briefing note from the IFS website.

https://www.ifs.org.uk/uploads/publications/bns/BN224.pdf

Low-Income Tenants Battle Soaring Rents

Low-income tenants are now spending an average of 28% of their wages on rent, up from 21% in the mid-1990s, new research indicates. They have been hit by substantial cuts to housing benefit, with government support expected to fall "further and further behind" the cost of housing, says the Institute for Fiscal Studies. Over the same period of time, the proportion of people renting homes privately has increased from 8% to 19%. Average private rents have gone up 33%. Download the report from the IFS website.

DWP: Benefit Cap 'Not Designed As Cost-Saving Measure'

The lowered overall household benefits cap was never “designed as a cost-saving” measure, a DWP spokesperson has said. The government has insisted that the total household benefit cap – which is reduced from £26,000 to £20,000 (£23,000 in London) – was designed to get people back into work and was not designed as a cost-saving measure. This is despite the cap being included in a list of measures last year to enable former chancellor George Osborne to achieve £12bn of welfare cuts. The DWP was responding to a report by the Institute for Fiscal Studies (IFS) today that suggested any cost-saving from the policy would be “trivial”. Read the IFS report on their website.

Cuts Will Leave 2.6 Million Children In Poverty

Tory benefit cuts will lead to more than 2.6 million British children living in poverty by 2020, a new study has revealed. The research by the Institute for Fiscal Studies (IFS) forecasts that another four years of David Cameron’s Government will mean the poorest households, particularly larger families and single parents, will be hardest hit.  The study says “the outlook looks less favourable for low-income households” in coming years and warns that inequality will worsen due to George Osborne’s planned cuts. It predicts that those at the very bottom of society, in the lowest 10% of households, will see no real terms growth in their incomes over the rest of the Parliament. Read more on the Huffington Post website.

Pay MORE To Stay – HA’s Cream The Tenant For £473m Per Year (Minimum)

According to the IFS some 250,000 social tenants will have to pay £3000 more in rent each year.  That is £750,000,000 (£750m) per year.  The bedroom tax affects 456,959 social tenant households at an average £792.48 per year or £362 million per year.  So on those simple numbers we see pay MORE to stay being more than twice as bad as the bedroom tax. Once again the social tenant gets shafted by this Conservative government. Yet the housing association landlord benefits as they keep this excess and additional rent charged whereas the excess from council landlord rents goes back to the Government.  So the housing associations benefit financially – and hugely – from this pay MORE to stay policy and are doing the dirty work for and on behalf of Government! Read more on the Speye blog.

Cuts To Social Rents Will Benefit Exchequer More Than Tenants

Reductions in social rents announced in the July Budget will be of little or no direct benefit to most of the 3.9 million households in England living in social housing. Most of those renting their home from councils or housing associations have low incomes and hence receive housing benefit to cover all or part of their rent. Entitlement to housing benefit will typically be reduced pound-for-pound as their rent falls. The reduction in housing benefit will save the exchequer money, and will strengthen tenants’ work incentives as they have less means-tested support to lose by entering work or increasing their earnings. Social landlords – housing associations and local authorities – will lose money. These are among the conclusions of a new report on social rent policy, published by the Institute for Fiscal Studies (IFS) and funded by Trust for London. Download a copy of the report from the IFS website.

Housing Benefit to Be Targeted In Osborne's Welfare Cuts

Housing benefit could be cut by over 10% in George Osborne's July Budget as the government attempts to deliver its commitment to reduce welfare spending by £12 billion in two years. The Institute for Fiscal Studies said that the pledge to protect child benefit from the social security cuts means HB, along with tax credits and disability/incapacity benefits, would "most likely" take the biggest hit.  Carl Emmerson, IFS deputy director, explained: "Cuts of this scale amount to almost 10% of unprotected benefits. Finding such a reduction without cutting child benefit would mean that even more significant cuts would likely be required to spending on one or more of tax credits, housing benefit and disability & incapacity benefits." Read more on 24dash.

Right to Buy 'Could Dent Public Finances and Reduce Social Housing'

Extending the right-to-buy scheme to housing association tenants could undermine the UK’s public finances, according to an assessment of the Conservative party’s flagship policy by the Institute of Fiscal Studies. The independent thinktank warned that selling off housing association homes would “represent a significant giveaway … potentially billions of pounds over the next parliament” and would “worsen the UK’s underlying public finance position”. It said given the “less-than-impressive record” of delivering replacement social housing under the existing right to buy, “there is a risk that these policies will lead to a further depletion of the social housing stock – something the proposal explicitly seeks to avoid”.  Download a copy of the report from the IFS website.

Inheritance Tax Cut Would Push Up House Prices

David Cameron’s plan to lower inheritance tax and compensate for it by increasing tax on the pensions of the wealthiest was described as being likely to complicate the system and raise house prices.  The prime minister promised to raise the inheritance-tax threshold for couples to £1 million with an additional £175,000 allowance for each partner when leaving their primary residence to their heirs.  The proposal was attacked by Paul Johnson, director of the independent Institute for Fiscal Studies as likely to push more money into housing. “It is rather odd to give this special treatment to housing, given that owner-occupied housing is already extremely tax privileged,” Johnson told the BBC. “Anything that does something like this, which increases the tax privilege associated with an asset like housing will drive the price up in the long run.” Read more on the Bloomberg Business website.

Local Authorities’ Spending Cut by Over 20% under Coalition

England’s local authorities have collectively seen their spending cut by 20.4% under the Tory-led coalition, a new report has revealed.  And the Institute for Fiscal Studies' (IFS) figures show that, taking into account population growth, spending per person has been cut by 23.4%.  But the government’s cuts have not been even across the country. Westminster City Council has suffered a cut of 46.3%, while North East Lincolnshire Council has experienced a more manageable cut of 6.2%. And according to the IFS, further cuts planned for 2015–16 will generally be focused on the same local authorities that have lost over the last five years.  Download the report from the IFS website.

Only 'Small Number' Of Benefit Capped Tenants Have Moved House

Only a ‘small number’ of tenants hit by the benefit cap have responded by moving house, a think tank report has said. Analysis of benefit cap numbers released by the DWP by the Institute for Fiscal Studies (IFS) said how claimants were adjusting ‘remained an open question’. It found evidence of moving house only among ‘the small number of claimants who lost particularly large amounts of benefit income as a result of the cap’. Among those who lost more than £200, 14% of those capped in May 2010 and 20% of those capped in May 2013 moved within a year. For the rest, the level of moves was around 11%. Read more on the IFS website.

Benefits Cap Is Getting More into Work, Research Claims

The government's cap on benefits is providing an incentive for people to find work, new research has suggested.  Studies for the DWP found those affected by the cap were 41% more likely to get a job than people who were unaffected. Work and Pensions Secretary Iain Duncan Smith said the benefits cap was "changing attitudes and behaviour".  But the Institute for Fiscal Studies said savings from the cap were "small". It said the cap affected about 27,000 families in the UK - which represents less than 1% of working-age families who receive housing benefits - and saved around £100m a year. Read more on the BBC website.

Welfare Reform Savings 'Less Than Expected'

Welfare spending over the course of this Parliament has fallen by just £2.5bn despite reforms aimed at saving £19bn. The Institute for Fiscal Studies (IFS) said the reasons included a rise in the cost of pensioner benefits, and an increase in housing benefit spend.  It said Chancellor George Osborne could need to make more spending cuts "just to stay on track". The Treasury said its plan was "securing a resilient economy". The IFS said changes to benefits and tax credits had been expected to save £19bn compared with "a world of no policy change". Read more on the IFS website.

Housing Benefit Reductions ‘Had Little Impact on Rents’ For Private Tenants

A package of cuts to Housing Benefit for about 900,000 tenants in the private rented sector has so far had little impact on average rents, but has affected the housing choices of some claimants, the Institute for Fiscal Studies (IFS) has found. These are among the findings of new IFS research, published by the Department for Work and Pensions (DWP) as part of the independent evaluation of the reforms, which were phased in during 2011 and 2012. The analysis looked at those claiming in January 2011 and followed them through to November 2013 – at least eleven months after their Housing Benefit was reduced. At that eleven - month point after being rolled onto the reformed system. Download the report from the DWP website.

Benefit Reforms Will Work, Says Leading Think Tank

Iain Duncan Smith’s plan to persuade millions of people that working is more lucrative than living on benefits could succeed, Britain’s leading economic think tank has said.  Reforms will widen the gap between wages and the income of people living on handouts, the Institute for Fiscal Studies said. It added that tax increases, benefit cuts and Universal Credit ‘will strengthen people’s incentives to work’.   The think tank said the complex changes will give the workless reason to seek a job and encourage those in jobs to work harder for promotions and pay rises.  Read more on the Daily Mail website.

Government's 'Welfare Revolution' Starts To Unwind

The DWP has been successful in making the political argument for welfare changes, and polls continue to show support for cuts to benefits across all parties. Whitehall analysts wonder, however, if the department has bitten off more than it can chew by announcing and attempting to implement a range of ambitious new policies, affecting vast numbers of people, in one term.  Officials have come under huge strain as they struggle to push forward with reform, at a time when the departmental headcount has been cut radically. The Institute for Fiscal Studies calculated recently that between 2011 and 2016 the department will have lost 40% of its workforce. The Public and Commercial Services union said the DWP had cut 20,000 jobs since May 2010.  Policy analysts agree that part of the problem lies with the department's determination to introduce several major reforms simultaneously, focusing on getting them running, and less on how well they work once they have been launched. Read more on the Guardian website.

Late Changes to Council Tax Benefit Reforms

In a ministerial statement recently the government announced a significant change to its policy to localise Council Tax Benefit (CTB) from next April. The government is proposing to localise support for council tax from 2013–14, abolishing CTB across Britain and giving grants to local to design their own systems for providing support for council tax to low-income families. On top of this, the government planned to cut by 10 per cent the funding it provides for council tax support. This would save around £500 million a year.  The effect is that localisation would create considerable complexity just as Universal Credit is being rolled out with the intention of simplifying things.  Now, new proposals have been announced.  A £100 million package will be available to councils whose schemes meet a particular set of criteria that the government considers “best practice”. It will, apparently, be available for one year only. Councils will be eligible for the money if nobody currently on full CTB ends up paying more than 8.5% of their council tax liability (the costs of collecting such small amounts from very low income households who are not used to paying council tax mean that councils may well prefer to give a full rebate to such households); if the rate at which the benefit is withdrawn as income rises is no higher than 25% (compared with 20% at the moment); and if there are no “cliff edges” in the system.  Read more on the Institute for Fiscal Studies website.

Comprehensive Spending Review - Responses

There have been many responses to the Comprehensive Spending Review announced on 20 October. Below you will find links to some of those responses. Nottingham City Homes has also produced its own, email me phil.meadows@nottinghamcityhomes.org.uk for a copy.

Institute_of_Fiscal_Studies  HouseMark  CIH  Crisis  Empty_Homes

HQN Local_Govt._Association  National_Federation_of_ALMOs

National_Housing_Federation Shelter Alan_Johnson_(Shadow_Chancellor)

Alison_Seabeck_(Shadow_Housing_Minister)