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The problem with housing benefit


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An article on the BBC this morning is highlighting the problems many renters face with shortfalls in their benefit failing to meet their rent obligations.  Unfortunately if the Government puts up housing benefit all it will do is further increase rents.  My own view is that housing benefit for those in employment is just driving wages down and rents up and only really helps landlords and employers.

How do we resolve this problem?

https://www.bbc.co.uk/news/uk-politics-52564478

 

Edited by dougless
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2 minutes ago, dougless said:

An article on the BBC this morning is highlighting the problems many renters face with shortfalls in their benefit failing to meet their rent obligations.  Unfortunately if the Government puts up housing benefit all it will do is further increase rents.  My own view is that housing benefit for those in employment is just driving wages down and rents up and only really helps landlords and employers.  How do we get resolve this problem?

https://www.bbc.co.uk/news/uk-politics-52564478

 

Easy - pick a part of the country (say Wales) half LHA allowances and see what happens.

After witnessing the savings do the rest of the UK.

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42 minutes ago, Houdini said:

Easy - pick a part of the country (say Wales) half LHA allowances and see what happens.

After witnessing the savings do the rest of the UK.

An interesting idea but I wonder how the Welsh would view it?

Edited by dougless
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Something odd about the story, even assuming that she is single (it states she is <35, no mention of kids) the 'shared accommodation' rate for Barnsley works out at £266/month (£61.50/week) so no it wouldn't cover the rent on a 2 bed house as it isn't meant to. How she got to £141 I'm not sure, perhaps savings causing her UC payment to be lowered?

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To be fair the article is about how the current health crisis is impacting renters so its not about housing benefit exclusively.  Many employees are discovering how measly our benefit system is when they are laid off which is probably eye opening for some.  However our benefit system is part of the problem because the element for housing does help to support high rents.

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The one big problem I have with HB is with the people who do work 40 plus hours per week and who are earning the low to average wages and have to pay their own rent, their lives are barely any better than those that are lifestyle welfare spongers, in fact I praise them for having enough pride in themselves to work  rather than play the system which must be so tempting to do.

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58 minutes ago, dougless said:

An interesting idea but I wonder how the Welsh would view it?

 

Don't you mean how Welsh landlords would view it. The implementation would be very simple, from April 2022 (so plenty of notice) the new rates are x,y,z. That gives everyone plenty of time to prepare. 

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18 minutes ago, crumblingcon said:

The one big problem I have with HB is with the people who do work 40 plus hours per week and who are earning the low to average wages and have to pay their own rent, their lives are barely any better than those that are lifestyle welfare spongers, in fact I praise them for having enough pride in themselves to work  rather than play the system which must be so tempting to do.

That depends where you are. I expect there is a lot of places in the country where if you work 40 plus hours a week you will be worse off than a HB sponger.

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2 hours ago, dougless said:

To be fair the article is about how the current health crisis is impacting renters so its not about housing benefit exclusively.  Many employees are discovering how measly our benefit system is when they are laid off which is probably eye opening for some.  However our benefit system is part of the problem because the element for housing does help to support high rents.

What she wants to do is pop out a few kids, and tell the council shes homeless. That'll get things sorted.

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4 hours ago, Tulip_mania said:

Something odd about the story, even assuming that she is single (it states she is <35, no mention of kids) the 'shared accommodation' rate for Barnsley works out at £266/month (£61.50/week) so no it wouldn't cover the rent on a 2 bed house as it isn't meant to. How she got to £141 I'm not sure, perhaps savings causing her UC payment to be lowered?

Her problem is she cannot afford that rent, at least without a job.

Amy Corker, 32, lost her job as an account executive at a printing firm, when the company was forced to lay off staff just before the start of the lockdown.

She applied for universal credit to cover the £425 a month rent on her two-bedroom house in Barnsley, South Yorkshire, but was "shocked" to receive just £141 in total, including housing allowance, and minus three days pay from her final wage, for the month. Her landlord, who knew she was struggling, waived her rent for a month, but she has now run out of money.

"I have always paid my rent. I have always paid my bills," said Amy.

"It is not my fault I have lost my job if I didn't have an understanding landlord I don't know what would have happened. I don't know what's going to happen next month."

Amy, who had only started her job at the printing firm in January, is now doing a commission-only telesales job from home and is trying hard to find another full-time role.

If she started that job late Jan then shed have barely worked a month.

When did she move int the house?

The problem with HB is it used to outcompete with the lowpaid wokers, forcing rents up.

Labour made a cretinous decision to set LHA at the average local rent, which just caused private rents to shoot up every year.

LHA is not set set to the 30%.

A better solution would be set LHA to 30% of the local median wage..

 

 

 

 

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3 hours ago, crumblingcon said:

The one big problem I have with HB is with the people who do work 40 plus hours per week and who are earning the low to average wages and have to pay their own rent, their lives are barely any better than those that are lifestyle welfare spongers, in fact I praise them for having enough pride in themselves to work  rather than play the system which must be so tempting to do.

Isn't this what universal credit was meant to deal with? 

 

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3 hours ago, Tulip_mania said:

Something odd about the story, even assuming that she is single (it states she is <35, no mention of kids) the 'shared accommodation' rate for Barnsley works out at £266/month (£61.50/week) so no it wouldn't cover the rent on a 2 bed house as it isn't meant to. How she got to £141 I'm not sure, perhaps savings causing her UC payment to be lowered?

She's just been laid off and it looks like she received her final wage which has (rightly) reduced the amount of UC she'll receive, If she had waited to claim the day after her wages came through she might have received the full amount of UC. 

She will have entitled to £317.82 + £251.63 in rent for the month (I'm using the pre-April rates).
UC reduces by 63p for each £1 of take home pay so if you add £317.82+£251.63 take away £141 (amount she received). Then divide the result by 0.63 you get approx £680 in wages. 

There are other explanations, most articles on UC conveniently focus on the net figure the claimant receives in cash whilst ignoring any wages, ignoring repayments of the "advance loan" most claimants take, ignoring payments towards previous benefit over-payments, utility arrears, rent arrears etc.  I think UC is a badly run system filled with IT problems however I have yet to see an article that has a complete and proper accounting. 

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4 minutes ago, spyguy said:

A better solution would be set LHA to 30% of the local median wage..

I agree on the principle, but that could potentially be a bit high, outside London do people really spend 30% of their wage on rent? Even in a low earning area, median earnings are say £20k, 30% is £6k/year, £500/month.

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3 hours ago, Houdini said:

That depends where you are. I expect there is a lot of places in the country where if you work 40 plus hours a week you will be worse off than a HB sponger.

Yep, that's the truth, sick of that system being abused, but it's now as good as accepted in society.

I have real empathy for those who are struggling, ill or just cannot find work, it's what the welfare state was designed for and I love it, but now we have to sift through all the fraudulent spongers and  too often miss and  hurt those that deserve it

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9 minutes ago, Tulip_mania said:

I agree on the principle, but that could potentially be a bit high, outside London do people really spend 30% of their wage on rent? Even in a low earning area, median earnings are say £20k, 30% is £6k/year, £500/month.

Agree on the principle, I would go for 25% and have an upper cap of 25% of the National median wage. Working families/individual should not be priced out by those on benefits. 

The country needs to go through a process of corrections so that we are in a better position to have a meritocracy. Unfortunately, as someone analogised a few years ago, it’s like a wheel has come loose on the economy and instead of the government stopping and reattaching the wheel they have loosened the opposite wheel to try and balance it out.

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Pay everybody a basic income and abolish housing benefit. People who pay for their own housing have to make decisions about where they can afford to live, any adult who isn't certified or living in sheltered accommodation should be making these choices for themselves.

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On 07/05/2020 at 10:14, Houdini said:

That depends where you are. I expect there is a lot of places in the country where if you work 40 plus hours a week you will be worse off than a HB sponger.

 Quite a lot of places in the country you can work 40hrs a week and be a HB sponger too, not just the workshy and unemployable claiming it. 

 Abolition of rent controls and easy credit was the makings of  BTL ,  HB subsidising unaffordable rents well out of synch with average local incomes fuelled HPI further: Stealth taxation for generation rent 

 

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