New Housing Benefit System Could Force People Out of Cambridge


Thursday, November 20th, 2008. 11:06am


Section 5.7 of a “Mapping Poverty Report ” presented to Cambridge City Council’s Strategy and Resources Scrutiny Committee on Monday the 17th of November 2008 states:

The Rent Service determines Broad Rental Market Areas and sets Local Housing Allowances for them. Approximately 800 claimants could be affected by changes brought about by a Rent Service Review of our locality, with the introduction of a new Broad Rental Market Area, extending the area for the new Local Housing Allowance beyond the City. A wider area will mean the dilution of high private rents in Cambridge by lower rents charged in outlying areas. Revenue Services found that 95% of claimants had a reduction of £55 per month on average after they were referred to the Rent Service.

Councillor Cantrill explained what this means in practice using one of his constituents who was receiving of housing benefit as an example. His constituent took some work – on a fixed term contract – which meant he stopped needing state support for a period of time. When his fixed term contract came to an end he applied for benefits again, but found that due to the new Local Housing Allowances – based not on the cost of renting just in Cambridge, but on the cost of renting in the surrounding areas he was £100/month worse off.

The Cambridge region includes Huntingdon, St Neots, St Ives, Newmarket, Saffron Walden, Haverhill and Ely.

One effect of this might be to force people to leave the city, it could also discourage those receiving benefits from taking work.

Currently Cambridge Council is currently making emergency funding available to cover the difference, but the meeting was warned that this could not continue for long.

The Liberals tried to make a party political point out of this; they tried to bait Cllr Herbert, the Labour leader of the opposition in Cambridge into condemning the Labour Government which has established the Local Housing Allowance. Cllr Herbert is sometimes caught in a difficult position when his passion for representing the people of Cambridge comes into conflict with his support for the Labour Government.

“Local Housing Allowance (LHA) was introduced nationally on 7 April 2008 and is a new way of working out Housing Benefit for private tenants.”

http://www.dwp.gov.uk/housingbenefit/claims-processing/lha/background.asp#c

The Cambridge area map is available from:
https://lha-direct.therentservice.gov.uk/Secure/LHARateSearch.aspx?SearchType=LA.

David Howarth raised this in Parliament on the 20th of October 2008 saying:

What does the Secretary of State have to say to the 800 people in my constituency whose housing benefit is being cut, or is threatened with being cut, because of the new absurd way in which the broad market rental areas are being calculated? I understand that he has already undertaken to review the policy, but in light of the illegality of it, as declared by the House of Lords, will he make sure that all those people who have wrongfully lost out will be fully compensated when this policy as it must do, changes?

The House of Lords Judgement.

10 comments/updates on “New Housing Benefit System Could Force People Out of Cambridge

  1. Richard Article author

    David Howarth in Parliament
    David Howarth has just raised this in Parliament again (on the 29th of June 2009).

    He was told that the government is to produce a “Green Paper” outlining its plans to come up with a fairer system.

  2. David Vincent

    What I think should be made clear is (a) the government changed the legislation to prevent the House of Lords decision having any further impact; (b)the Rent Service – now the Valuation Service – reviewed its decision on the extent of the Cambridge BRMA and left it almost entirely as they first decided; and (c) any Green Paper is unlikely to disturb Local Housing Allowance in its current form. The response to David Howarth’s question was entirely dismissive: he asked them to meet a delegation from Cambridge about a pressing problem and the government mentioned a Green Paper at some point in the future.

    The effect of the current regulations is to bar all families who might need benefit help to pay their rent – essentially the lower paid – from finding private rented accommodation in Cambridge City. Since the lower paid are also barred from ever buying in or near the City, all this does is increase pressure on the already inadequate supply of social housing.

  3. Richard Article author

    The question and answer can now be read on TheyWorkForYou.com

    David Howarth said:

    Will Ministers agree to meet a delegation from Cambridge to discuss the deeply disappointing result of the broad market rental area review for Cambridge, which means that hundreds of Cambridge residents will continue to be in a position whereby their housing benefit is forcing them to move out of the city—a situation that the valuation office says results from the state of the legislation, not any discretion on the part of that organisation?

    Helen Goodman, Parliamentary Under-Secretary, Department for Work and Pensions replied:

    The hon. Gentleman may be aware that we will shortly be publishing a Green Paper on housing benefit. When we do, we will look at how to create a system that combines efficiency with maintaining work incentives and is fair to people across the country.

    It is a non-answer, and shows no sign of urgency. This is a major problem, as it is stopping people taking jobs, fearing that if they become unemployed and in need of benefits again they will have to leave the City.

    There’s no need for the rest of us to fund city centre living for those who can’t afford it, and I think social security should only be a safety net. But it makes no sense to force people out of the area, moving them away from their families, without support from families the strains they put on the state may be even greater.

  4. David Vincent

    Renting former Council houses in North and East Cambridge at inflated rents should hardly count as “funding city centre living”. Thankfully, I do not regard myself as one of “the rest of us”. I thought you enjoyed a mixed community, Richard.

  5. Richard Article author

    David,

    My view, badly expressed perhaps, is that while we (all of us, as country) should not be funding expensive city centre living for those on benefits we also shouldn’t be forcing people to leave the city.

    I think people with strong family, work, or other substantial long-standing connections to the city to move out to Ely to find suitable accommodation they can afford on Housing benefit is unacceptable on one side. From the other point of view housing benefit ought be a safety net, and should not be enabling people to live in expensive areas. There needs to be a balance somewhere in the middle.

    Perhaps housing benefit ought be based on the average cost of renting in cheaper areas of the city and some of those areas immediately outside it?

    I think more discretion, within clear, fixed and well publicised guidance and limits ought be present in the system. For some families or individuals it might be entirely appriopriate that they are not supported to live in the city; for others it would not.

    Perhaps having juries who are not in court reviewing individuals’ benefits would be a useful check to ensure they remain in-line with public expectations, and in the public, local and national interests.

    Someone on housing benefit is being funded by the rest of society; I see no problem with being direct about that and not skirting around the point.

    As for inflated rents in North and East Cambridge; we must be careful that the housing benefit system does not contribute to artificial inflation of rental costs in the city.

  6. David Vincent

    I do not think there has ever been any real danger in Cambridge that HB\LHA inflates rents, especially since very few landlords in the City are even prepared to consider poorer people (even the working poor). In any event, there were perfectly good safeguards under the old system to protect against over expensive rents, except when there were strong reasons for someone needing to remain in a more expensive home.

    Of course, anyone receiving benefits is funded to an extent by the rest of society, as indeed is anyone using the NHS or the state education system. The healthy support the sick, those without children support those with children, the working young support the old and so on. My objection was the implication that there is a division between those receiving benefits and the “rest of society”, which I think is mischievous warping of the true nature of the situation (as is practised extensively by the Daily Mail and stories such as the £595,000 council flat with the sea-view).

    I understand the City Council put forward a perfectly well-reasoned argument to the Valuation Office for rejigging the market rental areas for this area, but the Valuation Service dismissed these (I suspect with tacit government backing).

    Sorry if I seem touchy on these subjects at present, but the Welfare Reform Bill going through parliament at present is another particularly stupid and unpleasant piece of legislation, which is supported by the same kind of anecdotal nonsense about “scroungers” and “city centre living”.

  7. Mark Cooper

    Hi Richard,

    In October 2008 I moved my entire family (wife and two children) to Cambridge in order to study as a mature undergraduate. My wife took a job within commutable distance to support me in this. Everything was well (after a very painful process of getting our youngest child into a primary school but that is another story) until my wife was made redundant in July this year. We then had to apply for HB on the four bedroom property (badly needing updating 1960s semi) off Cherry Hinton Road we had rented (we lost all our equity in the crash during our move). Our rent is £1200 per month and we struggled to find a house to rent at that! Our claim was successful and we received pretty much the full figure. What the council did not tell us was that this figure was only for a 13 week period and that after this we would go onto something called the LHA. In the meantime we renewed the contract on the house and my wife – finding a new job proved impossible on a decent salary – decided to join me in further education after much research into whether we could afford it. We were informed in October that our rent would reduce to £775 per month, a reduction of £425; plus it was further reduced due to our student finance to £361.00pm a reduction of £839pm £10,068 per year (our student finance in around £9000 plus another £3000ish which we haven’t been informed of yet because of the issues with SFD) of which a large proportion is a loan. As you can imagine this has destroyed us completely. We are prepared to move but we do not want to move our 11 year olds school for the fourth time in a year and I am tied to Cambridge terms to live within 5mile of Great St Mary’s church. There is no housing stock available for £775pm with the median point seeming to be around £1100pm. What do we do? It seems ridiculous that our LHA is based on a huge number of properties in areas which bear no relation to the situation in Cambridge or even the villages surrounding it. Haverhill is a different world; how can we both attend Cambridge University’s and live that far away? I am honestly at my wits end!

    Thanks for listening and help please…

    Mark

  8. David Vincent

    Hi Mark

    Keeping term is actually within 3 miles of GSM, but the area can be varied

    “(e)in exceptional circumstances, and for grave cause approved by the student’s College, in some other place outside the Precincts of the University” (Stat + Ord Chapter II)

    so I suggest you speak to your tutor fairly swiftly to see if your college will agree to a move further afield.

    Unfortunately, family accommodation for undergraduates is not on the agenda of most colleges, but you could ask (for next year if not this). There might even be some financial help available.

    I am not clear if you have a car (you say your wife was commuting, but I suppose this could have been by train) or how often you have to come into town for study purposes. Joining the “school run” may have to be considered. Or look at places with reasonable bus services. On the other hand, you were prepared to move the children’s schools the previous 3 times, so I’m not entirely sure why this one should be that different.

    You can’t do anything about the fact that the benefit system expects you to contribute £410 pcm towards your rent, or that they take student loans into account as income. All you can do is try and find a rent within the LHA limit. I am not sure you will need to go as far as Haverhill, although a lot of people (including employees of the University) do have to commute from Haverhill to Cambridge on a daily basis. But there was a 4 bed in Sawston advertised on Gum Tree at £750 pcm a week ago, for example, so they are out there.

    You are right about rents in the south of the City of course. They are distorted by student )and other) households paying £350 pcm per room. And presumably by some richer households (to make a rent of £1100 pcm “affordable” in the standard use of the term would require a net income of £3000 plus a month, which is “richer” in my terms, although I appreciate it may be bread-line in some people’s definitions).

    There were long arguments with the government and rent service about the Cambridge BRMA, but the amendments were minimal (albeit enough to make some people living in Huntingdon have their benefits reduced by over £100 a month).

    I think you have a grievance if you were indeed misled by the Council into thinking your rent
    might be met indefinitely, with the result that you renewed your tenancy, but you would have to review the correspondence carefully before complaining. Did you actually ask the question or just make an assumption? You could use this as an argument to support a request for additional payments until the end of the contractual period. But in the end I think you need to accept the fact that you are going to need to find somewhere cheaper, which will probably mean moving out of the immediate area of the south part of the city.

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