Many of the proposed housing benefit reforms find favour with Gary Vaux but he believes they could go further in their aim to return people to work
It’s been an obvious strand of government policy, supported by the Opposition, that lone parents should be encouraged to work rather than claim benefits.
The latest encouragement comes in the shape of a set of proposals to reform housing benefit. Some of them have merit; others have been drafted with one eye on the Daily Mail, which has already picked up on the “Housing benefit for families on Millionaires Row” theme.
The housing benefit reforms have to be seen as part of a package of changes, some good, such as disregarding child benefit and child support in the calculation of the benefit, and some bad, such as switching parents of young children from income support to jobseekers’ allowance. Surprising is how unimaginative the proposals are in addressing the fundamental barriers posed by the current housing benefit system when a parent wants to start paid employment.
One proposal that does make it into the consultation paper is for fixed-term awards of housing benefit, for six months at a time. This is to address concerns that claimants have about whether, and how much, housing benefit will be paid when in work.
It would also smoothe out some of the complex interactions with other benefits, especially tax credits, and avoid weekly adjustments in housing benefit for those with variable earnings. But it reduces flexibility and responsiveness.
Another proposal that has merit is to replace the “run-on” arrangements, when a person who starts work receives four weeks’ housing benefit at the same rate as when they were not working. Instead, there could be a three-month “transition-into-work payment” of the benefit, at the out-of-work rate, for people moving into work.
Local housing allowance
There will also be a review of the local housing allowance (LHA), used to calculate housing benefit for private tenants. The positive side is that the government is willing to consider, at last, whether people who have shared care of their children with a former partner should be “allowed” an LHA which includes a bedroom for those children.
But the proposal fails to mention foster carers in private rented accommodation, who are often adversely affected by the same rule.
The consultation paper also outlines the government’s long-term aspiration to possibly merge housing benefit with other income-related benefits, or create a form of “housing tax credit”.
Missing from the proposals are the radical (and expensive) solutions that would get people back to work. For example, how about extending housing benefit to mortgage interest so that help can be provided when a person is in work, and not just when out of work?
Or a review of the miserly “earnings disregards” in housing benefit, where anything above £20 a week brings a severe cut in a lone parents’ housing benefit? And while we are about it, let’s address those severe cuts too. Housing benefit is withdrawn at the harsh rate of 65p for every after-tax £1 that someone earns.
Reducing that to 50p, even for just a temporary period for newly-employed, people would be a start. If you feel this is a good idea, e-mail the Department for Work and Pensions’ consultation by 22 February at email@example.com
Gary Vaux is head of money advice, Hertfordshire Council. If you have a question e-mail firstname.lastname@example.org
This article is published in the 28 January issue of Community Care magazine under the heading Housing benefit shake-up let down by lack of imagaination