How IDS misled parliament on housing cuts


2:45 pm - November 17th 2010

by Don Paskini    


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I’ve said for a while that Iain Duncan Smith and his team at the DWP are weak on the detail of their policies and have a preference for “policy based evidence”, ignoring any data which doesn’t support their view of how the world should work.

Here’s a great example. Inside Housing found that a key fact which IDS and his Tory and Lib Dem allies quoted to justify their housing benefit policies was inaccurate, based not on the Office of National Statistics (as they claimed), but on a property website owned by Associated Newspapers.

The real stats demolish the claims of government ministers about the likely effect of housing benefit cuts.

IDS claimed, in parliament:

We now know that, according to the Office for National Statistics, the private marketplace in housing – Labour Members are completely wrong about this – fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%. There is thus a 7% gap with what is going on in the marketplace.

Here’s the facts, from John Birch at Inside Housing:

His reference to the ONS puzzled many people as they were unaware that it produced any statistics on private sector rents. And the Department for Work and Pensions has now confirmed to me that the source of the 5% figure was in fact the rental index set up by find-a-property.co.uk (now findaproperty.com), a website owned by Daily Mail publisher Associated Newspapers.

However, the problem with the figures goes way beyond the issue of what I am sure was IDS inadvertently misleading parliament about their source…

First off, rents for advertised new lettings are not a guide to rents in the market as a whole and especially to the rents of tenants who remain in the same property.

Second, findaproperty records asking rents rather than actual rents in its quarterly survey. Although its methodology adjusts for weightings by region, property type and number of bedrooms, that needs to be borne in mind because asking rents (just like asking prices in the for sale market) tend to be more volatile go up more in booms and down more in busts.

Third, findaproperty appears to cover a different part of the market to the local housing allowance. The average findaproperty rent in March 2010 was £820 a month – almost double the average amount of LHA paid.

Fourth, the comparison fails to consider what’s happened since February 2010. Between March and September 2010, findaproperty’s index rose 3.8% from £820 a month to £851 a month. In June the website’s property analyst Nigel Lewis said: ‘Rents have gone from strength to strength during the first half of 2010. The resurgence of the sales market has left tenants short of options and the result has been increasing rental prices.’

And in September he said: ‘Average rental prices are back up to where they were two years ago and I can only see them going up even more.

‘Stock levels in both the home buyer and rental markets are dwindling, and would-be buyers are still having a hard time getting mortgages. This is all putting increased pressure on the available rental stock which pretty much makes it a landlord’s market at the moment as they can effectively name their price.’

However, if it’s a landlord’s market and landlords are taking advantage of housing benefit, why did the average weekly award for LHA tenants only rise by 0.05% (from £112.85 to £113.43) between February and July 2010?

Fifth, as I blogged on Friday, the DWP’s own stats do not seem to support the view that the LHA somehow distorted the market. LHA awards only rose by a little more than non-LHA private rents in the period quoted by ministers and awards paid to private regulated tenants and housing association tenants both rose by more.

The key thing here is not that IDS is using incorrect stats to mislead Parliament (although he did, and should apologise), and it is not even that his analysis that LHA is distorting the housing market is incorrect (though it is).

It is that the real stats show that landlords have no need to drop their rents if benefits are cut, they can receive the same income by evicting LHA recipients and replacing them with other tenants. And if that is the case, then the government’s housing benefit cuts will lead to mass evictions of people who rely on LHA to pay the rent.

Rather than twisting the facts to fit his argument, IDS should adjust his policies to fit the evidence. And in this case, that means avoiding a social catastrophe by dropping the plans to cut Local Housing Allowance.

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About the author
Don Paskini is deputy-editor of LC. He also blogs at donpaskini. He is on twitter as @donpaskini
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Reader comments


“they can receive the same income by evicting LHA recipients and replacing them with other tenants”

Can they?

Leaving aside the transition costs of doing so, probably including substantial refurb, that rather depends on how large the resulting new supply would be relative to the overall stock.

What are those relative sizes?

Jules Birch’s “Third” and “Fourth” show a contradiction.

Third, findaproperty appears to cover a different part of the market to the local housing allowance. The average findaproperty rent in March 2010 was £820 a month – almost double the average amount of LHA paid.

Nothing wrong with that – it’s a valid objection to relying on the date. Unfortunately he then proceeds to do exactly that:

Fourth, the comparison fails to consider what’s happened since February 2010. Between March and September 2010, findaproperty’s index rose 3.8%…However, if it’s a landlord’s market and landlords are taking advantage of housing benefit, why did the average weekly award for LHA tenants only rise by 0.05% (from £112.85 to £113.43) between February and July 2010?

The obvious answer to Birch’s rehtorical question is that he’s not comparing like with like, and he’s the one that told us they weren’t. As such, the stats he’s using – given what he says at “Third” – can’t necessarily tell us about the relationship between LHA and the rents on the properties it funds.

This leaves your conclusions – which rely on Birch’s comments – hanging:

The key thing here is not that IDS is using incorrect stats to mislead Parliament (although he did, and should apologise), and it is not even that his analysis that LHA is distorting the housing market is incorrect (though it is).

This conclusion is unsupported because there’s no evidence – either way – in what you’ve posted about LHA’s effect on the housing market. Indeed, one oft cited argument – that LHA keeps rents artificially high, as opposed to driving them up – would be broadly consistent with the argument Birch makes, were it not for the the flaw pointed out above. Birch focuses instead on looking for a link between the change in rents and the change in LHA; if LHA is function to “lockstep” the level of rents, rather than to inflate them, you might well expect LHA to lag behind.

It is that the real stats show that landlords have no need to drop their rents if benefits are cut, they can receive the same income by evicting LHA recipients and replacing them with other tenants. And if that is the case, then the government’s housing benefit cuts will lead to mass evictions of people who rely on LHA to pay the rent.

Only if it’s true “…that landlords have no need to drop their rents…” does it follow that “…the government’s housing benefits cuts will lead to mass evictions…”. Again, there’s nothing in this post to support the first half. It runs counter to Birch’s “First” and “Second” – since he’s explaining why the data set IDS apparently used isn’t reliable – and I’ve already noted out the flaw that Birch himself identifies.

MTPT/cjcjc – look at Lewis’ quote:

‘Stock levels in both the home buyer and rental markets are dwindling, and would-be buyers are still having a hard time getting mortgages. This is all putting increased pressure on the available rental stock which pretty much makes it a landlord’s market at the moment as they can effectively name their price.’

It is that the real stats show that landlords have no need to drop their rents if benefits are cut, they can receive the same income by evicting LHA recipients and replacing them with other tenants.

Meanwhile…

A campaign to improve the legal process for landlords by making the tenant eviction for problem tenants easier and improving landlords’ rights of access, has gained the support of more than 2000 landlords in just one month.

The Rebalancing the Law petition – which will be presented to Downing Street by Landlord Action and [Tory] Mike Weatherley MP – is due to close on 5 November so landlords are being urged to back the campaign now.

One suspects the definition of ‘problem tenant’ is about to get a whole lot looser.

@Don: Remind me which pool of data he was working from, and how it related to LHA-supported rentals?

The rental market in london is completely screwed, I know, I am screwed.

There is a massive, even by london’s standard’s, shortage of housing. My evidence is anecdotal but is still a sample coving much of east london for the last two months.

Landlords can find tenants at the drop of a hat, many rental properties are on the market for under 24 hours.

Intersting that we can cut back housing for the poor, but Pip Squeak can find money to bail out his Irish banker friends.

Birch’s third point is thye relevant one here:

Third, findaproperty appears to cover a different part of the market to the local housing allowance. The average findaproperty rent in March 2010 was £820 a month – almost double the average amount of LHA paid.

Claimants and others just don’t function in the same housing market, least of all one where rent averages £820 a month. Most advertised properties simply aren’t available to claimants, or won’t be covered by HB because of price or form of tenancy.

The government must have access to information about rents being claimed for, since it’s administering the payouts. But it’s remarkable that it doesn’t seem interested in releasing the data that are actually relevant: better to have people imagining £500 a week is some kind of norm when most get something nearer £100.

But then this whole policy’s been accompanied by distortion and outright falsification. It’d be a bit much to expect anything approaching honesty from the DWP now.

9. scandalousbill

Matt Taylor.

It seems the main point that Don made in the article with the citations from John Birch, i.e. IDS mislead the house is still not debunked.

“His reference to the ONS puzzled many people as they were unaware that it produced any statistics on private sector rents. And the Department for Work and Pensions has now confirmed to me that the source of the 5% figure was in fact the rental index set up by find-a-property.co.uk (now findaproperty.com), a website owned by Daily Mail publisher Associated Newspapers.”

If true, it is a serious matter of Cabinet and parliamentary conduct. I would appreciate your thoughts on this.

One point that I have never seen mentioned is that many landlords do not accept housing benefit.
It’s not just a case of finding somewhere cheap to live, it’s about finding somewhere that will accept HB

Round here (deep SW) landlords dont like housing benefit, and in the past ten years there has been a huge reduction in family homes available to rent anyway – theyve been turned into student houses instead because landlords make a lot more money from that.

So family homes for rent have become scarce enough that I rarely see anything with more than two bedrooms for less than £500 a month. But LHA is £420 and due to go down another £12 for that two bed house.

So the LHA round here is already a lot lower than the cost of renting privately, and I think this is because some people in council housing are paying so little in comparison – the range that the LHA is measured from has a lowest rent of £30-ish! I assume that this is someones deal theyve been on for decades because I started renting in the early 90s and even a scabby bedsit cost more than that then.

So LHA is already insane even before they cut anything from it. I get that rents in London are ridiculous and that there are some people on unbelievable HB, but I dont get why sorting that out has to mean making HB smaller in places like this where LHA is already set too low.

@anony

“but I dont get why sorting that out has to mean making HB smaller in places like this where LHA is already set too low.”

Because the number of people on very high HB claims in tiny, the £400 cap is only projected to save £65 million. Whereas cutting the local cap from 50% to 30% of local rents is projected to save £1 billion, it is because of the coalition’s media spin that people are discussing the tiny percentage of high claims and not the large cuts to the benefit keeping a roof over poor people’s heads.

This other article on the same blog (link below) is much more important than the one highlighted above. It doesn’t show the Tories outright lying, though, so it may be less exciting. On the other hand, it does strongly suggest that the £400pw cap was a deliberate red herring put out as “the headline figure” to make the cuts sound reasonable. The real cap for most families will be more like *£180pw* (the cost of a cheap three bed in Maidstone, by the way), because of the overall cap of £26,000 on benefits to one household.

http://www.insidehousing.co.uk/community/blog/if-the-cap-fits/6511951.blog

cjcjc: “Can they? Leaving aside the transition costs of doing so, probably including substantial refurb, that rather depends on how large the resulting new supply would be relative to the overall stock. What are those relative sizes?”

Good question, though there’s precious little data out there. My analysis (from work) is that rents will probably fall a little across the whole market – but not by much. While I can’t put a number on it, the drop in housing benefit won’t be a big percentage of the total money all British people spend on rent, so it won’t take much heat out of the market. It’s one market. Landlords will easily switch from families on benefit to shared houses for students / young people.

What will happen is that the benefit tenants – who aren’t all unemployed, by the way – collectively will have far less money to put into the market (while everyone else continues to have about the same amount of money), so they will occupy less of the total housing.

I think we know what to expect from IDS. At least with Osbourne you know what you’re getting but IDS tries to play the benign uncle while planning to hit the poorest in society with benefit cuts.

So, all that aside, it’s okay for people to be paid housing benefit so they can live in a house that no private buyer or renter could ever afford?

jungle wrote at 8:15:
“This other article on the same blog (link below) is much more important than the one highlighted above. It doesn’t show the Tories outright lying, though, so it may be less exciting. On the other hand, it does strongly suggest that the £400pw cap was a deliberate red herring put out as “the headline figure” to make the cuts sound reasonable.”

Indeed, and right-wingers have had a field day whining about claims of £500 a week without mentioning that rents as low as £44 will also be inadmissible under the new allowances depending on size and location. And it isn’t just the fovernment that’s doing the misrepresenting – take this LibDem poll question at http://www.libdemvoice.org/ldv-survey-what-lib-dem-members-think-of-the-coalitions-comprehensive-spending-review-22040.html :

“Proposed housing benefit reforms
“The Coalition government has proposed that there should be a cap of £400 a week (around £20,000 a year) on the amount of housing benefit anyone can claim. Some people have said that these changes would be unfair on poorer people living in high-rent areas like central London and would lead to tens of thousands of people losing their homes. Other people have said that it is unfair that people on benefit should be given more money to spend on rent than many people in full-time work can afford. Do you support or oppose the proposed cap on housing benefit?”

So LibDems are misleadng even their own members and supporters into thinking this is all about the inner-London cap when that’s a small part of the package and low-income tenants everywhere will be hit (note the question title – “Proposed housing benefit reforms” – when it then only mentions one aspect). It’s been lies and distortion all the way, with most people misled into imagining that unusually high payments to large families in a handful of areas represent some norm.

Chris wrote at 8:52 pm:
“So, all that aside, it’s okay for people to be paid housing benefit so they can live in a house that no private buyer or renter could ever afford?”

See what I mean?

10. Helen wrote at 4:58:
“One point that I have never seen mentioned is that many landlords do not accept housing benefit. It’s not just a case of finding somewhere cheap to live, it’s about finding somewhere that will accept HB”

Most landlords won’t take anyone on HB. But it gets worse: even if you’re fortunate enough to find a decent place, the tenancy agreement has to meet the HB requirements – no agents, sub-lets or intermediaries, everything just so. And of course you often don’t see the contract until you’ve parted with the money, and even then the document might be deemed insufficient for HB. So every move becomes a game of Russian roulette in which you may end up without any benefit at all and could be locked into a six-month tenancy that you can’t pay for, with the likelihood of losing your home and your deposit when the money runs out.

It’s a barbaric system that limits most claimants to a handful of professional “DSS” landlords who know the ropes and charge the most they can get for often sub-standard properties. The ridiculous red tape surrounding payments excludes claimants from most of the decent cheap properties and explains why so many even now have to cover at least part of the rent from their day-to-day living money. The easiest way of bringing down costs would be to loosen the restrictions on what people can claim for so they can pay the lower rents rather than paying over the odds for the worst accommodation.

Chris: “So, all that aside, it’s okay for people to be paid housing benefit so they can live in a house that no private buyer or renter could ever afford?”

Read the linked article in my response (13) above. This is not about a £400pw cap, on “houses no private buyer or renter could ever afford”. It is totally irrelevant because the total cap on all benefits for anyone (£500pw) means no-one could ever be paid housing benefit remotely approaching that cap.

That’s quite serious, and hasn’t been taken into account in the (already terrifying) predictions in the newspapers – essentially it means that if you have a family and lose your job in London (and you don’t have savings) your realistic choices are either (A) get right out of the South East immediately or (B) move your family into a couple of rooms in insanitary slum housing. There are only so many low cost 3 beds in Luton or Maidstone to go round.

The same will be true for smaller areas (e.g. parts of the South West, and probably desirable areas of the north like York/Harrogate) elsewhere in the UK. This will not just affect Central London, as those pointing at the £400pw cap would have you believe.

Dave Parker: “Most landlords won’t take anyone on HB. But it gets worse: even if you’re fortunate enough to find a decent place, the tenancy agreement has to meet the HB requirements – no agents, sub-lets or intermediaries, everything just so.”

Is that really enforced? If they actually continue enforcing such rules (e.g. can’t claim for housing that’s too small for your family), we could actually see substantial numbers of people on the streets not because *they* are not eligible for HB but because none of the houses are eligible for the level of HB available. If you insist someone finds a three bed house in West London which costs £180pw and meets criteria laid down by the local authority – well, that’s not going to happen. They’ll just not be able to claim the benefit at all.

@15 Chris, the £400 cap was always just a distraction; a headline to grab the attention and take the focus from the other cuts which are harder to understand. Even some of the MPs debating the issue didn’t understand this, or that someone in that exceptionally unlikely situation would still get HB if they worked full time. The premise behind most of the debate was false in its own terms.

@16 Fortunately, rents will not be inadmissable completely if they exceed the allowance. The benefit can still be paid but is capped at the LHA. So if my personal LHA is a shared room rate of £55, I can rent a £100 a week house and still receive £55, if I make up the difference.

@17 Documents being deemed inadmissable sounds like a rogue council. The tests you list are not part of the law. Any enforceable agreement to pay rent is eligible for housing benefit, as long as it is not a sham, and is not to pay a close relative who lives in the same property. Refusal of benefit carries a right of appeal to an independent tribunal which will be upheld if the agreement is legally enforceable.

Refusal to rent to people on housing benefit is a serious problem for vulnerable people and seriously restricts choice, which must also push rents up. There is a serious case to be made that a blanket refusal by a landlord amouts to indirect disability or sex discriminaton under the Equality Act.


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  1. Liberal Conspiracy

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  17. Jon Dennis

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  34. london lettings

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  40. Nick H.

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  41. Web links for 17th November 2010 | ToUChstone blog: A public policy blog from the TUC

    […] How IDS misled parliament on housing cuts | Liberal Conspiracy Don Paskini discusses why 'findaproperty.com' is a less than accurate source of data on private sector rental prices, and on why the Secretary of State has (again) misled parliament by presenting these statistics as official data. […]

  42. Wendy Maddox

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  43. Eddie Torrent

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  44. Eddie Torrent

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  45. Yusuf Yearwood

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  46. Alison Charlton

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  47. Daniel Pitt

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  48. IDS makes embarrassing ‘correction’ to housing claim | Liberal Conspiracy

    […] to housing claim by Sunny Hundal     November 18, 2010 at 7:00 pm Yesterday Don Paskini highlighted that Iain Duncan Smith had recently misled the House of Commons over housing, by citing figures from […]

  49. Broken OfBritain

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  50. sunny hundal

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  51. Iain Duncan Smith – Lying and Stupid | the void

    […] was yesterday revealed that baldyman had lied about the source of his claim that the rental market was falling except for those rents paid by Local Housing Allowance (LHA).  […]

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  56. Daniel Flynn

    Tory propaganda to condemn the poor and do same to defend the rich @allinthistogether don't think so http://t.co/0Dt8qmO5





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