Affordable Rents and Housing Benefit – “I Told You So!”

Published by Phil Morgan on Tuesday, October 16th, 2012 at 09:26 am

The most powerful three words in the English Language are “I love you”. The most irritating four words are “I told you so!”

Just over a year ago in response to the announcement on Affordable Rents I warned: “Core to the Affordable Rents model is higher rents – in effect converting extra rent into more new homes. However given the proportion of tenants on housing benefit, and the temptation to social landlords to utilise housing benefit for affordable rents then it should be obvious that someone in Government should have calculated the costs in terms of housing benefit. Except they didn’t.

"Steve Webb, Work and Pensions Minister, admitted no such calculation has been done. To make matters worse there are incentives in the bidding process where social landlords are reletting homes to convert these too at affordable rents – ensuring more income and a more competitive grant rate. Thus the impact on the housing benefit bill will grow over time. Pretending, as CLG Minister Andrew Stunnell did, that the impact will be ‘really small’ is really stupid.”

The Commons Committee for Public Accounts has now published its report into Affordable Rents. Included in its report was an acknowledgement that the Affordable Rent Programme would see landlords “charging tenants higher rents. This will lead to an estimated £1.4 billion increase in the Housing Benefit bill over the next 30 years. The Programme therefore shifts costs from one government department to another, and it is unclear whether this will provide better value for money in the long term.”

The Affordable Rent Programme was devised over a weekend to deal with less money for CLG to build new houses. Ministers did this through, in effect, taking money from housing benefit. They didn’t bother to tell DWP about it and stored up the problem for the future. Which given the extra £10bn cuts in benefits just announced could be much nearer than any of us would like.