The media spotlight has highlighted how the Housing Benefit reforms from the spending review will impact on claimants in central London, however other areas will also be hit hard. Our analysis shows that the changes to housing benefit are likely to affect a higher proportion of claimants in seaside towns such as Blackpool, Brighton and Bournemouth, due to the large proportion of claimants in more expensive private sector accommodation. However, those central London claimants who are affected by the reforms will face the biggest impact on costs.
The Comprehensive Spending Review 2010 highlighted key changes to Housing Benefit:
- Setting the maximum Housing Benefit rate (the “Local Housing Allowance”) to the 30th percentile of local property rents from October 2011 (currently the allowance is set at a higher level; the median, or 50th percentile, of local property rents).
- Capping of the Local Housing Allowance rates for shared rooms, 1-bedroom, 2-bedroom; 3-bedroom and 4-bedroom households from April 2011 (with the maximum 4-bedroom allowance to be £400 per week)
- A maximum cap to the 4-bedroom rate from April 2011 (in other words, larger households will not receive more than the 4-bedroom allowance)
- Removal of the £15 excess from April 2011 (Housing Benefit recipients can currently keep this excess if their rent is below the maximum allowance).
Although much has been made of the £400 cap, matching the maximum allowance to the 30th (rather than 50th) percentile of local property rents will have a much more significant impact on most areas.
The Department for Work and Pensions spending review analysis of the impact of these changes for local authoritiesprovides estimates of the number of Housing Benefit claimants who likely to lose under the reforms (the Guardian has published this data in a downloadable spreadsheet with commentary).
Our analysis also includes the total number of Housing Benefit claimants to identify the proportion of Housing Benefit recipients in each local authority likely to be affected by the Housing Benefit reforms. This gives a different view of which areas will be hardest hit: those areas where Housing Benefit claimants tend to be located in the cheapest accommodation (already below the 30th percentile cut-off) will have correspondingly lower proportions of claimants affected. But in those areas where claimants are living in slightly more expensive accommodation (below the median property rental, but not in the cheapest 30% of properties), a higher proportion of claimants is likely to be affected.
|Local authority||Region||Housing Benefit claimants likely to be affected (numbers from DWP)||% of all Housing Benefit claimants likely to be affected|
|Brighton and Hove||South East||12,550||43.8%|
|Source: OCSI 2010, from DWP, Guardian Data Blog|
The table above shows the areas with the highest proportion of Housing Benefit claimants likely to be affected – eight of the 10 areas identified are seaside towns. This is likely due to the higher proportion of coastal town Housing Benefit claimants in private sector accommodation rather than social housing in seaside towns. Private sector rents are typically higher than social housing rents for similar quality accommodation, and Housing Benefit claimants in more expensive private sector accommodation are more likely to fall foul of the proposed changes.
Central London Housing Benefit claimants who are affected by the changes in Housing Benefit, will on average lose more of their benefit than claimants outside of Central London. However, our analysis suggests that a smaller proportion of Housing Benefit claimants in central London will be affected by the changes than across seaside towns. Only one Local Authority in the top 10 is located in Inner London (Wandsworth), while the City of London, Southwark, Islington, Tower Hamlets and Camden are among the 10% of Local Authorities in England with the lowest proportion of Housing Benefit claimants affected. We suggest that this is down to Housing Benefit claimants in Inner London being more likely to live in social housing, where rents are typically lower than equivalent private sector dwellings. Consequently, a higher proportion of claimants will be in accommodation already ranked among the cheapest 30% in the area, and therefore unaffected by the proposed Housing Benefit change.
The map below shows the proportion of claimants affected by the changes for English local authorities. Areas shaded blue have the largest proportion of households affected – highlighting the coastal areas in the table above, as well as a cluster of authorities in north London.
Stefan Noble, Oxford Consultants for Social Inclusion (OCSI).
October 29th, 2010.