Housing Benefit – who really benefits?

This week has seen yet another TV exposé on rogue landlords, this time by BBC Panorama “The Great Housing Benefit Scandal” aired on 20 April.  Whilst, as in all good exposé investigative journalism, extremes have been shown, there can be no question however that the landlords shown in this film are providing very poor quality accommodation, unacceptably poor.  Having spent over 25 years working in housing and temporary accommodation I can say that such poor accommodation is certainly not unique– there will be far too many properties across the UK in similar conditions. Are these landlords ripping off the system? Are they doing anything legally wrong?  There may well be health and safety issues, HMO rules and planning laws that mean there might be some element of illegality but these are basically technicalities.  What is not in doubt is that for many they are doing something morally wrong.

A fair and free market?

The counter-argument of course is they are operating within a free market – one driven by supply and demand.  They are doing nothing wrong.  There is huge demand for rented housing, especially from those unable to access other housing options and they are simply meeting that demand.  But here’s the rub – desperate people with few options. These tenants are not setting the rent level or getting any benefit from the HB. It is the landlord using the market, abusing the market, but not doing anything that any rational capitalist focussed purely on profit would not do.  They are finding a market niche – your market pricing point – where you can maximise income for the lowest cost.  You cannot criticise their economics even if you can absolutely question their morals or ethics.

Society failing the poor

But before we all get too high and mighty let us not forget that as a society we have failed to accommodate the poor individuals (by which I am reflecting upon their finances as well as expressing my sympathy).  The ethically suspect rogue landlords are still doing something others don’t do….or don’t do enough, which to house the lost and the lonely and those who others do not (in some cases will not) house.  As a society we allow this abuse to happen by not addressing that simple supply and demand equation.

So rogue landlords creaming off obscene profits benefit from HB.  However, perhaps so too do those genuinely good landlords who do work hard and maintain their properties and as such charge an entirely legitimate market rent.  They house the much vaunted and beloved by politicians ‘hard working families’.  They house them at rent levels that many working households can simply not afford without top up housing benefit; landlords again doing nothing wrong and certainly morally and ethically on much firmer ground simply following the market.

Not paying a living wage

But actually whilst such good landlords may make a reasonable or fair profit is the real beneficiary in such partial or top-up HB cases simply employers who are not paying a living wage, employers who are able to rely on this indirect State subsidy to keep their wages lower than might otherwise be the case if they themselves had to bear the cost of paying wages that enabled their workforce to live locally and come to work.  According to the House of Commons statistics, 478,000 people with jobs claimed housing benefit in 2009/10, rising to 1,049,000 in 2014. On current trends, the number of claimants will increase by a further 276,000 to 1,238,000 in 2018-19.

The cost to the taxpayer has climbed from £2.2bn in 2009/10 to £4.6bn this year and to a projected £6bn in 2018-19.  Whilst it may not touch the bank accounts of employers and company bosses it is clear to me that the explosion of zero hours contracts and non-living wage employers is to some extent facilitated by the HB system.

Avoiding stereotypes 

So let us not allow politicians or pundits to demonize housing benefit recipients with lazy stereotypes as those living in the lap of luxury whilst wasting their days watching Jeremy Kyle. Helping people find a job and move away from a life on benefits is a good thing.  Wouldn’t it
be an even better thing if they really could leave benefits behind by being paid a genuine
living wage?

 

 

 

 

 

 

Ashley Horsey
Chief Executive of Commonweal Housing