Living within the benefit cap in Haringey
As government is forced to defend the lack of savings from the overall benefit cap on the basis that aims to returns fairness to the system, we consider what the budget really is like for workless households in Haringey.
Today the Chartered Institute of Housing criticised the overall benefit cap for failing to get people into work and saving money. This research was based on the experiences of Haringey Council which was one of four London boroughs to implement the cap from April 2013, ahead of the national roll out last month.
In response the Work and Pensions minister, Mike Penning, appeared on the Today Programme criticising the research as being based on too small a sample and that it was too early in the process to see the long term gains. He also defended the policy, saying it was about returning fairness into a system: it is not fair that a workless household can receive more than £500 a week in benefits. But how far does £500 per week actually go in Haringey?
The CIH research showed that 45% of families affected were living in the private rented sector and another 43% were in temporary accommodation (which is most commonly privately rented). And DWP’s own figures have shown that 94% of families affected in Haringey contain children. For these private renting families with children, housing is going to be one of their biggest expenditures. So how much is housing in Haringey and how much income does that leave after the cap?
The table below draws on our analysis for the London’s Poverty Profile 2013 report, published by Trust for London last week. It looks at the cost of rent for different sized properties in Haringey. The rent levels are for the lower quartile so they reflect the lower end of the market, not the average.
It shows a family with 1 or 2 children (who require a 2 bedroom property) are likely to have to spend £325 per week in rent. If they were workless, they could only claim up to £500 per week in benefits which would leave them with a disposable income of £175 per week.
A larger family of 3 to 4 children would require a larger property (3 bedrooms) and would spend around £405 per week on rent. This leaves them with even less disposable income – £95 to feed clothe between 4 to 6 children and adults. In reality these families are not enjoying an income of £500 per week, their income after housing is very much lower than this.
We also explored the London-wide impact of the benefit cap in the London’s Poverty Profilereport. This benefit change is particularly important for London, around half of those affected are living in London. This is not because families in the capital are more likely to be workless, but the ones that are face huge housing costs.
The maps below are from the report. They show where families of different sizes affected by the cap could move to if their housing benefit would fall within the cap. The light green boroughs are affordable (where lower quartile rents fall within the cap limit) and the dark green ones are not.
For single adults without children, facing the lower cap of £350 a week, Inner London is unaffordable. Haringey is included in this group. For larger families, ever larger parts of London are unaffordable. For families with two children Inner and much of West London becomes unaffordable, for families with three children all of London is unaffordable.
Mike Penning claims that this policy is bringing fairness back into the benefit system. But this policy fails to address the unfairness that a family in Haringey, whether working or workless, with an income of £500 per week can expect to spend at least two thirds of that income on rent.