ROOF Blog

Hundreds of out-of-work families who have been living in expensive homes at the taxpayers’ expense are facing eviction after changes to housing benefit announced yesterday. Alistair Darling said that from October next year the most expensive properties would be removed from the housing benefit calculation. Housing benefit, which can be as much as £1,800 a week, discouraged people from working and was unfair on those who accepted smaller, cheaper homes, he said. Housing benefit will be capped at £1,100 a week, meaning that 13,000 families, mostly in London, will have to move out of their current properties and into somewhere more modest.

90% of couples under 40 with children in London can’t afford to get on the housing ladder. Analysis by the National Housing and Planning Advice Unit found that as an average figure across the capital only 10% of young families could afford to buy a suitable home. The figure drops to 5% in some areas including Camden, Hammersmith and Islington. Only in the wealthier boroughs of Richmond, Redbridge, Merton and Bromley can more than 20% of young families afford to buy a home. The figure of 10% in London compares with 21.4% in the South West and 23.8% for the South East.

Ministers are to crack down on excessive housing benefit payments in a series of reforms designed to curb the increasing £17 billion annual rental bill. Yvette Cooper, the work and pensions secretary, plans to cap the highest rates paid to private landlords — as much as £1,800 a week — to stop families on benefit living in palatial homes at the taxpayers’ expense. The reforms are expected to save hundreds of millions of pounds a year, but could result in hundreds of families being evicted from expensive accommodation with six months’ notice. The housing benefit bill, which covers rents in the private and social sector, has jumped from £11 billion in 1998 to £17.4 billion in 2008-09 and goes to 4.5 million claimants. The Treasury has forecast that this will rise to £20 billion by 2011 because of the recession, rising private rents and a critical shortage of social housing. The average rent in social housing is only £72 a week against £108 in the private sector.

At least 5,500 properties owned by London’s authorities are unoccupied, more than 3,000 of which have been vacant for three months or more. This is despite 353,000 people across the city waiting to be housed. The figures, released under the Freedom of Information Act, created fury among campaigners. Duncan Shrubsole, of homelessness charity Crisis, said: ‘It’s scandalous to have so many properties empty and we would urge all local authorities to make sure they are using their council housing to maximum capacity.’ Councils today defended their position saying many of the houses were uninhabitable. Lambeth Living, which manages social housing for Lambeth council, has 1,090 properties empty, 848 for more than three months, and 18,000 households on its housing waiting list — 8,000 of those families of two or more. A spokeswoman said empty properties were usually awaiting repair, redecoration or re-letting.

Almost 8000 homes for Armed Forces families are standing empty despite the Ministry of Defence spending £17m a year renting substitute properties. Figures showed there are currently 7889 unoccupied homes for service families in the UK, including 2077 that have been empty for more than a year. But the MoD has spent more than £88m since 2004 on renting homes where no suitable properties are available, with the bill for 2009 topping £17m. Liberal Democrat defence spokesman, Willie Rennie, who uncovered the figures, said: ‘It is scandalous that the Government is spending millions renting forces homes despite already having thousands of houses standing empty.’

Figures in last week’s pre-Budget report reveal 60,000 low-income families now face paying 90 per cent of any earnings directly to the taxman.

The number of affected families is up from 30,000 last year and is forecast to rise again to 70,000 next year.

The very high tax rates arise from complex rules that mean low income families have their benefits slashed if they take up work.

These so-called marginal tax rates – far higher than those faced by top earners – are blamed for discouraging thousands from seeking work.

In the build-up to the pre-Budget report this Wednesday, Pricewaterhouse Coopers (PWC) says the typical British family already faces a decline of 2.4 per cent, or £300 a year, in its discretionary spending power, after tax, mortgages, food and other essentials.

The best-off will see their spending power cut by as much as nine per cent, almost £5,000 a year, the most vicious assault on their living standards in three decades.

The impact of swingeing income tax and national insurance hikes, VAT increases, expected moves back to more normal mortgage rates and higher petrol and transport costs, thanks to the latest boom in world oil prices, will all conspire to devastate the household budgets of the better-off.