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Former housing minister calls for review of benefit rises bill

21 January 2013

The Welfare Benefits Uprating Bill returns to the Commons this afternoon for committee and remaining stages. As I reported last week, rebel backbench Lib Dems, the Labour front bench team and Green MP Caroline Lucas have tabled a number of amendments to the legislation to change the uprating itself, which may provoke heated exchanges on the floor of the House but little more.

But there is one more amendment for discussion which, even if it doesn’t get accepted this afternoon, could well reappear in the House of Lords. It’s from former Housing Minister John Healey (who was in office when Labour made its last minute and rather half-hearted attempt to cut the housing benefits bill) and calls for a review of the relationship between housing benefit and market rents in each local authority area. Healey’s clause says the annual review should analyse how much housing is affordable for those on housing benefits in each local authority area. If there is a significant divergence between local rents and housing benefit levels, then Healey wants the government to reconsider the way it uprates housing benefits.

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Now obviously like the rest of his party, Healey opposes the idea of the 1 per cent cap on benefit rises, and there is still plenty of hay to be made on that. But he is working on the basis that this government has granted similar reviews on other welfare legislation. In 2011, Lord Freud set up a review of the housing benefit cuts in the Welfare Reform Bill as a concession to peers scrutinising the legislation. Healey suspects the same could happen in the Lords, but tells me he wants to ‘get in early’ on this:

‘Previously they have held it back as a concession for the Lords. But I want to get in early on this argument because they are using housing benefit to turn the screw on people who have so little flexibility in their budgets. Ministers have not been open about the effects of this and I want to smoke them out.’

P.S. It will be interesting to see what Sarah Teather does today. She rebelled against the Bill at second reading, but has yet to sign the amendments put forward by her Lib Dem colleague Andrew George.

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  • alabenn

    It will be interesting to see what Sarah Teather does today,
    Please explain why a non entity like Teather could in any circumstances be interesting.

    • anyfool

      Try mating her with the gollum in the picture, the offspring would be very interesting.

    • John Lea

      Well said. Annoying wee gerbil that she is.

  • LB

    So who is going to pay the price for these benefits?

    Ah yes, you’re spending people’s retirement money. When it comes to their pensions, you’re going to say, sorry, there’s no money, you’re out in the street.

  • Tom Tom

    Landlords receiving housing benefit should lose tax relief on mortgages rather than be double-dipping on the taxpayer.

    • John Moss

      Is interest on a loan not an allowable business expense?

      • Tom Tom

        Yes it is, but then having the taxpayer fund your customers is a trifle absurd. Perhaps we could look at Tesco selling a bottle ofd whisky for contrast. Tesco gets Tax Credits to subsidise its wage costs; it pays Corporation Tax + NIC, and the bottle of Whisky carries 80% tax………whereas a BTL operation gets Subsidised LOan to buy property (QE); tax relief on Interest, and Housing Benefit to pay the rent………yet the Economic Rent has been extracted from Savers and First Time Buyers who are priced out of housing by Corporate Landlords who thus increase their supply of Tenants…. Is it not true Jophn Moss that 40% + of Housing Benefit Recipients are WORKING but cannot afford rents…..and that most are in London ?

        • John Moss

          BtL is a business just like any other. If a business is to be restricted from using loan capital to purchase an income producing asset, just because that income is in part subsidised by benefits, where do you stop? People making equipment for disabled people perhaps? Or the interest on loans taken out by farmers because some of the food they buy is bought by people on benefits?

          As you correctly state, many people receiving Housing Benefit are also working. That probably means they are not paying all their rent with benefit money, just some of it. How would you split that? What if the landlord had several properties, some let to those receiving some help from benefits and some not? How about those who don’t get Housing Benefit, but get Tax Credits or Child Benefit? would that disallow the landlord from deducting interest?

          Your argument falls because it requires one legitimate form of business to be taxed differently from another.

        • michael

          Over the next couple of years employers NI is set to rise to 18% of salary if paid to the employee rather than HMRC – that takes a minimum wage earner very close to the living wage.

        • itdoesntaddup

          It is sufficient simply to restrict the size of Housing Landlord Benefit paid: this places a floor under rents paid by those not being subsidised by the state. That is precisely why Mr Healey’s idea is completely wrong.

          If you taxed BTL mortgage interest that would simply serve to increase rents, which would be counterproductive. A far better solution is to limit the maximum LTV on a BTL mortgage to say 60%, reducing gearing. That also frees more of the rent to cover repairs rather than mortgage bills, and gives a better security of tenure for tenants who otherwise run the risk when their landlords are repossessed.

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