Thursday 24 February 2011

On the infinite stupidity of the UK welfare system...

From The Daily Mail:

Evicting a woman from her council home for failing to pay rent would breach her human rights, judges ruled yesterday. Town Hall chiefs wanted to evict Rebecca Powell, who receives thousands of pounds in benefits, after she ran up more than £3,500 in arrears on the accommodation she was given because she was homeless.

???

As I said over at HPC, the benefits system is stupid - because of all the to-ing and fro-ing and separate benefits and paying and clawing back by different departments - and encourages this sort of behaviour.

What's wrong with rolling all cash benefits into one payment (e.g. Citizen's Income or Universal Credit) and then deducting the council rent and council tax from that amount before paying over the net balance? That way it would be impossible for welfare claimants to run up arrears*.

Anecdotal: I was once tidying up a flat after the tenants had left and there were two envelopes from the council. One was a cheque from the Housing Benefit department for the rent; the other was a red reminder for unpaid Council Tax. The cheque and the demand were for similar amounts and we can safely assume that the tenants banked the former and ignored the latter.

* And instead of having means-tested Housing Benefit, it'd be far simpler (and come to much the same thing mathematically, just with less admin, faff, fraud and error) to deduct the rent directly from social tenants' wages, i.e. instead of paying them HB to cover most or all of the rent and then retrospectively reducing the HB by £x for every £100 they have earned (and at which stage they might be out of work again and so don't have the money to make up the difference), just let them live there for free and give them a PAYE code which tells the employer to deduct an additional x% from their wages. Hey ho, no more poverty trap.

14 comments:

john b said...

As always with the Daily Fail, the truth is in the second-last paragraph: she was entitled to a home, was screwed over by box-tickers, then the ECHR protected her from being kicked out of the home that she was entitled to for failing to tick boxes.

Re anecdote: I reckon the tenant ignored both. At the lower end of the "clue" spectrum, venal cunning is much rarer (by an order of magnitude) than ignoring official documents cos they're scary...

Onus Probandy said...

£3,500 in arrears on the accommodation she was given because she was homeless.

I'd always thought that accommodation costs were pretty low for the homeless.

That house price bubble really has done some damage if even the homeless can't afford to rent their non-home.

Onus Probandy said...

... oh and that suggestion in "*" for altering PAYE to cover HB is utter genius; and would obviously work for every other benefit too.

Tax credits are a good idea because...? I got nothing.

Mark Wadsworth said...

JB, sure, the Daily Mail uses this as an excuse for more foaming at the mouth at welfare and the ECHR, but they miss the main point.

OP, have you not seen the price of cardboard boxes? The HB idea is based on something that an economics professor once suggested to me. So far I've never seen a convincing argument against, even my local Labour councillor (who's in charge of housing) liked it.

marksany said...

There is value in paying out benefits and charging rent (market rents too.) The recipient understands how much he is being given by his taxpaying peers. If you give him a free house, he values it as worthless, one of the reasons why they are not looked after by tenants.

Scott Wright said...

OP: "Tax credits are a good idea because...? I got nothing."

They really aren't a good idea, the system is horribly complex and although my missus working 3 days a week costs us more money than if she worked 2 days a week, to cut down to 2 days a week would lose us money until such time as we renew, the renewal figures would be this years income BUT you can request that they pay based on an estimate of current year income if you think it will be lower. If you're even £1 under with your estimate they will claw this back as an overpayment whereas if you are paid based on prior year incomes and get a payrise of less than £10,000 you're paid correctly?

It's a shit system which would be vastly improved by linking benefit payments to PAYE using K codes just like Mark's rent example (and the one a few months back) or replaces the personal allowance (aka UKIP policy) and is simply clawed back by paying tax on the full income so that it acts as a top-up to those earning less than the personal allowance, a NIL tax position to those earning bang on and exactly as the current allowance system to those earning in excess of it.

It would certainly cost a lot less but then we'd have the bleeding heart "can't have public sector job losses, tax the rich more instead" brigade on our backs!!

Mark Wadsworth said...

MA: "There is value in paying out benefits and charging rent (market rents too.)"

Yes of course, but that's a policy thing and not an admin thing.

SW: for some insane reason, Labour kept up the lie that "Tax Credits make work pay" right to the bitter end. Not even the Tories or Lib Dems ever called them on it.

Lola said...

MW - Theref you go again, bein' all logical and commonsensical and stuff. Trouble is wot yew recommends will entail the loss of a lot of jobs in apparatchik-land. Hmmm.

Scott Wright said...

I think its about time I did some calculations based on how much per hour a mother has to earn per hour in order that tax credits gained minus childcare costs paid becomes a positive figure.

Our childcare costs are to a relative and therefore lower than registered childcare but not partially reclaimable via tax credits so my situation isn't really a fair assessment of the situation.

JuliaM said...

"What's wrong with..."

You know what's wrong with it, don't you? It requires fewer civil servants to administer.

Anonymous said...

My other half is a housing managers and evictions are a real bone of contention. Those evicted for arrears (or other breach of tenancy) are provided temporary accommodation at great expense and, then due to stupid legislation, immediately go back on the homeless list and get priority for another house. The government target is all homeless people will be housed by 2012. Every council and housing association already work to self defined quotas of up to 50% of all new lets must go to homeless.

Madness.

Mark Wadsworth said...

JM, aha, that counts as a down side? I didn't realise.

Anon, it's a difficult problem. Far better to increase welfare payments and pensions a bit* and just charge market rents. If you scrapped Housing Benefit, then rents would fall anyway, so the exercise would not be particularly costly for the taxpayer.

* While paying the rent element straight to the landlord, of course.

James Higham said...

Very simple - sooner we're out and needn't worry about this guff, the better. Trouble is, Dave won't lead us out of Egypt to the Promised Land.

john b said...

James: this has fuck all to do with the EU (the Daily Mail made that up), and a great deal to do with home-owner-ism.

(captcha: 'rental'. Yes, good idea...)