Housing benefit reform is a waste of time

Lucy de Groot (26 September, page 27) says reform of housing benefit is an important element in the government's programme for providing choice. The trouble is that the revised system addresses the issues in only some parts of the country. Where demand exceeds supply, and where social rents are so far below market levels, revising the system for social rents threatens to be a recipe more for confusion than improvement.

The basic arguments for change appear to be: under the current system tenants have no incentive to choose a cheaper property; the payment of benefits direct to landlords removes responsibility from the tenant and encourages indifference to the services provided; that it takes away the responsibility to budget for rent, which leads to an anxiety about life without a full rent subsidy, another barrier to work; and that moving to a system of flat rate benefits will make the whole thing much simpler and more difficult to fiddle.

The proposed system will potentially work in the private sector and the social sector in those parts of the country where social and market rents are comparable. But the system will not work in London and the South-east, where social housing rents are substantially below market levels and where demand far outstrips supply. In London, with more than 60,000 people in temporary accommodation awaiting permanent homes, the issue of choice is a little academic.

The reform agenda depends on a flat rate benefit, payable irrespective of rent due, combined with the existence of a market. This needs to provide opportunities for a purchaser to select one option over another based on features, quality and price, and allow the provider the option of choosing between a high-quality/high-cost strategy or a lower-spec/lower-cost option.

With social rents set to a standard formula, there is no prospect of choice on the basis of price. Unless we pursue rent restructuring with the express intention of abandoning it once we reach uniform social rents, the whole concept is flawed. What is more, in much of London the subtleties of the rent formulae produced by different valuations at different locations are lost as a result of the capping system. Certainly the variations in rents that flow from the current rent model will not produce the desired effects and, even if they did, it is hard to see how a wholesale move to cheaper accommodation will help build sustainable mixed communities.

It is also difficult to see how, with social housing rent levels not bothering the rent officer service, the revised proposals will be any simpler. They will still require income evidence, some form of tapering and variations of benefit as tenants move into and out of work. This is a shame because the complexity of many benefits already discourage take-up by those to whom they are targeted. We estimate, for example, that a skilled staff member and a claimant need two or three hours to fill in a claim for disability living allowance.

It may encourage tenants to budget better but, with the availability of credit and the competing financial pressures on low-income families, it is surely only a matter of how much, rather than if, the change will increase rent losses and affect the sector's credit rating.

By all means reform the benefit system in the private sector, but let's not create unnecessary confusion and cost by changing the system in the social sector to no obvious advantage. Instead, we should simplify the existing situation: ensure that claims are assessed and payments are made according to the times achieved by the best, make easier the rules for tenants who move into and out of work, extend the opportunities for fixed-term awards and certify approved landlords to process claims rather than overloading councils.