No more "Government Energy Bills Support Scheme"?

MattMattMattUK

Qyburn said:

I don't know if anything can be done without side affects. Personally I'd support raising the minimum wage as essentially the problem is prices rising faster than wages. And at the low end the Government is essentially subsidising businesses to pay below a living wage.

Raising the minimum wage/NLW would add further to inflation. It went up 10% in April and that will have already contributed to inflation. 

Where the subsidy sits is complicated, but in an economic sense the government is not subsidising low wages, it is subsidising low earnings. The NLW will provide a survivable living in most of the country if one is single and working 40 hours, or a couple both working 40ish hours, but we subsidise people to work less than full time. In London and parts of the South East then the NLW is not enough even on 40 hours a week, but in those regions even basic jobs will pay 20% above NLW, where I am which is outside London the supermarkets pay over £12 per hour for starting roles.

The major issue is housing benefit, it has hugely distorted the housing market and depressed wages in some areas. The solution would be to phase out housing benefit entirely, matched with a rise in key benefits paid at a flat rate nationally. That would remove the major distortion from housing where those on benefits are subsidised to live in areas where 95% of taxpayers who have to pay for their own accommodation could never afford to live. On top of that where workers were still needed in those areas the businesses would either need to pay employees enough to commute, or live a reasonable distance, the market would bring wages up to reach a sustainable equilibrium rather than bring broken because of huge distorting factors. 

Spoonie_Turtle

MattMattMattUK said:

The major issue is housing benefit, it has hugely distorted the housing market and depressed wages in some areas. The solution would be to phase out housing benefit entirely, matched with a rise in key benefits paid at a flat rate nationally. That would remove the major distortion from housing where those on benefits are subsidised to live in areas where 95% of taxpayers who have to pay for their own accommodation could never afford to live.

About that … housing element / Housing Benefit is limited to 30% of the market rate for the area in April 2020.  If you live with a non-dependent of some description - adult child who can't afford to move out, elderly parent - or have a two-bedroomed property for just a couple of adults, they will deduct money from the housing element so you'll have even more of a shortfall to find out of the rest of your low income. 

[And if you're single, under 35 and not claiming PIP, you can have the audacity to want a small one-bedroomed place to yourself but you'll only get the shared accommodation rate, so have fun finding somewhere - even a decent house share, realistically - with that amount.]

HB deducts money for income over £20, UC deducts money from the overall award which can leave someone with less than their housing costs entitlement.  It's not just handed out to everyone renting.

Also important to remember that the vast, vast majority of private landlords won't take people claiming benefits, or they will but only with 6-12 months' rent upfront or a guarantor.  So it's likely most of the people you are complaining about are social tenants, who had to have high priority to get social housing in the first place.

Of course the way benefits work isn't perfect, and no doubt it does cause some economic imbalances or problems (particularly with the cliff-edge of legacy benefits) but I think people reading your comment who may not know how benefits work need to be aware of the basic facts.

QrizB

Parts of this thread would seem more suitable for the Benefits board!

I think the OP has had their questions answered, unless they have any follow up ones?

MattMattMattUK

Spoonie_Turtle said:

MattMattMattUK said:

The major issue is housing benefit, it has hugely distorted the housing market and depressed wages in some areas. The solution would be to phase out housing benefit entirely, matched with a rise in key benefits paid at a flat rate nationally. That would remove the major distortion from housing where those on benefits are subsidised to live in areas where 95% of taxpayers who have to pay for their own accommodation could never afford to live.

About that … housing element / Housing Benefit is limited to 30% of the market rate for the area in April 2020.  If you live with a non-dependent of some description - adult child who can't afford to move out, elderly parent - or have a two-bedroomed property for just a couple of adults, they will deduct money from the housing element so you'll have even more of a shortfall to find out of the rest of your low income. 

It is not 30% of the market rate for the area, it is based on the cost of accommodation for the lowest 30% of the market, that is very different, "the 30th percentile on a list of rents in the Broad Rental Market Area".
https://www.gov.uk/government/collections/local-housing-allowance-lha-rates

Spoonie_Turtle said:

[And if you're single, under 35 and not claiming PIP, you can have the audacity to want a small one-bedroomed place to yourself but you'll only get the shared accommodation rate, so have fun finding somewhere - even a decent house share, realistically - with that amount.]

It is not about having the "audacity to want", it is about that being funded by other taxpayers. Why should taxpayers fund people to live alone in parts of the country that those who are self-funded could never dream of living in?

Spoonie_Turtle said:

Also important to remember that the vast, vast majority of private landlords won't take people claiming benefits, or they will but only with 6-12 months' rent upfront or a guarantor.  So it's likely most of the people you are complaining about are social tenants, who had to have high priority to get social housing in the first place.

Even if they are in social housing, it makes little sense to distort the market, funding people to live in expensive areas, firstly there is the market distortion, secondly there is the cost, either directly from building and owning the properties, or the lost opportunity cost of the below market rate for state owned assets, thirdly there is the fairness element, taxpayers in other parts of the country should not be expected to fund other people to live in Westminster, Notting Hill, Chertsey, Cheadle Hulme etc. when they could never dream of being able to afford to live their themselves. Our social contract relies on the concept of fairness and helping those in need in a sensible way, funding someone to live in the most expensive part of the country makes little sense and is not a rational use of taxpayer funds. 

Spoonie_Turtle said:

Of course the way benefits work isn't perfect, and no doubt it does cause some economic imbalances or problems (particularly with the cliff-edge of legacy benefits) but I think people reading your comment who may not know how benefits work need to be aware of the basic facts.

It is so far from perfect it is pretty much broken. It fails to support those in genuine need, particularly the disabled who in general receive less than needed to live on adequately or in some cases live at all, the in-work benefits system is a broken concept and should be phased out entirely. The unemployment benefit system is also so broken as to be nearly pointless, if someone has a mortgage, bills, a family etc. then what use is £367 pcm? Something along the lines of the Germany or Norwegian systems would be far better that reflect the contributions made makes far more sense. 

Spoonie_Turtle

MattMattMattUK said:

It is so far from perfect it is pretty much broken. It fails to support those in genuine need, particularly the disabled who in general receive less than needed to live on adequately or in some cases live at all, the in-work benefits system is a broken concept and should be phased out entirely. The unemployment benefit system is also so broken as to be nearly pointless, if someone has a mortgage, bills, a family etc. then what use is £367 pcm? Something along the lines of the Germany or Norwegian systems would be far better that reflect the contributions made makes far more sense. 

Nice to see we do agree on something

Chrysalis

Qyburn said:

Scot_39 said:

So I suspect many - many millions(*,**) - of peoples payments will increase cf last year - despite the cap drop - as lose the EBSS.

I'm sure that's correct. We're not really low users, yet the combination of hand-outs EPG, EBSS and AFP meant we didn't pay anything in Mar Apr or May, we won't pay a thing in June and will still have a bit of credit at the start of July.

But I dont think it is correct to assume the Government has an obligation to subsidise anything that rises in price. Instead there should be targeted support for people who need it. That needn't necessarily be solely Government money either, raising the minimum wage would make people better off and could save on benefits as well. 

To be honest I don't know why the £400 was even brought in, it seems to overlap with the goals of the EPG, except not directly linked to price cap. And it has had the harmful side effect of people expecting it to continue, or expecting it to be reinstated if prices ever rise.. 

I expect the EPG wasnt even a consideration before Truss came to power, as always with a change of political leadership there is a different thought process.  Given the EPG proved politically popular it effectively ended any potential expansion of EBSS which had more public controversy around it.

EBSS was wasteful, but EPG over shadows it in that regard, subsidised energy in a all you can eat manner.

As seen in earlier discussions, there is people who only think affordability was only an issue last winter, probably because their own wealth/income didnt really start to notice it until then, but for the poorest in society its been an issue from the April 2022 rise which was a fair jump, or even the October 2021 rise.   So hence the thinking now by the people not affected as much is that we dont need any col subsidies as everything is fine again, perhaps also a misunderstanding of how inflation worse where they think once inflation starts to lower it means the previous inflation is no longer relevant.

If Labour keep to their word and are in power next year, then their proposed £500 WHD could be an effective longer term version of the EBSS with much less publicity so hence less opposition to it by those who dont have empathy to the poor, they do plan to get rid of the controversial "high energy use" element of the WHD criteria which would have almost all energy billpays that qualified for the CoL qualify for the WHD.

Chrysalis

MattMattMattUK said:

Spoonie_Turtle said:

MattMattMattUK said:

The major issue is housing benefit, it has hugely distorted the housing market and depressed wages in some areas. The solution would be to phase out housing benefit entirely, matched with a rise in key benefits paid at a flat rate nationally. That would remove the major distortion from housing where those on benefits are subsidised to live in areas where 95% of taxpayers who have to pay for their own accommodation could never afford to live.

About that … housing element / Housing Benefit is limited to 30% of the market rate for the area in April 2020.  If you live with a non-dependent of some description - adult child who can't afford to move out, elderly parent - or have a two-bedroomed property for just a couple of adults, they will deduct money from the housing element so you'll have even more of a shortfall to find out of the rest of your low income. 

It is not 30% of the market rate for the area, it is based on the cost of accommodation for the lowest 30% of the market, that is very different, "the 30th percentile on a list of rents in the Broad Rental Market Area".
https://www.gov.uk/government/collections/local-housing-allowance-lha-rates

Spoonie_Turtle said:

[And if you're single, under 35 and not claiming PIP, you can have the audacity to want a small one-bedroomed place to yourself but you'll only get the shared accommodation rate, so have fun finding somewhere - even a decent house share, realistically - with that amount.]

It is not about having the "audacity to want", it is about that being funded by other taxpayers. Why should taxpayers fund people to live alone in parts of the country that those who are self-funded could never dream of living in?

Spoonie_Turtle said:

Also important to remember that the vast, vast majority of private landlords won't take people claiming benefits, or they will but only with 6-12 months' rent upfront or a guarantor.  So it's likely most of the people you are complaining about are social tenants, who had to have high priority to get social housing in the first place.

Even if they are in social housing, it makes little sense to distort the market, funding people to live in expensive areas, firstly there is the market distortion, secondly there is the cost, either directly from building and owning the properties, or the lost opportunity cost of the below market rate for state owned assets, thirdly there is the fairness element, taxpayers in other parts of the country should not be expected to fund other people to live in Westminster, Notting Hill, Chertsey, Cheadle Hulme etc. when they could never dream of being able to afford to live their themselves. Our social contract relies on the concept of fairness and helping those in need in a sensible way, funding someone to live in the most expensive part of the country makes little sense and is not a rational use of taxpayer funds. 

Spoonie_Turtle said:

Of course the way benefits work isn't perfect, and no doubt it does cause some economic imbalances or problems (particularly with the cliff-edge of legacy benefits) but I think people reading your comment who may not know how benefits work need to be aware of the basic facts.

It is so far from perfect it is pretty much broken. It fails to support those in genuine need, particularly the disabled who in general receive less than needed to live on adequately or in some cases live at all, the in-work benefits system is a broken concept and should be phased out entirely. The unemployment benefit system is also so broken as to be nearly pointless, if someone has a mortgage, bills, a family etc. then what use is £367 pcm? Something along the lines of the Germany or Norwegian systems would be far better that reflect the contributions made makes far more sense. 

There seems to be a misunderstanding here.

HB stopped tracking rents years ago, Sunak did a one off uplift during covid.

The majority of HB claimants I have known and this includes myself when I was relying on HB, dont pick out nice expensive places to live, its rather more that they actually trapped or have very limited options, the fact city areas have started to become really expensive to live is a side effect of supply and demand being massively disproportionate.  The government froze LHA rates expecting rental inflation to stop, but instead it carried on and now HB claimants have to subsidise rent out of other income.

As an example I checked just now my city LHA rates, the 1 bed flat rate would just about pay for a bed sit and only the 3 bed house rate can cover the cost of a 1 bed flat.  This is in the cheapest advertised properties on the local market I could find.

Is there even a thing such as cheap rental area anymore?

If you think there is better options for these people where do you suggest they live?  As you seem to be indicating people are living in posh properties.

 It was 30th percentile at some time in the past, not now.  Also that percentile includes HA properties and people on existing rents (who often pay less than open market rents), so unadvertised properties.

I do agree with you that the system is broken though, but I expect we wont agree on the solution.

Spoonie_Turtle

Chrysalis said:

MattMattMattUK said:

Spoonie_Turtle said:

MattMattMattUK said:

The major issue is housing benefit, it has hugely distorted the housing market and depressed wages in some areas. The solution would be to phase out housing benefit entirely, matched with a rise in key benefits paid at a flat rate nationally. That would remove the major distortion from housing where those on benefits are subsidised to live in areas where 95% of taxpayers who have to pay for their own accommodation could never afford to live.

About that … housing element / Housing Benefit is limited to 30% of the market rate for the area in April 2020.  If you live with a non-dependent of some description - adult child who can't afford to move out, elderly parent - or have a two-bedroomed property for just a couple of adults, they will deduct money from the housing element so you'll have even more of a shortfall to find out of the rest of your low income. 

It is not 30% of the market rate for the area, it is based on the cost of accommodation for the lowest 30% of the market, that is very different, "the 30th percentile on a list of rents in the Broad Rental Market Area".
https://www.gov.uk/government/collections/local-housing-allowance-lha-rates

Spoonie_Turtle said:

[And if you're single, under 35 and not claiming PIP, you can have the audacity to want a small one-bedroomed place to yourself but you'll only get the shared accommodation rate, so have fun finding somewhere - even a decent house share, realistically - with that amount.]

It is not about having the "audacity to want", it is about that being funded by other taxpayers. Why should taxpayers fund people to live alone in parts of the country that those who are self-funded could never dream of living in?

Spoonie_Turtle said:

Also important to remember that the vast, vast majority of private landlords won't take people claiming benefits, or they will but only with 6-12 months' rent upfront or a guarantor.  So it's likely most of the people you are complaining about are social tenants, who had to have high priority to get social housing in the first place.

Even if they are in social housing, it makes little sense to distort the market, funding people to live in expensive areas, firstly there is the market distortion, secondly there is the cost, either directly from building and owning the properties, or the lost opportunity cost of the below market rate for state owned assets, thirdly there is the fairness element, taxpayers in other parts of the country should not be expected to fund other people to live in Westminster, Notting Hill, Chertsey, Cheadle Hulme etc. when they could never dream of being able to afford to live their themselves. Our social contract relies on the concept of fairness and helping those in need in a sensible way, funding someone to live in the most expensive part of the country makes little sense and is not a rational use of taxpayer funds. 

Spoonie_Turtle said:

Of course the way benefits work isn't perfect, and no doubt it does cause some economic imbalances or problems (particularly with the cliff-edge of legacy benefits) but I think people reading your comment who may not know how benefits work need to be aware of the basic facts.

It is so far from perfect it is pretty much broken. It fails to support those in genuine need, particularly the disabled who in general receive less than needed to live on adequately or in some cases live at all, the in-work benefits system is a broken concept and should be phased out entirely. The unemployment benefit system is also so broken as to be nearly pointless, if someone has a mortgage, bills, a family etc. then what use is £367 pcm? Something along the lines of the Germany or Norwegian systems would be far better that reflect the contributions made makes far more sense.

 It was 30th percentile at some time in the past, not now.  Also that percentile includes HA properties and people on existing rents (who often pay less than open market rents), so unadvertised properties.

Yep, back in April 2020.  Frozen since then - not frozen at the 30th percentile, but frozen in cash terms.

(Extra history here if anyone is interested https://commonslibrary.parliament.uk/research-briefings/sn04957/ )