APPENDIX 11
Memorandum submitted by Mr Steve Wilcox
(TAB 78)
UNFINISHED BUSINESS:
HOUSING COSTS
AND THE
REFORM OF
WELFARE BENEFITS
The proposal for a Tax Credit scheme set out
in the March budget is the first key element of the new Labour
governments promise to modernize the welfare state, and to provide
improved incentives and support to help families take up opportunities
for low paid work. The potential returns from low paid work will
be further enhanced for many households with the introduction
of a minimum wage.
These reforms directly address two of the key
issues concerning households wanting to move off of Income Support
and into worklow wages and child care costs. They do not,
however, directly address the other key issuethe housing
costs that are typically by far the largest single item in household
budgets. For the governments welfare to work strategy to succeed
it needs to respond to all these issues, as well as ensuring the
supply of appropriate child care, training and education services,
and of course economic and regional policies to promote a sufficient
demand for labour throughout the UK.
The focus in this paper is on the key element
of the unfinished business in the reform of welfare benefitsthe
continuing review of the current housing benefit scheme. While
decisions on that front have not yet been made, the tax credit
proposals have significantly changed the context in which those
decisions will have to be reached. It is therefore necessary to
update and qualify earlier assessments of the options for housing
benefit reform, to take account of the potential impact of the
tax credit proposals.
This brief paper does not attempt to cover all
the aspects of the housing benefit scheme that could be usefully
reformed, as these have been covered in earlier reports.[47]
Rather it focuses on those options for reform that are most significant
for families with dependant children, and that need to be reconsidered
in the new context of the tax credit proposals.
TWO HOUSING
BENEFIT ISSUES
The review of the current housing benefit scheme
is focusing on two main issues. The first is the work incentive
dimension of the scheme, related to the governments wider welfare
to work programme. The second is the treatment of eligible rents
for housing benefit, and the suggestion that some or all tenants
should be required to pay some proportion of the rents from their
"base" incomes, abolishing the current arrangement where
tenants can get up to 100 per cent of their rent met by housing
benefit. These two issues are considered in turn below.
HOUSING BENEFIT
AND WELFARE
TO WORK
There are two main limitations of the current
housing benefit scheme, and for families they are both linked
to the messy overlap of the housing benefit and family credit
schemes. In principle the housing benefit and family credit schemes
should ensure that all families are slightly better off in work
(unless they have very high child care or travel to work costs).
However the complexity of these overlapping benefits is such that
households do not take housing benefit into account when they
are considering moving into low paid work, and only in a limited
proportion of cases do families take account of the availability
of family credit to supplement their earned incomes.
The overlap of these two means tested benefits
also creates the extended poverty trap, where families can increase
their gross earnings only to find that from every extra £1
they are left with just a three pence increase in their net disposable
income. Higher rent levels extend this poverty trap further up
the income scale.
While there is a strong equitable case for reducing
the severity of that poverty trap, research suggests that it is
has little direct effect on household behaviour, not least because
of the complexity of in work welfare benefits and the related
evidence that households do not consider in work housing benefit
when making decisions about labour market participation. This
suggests that if housing benefits are to reinforce the "work
pays" message then housing benefits, and in work benefits
more generally, need to be radically simplified.
ENTER TAX
CREDIT
The structure, severity and incidence of the
poverty trap will, however, be eased and modified by the Budget
proposal for a tax credit scheme to replace family credit. In
fact the tax credit scheme is very similar to the family credit
scheme, but with three critical changes. First it is to be administered
as part of the tax system, second it will have enhanced provisions
for qualifying child care costs, and thirdly it is to have a 55
per cent taper rate, against the current 70 per cent rate.
The proposed tax credit scheme is clearly more
generous than the family credit scheme. However, there are continuing
concerns, particularly for families with high rentsor very
low earnings. For families with low rents the improved generosity
of the tax credit scheme will generally be sufficient to take
them out of housing benefit dependence altogether. Broadly this
applies to families with rents below £40 per week, and earning
more than £140 per week (gross). For those households there
is as a result no overlap in the tax credit and housing benefit
tapers, and after tax, national insurance and tax credit deductions,
they will retain 30 pence from each additional £1 of gross
earnings.
The tax credit scheme will also be a signficant
improvement for low income home buying households, who are currently
denied access to housing benefit. Not only will the scheme be
more generous, the administration of the scheme through the tax
system could lead to a signficant improvement over the current
poor take up rate of family credit by home buyers (c50 per cent).
On its own, however, the tax credit scheme is only sufficient
to ensure that home buyers with very limited mortgages are better
off in low paid work.
Moreover for households with higher rents (ie
£60+) the Tax Credit scheme will overlap with housing benefit
much further up the income scale. This is because the lower tax
credit taper extends the scheme up to c£290 per week gross
earnings, while the current family credit scheme expires at c£230
per week gross earnings (and at correspondingly higher levels
for families with more than one child). For a family with two
children the tax credit scheme will operate for incomes up to
c£330 per annum. This is higher than average male manual
earnings.
For households with very low wages, typically
from part time work, tax credit can leave families dependant on
housing benefit even when they face rents of little more than
£8 per week. For families with net earnings below £90
per week, however, this does not involve overlapping tapers, as
the Tax Credit taper is proposed to operate only above that threshold
level. These points are illustrated in more detail in the schedules
in Annex 1.
These show a range of low earning figures, for
lone parents and couples with children, and the net income they
would have, inclusive of tax credit, at that level of earnings.
The schedules also show the amount of housing costs "implicit"
in that level of net income, that is the amount by which their
housing benefit entitlement would be reduced at that point. Only
if their rent is lower than the "implied housing costs"
would they escape the dependency on housing benefit. For the gross
earning levels figures shown, and any rent levels above the "implicit"
housing costs, this would potentially involve overlapping tax
credit and housing benefit tapers.
The main point from the schedules is that for
families on low wage rates working just 16 hours a week, their
income including tax credit would be sufficient only to cover
a rent of some £8-£26 per week. For families working
30 hours at the same low hourly rates their income would be sufficient
to cover a rent of £32 to £46 per week. It is also notable
that the implicit housing cost figures show little variation between
different household types.
Where the tax credit and housing benefit schemes
continue to overlap households will face marginal deduction rates
from gross earning of 95 per cent (compared to 97 per cent), or
more frequently 89 per cent as the more generous tax credit scheme
will also result in many more households being removed from any
dependency on council tax benefit. The impact of higher rents
in extending these higher cumulative rates of marginal deductions
from earnings is illustrated in Figure 1, which shows the case
of a couple with two children. Equivalent data showing the position
for other household types is given in Table 1.
Even so the tax credit scheme will result in
substantially increased in work incomes for households still dependent
on housing benefit, not least because of the removal of the "parallel"
deductions of housing benefit and the c£10 extra family credit
paid to households that work over thirty hours per week. This
current anomaly results in a 135 per cent deduction from net earnings
over the income range where the extra family credit tapers out.
This seemingly minor, but very welcome, element in the tax credit
reform has a particularly strong impact on the net incomes of
households with gross earnings in the mid £200s, as shown
in Figure 2.
The greatest weakness of the reform proposals
to date, however, is that for many households with higher rents
the confusing overlap of the different in work benefits remains
in place. Such households are as a result no more likely to take
account of the potential for housing benefit to boost their in
work incomes than they do now. So for high housing cost households
the "work pays" message will not be effectively delivered.
EARNED INCOMES
OF WORKING
TENANTS
The practical significance of the tax credit
reforms also critically depend on the distribution of earned incomes
for low income families, and the distribution of rent levels.
An indication of the distribution of the net earned incomes of
new housing association tenants is given in Table 2. This shows
figures at 1998-99 levels uprated from 1996-97 data.
It can be seen for example, that there are more
lone parents working part time than full time, and that one in
six of the couples with children have a household head working
part time. It is also the case that over 50 per cent of lone parents
working part time, and 30 per cent of couples with a household
head working part time, have take home pay of less than £70
per week.
The average take home pay for a lone parent
working part time is just £74 per week, and £79 for
couples with just one partner in part time work. For families
in full time work the take home pay figures are £166 per
week for lone parents, and £183 for couples with only one
partner in work. For dual earner couples the figures are higher,
with the average for couples where both partners are in full time
work reaching £312 per week.
The introduction of a minimum wage will have
a significant impact in reducing the numbers of families in full
time work with net earnings below £120 per week, but will
have only a limited impact on earnings at higher levelsin
some of the cases of couples where both partners are in low paid
work, whether full or part time. The minimum wage will, in turn,
significantly reduce the numbers of families, with at least one
adult in full time work, that remain dependant on housing benefit
where rents are no more than £40 to £45 per week. At
those rent levels, only families relying solely on part time earnings,
earnings from self employment, very young families, or families
otherwise outside the scope of the minimum wage provisions, should
remain eligible for housing benefit.
However, even in the local authority and housing
association sectors, average rents for family size dwellings in
England are very often above that level. Average council rents
for three bedroom lettings in London are now over £65 per
week, while in the South East they are over £55 per week.
Three quarters of all new housing association lettings of two
bedroom properties in England are at rents exceeding £50
per week; with some 45 per cent being over £60 per week.
Similarly seven out of every eight lettings of three bedroom lettings
are at rents over £50 per week, with some 70 per cent being
over £60 per week.
In these cases, of which there are relatively
few in Scotland and Wales, households will continue to need to
earn significantly above minimum wage levels if they are to avoid
dependency on housing benefit (as shown in Table 1). Taking the
income levels of new housing association tenant families in work
(as shown in Table 2), over four fifths of all lone parents with
rents of £60 per week will remain dependant on housing benefit
after the advent of the minimum wage and tax credit. Similarly
nearly three fifths of all couples with only one partner in work
will remain dependent on housing benefit.
The complex dual dependency on family and housing
benefits will in consequence continue to impact on very substantial
numbers of low income working families, without some further changes
in rent and benefit policies.
OPTIONS FOR
HOUSING BENEFIT
AND RELATED
REFORMS
It is in this context that the reforms of the
housing benefit scheme, and the related issues of rent policies
in the social rented sectors now need to be evaluated. There are
two broad approaches to reforms designed to provide enhance work
incentives taking full account of housing costsincremental
reforms that do not change the fundamental structure of existing
benefits, and more radical reforms to harmonize the structure
of all in work benefits. Within each broad approach there are
sundry variants. These broad approaches, and some of the more
salient variations, are considered in turn below.
INCREMENTAL REFORMS
(a) Housing benefit reforms
The most significant incremental reforms would
be either increasing the housing benefit earnings disregards,
so that households can earn more above Income Support levels before
the taper is applied to reduce benefit entitlement, and/or reducing
the 65 per cent rent taper.
The annual costs of increasing the earnings
disregards have recently been estimated at from £110 million
(an extra £5 per week for single people, and an extra £10
for other households) to £250 million (an extra £15
and £20 per week respectively). These reforms would improve
the in work incomes of low income working households without children,
who have been largely ignored in the initial benefit reforms announced
by the new labour government (although they will benefit from
the proposed national insurance reforms).
For families with children, however, both increasing
the earnings disregard, and even more so reductions in the 65
per cent rent taper rate, will increase the incidence of overlap
between the tax credit and the rent taper, bringing lower rent
households back into the poverty trap, and consequently increasing
the number of families facing marginal deduction rates of over
84-95 per cent.
(b) Tax credit reforms
A further option would be to improve the proposed
Tax Credit scheme, by increasing the level of the allowances.
This would have the result of lifting more families off of housing
benefit, with each £10 increase in Tax Credit adding £6.50
to the rent that families could meet without qualifying for housing
benefit. The messy overlap between the two schemes would remain;
but would apply to far fewer households. Any general increases
in Tax Credit would also benefit low income working home buyer
households.
One disadvantage of this approach is the costs
it entails in providing additional assistance to households (both
tenants and home buyers) with relatively modest housing costs.
The other is that, as shown in Annex 1, for families in part time
work, or otherwise with very low earnings, there would need to
be a very substantial increase in order to lift them off housing
benefit, even when rents remain at modest levels.
(c) Restraining council and housing association
rents
If council and housing association rents were
restricted, this could significantly reduce the incidence of overlap
between the Tax Credit and Housing Benefit schemes. Such an option
is not, however, possible within a deregulated private rented
sector.
There have been a range of official and other
financial analyses showing that the costs of switching back, to
some degree, from housing benefit to increased bricks and mortar
subsidies, are quite modest. The net costs of a 10 per cent reduction
in council rents were, for example, recently estimated at £100
million per annum. The long term costs of increasing housing association
grant rates are similarly modest; however they require an "up
front" expenditure on higher grants, against savings in housing
benefit and inflation related costs over a run of years.
It should however, be recognised that the advent
of the more generous Tax Credit scheme, by absorbing part of the
costs of housing benefit, will tend to increase the marginal costs
of moving towards bricks and mortar subsidies. The precise form
and levels of the "inflationary costs" arising from
higher rent levels are also open to question.
Nonetheless the key advantage of the rent restraint
approach is that it bears most directly on the evidence that households
concerns about meeting their housing costs are second only to
their concerns about earnings levels, when they are considering
moving off of benefits and into work.
There are also related equitable and efficiency
arguments in favour of a more coherent structure for council and
housing association rents, and a move towards harmonizing rents
in the two sectors would in itself go some way to reducing the
very high levels of rents charged by some housing associationsand
to a lesser extent by some councils.
Any policy of rent restraint needs, however,
to be sensitively implemented, and given the current extent of
divergence, moves towards a more coherent rent structure are likely
to take ten or more years to implement. A policy of rent restraint,
while involving very limited net costs, does nonetheless place
on central government a more direct responsibility to ensure that
councils and housing associations have access to the necessary
funds for investment in major repairs and stock improvements.
RADICAL REFORMS
(a) An integrated "work credit" scheme
It will only be possible to integrate housing
benefit with the tax credit scheme by making further radical changes
to the proposed tax credit scheme. Critical issues involve the
personal allowances, which are not structured in the same way
as for housing benefit, and the 55 per cent tax credit taper rate
which already results in benefits extending a long way up the
income scale, even for households without eligible child care
costs.
0
If the tax credit and housing benefit schemes
are to be integrated this will realistically require a taper rate
on net earnings higher than the 55 per cent rate for the tax credit
scheme on its own, but lower than the combined 84-93 per cent
rate that will apply to net earnings where the tax credit and
housing benefit schemes overlap.
The proposal for a work credit scheme set out
in earlier CIH and NHF reports[48]
was based on an 80 per cent combined taper rate. This, however,
was estimated to cost just £750 million, compared to the
£1.35 billion already committed for the tax credit scheme.
Given this existing budgetary commitment it should be possible
to create an integrated work credit scheme with a lower combined
rate (say 70 per cent) without significant further costs.
A further element of the work credit scheme
proposal, was that it involved reducing the basic work credit
entitlement, on the basis that all qualifying households then
received the same help with housing costs as they would while
in receipt of Income Support. This radical simplification of the
structure of in work benefits was intended to respond to the evidence
that households consider rent levels, and sometimes family credit,
but hardly ever housing benefit, when thinking about moving into
low paid work.
COVER FOR
HOME BUYERS
It is also noteworthy that the work credit scheme
estimates included extending the scheme to low income home buyers.
Far more effectively than the flat rate tax credit scheme this
would serve to ensure that low paid home buyers were not left
with net incomes below Income Support levels. The latest figures
show that there were some 850,000 home buyers with sub Income
Support income levels in 1992, of which the majority were households
ineligible for Income Support by virtue of low paid employment
(or self-employment).
While those numbers are now likely to be somewhat
lower, not least because of repossessions in the intervening years,
continuing labour market trends, and household preferences, suggest
that the issue of home owners in relatively low paid and insecure
forms of work will not disappear. While there is a role for the
further promotion of private insurance policies for home owners
mortgage costs in the event of unemployment, these will provide
only relatively short term cover. It should be possible to improve
the currently low take up rates for such policies (c30 per cent).
However, even the better insurance policies are inherently constrained
in the help they can offer to self-employed and short term contract
workers.
The cost estimate for extending the work credit
to home buying households, at c£250 million, is much lower
than DSS estimates for a "mortgage benefit scheme".
The lower estimate for the work credit scheme reflects four factorsa
lower assumption about take up rates, including tighter limits
on eligible mortgage costs, allowing for the impact of private
insurance policies covering short periods of unemployment by one
partner in dual earner households, and taking account of the offsetting
savings in housing benefit costs resulting from reduced levels
of repossessions.
Finally a more "tenure neutral" benefit
policy should provide a more stable level of political support
for the reformed benefit system, and would at the same time make
it easier to phrase out the last vestiges of MIRAS (and thus saving
some £2 billion per annum).
(b) A "cost gap" housing credit
An important variant to this integrated approach
to reform would be to add a "cost gap" housing credit
to the tax credit scheme, linked to the notion that the "basic"
tax credit covers an initial element of housing costs. As with
the work credit scheme outlined above this approach would require
significant modifications to the current proposals for the work
credit scheme. It would differ in that it would have a higher
level of basic credit, and a correspondingly reduced "housing
credit", on the reasoning that the basic credit was presumed
to cover an initial element of housing costs. This approach would
cost somewhat more than the work credit proposal, however, as
the higher level of "basic credit" would also go to
households with housing costs below the threshold for the cost
gap housing credit.
The costs of this approach would depend on the
threshold level of housing costs deemed to be covered by Tax Credit,
and the taper rates chosen for the schemes. This would require
some substantial increase in the levels of maximum Tax Credit,
which would need to be offset by a taper rate higher than 55 per
cent, starting at a lower earnings threshold, in order to avoid
benefit dependency extending uncomfortably far up the income scale.
The need for such restructuring is indicated
by the figures in Annex 1, showing that for households on very
low incomes Tax Credit can carry with it little more than £8
"implicit" housing benefit. This implies, for example,
a £30+ per week increase to basic Tax Credit allowances,
if a cost gap housing credit scheme is only to apply to households
with housing costs in excess of £40 per week.
As with the work credit scheme proposal the
most important gains from this approach would be the radical simplification
and harmonisation of in work benefits, removing the messy overlap
of scheme tapers that currently produce the worst case poverty
trap. As with the work credit scheme it would also be readily
possible to extend the housing credit scheme to low income working
home buyers.
Most discussion of cost gap style housing allowances,
drawing on the experience of European and other countries, also
assumes that the allowance should only cover a proportion of housing
costs above the threshold level, and not the whole rent. The difficulties
of this rent proportional approach are considered further below.
It should be noted here, however, that such an approach is not
a necessary feature of a cost gap scheme.
Not all of the above options are mutually exclusive.
There is, for example, a strong case for combining policies of
rent restraint and rent harmonization, with the introduction of
an integrated work credit or housing credit scheme. It should
also be noted that a number of the benefit reform options would
permit significant administrative reforms and savings.
One final observation on all these options is
that decisions should not be based exclusively on cost benefit
analyses that take no account of potential behaviour effects.
The impacts on behaviour do need to be considered, even if the
evidence is not sufficiently robust to be routinely included in
cost benefit analyses. There are also issues of equity to consider,
especially in a context where the cost benefit analyses show limited
differences between the costs of alternative policies.
Eligible rents
Whatever approach to reforms are taken in order
to ensure that housing benefits make a more effective contribution
to welfare to work policies, the issues involved in defining the
limits to eligible housing costs need to be further considered.
There is a particular issue about provision for "intensive"
management and support costs (which is not dealt with here), and
a more general issue around whether, when, and to what extent,
households should be required to make some direct contribution
from their net incomes towards their housing costs.
Frequent references are made in this context
to the generosity of the UK housing benefit scheme, in taking
100 per cent of the rent as the starting point in calculating
housing benefit entitlement. Less often recognised is that this
is the flip side of the coin for a system of basic social security
and social insurance benefits that are among the least generous
in Europe, notwithstanding the contribution of the housing benefit
scheme.
The March Budget announcement of increases in
child benefit, and the higher Income Support allowances for children
under the age of 11 are very welcome; but they are not sufficient
to overcome the legacy of two decades when the gap between average
earnings and benefit levels have been allowed to drift ever further
apart. Out of work households in the UK are much less able to
make any contribution to their rents than their European counter-parts,
and will remain so unless there is a significant hike in the overall
level of social security benefits.
Rent levels in the UK also vary sharply both
between and within tenures, and between and within regions. The
extent of intra-regional rent variations in the private rented
sector (in housing benefit cases) is shown in Figure 3. In this
context any system of crude national or regional limits on eligible
rents for benefit are likely to result in severe hardship for
some low income households. Such a system will also exclude low
income households from localities with above average rents, and
consequently will run counter to the policy objective of tackling
social exclusion.
Tighter restrictions on eligible rents for housing
benefit are also likely to result in a further reduction in the
supply of private rented housing to low income households. Already,
in eighteen months since the "local reference rent"
limits were introduced in January 1996, we have seen a 12 per
cent (130,000) reduction in the number of housing benefit claimants
with private sector tenancies. Together with other factors (reduced
unemployment, action on fraud) this has also resulted in substantial
savings to the exchequer; and the forecast for expenditure on
rent allowances this year is now £300 million lower than
in the expenditure plans inherited from the last government.
Given the potential impact on the supply of
private rented lettings to low income households, any further
restrictions in eligible rents in the sector should logically
be accompanied by compensating measures to boost the supply of
council and housing association tenancies, and a clear strategy
to ensure that the concentration of low income households to those
tenures does not lead to increased geographical social exclusion.
There is a sound "in principle" case
that households should have some incentives to be prudent in the
housing cost commitments they enter. However, for all the reasons
indicated above, there is also a case for proceeding cautiously
in reforming the current locally determined limits on the housing
costs eligible for housing benefit, rather than introducing a
"big bang" reform based on national or regional limits.
Moreover for council and housing association tenants there is
little sense in incentivizing benefit dependent households about
rent levels without first ensuring that there is a coherent rent
policy.
This is not to argue that there should be no
reforms of the current arrangements. Indeed there is a case for
reviewing the operation of the very different limits relating
both to housing cost levels, and to under-occupation, as they
currently apply (in both theory and practice) in each of the tenures,
with particular regard being given to the emerging evidence of
the impact of the rent restrictions introduced since January 1996
in respect of private rents.
CONCLUSION
The outcome of the review of the housing benefit
scheme is not just important for the fortunes for millions of
low income households in and out of work. Getting it right remains
an essential ingredient if the government's wider "welfare
to work" policies are to succeed.
In the writers view the reforms that would be
most likely to meet welfare to work and related policy objectives
would include:
an integrated approach to in work
family and housing benefits;
support for low income working home
buyers as well as tenants;
a policy of rent restraint and harmonization
in the council and housing association sectors;
and a cautious review of the treatment
of housing costs eligible for benefit.
4 May 1998
TABLE 1
|
Escaping benefit dependency: Weekly earnings levels at which tax credit and housing benefit entitlement cease
(a) Gross earnings level at which benefit dependency ceases
|
| | |
| | | |
| £ per week |
|
| | Housing benefit at various rent levels
| |
Household type | Tax Credit |
£40 | £50 | £55
| £60 | £65 | £70
| £80 |
|
Lone parent + 1 child <11 | 290.00
| 134.40 | 184.20 | 209.70
| 235.20 | 260.70 | 286.20
| 311.20 |
Lone parent + 2 children <11 | 330.30
| 120.60 | 169.50 | 195.30
| 220.80 | 246.30 | 271.80
| 322.90 |
Couple + 1 child <11 | 290.00
| 142.90 | 193.00 | 218.50
| 244.00 | 269.50 | 292.30
| 315.20 |
Couple + 2 children <11 & 11-15 | 345.40
| 128.90 | 178.40 | 203.90
| 229.40 | 254.90 | 280.50
| 331.50 |
Couple + 3 children 2 <11 & 1 11-15 |
385.80 | 115.10 | 164.00
| 189.50 | 215.00 | 240.50
| 266.00 | 317.00 |
|
(b) Net earnings level at which benefit dependency ceases
|
| | |
| | | |
| £ per week |
|
| | Housing benefit at various rent levels
| |
Household type | Tax Credit |
£40 | £50 | £55
| £60 | £65 | £70
| £80 |
|
Lone parent + 1 child <11 | 225.40
| 120.30 | 154.50 | 169.60
| 188.70 | 205.70 | 222.80
| 239.60 |
Lone parent + 2 children <11 | 252.30
| 110.60 | 144.70 | 161.90
| 179.00 | 196.10 | 213.20
| 247.40 |
Couple + 1 child <11 | 225.40
| 126.20 | 160.40 | 177.50
| 194.60 | 211.60 | 226.90
| 242.30 |
Couple + 2 children <11 & 11-15 | 259.50
| 116.40 | 150.60 | 167.70
| 184.80 | 201.90 | 219.00
| 253.20 |
Couple + 3 children 2 <11 & 1 11-15 |
289.60 | 106.70 | 140.90
| 158.10 | 175.00 | 192.20
| 209.40 | 243.50 |
|
Notes:
All figures to nearest 10p; based on standard 1998-99 Income Support and Housing Benefit rates.
All cases based on at least one adult working for 30+ hours.
|
TABLE 2
Take home pay of new housing association tenants
1996 data converted in 1998 levels (ie x 1.07)
Cumulative Percentages
|
Range | Lone parents
| | Couples with children
| |
| Part-time
work |
Full time
work | All | One in
Part-time
work
| One in
full-time
work | Two in
part-time
work
| One in p/t
work and
one in f/t
work
| Two in
full-time
work | All
|
|
Under £50 | 24.5 | 2.6
| 14.6 | 22.5 | 2.1
| 5.2 | 1.5 | 1.6
| 4.4 |
Under £60 | 38.8 | 3.9
| 23.1 | 38.1 | 2.8
| 10.4 | 1.8 | 1.8
| 6.8 |
Under £70 | 51.9 | 5.7
| 31.1 | 51.5 | 4.4
| 16.7 | 2.4 | 1.8
| 9.5 |
Under £80 | 61.2 | 7.7
| 37.1 | 61.7 | 5.8
| 20.8 | 2.6 | 1.9
| 11.6 |
Under £90 | 71.1 | 10.3
| 43.7 | 70.2 | 7.9
| 25.0 | 3.1 | 2.0
| 14.0 |
Under £100 | 78.3 | 14.3
| 49.5 | 75.6 | 9.8
| 30.2 | 3.7 | 2.1
| 15.9 |
Under £110 | 84.6 | 20.7
| 55.8 | 82.0 | 13.0
| 38.5 | 4.3 | 2.4
| 18.7 |
Under £120 | 88.2 | 25.4
| 59.9 | 84.7 | 15.8
| 42.7 | 4.8 | 2.8
| 20.9 |
Under £130 | 91.1 | 31.8
| 64.4 | 87.4 | 20.9
| 46.9 | 5.6 | 3.0
| 24.5 |
Under £140 | 93.7 | 38.8
| 69.0 | 90.3 | 27.1
| 55.2 | 6.4 | 3.9
| 28.7 |
Under £150 | 95.3 | 44.5
| 72.4 | 91.6 | 33.0
| 58.3 | 7.6 | 4.6
| 32.7 |
Under £160 | 96.1 | 47.6
| 74.2 | 92.3 | 35.7
| 61.5 | 8.7 | 4.7
| 34.6 |
Under £170 | 97.6 | 55.9
| 78.8 | 94.5 | 45.4
| 70.8 | 10.8 | 6.4
| 41.2 |
Under £180 | 98.3 | 60.9
| 81.4 | 95.7 | 51.9
| 70.8 | 13.2 | 7.6
| 45.7 |
Under £190 | 98.8 | 65.9
| 84.0 | 96.2 | 57.8
| 72.9 | 15.9 | 8.1
| 49.8 |
Under £200 | 99.1 | 70.8
| 86.3 | 96.9 | 63.3
| 78.1 | 19.6 | 10.2
| 54.0 |
Under £220 | 99.6 | 81.5
| 91.5 | 98.1 | 75.8
| 85.4 | 32.7 | 16.0
| 64.6 |
Under £240 | 99.7 | 86.4
| 93.7 | 98.8 | 81.0
| 86.5 | 42.2 | 20.6
| 69.8 |
Under £260 | 99.8 | 90.1
| 95.5 | 99.3 | 85.9
| 89.6 | 52.9 | 27.0
| 75.3 |
| | |
| | | |
| | |
All Cases | 100.0 | 100.0
| 100.0 | 100.0 | 100.0
| 100.0 | 100.0 | 100.0
| 100.0 |
(Number) | 2,474 | 2,026
| 4,500 | 1,088 | 5,428
| 96 | 1,528 | 1,054
| 9,194 |
|



47
References: Time for mortgage benefits, S Webb and S Wilcox, Joseph
Rowntree Foundation, 1991. Housing benefit and the disincentive
to work, S Wilcox, Joseph Rowntree Foundation, 1993. Replacing
housing benefit with housing credit, S Wilcox, Chartered Institute
of Housing, 1997. Securing home ownership: providing an effective
safety net for home buyers, H Sutherland and S Wilcox, Council
of Mortgage Lenders, 1997. Housing benefit, affordability and
work incentives, H Sutherland and S Wilcox. Back
48
See footnote on p. 114. Back
|