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A long list of costs and casualties

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Not infrequently, the work and pensions secretary Iain Duncan Smith recalls being made redundant and facing life on the dole. Of course, most people being sent down the road are not so fortunate as to be able to rely on the wealthy in-laws.

Less frequently mentioned nowadays was his second enforced redundancy after just two years as leader of the Conservative Party. Why do I mention this now? I will take Mr Duncan Smith at his own words and, therefore, not underestimate the determination of a quiet man. However, word on the street is that Mr Duncan Smith’s welfare reform programme is heading towards the rocks.

If that results, he will be facing his own interview on the Work Programme in the near future.

The biggest unintended consequence of Mr Duncan Smith’s plans is that social housing providers are cutting their investment plans y £1bn plus

The Treasury has been consistently sceptical about Mr Duncan Smith’s welfare reform programme. Forget the objectives; forget the specific policies. It’s the practical delivery of the programme within the financial parameters that’s the key problem. However, it’s also important to look at the unintended (or were they?) financial and social consequences.

Let’s just consider a few elements:

  • The Department for Work & Pensions has already been forced to ditch three of the four proposed Universal Credit pathfinders because the IT systems – even for this limited application – are nowhere near ready.
  • Insiders are now confirming that there is no chance of 1 million people receiving universal credit by April 2014, as Mr Duncan Smith promised in November 2011.
  • Applications for discretionary housing payments (DHP) in April, as a consequence of the bedroom tax, leapt from 5,700 last year to more than 25,000 this year and many more will claim when they find out about them. The budget for DHPs will shortly be exhausted, or so constrained that arrears will take a further leap.
  • As the DHP budget runs out, there will be thousands of bad news stories about the impact on adults with disabilities and on children who are no longer able to stay with one parent, after relationship breakdown.
  • The costs of collecting the bedroom tax, including managing arrears, could well take up most of the extra income.
  • A housing association at the heart of the first direct payment pathfinder experienced a 29% rise in people contacting its financial support team in the last year, and a 19% rise in the total amount of debt referred.
  • Rent arrears in these pathfinders are already increasing dramatically. The reality is that ‘direct by default’ is already being carefully ditched.
  • The welfare reform agenda will increase costs in a whole range of other service areas, say 95% of senior council officers. None of these costs were included in the DWP impact assessment.
  • It is clear that DWP simply didn’t understand or take account of the frequency of changes in personal circumstances which affect housing and some other benefits which they are trying to incorporate into the universal credit system

Of course, if the government had really been serious about subsidising under-occupation, they would not have excluded pensioners from the scope of the bedroom tax. Not that I am advocating an expansion of the bedroom tax, rather the opposite.

Perhaps the biggest unintended consequence of Mr Duncan Smith’s plans is that, because of the necessary extra provision for increases in arrears, increasing costs of collection and advice, and possibly increased borrowing costs social housing providers are cutting their investment plans for this year by an estimated £1bn plus, mainly impacting on the construction industry and building materials’ providers. So, at the very time that the government is rushing around trying to find good-value infrastructure investment projects that can be on site quickly, it scuppers over £1bn that fits the bill.

It has not been a good few weeks for Mr Duncan Smith. He called for people to voluntarily return winter fuel payments. Just 200 did so. He also lost a major court battle to keep the locations of thousands of workfare placements secret, was defeated when the Court of Appeal ruled that workers had been unlawfully made to do unpaid work and was again rebuked by the UK Statistics Authority over the deliberate misuse of statistics.

In November 2003, Iain Duncan Smith released his novel The Devil’s Tune. The critics panned it. “Really, it’s terrible … terrible, terrible, terrible” was one of the more generous.  The book never made it into paperback.

Now, with welfare reform being “terrible, terrible….”, perhaps IDS is determined to mark his place in history with the greatest crash on the rocks of all time. The dreadful prospect is that millions of the poorest families will be the ones most affected.

Clive Betts (Lab), chair, communities and local government select committee

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