Categories
Blog Post

Passing the buck for new homes

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

The proposals for the new ‘Affordable Rent’ regime published today by Communities and Local Government department and the Homes and Communities Agency  are in the classic style of this government. 

Make huge cuts.  Change a few rules.  Devolve responsibility.  Then wash your hands, it’s nothing to do with us.

Passing the buck developed as an art form.  Pontius Pilate has nothing on these guys.  Nothing could be clearer than the one underlined and emphasised sentence in Grant Shapps’ introduction:

 “So Government is getting out of the way where it needs to, and is supporting you where it can. Ultimately, though, delivery depends on the initiative of providers, and the support of local authorities and local communities. It is now up to you to deliver the homes we need.”

The mis-named ‘Affordable Rent’ (AR) product will be the main form of provision in future.  Providers will be able to get some grant from the Homes and Communities Agency, but the pot is about half what it used to be.  They will have to show how they can generate resources  by borrowing (I thought the government didn’t like borrowing?) against the increased rental stream from letting new homes and a proportion of re-let homes at AR levels (up to 80% of market rents), together with other resources such as existing surpluses, s106 planning gain, free or cheap public land, recycled grant from previous developments and so on. 

But there are no numbers – no specific expectations, not even a regional distribution of the HCA’s funding (although London is expected to get the same share of outputs as now, around 27%), no expected or even hoped-for split between city town and country.  The outcome will depend on the bids, what providers think they can do and where they think they can do it.  From housing strategy to housing chaos in one easy step.

The HCA paper does include some detail about AR.  The product (and therefore the rental income) will only be available to Registered Providers who achieve an HCA contract for delivery, so that will exclude virtually all councils and all non-developing housing associations and any existing developing HAs who do not win a contract.  So that will keep the numbers of AR lettings down and ensure that most re-lets across the stock will be under a continuation of the existing ‘rent restructuring’ rules.  Under AR or social rent, the terms of tenancy will be up to the landlord to decide within a policy framework set by local authorities – subject to a 2 year minimum term for AR tenancies.  So all future tenancies could be short or long term at the landlords’ whim. 

The relationship between AR and housing benefit is going to be crucial.  The HCA paper implies that HB will be payable on an AR letting even if the 80% market rent takes it above the local LHA limit.  That might offer some protection to tenants who will be on benefits for a long time.  However the overall benefits cap of £26,000 will still apply, irrespective of the rent being covered: in high rent areas, that will be the worst of all the new rules in practice.  If the aim of building 150,000 new affordable homes is achieved, and say 90% of them are AR and say 60% of those are let to HB tenants, then the cost to the government will run to several hundred millions of pounds, proving yet again that cuts in one place often pop up as extra costs somewhere else.  

Providers have to submit their ‘offers’ by 3 May and initial contracts are expected to be sign in July.

Categories
Blog Post

The ghost of Christmas yet to come

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

We don’t often link to the Telegraph on Red Brick.  But the sting operation against leading Liberal Democrats has had a focus on one of our favourite topics – housing benefit.

So here is what Business Minister Ed Davey actually said to the undercover reporters on this topic.  Hear the tape here.

“Well, their housing benefit cuts, for example, which are going to mean in my view if they go through that some people on the breadline will be put below the breadline.  And that’s just deeply unacceptable.  There is (sic) five changes to housing benefit, and there are two which I find are unsupportable.  One which will come in in 2010-13 where if you were unemployed for 12 months and you still were passing the working test which is actively seeking work – to get jobseekers allowance, which is about £80 a week, something like that, so you can eat you will have to show that you are looking for work…… I don’t understand why you are on the breadline, you’ve been trying to look for work, you’ve been passing all the government tests, and you’re suddenly going to have your rent, which is your highest cost, your help with that, taken down by 10 per cent.  No logic behind that whatsoever…. We spend too much on it.  It’s pushed up rents and landlords, rich landlords, are getting their pockets filled.  So the system doesn’t work, but I don’t think you kick people when they’re down.”

Contrast that with the pugnacious and ever so slightly pompous Mr Davey’s attack on Chris Bryant and Boris Johnson on BBC’s Question Time in October for using the word ‘cleansing’ to describe the housing benefit changes.  He said:

“Chris and Boris Johnson should apologise.  The language they are using is appalling and I think it is scaremongering and I think their analysis is completely wrong.  And I’ll tell you why it’s appalling.  I have Kosovan asylum seekers in my constituency who really were ethnically cleansed ….. what is being proposed is nothing of the sort, you should use temperate language and have a moderate and grown up and adult debate…. People will find that 790,000 social homes in London will be completely unaffected.  They will find that the vast majority of housing benefit recipients across the country will be unaffected.   And yes there will be some but we have increased massively the fund that will assist if there are problems to £140m.  And even those people who will be affected, they will be able to find that up to a third of private rented sector homes in London still affordable under housing benefit.  Now I’m afraid you are being factually wrong and pandering to people’s sentiment when we’re actually putting in a sensible policy….. The real issue here is that we are proposing after all these changes the state will still subsidise up to £20,000 a year rent in the private sector – £400 a week”.   

A few facts

–        Many social tenants will be affected by the 10% cut in jobseekers allowance, uprating benefits at less then RPI, and the increase in rents for some tenancies to 80% market rents

–        The £21,000 a year cap is irrelevant to most private tenants.  Many more will be affected by the 30th percentile rule and the overall benefits cap of £26,000

–        The ‘vast majority’ of private tenants will be affected, as the government’s own figures now show.

As an aside, Ed Davey’s rage about the use of hyperbole about cleansing looked synthetic at the time – after all, Lord Turnbull said Gordon Brown was Stalinist – but it looks even odder now that Vince Cable has called the government ‘Maoist’.  It seems that comparisons to genocidal maniacs are more common that we think.

We’ve observed before that the more the government accuse the opposition of scaremongering, the more likely it is to be true.   Below the breadline…… kicking people when they’re down.  Mr Davey’s real views deserve to be heard, and should be acted upon. 

Even Ebenezer Scrooge finally repents.  If the LibDems stand up for their principles, they might just get to play the part of the ghost of Christmas yet to come.

Categories
Blog Post

What will housing look like at Christmas 2014?

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

Just published on the Labour Housing Group website is a fascinating article by LHG Executive member Graham Martin, who tries to predict what will happen to the 3 main tenures between now and Xmas four years hence, when we will be 5 months away from the most likely date of the next General Election.  What will the Labour Party, when returned to government, be facing in housing?  Here is a summary of Graham’s conclusions (figures are for England only).   

Social Housing

Housing Associations currently own around 2.3m affordable homes.  Given the size of the stock, the overall numbers will change slowly despite the planned changes. 

  • The current (inherited and new) social rented programme will produce about 100,000-120,000 extra ‘target rented’ properties.  But between 100,000-170,000 existing target rent homes will be relet at intermediate (upto 80% market) rents.  In 2014 it is likely to be 50,000 fewer in total than now.
  • There will be around 285,000 more homes let at intermediate rents (say 135,000 relets and 150,000 new build). 
  • The debt funded/rental cross-subsidised new Intermediate rented homes will be produced mainly in London and the South East (with some in the South West and Midlands) as it is here that the maths work best.  In other parts of the country, intermediate rents will result in either a small increase or even a rent reduction, making development on the new model unviable. 
  • The biggest impact is likely to be caused by the interaction of the various benefit changes, and in particular the overall benefit cap of £26,000, restricting tenants’ ability to pay.

Council house numbers will change slowly.  There is little appetite and resources for significant stock transfers.  Some other conclusions: 

  • The reform of Housing Revenue Accounts is likely to improve councils’ financial strength and their ability to invest in their own stock.  There is a risk that there will be a smash and grab raid on HRA money (rising rents, financially more secure) to cross subsidise the General Fund.
  • The provision by councils of Intermediate rented housing is likely to be slow.
  • Management issues around benefits are likely to be the same as with Housing Associations.
  • Changes to statutory homelessness rules, and changing letting priorities will have a significant impact.

Home Ownership

Graham projects that house prices might fall another 20%, maybe 25%-30%, as measured against inflation. This will be mainly due to the long term ‘deleveraging’ of the residential mortgage market – i.e. there will not be the money to lend to home owners to buy new homes (such money as there is will go mainly to those buying the nicest properties with the biggest deposits).

Home construction for home ownership will be remain low until 2014, after which is may start to increase again (from a very low base).

The lack of affordable homes for (all but the best off) first time buyers will result in increased pressure on the rental market, and more adult children living in the parental home.

Private Rented Sector

The hardest to predict. The only certainly is that there will be big change.

The changes to Housing Benefit (and total benefit) rules will profoundly impact on the sector. Landlords may split their properties into smaller flats to respond to the benefit caps and ceilings.  Savills are projecting that the impact will be, first, large falls in demand for and rents of 1 bedroom flats (due to under 35’s now being subject to the ‘single room rate’ rule), and, secondly, increased demand for larger ‘shareable’ properties.

The new 30% centile cap on maximum HB and the plan to greatly widen the ‘Broad Market Rental Areas’ will have a big impact.  There are areas where over 30% of private tenants are dependant on HB, but will be constrained to living in the 30% of cheapest properties. 40% into 30% just does not go….

It is likely that the gap in housing (especially ‘green’) quality between other tenures and the private rented sector will grow significantly upto 2015.

Regulation and quality control are likely to be drastically reduced due to spending cuts, and there is a danger that undesirable landlord practices will increase. This is unfair to tenants but also to responsible landlords and managing agents.

There is an opportunity to promote high quality institutional landlordism, with investment available if the regulatory structure is right.  REITS – Real Estate Investment Trusts – could work well in residential letting, kick starting the UK residential construction industry, and providing high quality, long  term rented property at market rents.

Categories
Blog Post

LHA on a Shoestring (Eddie, that is)

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

The excellent blogger Jules Birch, of Inside Housing magazine, demonstrates the value of a good journalistic nose and a bit of statistical persistence. 

Last week, Ministers made much of the comparison between private sector rents, which they claimed the Office for National Statistics showed were down by 5% in a year, and rents where local housing allowance was being paid, up 3%.  This proved, they declared in the House and on the airwaves, that LHA was distorting the market, driving high rents and fuelling profiteering by landlords. 

Birch, aka Inspector Clouseau, smelled a rat.  And in particular that the ONS produces no such statistics.  A few calls later, and Inspector Morse forced the admission from the department that the statistics in fact came from a private property website.  And Inspector Frost then discovered that using the website’s stats as an index was dodgy in the extreme, not to be relied on as an indicator of rents in the sector as a whole let alone the LHA market, and that their analyst was in fact predicting rent rises.  And finally Inspector Taggart demonstrated that all the available evidence shows that LHA does not distort the market after all.  No case to answer.

So, was Ian Duncan Smith misleading the House – sorry, in Parliamentary language, was he ‘inadvertently’ misleading the House?  If this had been Labour Ministers it would have been all over the front pages and Paxman and Humphreys would  demanding an apology, but so far our forensic investigator, Britain’s answer to the Girl with the Dragon Tattoo, has only managed the pages of Inside Housing and not the Daily Mail.

I’m sure that erstwhile Jane Tennisons and Juliet Bravos on Labour’s front bench will pursue further enquiries in Parliament. 

http://www.insidehousing.co.uk/community/blog/mind-the-gap/6512515.blog

(illustration: an inspector’s insignia)

Categories
Blog Post

HB: more heat than light

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

Yesterday’s marathon Commons debate on the proposed housing benefit changes produced more heat than light.  There were a lot of apparently conflicting statistics, especially about the number of people affected and the number of people likely to have to move home as a result.


The main government theme – sorry, but I can no longer distinguish between Tory and Liberal members of the government, I had thought the Minister, Steve Webb, was a Liberal Democrat until I heard his speech – was to attack Labour’s ‘scaremongering’.  But as the government has yet to publish any meaningful analysis of the proposals, or to demonstrate how the savings are calculated, the opposition has to rely on its own analysis and that of the housing organisations like the National Housing Federation and Shelter, and all have predicted dire outcomes.


There was an interesting debate about the impact the Local Housing Allowance has had on rent levels in the private rented sector.  In short, Labour argued that rent levels, especially in higher rent areas, have been dragged up by buoyant and growing demand from non-HB tenants, especially the growing group of people who would have become owner occupiers in previous times who now can’t or won’t take a risk on buying.  Therefore LHA, being linked to the median rent, follows the market rather than leads it.  Labour in office had decided to remove the highest rents from the calculation of the median to reduce the impact the top of the market was having on the measure that determined the going LHA rate.
The government benches took two slightly different views; on the backbenches several claimed that the LHA level was determining the rent levels, driving the market up, but the Minister relied on the more limited construction that, as the LHA supported 40% of rent payers in the sector, it must therefore have some effect on the price. 

This seems to me to be a proper debate about a fundamental issue.  How does state intervention impact on a market, especially one with inelastic supply, which caters for the very rich and the very poor and lots in between and has little consumer protection?   We will be more and more dependant on private renting in the future, and this is a question worthy of proper study and analysis.  One factor may be the differences between the market in high rent areas and those in areas where the gap between social and market rents is really quite small and where there are fewer richer people entering the market.


Another noteworthy feature of the debate was the number of speakers from places well away from London.  The government has been keen to keep the debate focused on the more extreme cases where the national cap will now apply, but there were speeches about Glasgow and Sheffield and Sunderland and elsewhere identifying the likely losers and the impact the losses might have on families.


The only real sign of dissent on the government side concerned the proposal to cut HB by 10% for anyone on job seekers allowance for more than a year, irrespective of how hard they had looked for a job, and LibDem Simon Hughes said he would oppose this – although the remainer of his interventions gave me the impression that he might end up supporting the rest of the package, making it much more likely that it will go through.

Categories
Blog Post

Is homelessness next on the hit list?

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

In the absence of a proper statement as to what the ConDem government’s housing policy is, we are left to pick up jigsaw pieces and try to make a coherent picture out of them.

Lord Freud of Benefit Reform, speaking to the work and pensions select committee, seems to have let one particular cat out of the bag. 

Flying in the face of expert opinion and echoing what David Cameron said on the subject, he argued that the housing benefit reforms would not cause additional homelessness or a need for additional temporary accommodation.  But then, in rather contradictory terms, he argued that it would be very valuable to change the definition of homelessness.  The statutory definition is not as it should be, he complained, because it is more than not having a roof over your head. 

If this is a signal that the government is working on a change in the statutory definition, which has been broadly the same since landmark private member’s legislation in 1977, promoted by a Liberal, then yet more of the most dire forecasts of the housing world will come true.  Freud complains that housing experts are stirring up fears and frightening people, but the pattern at the moment is that, when the worst fears are expressed, they are condemned as scaremongering by Ministers one day only to be confirmed as policy the next.       

As we have noted before, the homelessness legislation is indeed a barrier to the government’s plans to cut housing benefit support, because local authorities will have to take responsibility for some of those displaced.  So the next obvious step is to change the homelessness legislation to enable the HB cuts to be delivered without so many knock-on effects.  In effect, many more people will become homeless under the existing definition, but will not be regarded as homeless by a new definition.  So there is no additional homelessness.  Clever trick, but a trick nonetheless.  

There is a large constituency in this country that believes that the homelessness safety net, imperfect though it is, is one of the core pillars of the welfare state, not just a nice add-on that we can no longer afford.  Out there in the real world there are countless voluntary organisations, faith groups, and concerned citizens who work with homeless people daily and know the real story.  Many regard the manner in which we treat homeless people as a benchmark of our civilisation.  When mobilised, they can be a huge political force, and if I was the coalition government, I wouldn’t want to upset them.

Categories
Blog Post

Mean and nasty

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

The Conservative Party never apologised for the corruption and gerrymandering practised by Dame Shirley Porter at the expense of the homeless and badly housed people of Westminster.  John Major once promised to do so when the legal process was complete and if the case was finally found against her, but it has never been forthcoming.  There is a deep and abiding suspicion that the Tories have never forgiven the Audit Commission for its role in bringing her to book and the constant embarrassment that the case caused them.  Some even think that the decision to abolish the Audit Commission could be some macabre form of revenge.

More important however is the strain of thought that has survived down the years: poor people should not be allowed to live in places like Westminster and, in Porter’s words, you have to be ‘mean and nasty’ to homeless people. 

One of the clear impediments in the way of the Government’s housing benefit reforms – the 21st century clearances – is the homelessness legislation.  Many of the people who will not be able to afford their homes after the HB changes will have rights under the 2002 Homelessness Act.  And Westminster Council is very alive to this.

An exchange of letters between the Westminster Cabinet Member for Housing, Cllr Philippa Roe, and Grant Shapps, disclosed in Dave Hill’s London Blog yesterday and also seen by Red Brick, couldn’t be clearer. 

Roe essentially has 3 demands, which taken together would gut the legislative safety net for homeless people.

First, she wants to tighten the local connection rules.  Currently, an applicant with 6 months residency in the borough could claim a local connection if they became homeless, and she wants this extended to 3 years.  6 months happens to be the length of the typical assured shorthold tenancy, and Westminster has long believed that the masses move into Westminster on a short tenancy just so they can make a homelessness claim on the City at the end of it.  In fact anyone with any knowledge of Westminster’s approach to temporary accommodation and the extraordinary length of time people have to wait for a home would avoid them like the plague if they had the choice.

Secondly, and more worrying, is her demand that the main homelessness duty under s.193 should be discharged by finding someone an assured shorthold tenancy in the private rented sector.  This would effectively remove the safety net that has been in place since 1977.  This is a possible outcome under the current Act and Guidance, but only if the tenancy meets conditions and the applicant signs a statement accepting the offer and saying that they understand it discharges the s.193 duty. 

Thirdly, she wants to end the requirement in most cases to offer temporary accommodation in borough.  The guidance seems to be widely ignored already and most of Westminster’s TA is out of borough and often the other side of London, but the change would give them more freedom to dump people far from their support networks, schools and jobs.

Shapps’ reply is non-committal although his promise to give the points ‘careful consideration’ is not as comforting as a rejection would be.  Even giving them ‘consideration’ risks undermining his carefully created reputation for being ok on homelessness.  

The wheels are starting to come off the HB proposals.  First, because even this Government might baulk at the prospect of having to tackle the homelessness safety net to make them work.  Secondly because they simply have not thought through the parallel policies of cutting HB at the same time as increasing rents rapidly.  And thirdly, because councils are beginning to get nervous about the unintended consequences that a rapid churn of poorer tenants might have for their budgets.  It’s not over yet.

Categories
Blog Post

Housing disbenefit

<strong><span class="has-inline-color has-accent-color">Steve Hilditch</span></strong>
Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

I can’t recall a time when housing issues have dominated the headlines in the national press like they have in the last week.  Having spent the best part of 40 years, off and on, trying to get newspapers to take housing stories seriously, all my Christmases have come at once.  Only Lady Porter and mortgage repossessions broke through onto the front pages like this.  It’s been hard to keep up.  The increasingly ridiculous Mayor of London managed to stir the pot beautifully.  Cameron’s pomposity and arrogance became ever more obvious at PMQs, further exposing his absolute lack of understanding of what it is to be poor. 

Nick Clegg’s synthetic anger about Chris Bryant and Boris Johnson comparing the housing benefit policies to social cleansing was clearly an attempted diversion that only succeeded in demonstrating how threadbare the government’s position is.  I am sure he has never engaged in hyperbole before.  Of course there are no armies and no machine guns just as many workplaces are not really run by ‘a little Hitler’ despite the protestations of the staff.  It is undoubtedly the case that many extremely poor people will be forced, by economic compulsion rather than armies, to move against their will, often out of areas where they were born and bred and where all their community connections and family support services are.  It will ruin many of the country’s most vibrant and genuinely mixed neighbourhoods, where rich and poor and all ethnicities live cheek by jowl and have done so for generations.  The imagery is therefore relevant: in truth it’s the power these images have to communicate the story that rattles Clegg.    

 Apart from attack being the best form of defence, the government’s strategy has been to keep the story focused on the few extreme central London examples rather than the many inner London, outer London, Home Counties, and the rest of the country cases where the HB reforms will hit people hard.  There are several reforms not just the cap; they will hit poor private tenants, they will hit poor social tenants, they will hit poor homeless people living in private leased accommodation, they will hit tenants everywhere not just in London, crucially they will hit people in work as much as they will hit jobseekers and other people who do not work, and the numbers affected will be in the many hundreds of thousands.

 The coverage has also revealed a basic ignorance in much of the media about the core story.  The Guardian started its front page story by referring to ‘council home associations’, whatever they are, and a presenter on News 24 asked a guest about social tenants living in rich areas of London despite the story being about Local Housing Allowance caps.  HB as an in-work benefit could be a feature in Stephen Fry’s General Ignorance round in QI.

 They say that no-one understands the entirety of how the housing revenue account subsidy system works.  In truth it’s a doddle compared to HB and the relationship between rents, HB and other benefits.  That’s why this story is about an emotional response and a feeling as to whether the government is right or wrong, and that’s why the imagery is so powerful and important.  So far, I’m delighted to say, it’s Government 0 Humanity 1.

Categories
Blog Post

A long term increase in the benefit bill…

<strong>by Tony Clements</strong>
by Tony Clements

Former policy advisor to Rt Hon John Healey MP during his tenure as Minister of State for Housing and Planning. Executive Director of Place for Ealing Council.

So what would Labour do instead? It’s the standard question to us at the moment and indeed of any opposition.

It’s a difficult one to answer for a lot of reasons. One of those reasons is that whatever you do, you have to graft it on to what the other lot have done during their time in power.

One of the things Labour is likely to face coming into office again in the future is a considerably higher housing benefit bill. Yes, really – despite the caps and restrictions that will do real damage to mixed communities, the CSR paved the way for a rising bill in the long-term. Here’s why:

George Osborne announced two weeks ago that capital funding for ‘social’ or affordable housing would be cut. He says by 50%, in truth it’s more like 75%, but that’s a different issue. So how will the Tories justify their claims that they will build more affordable homes? By increasing ‘social’ rents to 80% of market rents and then allowing housing associations to borrow against these new higher revenue streams to build more homes. OK, well that could stack up. But how will people on the waiting lists be able to afford near market rents? They are often often workers on very low incomes, carers, disabled, workless etc? Well Nick Clegg has the answer here:

“People on low pay on those new rents will be compensated in full through housing benefit.”

So, in a nutshell, it’s a shift in the cost of subsidising housing from up-front capital to build homes to putting more people on higher levels of benefit, so they can afford near-market rents.

They’ve moved the bill from the Department of Communities and Local Government to the Department of Work and Pensions – nifty footwork from Eric Pickles.

That’s great for cutting big capital budgets now in order for the Chancellor to say he’s wiped out the deficit before the next election: it’s rubbish for the taxpayer in the future who has to shoulder the long-term costs. 

It’s like a great big housing PFI: avoid the capital investment up-front, pay more in the long-term.

p.s. I think there’s good reason to think that the benefits system won’t cover these costs ‘in full’ as Nick Clegg says, but that’s for another post.