Labour shortage leads to suspension of social housing income limits

Friday 05 November 2021

Social housing tenants can earn as much as they like for now with no risk of being moved out of their homes.

The Committee for Employment & Social Security has immediately suspended income limits on social housing tenants until at least the end of 2022 in response to the island’s chronic shortage of labour.

It is estimated that there are more than 1,000 job vacancies in Guernsey at present. Retail, hospitality and finance are among the sectors most affected. Some recruitment specialists have said the island is experiencing its worst labour shortage for 30 years.

Deputy Steve Falla, a member of the Committee for Employment & Social Security and Vice-President of the Committee for Economic Development, said that suspending income limits for social housing tenants would help employers who are struggling to find staff.

Pictured: Deputy Steve Falla said that suspending social housing tenants' income limits until the end of 2022 could be part of the solution to the island's serious shortage of labour. 

“The current labour shortages are a significant concern and suspending the income limits applied within social housing is something our Committee considered an important step in order to further increase States’ support to the businesses community,” said Deputy Falla.

Tenants’ income limits – the point at which they could have expected to lose their tenancy – have varied depending on their housing needs. For example, a couple in a one-bedroom home without children had an annual income limit of £31,460 whereas a household with two children had an annual income limit of £54,600.

Pictured: Annual income thresholds for social housing tenants - now suspended - varied from £25,220 to £60,320 depending on the circumstances of the household.

The Committee for Employment & Social Security acknowledges that it is difficult to predict the effects of this change on tenants’ behaviour and therefore on the labour market.

“We have evicted no tenants in 2019, 2020 and 2021 for exceeding an income threshold,” it said. “However, tenants have moved out of their own accord when they earn over the limits or when we contact them upon a review of tenancy and explain they are over the limits. We have no way of knowing how many tenants have chosen to leave because of the policy.”

Historically, the Committee has also not collected reliable information on how many social housing tenants turn down opportunities to work additional hours or do not take supplementary jobs to ensure their earnings do not cross the income threshold and place their tenancy at risk.

Andrew Le Lievre, a former member of the Committee for Employment & Social Security who also spent most of his professional career in senior roles in social welfare and housing, predicts that suspending income limits will have only a small impact.

Pictured: Andrew Le Lievre, who led the island's most-recent major social welfare reforms which merged supplementary benefit and rent rebate, said that income thresholds - now suspended - have less impact on tenants' earnings than many other more important factors.

“There is some truth in the idea that income thresholds have at times discouraged some tenants from improving their financial circumstances,” said Mr Le Lievre.

“However, a far greater disincentive was that housing rent rebate claims were based on a fixed earnings limit applied to gross income with no regard to family circumstances. Income Support [which merged the rent rebate and supplementary benefit schemes] has ironed out most of these wrinkles.

“Dispensing with income limits may benefit some tenants who are unconstrained in the hours they could work or the number of jobs they take on, but I would have to ask how many tenants are lucky enough to be so free to do so.

"Many, many tenants have reached their maximum earning capacity and have still not reached a level of income sufficient to provide for themselves or their families. Their constraint is low wages – not a lack of work ethic.

"Removing the income limits will have zero impact for these tenants and it is the same for the sick, the elderly and many single parents who are juggling childcare with work and looking after a family at the same time.

"I suspect that very few will be able to improve their circumstances greatly – some will, but not many."

The suspension of social housing tenants’ income limits comes after a States’ debate this week in which several deputies said they feared there was a ‘benefits trap’ which could discourage work. Though Express understands the policy change was in train well before the States’ debate.

Pictured: Deputy John Dyke has consistently criticised aspects of the island's social welfare system as overly generous and likely to discourage some recipients from improving their financial circumstances.

Deputy John Dyke claimed that as a result of States’ policies on social welfare “we are now seriously in benefit trap territory".

“I think there are some problems with our welfare system. I’ve been reading around this subject with international comparisons," said Deputy Dyke.

“What is clear is that the more you put people in the situation of having to choose whether to work or stick on welfare because they’re better off on welfare you put them in such a position that they make choices which ultimately destroy their lives. They become people with no responsibility, with no hope and no nothing. Because they are trapped by a system that makes them worse off for working and I think we have some of those issues here.”