The effect of the Chancellor’s announcement to cut housing benefit by £1.8 billion a year by 2014/15 may be to drive tenants into debt, at the very least, and quite possibly into eviction through arrears and further homelessness, according to some homeless charities.

There has been much made in the media of the few individuals whose housing benefit costs seem entirely disproportionate but the real story is that nearly half of all housing benefit claimants are already contributing to a shortfall in the housing benefit allocated for their properties of £100 a month.

The measures in the current budget include the most controversial plan to cut housing benefit by 10 per cent to people who have been on jobseekers allowance for more than a year from April 2013. The measure will hit around 700,000 people in the social and private rented sectors.

Caroline Davey, deputy director of policy and research at homelessness charity Shelter, states that jobseekers allowance payments can already be stopped for those deemed to be making insufficient efforts to find work. While the housing benefit system can put people off looking for work, the proposals do not tackle any of the causes, such as steep drops in payments leaving some people no better off in work. She adds:
‘They have gone for penalising claimants without reforming the broad problems of the system and have done so in a recession with rising unemployment, costs, and a child benefit freeze’

Changes in Local Housing Allowance in the private rented sector
The amount that a local authority feel it is reasonable to pay for private sector rents is set using what is called the local housing allowance which is a based on whether the property has shared facilities, is self-contained etc. Plans to set local housing allowance rates using the bottom 30 per cent of rents in an area will mean almost every claimant sees their benefit cut, according to homeless charities. At present almost half of households on LHA have a shortfall of £100 a month on average. The fear is that tenants whose benefit is far lower than their rent will eventually fall into arrears and be evicted by their landlord. They would be classed as intentionally homeless by their local authority because they have arrears, making them a low priority for help.

An example from Andy Winter, chief executive of Brighton Housing Trust, which finds private lets for homeless people, has calculated that the current local housing allowance rate of £149.59 a week for a one-bedroom flat will fall by around £28.50 when benefit is linked to the lowest 30 per cent of rents and cut by 10 per cent for those on jobseekers allowance for more than a year. Tenants will have to scrape together this shortfall from the £64.50 they receive in jobseekers allowance which covers their living costs.

Having lived on JSA myself, there is not much left over when you have paid for food, your fuel, light and water bills and if you are seeking work – all the costs relating to job-seeking. The UK has had the highest food price inflation in Europe and the cost of food shopping increased by 8% in 2009 plus the hikes in utility bills has put further pressure on people’s income. Even though the rate of increase has eased over the last year, the overall impact has been an increase in people’s cost hitting those with those on low incomes hit the most.

The current government may be right that the housing benefit system is in “dire need of reform” to quote the Chancellor but we do risk the most vulnerable and those who genuinely want to get back to work but need to improve their skills or train or go to college to be able to get a job which will cover their housing and living costs.

Margaret Shapland
Advice and Welfare