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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

'We need to take a longer-term look at welfare'

06/12/2017


The chancellor made some welcome changes in last month's Budget – but many policies are still obstructing efforts to tackle homelessness and make sure people can access a decent home at a price they can afford, says CIH policy and practice officer Sam Lister.

The Budget was notable for the fact that it broke the pattern of successive welfare cuts going back to 2010. It will provide a modest amount of relief for hard-pressed claimants, with a number of welcome measures including:

  • From January 2018 universal credit claimants will be able to get a loan of their full award within five days of their claim, with the repayment period extended from six to 12 months. Currently only half of their award is available.
  • From February 2018 the seven-day waiting period for universal credit is abolished
  • The roll-out time table for universal credit full service is extended by three months by slowing the rate of roll-out between February and April 2018
  • From April 2018 those already on housing benefit when they are moved to universal credit will continue to receive housing benefit during the transition
  • The government will make it easier for tenants to have their housing costs element paid to their landlord
  • For private renters the number of local housing allowance (LHA) rates that benefit from the targeted affordability fund will increase.

The most welcome of these is the end of the seven-day waiting period. Although waiting days have always been a feature of social security, until relatively recently they were confined to contributory benefits, where they could be justified as the excess for insurance cover. They have never made sense for benefits which are meant to provide a safety net for people with no independent means of support. But this measure merely reduces the typical 42 day wait to 35.

The two-week housing benefit run-on for claimants moving onto universal credit is a clever short-term fix. A fundamental design flaw of universal credit is that, unlike legacy benefits, when work ends families have no other income to fill the gap. A two week run-on of housing benefit provides this for some households but only during the transition stage and won’t be available once universal credit is fully rolled out.

Although the above measures are welcome they don’t reverse any of the other reforms imposed since 2010 such as the benefit cap, the bedroom tax and cuts to the local housing allowance. And there have also been heavy cuts to tax credits and disability benefits over the same period. Some of these cuts are still in progress – 2018 is the third year out of four that working-age benefits have been frozen, and this follows three years of uprating capped at one per cent. The result is that by April basic benefits intended for essential living expenses other than housing costs will be worth only 90 per cent of their 2012 value.

For private tenants the situation is even worse – not only has the value of their basic living expenses been eroded, but also the local housing allowance. In nine out of ten local housing markets the LHA now covers less than the bottom 30% of properties and as the freeze continues its purchasing power will contract at an accelerating rate. Private renters who manage to secure a tenancy will face a widening shortfall between the LHA and their rent which they have to make up out of shrinking basic benefits, leaving them at risk of falling into debt, moving to substandard accommodation and in the worst cases homelessness. Targeted affordability funding does nothing to reverse this trend; it merely slows its acceleration. The only solution is to remove the freeze on LHA and to make sure they are more accurately linked to actual rents.


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