Housing benefit cuts spell disaster for vulnerable tenants
1 March 2010
Crisis, the national charity for single homeless people, today releases the results of research (1) into how difficult housing benefit claimants find it to move into work and find accommodation in the private rented sector.
New research shows housing benefit cuts could push struggling tenants further towards poverty, debt and homelessness and traps recipients in unemployment and poverty.
Crisis, the national charity for single homeless people, today releases the results of research (1) into how difficult housing benefit claimants find it to move into work and find accommodation in the private rented sector.
This research has been carried out against the background of a Government consultation into reform of housing benefit (2). Proposals include changes which would see cuts to the levels of Local Housing Allowance (LHA), the form of housing benefit for people living in the private rented sector (PRS).
Leslie Morphy, Chief Executive of Crisis, said: "This new Crisis research shows the vast majority of housing benefit recipients are already living on a shoestring, with the additional huge frustration that taking a job simply does not add up.
"Crisis welcomes the Government finally moving to reform housing benefit, but it's vital that changes make the situation better, not worse.
"We need a system which works for tenants and landlords and where work pays. And we certainly don't need the disasters of increased poverty, debt and potentially even homelessness which a reduction in benefit rates from changing how they are calculated would bring."
Key findings:
Housing benefit cuts could push already struggling tenants further towards poverty, debt and even homelessness
The Government is proposing to change how local housing allowance rates are calculated. This would have the effect of reducing benefit rates - at best severely limiting the areas where claimants can live and at worst leaving them facing significant shortfalls. There are around 675,000 LHA recipients and large numbers of people would be affected by even small cuts in LHA. Job Seekers Allowance for single people over 25 is £64 a week; in this context, £5 less a week in Local Housing Allowance is an 8% cut in income.
- A £5 weekly reduction in LHA would make it more difficult for claimants to pay the rent, said 86% of housing advisors, with 17% saying it would make it nearly impossible
- A £15 weekly reduction in LHA levels 90% of housing advisors said would make it more difficult for claimants to cover their rent, with 54% saying it would make it nearly impossible.
- If faced with a shortfall between their benefit and their rent 92% of housing advisors say that clients fall behind with their rent and 55% of housing advisors said clients got into debt in other areas such as credit cards and loans when faced with shortfalls.
- Among claimants, 25% said problems such as rent arrears, falling behind with bills and getting into debt because of housing benefit shortfalls had previously contributed to them becoming homeless.
- Increased poverty, debt and even homelessness could overshadow any savings to be made through a cut in benefit rates. By cutting an LHA recipient's benefit by £5 a week the Government would save £260. But the cost to the state of a single person becoming homeless can be as high as £24,500 a year.
Housing benefit traps recipients in joblessness
The system means that for many housing benefit recipients, taking a job simply would not pay.
- Among the housing advisors surveyed, 94% said their clients express concerns about what will happen to their housing benefit if they move into work.
- Among the jobless claimants seeking work who responded to our survey, 64% said they were worried or very worried about what could happen to their housing benefit it they found work.
Recommendations
1. Rents must be affordable within housing benefit rates
The Government has proposed in its consultation various changes to the way the level of LHA in any given area is calculated. All of them will have the effect of reducing the "median rent" on which LHA is based and therefore will reduce LHA rates payable to claimants - which as this research from Crisis shows will result in claimants facing shortfalls between their benefit and their rent. The Government must therefore carefully model the effect of any changes to the system and not proceed with any that would reduce rates and result in new or increased shortfalls for claimants.
2. Address barriers to work caused by Housing BenefitThe Government must ease the transition into work and ensure work always pays. We welcome the proposals in the consultation to pay a new transition into work payment and to fix awards over a period for those facing fluctuating incomes. These changes need to come in as soon as possible with the maximum flexibility for claimants. We also, however, need more radical reform to end the absurd situation of benefits recipients losing up to 85p in for every £1 they earn when they move into work so that work really does always pay
3. Remove barriers to landlords letting to claimants
Landlords often do not want to let to LHA recipients because of the way the system works. Choice should be restored to all tenants on who their benefit is paid to and other reforms should be considered to bring housing benefit payments in line with normal renting, such as being able to be paid on a calendar basis and a month in advance.
For further media information, please contact Phil Power 020 7426 3832 or phil.power@crisis.org.uk Out of hours mobile contact 07973 372 587
Notes to editors
(1) The research briefing is based on two surveys carried out in January 2010. One survey was of 208 housing advisors contacted via Crisis' mailing list of PRS access schemes, which assist homeless and vulnerably housed people to access and sustain tenancies in the private rented sector. The second survey was of 146 Crisis clients from out Skylight education, training and employment centres in London and Newcastle, of which 117 are currently receiving housing benefit. A copy of the research briefing can be downloaded here: http://www.crisis.org.uk/policy-and-research.php
(2) http://www.dwp.gov.uk/docs/hb-consultation.pdf. Crisis' response to the consultation can be found here: http://www.crisis.org.uk/publications-search.php?fullitem=265
Crisis is the national charity for single homeless people. We are dedicated to ending homelessness by delivering life-changing services and campaigning for change. Our innovative education, employment, housing and well-being services address individual needs and help homeless people to transform their lives. We measure our success and can demonstrate tangible results and value for money. We are determined campaigners, working to prevent people from becoming homeless and advocating solutions informed by research and our direct experience. We have ambitious plans for the future and are committed to help more people in more places across the UK. We know we won't end homelessness overnight or on our own. But we take a lead, collaborate with others and together make change happen.
