From April this year, the UK government will cap overall spending on welfare. Chris Johnes (Oxfam) hoped this would encourage government departments to invest in long-term programmes tackling poverty to cut future spending… but the current social housing strategy seems to be aiming for exactly the opposite.
Tackling the high cost of welfare is one of the government’s top priorities. Isn’t it? Both the Prime Minister and the Chancellor have repeatedly said that cutting welfare costs is essential to getting the budget deficit under control. So after freezing many benefits for working age people last year, the government has since decided it will introduce an overall cap on many benefits starting from next financial year.
This should be a spur to government departments to look at ways they can get the welfare bill down. Indeed, our experience as a charity is that the Treasury is interested at looking at how longer term preventative programmes – which help people tackle deep rooted personal problems – can be supported to cut the need for welfare spend in the future. These kinds of preventative spending could include family support, more tailored back to work schemes, expanding the supply of cheaper housing and better vocational education.
However, nobody seems to have told the Department for Communities and Local Government (DCLG), which seems determined to continue a housing strategy for England that will further push up rents. The strategy – which doesn’t include plans for building new homes for “social rent” (ie genuinely affordable rent) – will also drive up the need for people on low incomes to draw on housing benefit to be able to afford their rent.
The reality is that the current mix of jobs and housing available means that many people in work, especially in the south east, need housing benefit to be able to pay their rent. And the DCLG’s policy is based quite deliberately on allowing the housing benefit bill to rise – it’s not their problem, it’s another department’s budget. However, it could soon become the tenants’ problem in a big way.
If the welfare spending cap is breached, then housing benefit is an obvious target – it’s one of the largest benefits covered by the cap (it costs £24bn per year) – which means the amount of housing benefit available per person could be reduced if overall welfare spend goes too high.
And if people on low incomes will no longer have their rents fully covered, then they will face their household budgets getting even more squeezed and being forced to choose between paying the rent, heating their homes or eating. In other words, severe hardship will be imposed on thousands, if not hundreds of thousands of families because different bits of government failed to work effectively together.
There is, of course, an alternative, as charities have been telling the Treasury and governments in other parts of the UK have been pursuing. This is to put proper investment in genuinely affordable social housing – it may be expensive initially, but its long-term impact on rents will save both government money and human misery in the future.
Source – Chris Johnes, Director, UK Poverty Programme, Oxfam