With a further £12bn in welfare cuts in the pipeline, what evidence is there to show that reforms to the welfare system are helping people into work and cutting costs?
The head of Housing and Communities at the London School of Economics (LSE) believes that savings are lower and costs are higher than planned.
Anne Power says:
“In 2013 and 2014, LSE Housing and Communities carried out a survey of 200 social housing tenants across the South West of England to find out whether welfare reform, introduced by the coalition government, was in practice helping tenants into jobs and making them better off.
“We found that the impact was direct, harsh and in most cases not leading directly to work. We have also talked to 150 social landlords and their tenants all over the country to understand the impact of cuts in benefits on the way landlords and tenants are managing.
“Our findings are striking. Welfare reform isn’t working as planned. Government savings are lower and costs are higher, particularly disability payments due to mismanagement.
“The ‘Bedroom Tax’, was introduced to make social housing tenants with one spare bedroom move home or pay more rent. This has led to empty homes in some parts of the country as many social landlords in the North and the Midlands have surplus larger properties which they have under-let to small households. Tenants now compete to downsize, leaving a costly supply of empty, larger units. Often tenants simply can’t find a smaller unit to move too.
“Sanctions, government-imposed penalties on job seekers who fail to meet Job Centre requirements, suspend all benefits with no notice. Many appeals have over-turned the job centre sanctions but often too late to prevent deep and sometimes tragic hardship. Housing benefit payments are also rising because evictions have forced tenants to pay higher rents in the private rented sector.
“Welfare reform is directed at getting a job. But older working age bands struggle because, after a long gap, skills may no longer be usable and jobs requiring IT require considerable retraining. Former manual workers often suffer serious injuries at work and can no longer do hard labour.
“Benefit cuts create longer term social costs too. For example, carers and their dependents may need a spare bedroom for a foster child or sick relative or night-time carer.
“The government is playing to popular attitudes. Spending on welfare, when austerity hits everyone, is not popular. There is a common belief that far more people cheat than actually do, whereas bureaucratic errors are far more common and cost more.
“There is general belief that people should work, whatever the job and certainly tenants we spoke to want to work. Tenants like working. But “booting” people into standing on their own feet can cut vital support lines without jolting them into a job. It can incapacitate them.
“Welfare reform is underpinned by a strong belief in the value of the market; if things don’t pay, they will stop happening, so if benefits don’t pay, people will stop depending on them. This over-simplified view has led to unintended and unnecessarily harsh consequences. As tenants feel less certain that they can rely on benefits, they find job centre interviews and the threat of sanctions too painful and too humiliating, so some just disappear off the unemployment register.
“The number of people actually finding work through job centre action is far smaller than claimed.
“On the other hand, tenants want to work whenever possible, even when pay is poor, so in that sense the strong work focus of welfare reform is positive. Tenants also like training and learning – and job centres send claimants on courses.
“Tenants are adjusting to lower incomes, although paying bills is a constant juggling act and it is no longer possible to take basic support for granted. The adjustment tenants are making would be far more painful if it wasn’t for advice organisations like CAB, churches and charities that offer emergency support. Food banks help in extreme circumstances.
“Social landlords are responding to welfare reform and the wider cuts they face with considerable anxiety. They know the vast majority of their 4 million tenant households are hard hit.
“Collecting rents becomes even more important, but far more challenging. Welfare reform has forced social landlords to recognise the need for more direct, face-to-face, front-line contact with tenants to ensure payments and help resolve problems. They develop opportunities for training and accessing jobs to help welfare reform work.”
Source – Welfare Weekly, 26 May 2015
Tenants of private landlords should be given new rights to stay in their home as long as they please as well as guarantees that their rent will not increase above inflation, a think tank has argued.
Civitas said that a new regulatory regime is needed in the private rental sector to prevent landlords exploiting the shortage of homes to choose from at the expense of both tenants and taxpayers.
The growing private rented sector is expected to account for more than one third of the UK’s housing stock by 2032 and, at present, two-fifths (40 per cent) of private tenants’ incomes are typically taken up by their rent.
An increasing lack of affordability in the sector is being reflected in an increasing housing benefit bill for taxpayers, the report said.
The number of private renters needing housing benefit to meet their costs has more than doubled in the past decade, from 722,000 in 2003/4 to 1.7 million in 2013/14. This figure is forecast to reach 1.85 million in 2018/19, according to the Future of Private Renting report.
The document also said that the amount of housing benefit rent subsidies claimed in the private rented sector has more than doubled in real terms over the last 10 years, from £3.9bn in 2003/4 to £9.5bn in 2013/14, and is set to top £10bn in 2018/19.
The report said that while these sums are vital for growing numbers of low-income households with little choice but to rent privately, they are also creating a “vicious circle” by helping to prop up the rent inflation that they are meant to alleviate.
In areas with very high numbers of claimants, this could give landlords the opportunity to set their rents at artificially high levels, in line with the local housing allowance, the report said.
The report argued that the private sector should be required to offer indefinite tenancies “as the norm”. And once an initial rent has been agreed, index-linked ceilings on rent rises would give renters the security they need, it argued.
Daniel Bentley, author of the report, said:
“As private renting grows it is important to ensure that it offers a fair deal to those who have little choice but to rely on it.
“This vicious circle will only worsen as the private rented sector comes to represent an ever-larger proportion of the housing market and more and more tenants have to fall back on housing benefit.”
Civitas said that exceptions to rent ceilings could be made in cases where a property has genuinely been improved.
Landlords who buy new-build homes would also be exempted from the regulatory regime, but they would be encouraged to enter similar voluntary agreements.
The report said that at present, the vast majority of landlords invest in existing homes rather than new-build, with this added competition for homes helping to push up prices and crowd out first-time buyers.
Mr Bentley said new regulations would not necessarily spell an exodus of private landlords, “many of whom have invested to capitalise on rising house prices and are influenced in their investment decisions by a much broader range of factors”.
He said: “Future landlord investment must be nudged towards new-build rather than being encouraged to buy up existing owner-occupied homes.”
Source – Northern Echo, 02 Jan 2015
A “power imbalance” between landlords and tenants has led more households to seek external help to cope in the private rented sector, a Citizens Advice Bureau claims.
In the three months to September 2014, more than 100 people received advice from the Newcastle branch of the Citizens Advice Bureau (CAB) about problems.
Issues included landlords not repairing leaking roofs, not replacing emergency lighting, the withholding of personal mail and refusals to return deposits.
Nationally, CABs helped people with 14% more repairs and maintenance problems between July and September this year than in the same period in 2013.
The organisation’s latest Advice Trends report lists difficulties getting repairs and maintenance as the most common problem reported, with the charity having helped in almost 17,000 of these issues over the past year.
The study also claims one in three private rented properties in England does not meet the Government’s decent home minimum standard, while renters have few rights and fear eviction. CABs helped with 20% more issues where people are facing eviction without arrears.
Currently, the CAB-backed Tenancies Reform Bill is going through parliament, with a House of Commons debate taking place last month and another set for January 23.
If it becomes law, the bill would prevent so-called ‘retaliatory evictions’, and has been supported by Newcastle MPs Chi Onwurah and Catherine McKinnell.
Shona Alexander, chief executive of Newcastle CAB, said:
“Many people are finding it tough dealing with their landlords in the private rented sector. We are seeing more private tenants coming to us for help.
“People are living in homes which are damp, in need of repair and in some cases dangerous. But they fear that if they ask their landlord to fix problems they may face eviction.
“The power imbalance between private landlords and tenants needs to change. It’s time for private renters’ rights to be brought up to a decent 21st century standard.”
However, the National Landlords Association (NLA), which promotes and protects landlords, argues bringing in new legislation is unnecessary.
Bruce Haagensen, NLA representative in the North East, said:
“Retaliatory eviction, if and where it does happen, is an unacceptable and completely unprofessional response. Tenants should be able to raise issues with their landlords without the fear of losing their home.
“However, the Tenancies Reform or ‘Revenge Evictions’ Bill is a response more to the fear of it happening than widespread experience and the NLA has always been concerned that there is not the weight of evidence to justify the need for additional legislation.
“Following last month’s events it would seem the majority of MPs share these reservations given that so few were present to vote for it.”
Source – Newcastle Evening Chronicle, 08 Dec 2014
This article was written by Patrick Wintour, political editor, for The Guardian on Monday 20th October 2014
Britain is on the brink of becoming a nation permanently divided between rich and poor, according to the Social Mobility and Child Poverty Commission in its second annual state of the nation report.
The 335-page document is likely to be a reference point against which the government’s anti-poverty record will be judged, and to feature strongly in opposition party manifestos for the 2015 general election.
The report says all three main Westminster political parties are lamentably failing to be frank with the electorate about the fact there is no chance of meeting the government’s statutory child poverty target by 2020.
It also predicts that 2010-2020 will be the first decade since records began that saw a rise in absolute poverty – defined as a household in which income is below 60% of median earnings. A rise from 2.6 million households in absolute poverty to 3.5 million is now expected.
The chair of the commission, the former Labour cabinet minister Alan Milburn, said: “Muddling through will not do when the mismatch between needs and anti-poverty government policies are widening.”
Asked whether the government had responded to his first report, he said:
“It is like water from the stone. Our plea is not just to the current parties of government … They are great at talking the talk, the issue is whether they can walk the walk. The policies lack the scale to move the dial.”
Milburn attacked the government for failing to agree a child poverty strategy due to a coalition row.
“You cannot have a situation where government ministers first discredit a target and then fail to agree a new target and then go back to a discredited old target,” he said. “That is beyond a Whitehall farce.”
The report warns that “2020 could mark a watershed between an era in which for decades there have been rising living standards shared by all and a future era where rising living standards bypass the poorest in society.”
It suggests that the link between effort and reward, on which social mobility relies, has been broken by changes in the housing market – with home ownership rates halving among young people in 20 years – and the labour market – with 5 million workers trapped in low pay.
When combined with cuts in welfare and public spending, these changes put Britain on track to become a permanently divided nation.
The report calls on the next government to supplement the existing targets with new measures to give a more rounded picture of poverty and to amend the legislation to set out a new timescale for achieving them.
The commission made six major recommendations:
• The UK should commit to implementing a living wage by 2025 at the latest.
• The Office of Budget Responsibility should publish an assessment of each Budget for its impact on social mobility and child poverty.
• Half of all workplaces with more than 10 staff should offer quality apprenticeships.
• New forms of housing tenure through expanded shared ownership schemes and reform of the private rented sector.
• The best teachers should be paid more to teach in the worst schools to help end illiteracy and innumeracy in primary schools by 2025 and halve the attainment gap in secondary school by 2025. It suggests teachers should get a 25% pay rise to work in the most challenging schools.
• Unpaid internships to be made illegal and 5,000 more pupils from a free school meals background to be going to university by 2020. It proposes that the extra 100,000 university places by 2020 give universities a unique chance to find the extra 5,000 places, with the Russell group admitting 3,000 more places for state schools, using textual admission processes.
Milburn said internships had become a new rung on the professional ladder and were being abused by the middle classes and people from private educational backgrounds.
The report highlights that child poverty, set against the 2010 Child Poverty Act, was at a historic low in 2012-13.
But it adds:
“The bad news is that real wages are still falling while jobs are becoming less secure. Housing costs are straining the link between effort and reward that should be at the heart of a fair and socially mobile country and different parts of society are having different experiences of the recovery with big variations by income age family type and region.”
It also finds
“a higher proportion of jobs are insecure and low paid and 5 million people earn less than the living wage”.
Milburn also challenged Labour’s promise to commit to a minimum wage of £8 an hour by 2020, saying the number was less ambitious than what has been achieved in the current parliament. Labour said its policy was to raise the minimum wage to 58% of average earnings – higher than the current average.
The report also warns that money will not be available in the next parliament to drive an anti-poverty fight. Milburn said:
“The impact of welfare cuts and entrenched low pay and welfare cuts will bite between now and 2020. The pace of fiscal consolidation has been slower than anticipated, meaning over 40% has been deferred to the next parliament.
“Each of the main parties are committed to eye-wateringly tight spending cuts. None of them have made much effort to reconcile the social ends they say they want with the fiscal means to which they are committed.
“In particular plans, to cut in-work support in real terms in the next parliament can only make the working poor worse off, not better off.”
The report adds:
”The current proposal for tax-free childcare is complicated, with resources focused on those with the highest incomes – the wrong priority at a time austerity.
“In education the attainment gap remains unacceptably wide and static – almost two-thirds of children fail to achieve the basics of five GCSEs including English and maths. Poor children are less likely to be taught by good teachers.”
Source – Welfare Weekly, 24 Oct 2014
Hartlepool councillors have agreed new plans for a council to set up a social lettings agency in Hartlepool in a bid to develop a more “robust” housing service.
Housing chiefs at Hartlepool Borough Council say there is a need because the last decade has seen the first rise in the percentage of households renting since 1918.
But officials say it is estimated 34.8 per cent of the private rented sector does not meet the Decent Homes Standard, therefore they believe by developing a social lettings agency there is scope to generate much-needed income while helping improve the quality, standard and management of private rented properties.
A report highlighted some of the problems experienced in town including; poor management, poor quality housing, unresponsive repairs and maintenance, high rent levels and the poor appearance of properties.
The new agency, using existing council staff, will provide similar services to a commercial ‘high street’ letting and managing agent but officials say the intention is not to undercut the market, but provide a competitive rate for the service.
The decision was taken by the finance and policy committee and officials say this current year will be a transitional one. Any income is dependent on the number of properties managed but the target for properties to be managed by the council is 70 in 2015-16 and up to 100 the year after.
The council will target existing landlords who have expressed an interest, empty houses and the wider market. Meanwhile, tenants who are facing homelessness, those who can’t afford to buy a home or who are finding it hard to secure a tenancy in the private sector will also be targeted.
Damien Wilson, the council’s assistant director of regeneration, said: “The proposals provide important social benefits and will ensure a robust housing service able to meet the needs of service users into the future.
“The staffing resource being retained in the service is crucial to the development of the new services as they hold valuable skills and knowledge essential to the delivery of the new services.”
Initial market testing showed an appetite from landlords for a “reliable and affordable lettings and management agency”.
Source – Hartlepool Mail 03 July 2014