The Welfare Bill - Cause for Concern

This afternoon, MPs will be debating the Welfare Reform & Work Bill in the House of Commons. Despite this being “2nd Reading”, it is the first official opportunity for politicians to welcome the bits they like and raise concerns about the ones they don’t.

Meanwhile, ministers will be present in the Commons to listen to all of the concerns raised – from their own MPs, the Opposition and the smaller parties. And, crucially, having listened closely to the debate, the minister will summarise the points made and respond.

In the strange world of Parliamentary business and legislation, these exchanges are extremely important. The Bill will be amended many times during its course, but ensuring the minister is faced with legitimate, well-argued concerns every time they are stood at the Dispatch Box will set the tone and context for changing the Bill, helping to make sure it best serves those who will be affected by it.

Some of those affected will be among the millions of people we help ever year through our services, who are struggling with bad housing or homelessness. We’re here so no one has to fight bad housing or homelessness on their own, and we therefore have some very real and legitimate concerns – so what are they?

One of the most damaging items contained in the Bill is the freeze to Local Housing Allowance rates (housing benefit for private renters). It is a slow burner but one that will mean more and more private renters will be unable to pay their housing costs as rents outstrip wage growth. 1.4 million households claim LHA and it is vital for ensuring low income households can afford to rent a home. But in 2 years it will not cover the bottom third of rents in almost all local authorities, as it is meant to. This will reduce the number affordable homes for families on low incomes and puts hundreds of thousands of households at risk of rent arrears. And with rents set to continue rising, whole swathes of the country will become virtually off limits if the freeze remains in place for the full four years.

Another worrying element is the lowering of the Benefit Cap. Despite its former justifications, the Government have decided to remove the link to average earnings, simply making it punitive. It will now affect much smaller families in less expensive areas. With deductions made directly from Housing Benefit, this will increase the risk of homelessness and price out-of-work families out of large parts of the country.

Additional support for working families is also being taken away. The removal of the Family Premium will lead to reduced housing benefit payments for working families, making it harder for them to manage the shortfalls as the value of LHA falls. Growing families will also find that the additional costs of an extra child are no longer recognised after two children. Worryingly the government has released no modelling of the impact of either of these changes.

And it’s not just renters who will feel the pinch; Support for Mortgage Interest payments for homeowners will be replaced by a loan. Little accompanying detail has been announced. This isn’t necessarily concerning provided the loans do not put people’s homes at risk and mortgage holders are able to choose between a reasonable and affordable payment plan or deferring payment until the sale of the property.

In some welcome news (at least in the short term), the Bill will reduce Social Rents; tackling the high cost of housing is the only sustainable way of reducing welfare spending. But house building – the only way to bring housing costs down in the long term – must not be undermined, reinforcing the need for things like the Affordable Homes Programme to make sure affordable homes to rent still get built.

Something that is particularly worrying, and that has much of the wider charity sector up in arms is the redefinition of Child Poverty. From our perspective, the new definition risks under-estimating the rise in in-work poverty. It will also be a missed opportunity if the new definition does not capture the impacts of high housing costs on family finances and bad housing on children’s lives.

Disappointingly, the removal of housing benefit for 18-21 year olds will now presumably be brought in by regulations, given its absence from the Bill. It is alarming that such a key shift in who is entitled to state support will pass without real debate or Primary Legislation. This measure risks removing support from an extremely vulnerable group and, despite reassurances, the government is yet to come forward with detailed robust and practical exemptions. However, even with exemptions, we suspect many will fall through the net as the bureaucracy of the welfare system struggles to reflect the reality of people’s lives. The consequence will be more street homelessness rather than ‘earning or learning’. The removal of housing benefit from an entire arbitrary section of the population is a fundamental change to the welfare state – it should be given the Parliamentary scrutiny and oversight such a decision merits.

As you can see, we’re not short on concerns. But what we need now is for MPs from all sides of the House to raise these in the Commons with ministers. I am sure that politicians from across the country, from all parties, and from all backgrounds, do not want to see more people struggling to stay in their homes or a rise in homelessness. Which is why we need them to be at that debate, making the case and ensuring those who fall on hard times get the help when they need it most.