Osborne tinkers with welfare

The assault on housing benefit has been unrelenting over the past 5 years. Vital parts of our housing safety net – which make up ordinary families last line of defence against homelessness, poverty and desperation – have been significantly reduced.

After major cuts in 2010, the government again raided housing benefit in this year’s Summer Budget, ushering in a four year freeze to Local Housing Allowance (the form of housing benefit for people living in the private rented sector), while also lowering the benefit cap.

In yesterday’s Comprehensive Spending Review Chancellor George Osborne led the charge once again. It was a mere skirmish compared to past announcements on welfare, but there are still some losers:

Capping the amount of rent that housing benefit will cover in the social rented sector to the relevant local housing allowance (LHA) rate:

Yesterday’s announcement changes the rules about what you can get in housing benefit if you rent a council/social home, to bring them in line with the rules about what you can get if you rent privately. This will affect tenancies that start from 1st April 2016, but the changes won’t be rolled out until 2018. So who is going to feel the impact of this policy?

One key concern is that in the future, single people under the age of 35, who don’t have dependents, will only be able to get the shared accommodation rate of housing benefit – in other words, the cost of renting a room in a shared house. This is a questionable policy for a sector that supports a high number of vulnerable households, many of whom will be single and under the age of 35. After all, allocations policies promoted by the government mean that new social lets are targeted at just these more vulnerable tenants – for whom sharing accommodation, often with complete strangers, is not a suitable option. For this policy to work, the government will need to consider exemptions for specific vulnerable groups.

There are also concerns about how the policy will impact on households in parts of the country where social and affordable rents are above the LHA rate, or where large families are concerned. For some families, the options will be bleak: downsize into overcrowded accommodation; or stay put, and risk growing rent arrears and the threat of eviction.

Decreasing temporary absence in housing benefit: currently, people are allowed to leave the country and still claim housing benefit, as long as they intend to return home within 13 weeks. The government plan to reduce this time-limit to four weeks, beyond which point your housing benefit claim will be cancelled and rent will go unpaid.

It is unclear how this change will effect claimants who need to go abroad for long periods of time, due to family commitments or work. For example, what will happen to members of armed services, or others who are regularly required to work outside of the UK for longer than four weeks?

New funding for temporary homeless accommodation: the CSR also ushered in changes to the way temporary accommodation for homeless households is funded. The new arrangement scraps a management fee that was provided to local authorities based on the actual number of cases that a council housed in temporary accommodation.

Now a standalone grant will be paid to councils upfront. The government is encouraging councils to use this money flexibly to prevent homelessness.

This is generally good news, as it will allow councils to innovate to better meet the needs of homeless households. But there are risks. The overall budget is increasing by £10m each year until 2021, but this increase is based on current homelessness trends: the grant may not take account of future fluctuations in the number of homeless households requiring temporary accommodation. New welfare reforms, such as the freeze to LHA and the lowering of the benefit cap, will make it almost impossible to predict homeless numbers accurately. Furthermore, while the renewed emphasis on preventing homelessness is to be encouraged, there’s a limit to what prevention can achieve if there is simply not enough affordable accommodation in the local area.

For all Osborne’s tinkering, the cost of providing housing benefit is still going up and up, as more and more people are forced to rely on it to pay their ever increasing rents. At Shelter we believe the only way we’ll drive the housing benefit bill down, and at the same time reverse the trend of increasing homelessness, is for the government to build more homes that are genuinely affordable to people on low and middling incomes.