Landlord News

Further Welfare Cuts Could Cause Social Sector Issues

Em Morley - May 27, 2015

If welfare funding suffers further cuts by the Government, then the social rental sector could experience spiralling rent arrears, tenant evictions and homelessness, warns a new report.

The study of 75 local authorities and housing associations in England by Grant Thornton UK LLP, estimates that the ongoing effects of bedroom tax, alongside plans to extend the benefit cap and impose additional limits to housing benefit, could cause more financial difficulty for tenants.

The report indicates that councils’ and housing associations’ ability to ease growing arrears problems has been reduced. Growing numbers are issuing possession orders to tenants who cannot pay the rent.

The document, titled Easing the burden: The impact of welfare reform on local government and the social housing sector, explored how local welfare has changed over the last two years from the eyes of local authorities and housing associations.

YFurther Welfare Cuts Could Cause Social Sector Issues

Further Welfare Cuts Could Cause Social Sector Issues

Most local authorities and housing associations reported an increase in average Council Tax and growing rent arrears since 2012-13, which they claimed was partly down to welfare reform.

Housing benefit reforms have caused people to move to smaller homes, but less than 10% of those affected have actually moved. This is due to a shortage of smaller properties.

Following the changes, 47% of local authorities and 51% of housing associations stated that housing benefit is substantially more expensive to administer, as cases are now more complicated.

Head of Local Government at Grant Thornton UK LLP, Paul Dossett, says: “In general, welfare reform has prompted an impressive response from many local authorities and housing associations, and has been a key driver for innovation and improvement.

“The question is: Can they continue to make efficient use of rapidly reducing resources? Our research suggests that without flexibility from Whitehall and further measures, such as devolution of welfare funding, this is unlikely.”

Dossett continues: “The collective impact of welfare reform on those in need of support is to some degree hidden due to the lack of data on the casual link between welfare reform and poverty. Our research found that only 42% of local authorities track poverty levels to measure the impact of welfare reform.

“We urge the new Government to consider carefully the impact of the cuts to welfare reform that are put forward, not just in isolation, but collectively. Whilst Whitehall fiscally sees only individual cuts to local authorities, the people affected and we, as auditors, see the cumulative impact.

“A significant cohort of people – both working and unemployed – will remain in need of support, so local authorities and housing associations will need to focus any available money on them. Further devolution of powers to local government for welfare administration could be the key to a sustainable future, especially if different agencies work together.”1 

The report highlights areas of national policy that could be better coordinated, so that the financial impact of welfare put on local authorities can be fully understood and better managed.

They include:

  • Building more homes to keep up with demand.
  • Health and social care integration, particularly following instances of hardship.
  • The policy that supports groups of foreign nationals who have bypassed official immigration channels.

1 http://www.scottishhousingnews.com/3517/england-social-landlords-welfare-expect-cuts-to-trigger-new-wave-of-homelessness/?utm_content=buffer729c1&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer