English | Cymraeg Tel: 029 2076 5760 Connect: Twitter

Making welfare work for Wales

The Bevan Foundation has just completed an investigation of the future of the welfare system in Wales. Victoria Winckler looks at some of the issues on housing benefit.

Housing benefit is critically important to housing in Wales. Last year (2014/15), more than £1 billion of housing benefits supported nearly a quarter of a million tenants in Wales with the costs of their rent, around two thirds of them in social housing.

Housing benefit has been subject to an enormous number of changes since 2010, which can be summarised as:

  • Restrictions on property size

While the removal of the ‘spare room subsidy’ / bedroom tax is the most well-known, other changes have also limited the size of property for which a tenant can claim benefit, such as the restriction of single claimants aged under-35 years to the shared room rate and the ceiling on local housing allowance.

  • Limits on the amount of benefit

The benefit cap – soon to fall to £20,000 in Wales – has received the most attention, but changes in the calculation of claimants’ incomes (such as allowances for children) and the freezing of local housing allowance rates have also cut the amount of housing benefit that can be received by a household.

  • Changes in payment arrangements

Once help with housing costs is included in universal credit, claimants will receive the contribution to rent as a lump sum along with other benefit payments. Benefits will be paid monthly, in arrears and to one person in a household.

The impact of these changes on families is considerable. Households affected by the loss of the ‘spare bedroom subsidy’, for example, have lost an average of £14.17 a week. For those affected by the benefit cap, the losses have been even greater – four out of ten of those affected by £26,000 cap have are more than £50 a week worse off. Hardly surprisingly, there are already many reports of tenants experiencing increased hardship, debt and arrears, and some evidence of increasing evictions and homelessness. The most recent round of reforms will add to households’ losses.

The near-universal response by public bodies and social landlords to these changes can be summed up in one word: ‘mitigation’. Social landlords have, in general, focused on providing support to tenants such as helping with money management or teaching digital skills, and on changes to housing management such as facilitating moves to smaller properties or revising affordability assessments. There are some outstanding examples of ‘mitigation’ in Wales which have made a very real difference to people’s lives.

But, valuable though these activities are, they do not address the fundamental problem, which is that changes to housing benefit are potentially transforming social housing in Wales, at best challenging and at worst undermining Welsh housing policy.

The first, and most obvious, challenge is to the ideal of a long-term home. Look no further than the Lifetime Homes Standard or the Renting Homes (Wales) Act 2016 as evidence of the Welsh Government’s commitment to security and stability for tenants. Yet at the same time, the housing benefit regime expects tenants receiving housing benefit to move home each time their bedroom entitlement changes, or pay a penalty of around £700 a year. So far the majority of tenants affected have borne the cuts to housing benefit rather than move, but as further cuts bite that position could well change.

The second challenge is to meeting need. Providing the right home of the right type (and at the right price) has been the bedrock of Welsh housing policy to date. Yet the de-coupling of the amount of housing benefit that can be received from the cost of meeting housing need is likely to mean that increasing numbers of people simply cannot afford the right home. We see this already as many social landlords introduce tough affordability tests for new tenants, effectively denying the very poorest access to decent housing.

The third challenge is to the Welsh Government’s and social landlords’ ability to invest in social housing and support services. The changes to housing benefit reduce social landlords’ income at the same time as increasing management costs and the need for support services. The long-term risks to the sector from welfare reform remain to be seen, but without doubt the funding model is changing.

Given the substantial threats to Welsh housing policy, arguably something more than ‘mitigation’ is required – perhaps even devolution of the housing element of universal credit. That is one of the options being investigated in our current project looking at ‘Making Welfare Work for Wales’.

This is not as fanciful as it might sound. The Scotland Bill includes provision for the Scottish Government to change payment arrangements, vary rent and size criteria, and make additional payments. Some English cities are calling for similar powers, along with the ability to determine local housing allowance.

There is certainly a strong case for aligning the £1 billion spend on housing benefit more closely with Welsh housing policy, including the potential to invest in increasing the supply of housing as well as to remove some of the most invidious of recent changes.

There are risks too, not least of managing a demand-driven budget and concerns about cuts to any funding that might be devolved. And as for whether the devolution of such an important element in the UK government’s welfare regime would be agreed – well, this is a long game.

Victoria Winckler is director of the Bevan Foundation. For more information about the project visit www.bevanfoundation.org/current-projects/making-welfare-work-for-wales. WHQ will be covering the results of the project in a future issue

Sign up to our email newsletter

Every two months we'll email you a summary of the latest news & articles on the WHQ website. Better still, if you're a fully paid up magazine subscriber, you'll get access to the latest members-only articles as well.

Sign up for the email newsletter »

Looking to advertise in our magazine?

Advertising and sponsored features are a great way to raise your profile with our readership of housing and regeneration decision makers in Wales.

Find out more »