Concessions made on welfare reform by the UK Government in the Autumn are welcome but do not go far enough, says Hayley MacNamara
In preparation for this piece, I typed ‘welfare reform’ into Google News. An increasingly gloomy subject has been made even more pitiful with the first article listed: ‘Trump to look at welfare reform next’. Whoever gave him that idea?
In recent months we have seen a slight shift in UK Government policy on welfare. In October, the prime minister made the very welcome announcement that local housing allowance (LHA) will no longer apply to the social rented sector in 2019. In November, the Chancellor Philip Hammond announced that minor improvements would be made to the Universal Credit system, in recognition of its failings. In December, the Department for Work and Pensions (DWP) committed to reform the personal independence payment (PIP) and employment support allowance (ESA) following criticism that the process was focused on ‘turning out numbers”’.
Do these announcements go far enough? Not at all, unfortunately.
Let’s first turn to Universal Credit. Prior to the UK Budget announcement, we developed three key calls for improvements to the system. Firstly, we’re calling for the waiting time to be reduced from six to four weeks as the initial wait for the first payment puts an increasing amount of pressure on tenants’ income and mental state. Beyond that, we would like to see the option for tenants to be paid more frequently, to suit their circumstances.
Our second call is for faster payment of housing support to the claimant, as soon as it is verified, so that we can avoid the potential for further rent arrears. In addition, we would like to see the option for tenants to have their housing element of Universal Credit paid directly to the landlord. This came through strongly from tenants in our research with Cardiff Metropolitan University.
Finally, we would like to see improved communication between the DWP, landlord and tenants so that Universal Credit can be as painless a process as possible. The immediate roll out of the landlord portal and trusted partner status systems to all housing associations operating in full service areas will go some way to assist with this by accelerating processing times and improving communication.
Unfortunately, the announcements made in the budget did not go far enough to address our three calls. In Wales, the roll out of full service is less than 10 per cent complete. However, we are already seeing its considerable impact with increasing rent arrears, desperate tenants making tough decisions between heating or food, and the complexity of the system adding to the stress for all involved. This is why we are continuing to call on the UK Government to immediately pause the roll out of Universal Credit so that it can work on implementing our suggested improvements as soon as possible.
In addition, we have yet to see any shift from UK Government on the benefit freeze. In November, it was confirmed that the four-year freeze which commenced in April 2016 would remain. Our research report on the impact of LHA on the private rental sector demonstrated the impact that the freeze is having on affordability and access to housing. In one Broad Market Rental Area, the freeze contributed to tenants only receiving enough housing support through the welfare system to afford access to 2 per cent of the private rental sector.
At a time when benefits continue to be frozen, the UK’s inflation rate rose to 3.1 per cent in November and recent data shows that average weekly wages are growing at just 2.2 per cent. Food inflation has also increased. This provides a desperate situation for those on low incomes, and it will have the biggest impact on working families. We need to end the benefit freeze immediately.
In-work poverty is increasingly becoming as much of an issue as out of work poverty. Designed in the aftermath of the financial crisis, Universal Credit focuses on reducing worklessness which is now at an all-time low. Workless households may have been a big problem in late 20th century Britain, but in-work poverty is the big challenge this century. Of the 12 million working-age adults and children in poverty, 8 million live in households where at least one person is in work.
On average, working families on Universal Credit are £625 per year worse off. The ‘option’ of earning more in order to offset any benefit losses is made harder by the taper rate in the tax credit system and Universal Credit. We welcome the commitment from UK Government in the budget announcement to explore improvements to work allowances in the Universal Credit system, and would urge for further exploration into reducing taper rates.
Whilst we have seen a shift from UK Government to begin to accept failings, the concessions made do not go far enough. There is, however, the opportunity to build on this momentum and continue to push for further reforms and improvements. The welfare system was originally designed to provide a safety net for those in desperate need of support, and we need to ensure that this remains.
Hayley MacNamara is policy and programmes manager at Community Housing Cymru