Comprehensive cuts = false economy all round
The Comprehensive Spending Review (CSR) confirmed that the Welsh Government, and its key partners, would be forced to make difficult financial decisions over the next few months and years. Subsequently, in the Welsh Government’s November budget announcement, housing, never the most favoured within the overall governmental settlement, was indeed hit hard. While the overall budget falls by 6% in real terms by 2013-14, the money for homelessness is down 11% in real terms between the 2010-11 baseline and 2013-14.
The CSR compounded the previously announced cuts to the Local Housing Allowance (LHA) and Housing Benefit entitlements of thousands of Welsh households. Taken together, the CSR and benefit cuts are a heavy blow. The LHA cuts will cause financial hardship for many and force the costs of dealing with the fall-out onto local authorities and the third sector, while the impact of the CSR means we have less money to deal with current needs and even less to deal with the expected increase in households requiring homelessness and housing support. Further cuts to legal aid funding may also make access to justice more difficult for vulnerable people. With housing hit hard in the Welsh budget, it appears that providing decent homes and preventing homelessness will be even more difficult over the next few years. While politicians at all levels talk about the need to make savings, they ignore both the social and economic costs generated by increased poverty and homelessness.
The reform of LHA will certainly hit the poorest households hard. Government figures show that 48,530 of the 48,710 households claiming LHA in the private rented sector in Wales will lose out by an average of nine pounds a week, or £468 a year. Some will lose a lot more; in Anglesey the LHA for a two-bedroom house is likely to be reduced by £780 a year. The extension of the Shared Room Rate to single people under 35 years old will make decent homes harder to find while, in the longer term, the proposal to link LHA to the Consumer Price Index rather than local rents, will lead to lower allowances and increased housing need. Recent speculation that Iain Duncan Smith is wavering on the timing of some of the cuts for existing tenants may, just may, allow campaigners further lobbying opportunities.
Strategically, the private rented sector is a central component of the Welsh Government’s ten year homelessness plan and a major source of the supply required to prevent homelessness. There is no question that the benefit cuts threaten the role of the sector to deliver results. There is no evidence to back-up the claims of Westminster politicians that landlords in the sector will reduce rents. Demand for rented accommodation is high, owner occupation is expensive and the social stock is under continuous pressure. Add to that the financial commitments of many landlords, the antipathy of some towards housing benefit claimants and that recent evidence from the National Landlords Association indicates that 67% of landlords in Wales will not negotiate lower rents – then the situation is bleak for many people. Faced with homelessness, a proportion of households will approach advice services and local authorities. For every household doing this, especially if they have a priority need, there will be a financial, as well as a social, cost. Dealing with a priority need household, for example, can cost a local authority around £5,300.
The final element of course is welfare reform. The welfare system needs reforming, but the fundamental principle is that it should provide a decent standard of living for those in need. Benefit cuts, and especially the arbitrary cut to the housing benefit of people on Job Seekers Allowance for over 12 months – irrespective of individual efforts to get jobs – does not augur well for the direction of broader reform. As well as simplifying welfare, government policy must focus on enabling the creation of employment and the quality of the jobs created. Addressing low pay and in-work poverty, however, is a nettle still to be fully grasped.
With austerity biting, we need to ensure that resources are used effectively and employ spend to save tactics as much as possible. If more people are going to be approaching services then we need a strong network of housing advice to help them. We need to place more focus on making better use of existing housing resources. Bringing more empty properties back into use would contribute towards the homes available in communities and makes economic sense as well. The work being done to prevent homelessness could be so much more effective and help more people to find solutions so, in the midst of all the problems, let’s use the new legislative powers in Wales to help anyone facing homelessness to find and keep a decent home.
John Pritchard, Shelter Cymru