Impacts of Welfare Reform
by Ken Gibb
Two new major studies on the impact of welfare reform have been published by the Joseph Rowntree Foundation in the last day or two. The first, by Steve Wilcox, reviews the first year of the bedroom tax. The second, by Anne Power and colleagues, analyses surveys of social tenants and housing associations in terms of the wider effects wrought by the cumulative effects of benefit reform more broadly. The studies neatly dovetail with work I have been doing in terms of reviewing the impact of the bedroom tax in Scotland and (with my colleagues Sharon Wright, Des McNulty and Nigel Sprigings) an evidence review for the Scottish Government on the wider impacts of housing-related reforms in Scotland.
Steve Wilcox suggests that about 85% of owners and 60% of private tenants under-occupy relative to the bedroom standard but only about 4% of all under-occupiers are working age social tenants. He finds that fewer than the expected numbers were affected by the bedroom tax (500,000 rather than 660,000) and that consequently the savings were less than anticipated by DWP (for 2013-14, £330 million rather than £480 million). This may be because survey estimates used by DWP are not the same as actual records but it took place in a context when the overall numbers of social tenants on HB actually rose (though there was a 5% reduction in working age claimants in all tenures and there may have been some size reclassifications by landlords).
Only 6% of affected tenants moved in the first 6 months after introduction. Instead the vast majority coped by either drawing on savings or other resources, by taking in lodgers or other family members by working (1%)and by seeking transfers or mutual exchanges. Disabled households are particularly hard hit and may account for more than two thirds of households affected by the bedroom tax. Wilcox reports that broadly half of all affected households are in arrears but more time is needed to see whether this will lead to a distinct rise in evictions. Indicative work comparing one bed vacancies with demand for downsizing suggests a mismatch in the region of 4:1 (though this takes account of other calls on smaller properties – suggesting the problem is actually much worse).
In response to these findings, Wilcox suggests a number of ameliorative short run reforms to help the key groups such as the disabled, further work re-classifying the appropriate bedroom standard and longer term proposals to move towards something more like the Local Housing Allowance regime operating in the private rented sector wherein rent structures could be altered to reflect demand for different sizes and types.
Anne Power and colleagues find that social tenants rely heavily on benefits, but that the benefits system is becoming both tougher and tighter, such that tenants are being forced to cut back on food and energy consumption. Apart from reporting increases in poverty, tenants also expect evictions to increase. In response landlords are working harder to intensify preventative solutions and tenancy sustainment measures as well as trying to help people find work-based responses. They conclude that reform may leave tenants more not less dependent on benefits, that landlords will have less capacity to build more stock, and they anticipate rising benefit costs as more are forced to rent privately. In other words, as they put it, ‘a safety net can prevent [more] costly outcomes’.
These two studies reinforce and extend our growing knowledge of what is going on and what is the lived experience of those directly exposed to benefit change and income loss. There was nothing I found inherently surprising about the LSE study but it did provide solid multiple sources telling a coherent and consistent account of the problems that have been primarily thus far examined in local case studies. They raise serious questions about the efficacy of the DWP project, to the extent that it may result on more people relying on benefits (and of course with low wages, this may be for many in-work) and that the corollary of more shifting to private renting may be a higher not a lower housing benefit bill.
This is all consistent with our Scottish work. High proportions of the disabled affected by the bedroom tax, a massive mismatch between the flow of one bed properties and the scale of demand for them (and not just from down-sizers but also from single homeless referrals), the critical role of Discretionary Housing Payments (all the more so in Scotland) and the sense, as Wilcox put it in his report, that for reasons of preferences as well as constraints, people just do not want to or feel they can move and are thus obliged to manage the consequent income reduction they face as best as they can. The other thing that Steve Wilcox confirms is that one should be careful not to jump to conclusions in an area short on definitive data and one which is dynamic and always changing in terms of, for instance, flows in and out of bedroom tax eligibility or in and out of arrears.
So, the evidence base is growing and these reports confirm and deepen the consensus of the research evaluations and impacts work thus far undertaken.There is really no excuse for apologists or others to present these reforms in any way other than at the very least recognising the serious hardships, fear and unintended consequences they are creating.
Anne Power, Bert Provan, Eileen Herden and Nicola Serle (2014) The Impact of Welfare Reform on Social Landlords and Tenants. Joseph Rowntree Foundation: York.
Steve Wilcox (2014) Housing Benefit Size Criteria: Impacts for Social Sector Tenants and Options for Reform. Joseph Rowntree Foundation: York.
Both are available at http://jrf.org.uk