Reviewing Welfare Reform

by Ken Gibb

Over the last 18 months or so, a steady stream of academic research findings have challenged key arguments put forward by the DWP about the impact of welfare reform. These studies have highlighted evidence that does not support the behavioural assumptions on which impact assessments carried out by the Department are based.

The context in which the public debate is taking place is widespread media and mainstream political support for the necessity of welfare reform. This is coupled with anxiety about the consequences of specific measures such as the bedroom tax or about the impact of benefits changes on particular client groups such as people with disabilities. In recent months UK politicians and pundits have also expressed growing alarm at implementation problems and roll-out delays. But until recently the academic findings have not been drawn together and as a result not featured prominently in the debate.

 Earlier this month, the Scottish Government published an evidence review we carried out on the housing impacts of the post 2010 welfare reforms (1; 2). It was written before two of the more recent contributions to the research base were published, one by Steve Wilcox and also the recent widely reported CCHPR interim evaluation of the bedroom tax for DWP (3). The Scottish Government report is a rare attempt to synthesise a wide range of literature and, alongside the Wilcox and CCHPR reports, it raises fundamental questions.

We readily acknowledge that there are thorny methodological questions. For instance, some of the available evidence comes from research undertaken prior to the introduction of the reforms. This includes not just impact assessments but also studies that estimate effects using secondary data. Some of the research after reform was introduced is incomplete – providing evidence based on initial or interim findings only and some is based on small scale studies. Despite this, there was enough high quality work available, both quantitative and qualitative, to raise serious questions about the scope, direction and implications of UK welfare reform.

Our evidence review was organised around themes agreed with the Scottish Government and findings were split into sections reviewing the research on the private renting reforms (the most long-standing and hence the largest body of evaluative work), social renting reforms to working age tenants, cumulative effects to households, places and markets and the impact on social housing businesses. 

The conclusions can be grouped under six headings:

  1. Changes to working age benefits (including non housing related benefits) have increased financial risks for claimants. Large numbers of disabled people in particular have lost entitlement to some or all of their benefits.
  2.  Welfare change is interacting with the private rented sector in dynamic ways: will landlords risk letting to benefit-dependent tenants; will they actually stay in that part of the market? Housing Benefit claims by working people have actually doubled since 2009. Rental market benefit cuts have wider effects, not least by forcing those affected to seek lower cost housing further afield. Private renting is the sector with the least residential stability and the cumulative effect on the PRS is likely to exacerbate turnover and weaken both neighbourhood and local service cohesion.
  3.  Most social sector studies thus far have focused on the under-occupation charge. The evidence suggests that it is difficult to calculate how much downsizing will occur but that there are strong countervailing forces reducing mobility. Social landlords are most concerned about the financial inclusion issues surrounding whether tenants can cope with responsibility for rent payments following the introduction of Universal Credit that will end direct payments.
  4.  The impacts on housing systems are best understood in the wider context of welfare reform reducing incomes and creating new uncertainties for recipients e.g. as a result of changes to ESA and the introduction of PIPs, as well as the sanctions regime. These reforms are important strategic drivers for housing organisations affecting their business plans, development and investment strategies both in the light of lower rental income security and continuing less attractive lending opportunities.
  5.  We found evidence of inter tenure and place effects of these reforms on local housing systems. A common concern is that previously settled neighbourhoods and more marginal areas will be threatened by increased turnover and mobility as households seek lower cost housing, thereby undermining local services and community cohesion.
  6.  Finally, the review identified evidence gaps. First, there is no robust sense of ‘second round’ effects on behaviour. Second, there remain few if any comprehensive studies of local markets taking account of other drivers of housing outcomes, as well as welfare reform. Third, there is no detailed research evidence on lender attitudes to the new risks they perceive. Fourth, a detailed study of the interaction between sanctions, welfare reforms and housing/labour market processes and outcomes would be valuable

One criticism of the UK government’s welfare reform project, and in particular the housing dimensions of it, has been that it lacked convincing evidence to support it. Another important criticism was that the implicit or even explicit behavioural assumptions concerning responses of affected tenants, private landlords and social housing organisations – were simply not warranted. Our evidence review worked through a considerable volume of research material, and despite the gaps and the other caveats identified (e.g. it is still early in terms of housing responses post reform), there is no doubt that the overwhelming majority of the robust research evidence remains consistent with such criticism.

The outcome evidence on private renting does not support the behaviour change expected in the market and proposed by DWP, Neither have under-occupying social tenants down-sized though it is less clear why. The more recent CCHPR and Wilcox studies on the under-occupation charge also fit with this perspective. Perhaps that is no great surprise but at least now the conclusion is based on evidence rather than conjecture.

Notes

  1. Thanks to Des McNulty, a co-author of the evidence review report, who commented on a draft of this post.
  2. Gibb, K, Sprigings, N, Wright, S and McNulty, D (2014) Evidence Review of the Impacts of UK Welfare Reform Affecting Housing in Scotland. Social Research Scottish Government. See: http://www.scotland.gov.uk/Topics/Built-Environment/Housing/supply-demand/chma/welfarereformhousingevidence/welfarereformreport
  3. Wilcox, S (2014) Housing Benefit Size Criteria: Impacts for Social Sector Tenants and Options for Reform. Joseph Rowntree Foundation: York. Cambridge Centre for Housing and Planning Research (2014) Evaluation of Removal of the Spare Room Subsidy: Interim Report. Department of Work and Pensions: London.
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