Welfare Reform and the Universal Credit – are you prepared for the biggest benefits shake up in 60 years?
Did you watch John Humphreys’ recent and well-balanced BBC documentary? It showed how people caught in the benefits trap make rational choices about the value of working a hard 40-hour week for only a fraction more than the state will pay in benefits.
In the Welfare Reform Bill the Coalition Government is tackling what they describe as a ‘perverse incentive not to work’ and other concerns about the current benefits system. Key principles are to:
Bring in a Universal Credit (UC) designed to incentivise work by removing the ‘benefit trap’ where some claimants lose over 90p in every £1 they earn as their benefits are withdrawn. UC will combine many means-tested benefits, including job seekers allowance, income support and housing benefit.
Reduce the overall cost – with £18bn taken out of the welfare bill over four years.
There are particular concerns for social housing landlords:
The maximum weekly benefits cap of £500 will affect larger families; initially those in temporary accommodation but increasingly tenants of mainstream social housing (as the new 80% market rent affordability definition is introduced)
Tenants living in properties deemed too big for their needs – ‘under-occupation’ – will receive a UC rent element lower than their actual rent
The new system no longer so clearly demarcates different payments for different costs (e.g. housing benefit for rent, job seeker’s allowance for living costs)
The rent element of UC will be paid direct to claimants for both Registered Provider and Local Authority tenants – discussed in more detail in October by Jim Lashmar
Monthly UC payments for tenants who may be liable to pay rent weekly
‘Digitisation’ of service access and the potential for some claimants to be excluded
The strengthened ‘conditionality’ principle, whereby sanctions will be imposed on those not doing enough to find work, may see many tenants fall off benefits, especially those who live chaotic lives.
Landlords will need to carefully manage the impact of these changes and some already consider that services may need to be re-provided as a result.
We will continue e-bulletin briefings on the Bill; in the meantime, Altair can support organisations to understand the changes and respond to the strategic considerations they raise. For more information see our Welfare Reform product descriptions. For an informal discussion, please contact Graham Hishmurgh, Associate Director, on 07940 569395.