Lower salaries and rising rents forcing employed households to seek help
Majority of new housing benefit claimants in work
More than 90 per cent of new housing benefit claims over the past two years have been made by employed people, as squeezed workers seek help with their living costs.
A report published today by research group The Building and Social Housing Foundation found that 93 per cent of new housing benefit claims made between January 2010 and December 2011 were made by households containing at least one employed adult.
The report, entitled The growth of in-work housing benefit claimants, analyses Department for Work and Pensions data and comes in the wake of the passing of the government’s Welfare Reform Act earlier this month.
The act was designed to shave £2.25 billion a year off the £22.4 billion housing benefit bill by 2014/15. It also aims to send out a message that people will be better off in work than on benefits.
The DWP said in November 2010 that its reforms would ‘reintroduce the culture of work in households where it may have been absent for generations’. But BSHF’s report shows that the vast majority of new claimants are already in work.
The number of housing benefit claimants in Great Britain increased by 300,000 to 4.95 million between January 2010 and December 2011.
Of those 300,000, 93 per cent (279,000) were households where at least one adult was employed. Since November 2008, the proportion of housing benefit claimants in work has increased from 10 per cent to 17 per cent, while the overall number of in-work claimants has doubled from 430,000 to 865,000.
‘This increase appears to be a departure from historic trends where the number of housing benefit claimants was closely associated with levels of employment,’ the report said.
Wage reductions and higher rents have been mooted by BSHF as possible reasons for the increase.
The report calls for the DWP to commission a study into the impact of the increase and warns that the government will miss its benefit savings target if the trend continues.
A DWP spokesperson denied the trend could lead to the coalition missing its savings targets. He said: ‘The DWP forecast assumptions do include the recent growth of in-work claimants.’
Chancellor George Osborne said in his Budget speech last week that further welfare savings of £10 billion were required by 2016 to prevent departmental budget cuts.
Inside Housing’s What’s the Benefit? campaign called for a more equitable way to reduce the benefit bill.
number of housing benefit claimants in Great Britain, excluding Northern Ireland
extra claimants since January 2010, of which 279,000 were employed
93 per cent
proportion of the increase in housing benefit claims from in-work households
- In 2010 and 2011 sizeable numbers of in-work households started to claim housing benefit
- There has been a considerable change in the financial situation of households, this could be due to rent freezes, more part-time workers and inflation
- The Department for Work and Pensions will not achieve planned £2.25 billion savings on housing benefit if the number of in-work claimants continues to increase