Friday, 19 September 2014

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.

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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.

Key findings

4.95 million
number of housing benefit claimants in Great Britain, excluding Northern Ireland

300,000
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

 

Readers' comments (14)

  • Rick Campbell

    Joe Halewood will have a field day with this as it underpins what he has been saying -- I hope the government and the Opposition (oxymoron) learn from it!

    I'm still smirking from GG winning Bradford West and hoping that the mainstream parties actually learn a lesson.

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  • Joe Halewood

    The figures are indeed accurate as of the 300,160 new claimants since January 2010 279,470 are in work and this is 93.11%

    I have always used the figures since election and since May 2010 there have been 200,730 new claims in payment yet there has been an increase in working claimants of 214,650. Strangely but accurately 107%

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  • Ilimis

    Rent to High and Service Charges getting beyond a joke

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  • Not rocket science but the inevitable progression, horror story none the less.

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  • Ilimis

    Does anyone know will Shared Ownership people be able to claim benefits due to these rising costs

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  • No surprise to me. Rents too high, and wages too low. "affordable" housing is not helping low paid at all!

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  • Chris

    Perhaps those who have found the defects in Tory Policy hard to comprehend will now understand what we have been warning of now it is beginning to occur. Massively increasing rents is pushing more people into benefit dependency. Couple this with the ongoing wage regulation making the poorest poorer and the average poorer too then the stage is set for massive rent exploitation and a huge increase in the benefits bill.

    Never forget, the Tories have deliberately set down this path - now try and work out why!

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  • Trevor Galley

    This growing number of in-work Housing Benefit claimants has to have a massive impact on government policy, including the Governments Hsg Strategy. Housing Benefit expenditure is increasing not decreasing as Government (The Coalition) and Welfare Reform had hoped.

    All housing benefit claimants face the choice of debt, cutting back on basic living expenses, the risk of homelessness and whether its worth being employed and more children will remain living with parents, and with more people sharing accommodation with friends or others as social housing provision is reoriented away from housing those in greatest need, towards those who are working on low and average incomes.

    The poorest (Working or not) will be hit hardest through the Government’s welfare and Housing Benefit reforms. What will DWP be recommending to Ministers now?

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  • Joe Halewood

    My first comment above - that 107% of new HB claimants are in work is correct however bizarre it reads - the full detail and background is here (http://wp.me/p1vuvL-bp)

    Trevor "What will DWP be recommending to Ministers now?" My answer is nothing new as the clear steer from Universal Credit is for social landlords to get their non-working tenants into NMW jobs.

    In doing so tenants will receive working tax credit the receipt of which exempts you from the overall benefit cap (£350/£500pw for singles /families) and will still mean tenant can claim at least some HB.

    It wouldnt surprise me at all when social landlords recognise this as a way to safeguard their income streams and begin promoting it.

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  • Eric Blair

    I can't say I'm even slightly surprised to learn that more in-work households are asking for help. The idea of 'a dependency culture' is just re-vamped 80s sloganeering, and has little bearing on reality. But then the coalition is undeterred by reality.

    It's not hard to work out that lower paid households are going to be squeezed given the rising cost of living and wage freezes. Oil prices are high too, so that puts a premium on heating bills and transport (to work or otherwise).

    CPI inflation is very likely to remain over the target figure of 2% throughout 2012. Couple this to the fact that there is no real economic growth, and that we may be entering a second phase of recession (if we haven't already). I would argue strongly that the ConDem's cuts are actually generating this situation, rather than it being a case of the Eurozone having a 'chilling down' effect.

    It'll cost more to sort out the resulting witch's brew of problems than ever! Now is the summer of our discontent.

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