Thursday, 26 February 2015

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

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)

  • Joe Halewood

    The article above is replicated in the Guardian today and the DWP has asked fro a correction to be printed stating that the assumptions in the BSHF report are wrong: DWP says:

    ""BSHF findings are based on wrong assumptions. The fact is that DWP forecast assumptions do include the recent growth in in-work claimants and they have been agreed with the independent Office for Budget Responsibility as well as a range of stakeholders.

    "The reality is that Universal Credit will continue to provide a housing safety net, as well helping people into work and those in work to increase their hours by ensuring they keep more of each extra pound they earn and allowing greater access to childcare for 80,000 households."

    Pots and kettles springs to mind with the DWP projectsions and assumptions.

    DWP said in June 2010 the HB reforms will save £2bn a year from the then HB bill of £20.8bn. It is now £22.5bn or £3.7bn over target and has risen by £2.7million per day since the coalition took office.

    The reality of Universal Credit? DWP owns figures say that thousands of households will be hit by the overall benefit cap including 44% of them being in social housing - not just the much higher cost of PRS rents then - so how will UC continue to provide a safety net?

    DWP projections say affordable rent will have no net increase in cost yet it will have up to £2bn per year added cost to HB bill.

    DWP's Universal Credit must also cost far more as it includes a one-stop assessment process for all benefits and this must equate to a 100% take up rate of benefit. Yet working tax credit and HB alone would see a £15bn per year increase to the overall bill on this basis!!!

    Eric- we have zero growth and OECD forecast we will re-enter a recession imminently. The austerity measures of this colaition contrast markedly with the Keynesian ones US adopted and US has a growth rate of 3% at the moment. There is an undoubted correlation and link here.

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  • New labour have been totally awful for tenants and poorer
    communities in their 13 years in goverment, as they have
    allowed housing rents to go up by over 200 % , and
    also allowed massive price rises in necessities such as
    food / clothing / transport / gas / electric / water and council tax.
    The tories are now keeping these high rents , but cutting all sorts of
    benefits for the poorest people in the uk.
    New labour have spent the past 2 years acting like some casual
    crossbench party in Parliament ,as if they could pick and choose
    which policies to support / oppose, and proclaiming themselves
    as the party of the squeezed middle , and as if totally
    unconcerned about the squeezed poor.

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  • Interesting to note 93% of new HB claims thro 2010 - 2011 a 2 year period were from household housing at least one employed person. I wonder if the figures for the previous 6 years are available ? Whilst I accept it is likely SOME of these statistics will be due to one wage earner losing their job or one having their hours reduced, surely it is also the case that in order to reduce the HB totals, councils and HAs have over the past two years been giving a preference to making new lettings to tenant families and individuals where one person at least is working - thereby reducing the sum payable on each property. Ive noticed this in my area where i live on a large estste - anyone know if those statistics are available anywhere ?

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  • Tony Smith

    The current gov't have reaped what they have sowed here. Squeezed workers forced to seek HB, at least they are choosing work, little consolation.

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