Charities Warn of Explosion in Levels of Homelessness

Scottish and English charities are warning that the comprehensive spending review will lead to soaring homelessness and a crippling shortage of affordable homes.

While the full implications for Scotland will only be known when the Scottish Government sets its own Budget, further changes to housing benefit announced on Wednesday have caused dismay in the sector.

Mary Taylor, chief executive of the Scottish Federation of Housing Associations, said that unless Finance Minister John Swinney could find a way to protect the sector, the results would be “terrible”.

The Emergency Budget In June announced a package of reforms to Housing Benefit, including:

• changing the way Local Housing Allowances are worked out from October 2011
• uprating Local Housing Allowances from 2013-14 using the Consumer Price Index (CPI)
• setting a maximum Local Housing Allowance amount for each property size
• from October 2010 Support for Mortgage Interest payments will use an interest rate equal to the Bank of England’s published monthly Average Mortgage Rate
• maximum limits on Housing Benefit (from £250 a week for a one-bedroom property to £400 a week for a four-bedroom or larger)
• from April 2013, the size of houses for working age people in the social sector will reflect family size
• reversing the freeze since 2001-02 in deductions for non-dependents – these will be uprated in April 2011 based on the Consumer Price Index (CPI)
• from April 2013 reducing Housing Benefit to 90 per cent after 12 months of getting Jobseekers Allowance

The CSR confirmed that these changes would take place and that there will be further £7 billion reduction to the welfare budget.  Additional changes to housing benefits include:

• an increase in the age threshold for the shared room rate in housing benefit from 25 to 35, so that Housing Benefit rules reflect the housing expectations of people of a similar age not on benefits
• greater flexibility to local authorities to manage council tax together with direct control over Council Tax Benefit, within an overall budget that will be reduced by 10 per cent from April 2013

These changes have the potential to inflict untold misery on thousands of low income households. Whereas the £400 cap per week is unlikely to affect many families outside London, other changes will almost certainly lead to rent arrears and evictions across the country. The current JSA rate of £65.45, which falls to £51.85 for under twenty fives, is simply not enough for people to pay the Housing Benefit shortfall. This is the amount that the law says that you need to live on and only covers the most basic requirements. 

In addition to the above measures, the CSR states that ‘Social landlords will be able to offer a growing proportion of new social tenants new intermediate rental contracts that are more flexible, at rent levels between current market and social rents.’ In his speech Chancellor George Osbourne stated that this could be around 80% of local market value.

Also announced in the CSR:

• a time limit to contributory Employment and Support Allowance for those in the Work Related Activity Group of one year
• The withdrawal of the mobility component of Disability Living allowance for those in residential care,
• a freeze on the maximum Savings Credit award in Pension Credit for four years
• a time limit to contributory Employment and Support Allowance for those in the Work Related Activity Group of one year
• freezing the basic and 30 hour elements of tax credits for three years
• changing the Working Tax Credit eligibility rules so that couples with children must work 24 hours per week between them
• returning the childcare element of the Working Tax Credit to its previous 70 per cent level
• increasing the child element of the Child Tax Credit by a further £30 in 2011-12 and £50 in 2012-13 above indexation, meaning annual increases of £180 and then £110

Tags: Housing, Local Authority, Policy