We have always maintained that the UK Government’s welfare reform programme will have devastating consequences for communities in Wales.
It therefore came as no surprise when a recent Wales Audit Office report published evidence stating that welfare reform is having an adverse and disproportionate effect in Wales. The report found that a greater proportion of Welsh social housing tenants have had their housing benefit reduced than elsewhere in the UK, with 51% of tenants reporting an increase in personal debt. This was backed by evidence from social landlords showing a £5.3m increase in rent arrears in the first six months of the removal of the spare room subsidy and the introduction of the benefit cap.
For some Welsh social housing tenants, the welfare changes will have created a level of hardship and a spiral of social and economic deprivation that will be hard, if not impossible, to break.
This is easier to understand in the context of:
· higher (on average) unemployment than anywhere in the UK
· a heavy reliance on the public sector as an employer
· households paying 5% more for electricity than the rest of UK
· higher rates of digital exclusion than other UK regions - 39% of social housing tenants have no access to PC
· a five-fold increase in the use of foodbanks over the last 2 years – 29.7% by people who had experienced welfare benefit delays
· a £4.1m cut in specialist advice services, despite increasing need
In 2013, the Welsh Affairs Select Committee also published evidence highlighting how the spare room subsidy had been a “policy failure” in the Welsh Valleys where, effectively, a social housing tenant moving to a smaller property in the private rented sector would cost the tax payer more money.
So what are social landlords doing?
60% of Welsh social landlords have reported an increase in management costs as they refocus their resources to manage welfare changes. Most landlords are also prioritising tenants affected by the spare room subsidy to move, more tenant profiling, providing low level money advice and budgeting services, and investing significant amounts of money in awareness raising, and have programmes in place to help tenants back into work. A rise in rent arrears and the increased costs of managing welfare changes still means, however, that Welsh housing associations and local authorities are struggling to find effective and sustainable solutions to the challenges they face.
These challenges will be exacerbated by direct payments and the roll out of Universal Credit unless action is taken now. We need more control over welfare and the flexibility to provide:
· choice to tenants about payment options
· more investment in specialist services such as Your Benefit Are Changing - a service that demonstrates high levels of success in mitigating the worst effects of welfare reform
· local solutions tailored to local needs
CHC and others have been highlighting the negative impact of welfare reform on Wales for some time and we will continue to make the call for a fairer welfare system for Wales to prevent further deprivation. Prevention is always better, and definitely more cost effective, than cure.