Welfare Reform – Are we there yet?

As the UK embarks on a transformational journey towards universal credit, Nick Selwyn of the Wales Audit Office discusses how a recent Wales Audit Office report into these welfare changes showed why this is a key issue for both social housing tenants and politicians here in Wales.

The last three years have been dominated by an often-passionate debate on the rights and wrongs of the UK Governments reform of the welfare system. On the one hand, the national Government has been clear that it wants to encourage people on benefits back into work, reduce the amount the country spends on welfare and simplify the system. These are all worthy aims and hard to disagree with. We are often told that reforming welfare is also the way to end poverty. On the other side, people see the changes as penalising those on benefits, limiting yet further their choices and reducing their chances of escaping from poverty.

One of the most explosive issues is the changes to housing benefit. The UK Government believes that by capping the total amount of benefit a family can claim and introducing the spare room subsidy for social housing tenants, commonly called the bedroom tax, will save £1 billion in 2013-14 and 2014-15.

Political commentators and newspapers frequently tell us that these changes will encourage welfare spongers to get a job and for taxpayers, see our money spent on things that really matter and not subsidising welfare claimants to live a life of riley. The UK Government also believes that by reducing the amount of benefit people receive there will be an increase mobility; better use of the social housing stock as families ‘right size’and increasing employment. If only it was that simple.

Our study on the impact of welfare reform changes in Wales on social housing tenants, councils, housing associations and Welsh Government shows that it is a far more complicated picture with some unintended consequences.

For example, many of the changes coincide with an increase in poverty not a decrease for many tenants on benefits. Over half of the tenants we surveyed have seen their personal debt increase; the average reduction in benefits is roughly £780 per annum, a large proportion for low income households; there has been a five-fold increase in foodbank usage with benefits issues accounting for half of the referrals; and six months after these changes, rent arrears have increased by £5.3 million.

Councils and housing associations now have to spend more money and more staff time in managing this impact. Core business activities such as letting empty homes and managing rent accounts is more expensive and far more complicated than before. Mobility within the social housing sector has not improved, primarily because of restrictions on the availability of smaller homes, and there has been no significant increase in employment amongst tenants. In addition, Welsh Government has allocated more money to deal with the impact in Wales

We are only part way through the programme of welfare changes and there is real fear that the roll out of Universal Credit and introduction of direct payments will make this situation far worse. It is clear that welfare reform will be a key issue at the next UK general election in 2015. Some political parties are intent on overhauling these changes whilst others are planning to push through further reform.  Whatever happens there is an interesting road ahead for us all.

If you would like to read more about the recent Wales Audit Office report into welfare reform, visit the website to download a copy of the report

The impact of welfare reform changes on social housing tenants in Wales (PDF)

Nick SelwynAbout the Author:

Nick Selwyn is a Local Government Manager at the Wales Audit Office, with responsibilities for our programme of all-Wales studies. He has worked for the WAO for eight years in a variety of roles and is a Fellow of the Chartered Institute of Housing.

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