Vulnerable to be hardest hit by government’s welfare reforms, says impact report

By ANDREW WHITAKER
Published on 17/08/2012 00:00

LOW-INCOME families and the disabled in Scotland will be among the hardest hit by the UK government’s move to abolish housing benefit, a report warns.

Social tenants will “lose hundreds of millions of pounds” as a result of the UK government’s welfare reforms, the Scottish Federation of Housing Associations (SFHA) claimed .

Housing benefit will be phased out from April 2013 and substituted with the new universal credit, a single payment which will replace the current range of working age benefits.

But the new order could result in “significant financial losses” to tenants on low incomes living in housing association and co-operative properties, the SFHA said.

The Department of Work and Pensions (DWP) has urged caution over some of the report’s “assumptions” and insisted that the changes are necessary to prevent its housing benefit bill spiralling to £25 billion by 2015.

From April 2013, tenants will be expected to contribute towards rent if they are living in accommodation which is larger than they need in the way that housing benefit claimants living in the private sector do now.

SFHA’s report – The Impact of Welfare Reform on Housing Associations and Housing Co-operatives in Scotland – states that welfare reforms will cost working-age tenants between £123 million and £228m by 2017.

Maureen Watson, director of policy at the SFHA, said: “The findings of our report lay bare the real financial loss to working-age tenants in our sector, who are already on low incomes and many of whom are currently struggling with their finances.

“The report also makes disturbing reading for our members, housing associations and co-operatives, who are charitable or not-for-profit providers of social housing.”

SFHA tenants are expected to lose about £33.5m a year in housing benefit alone and a further £50m a year as a result of switching inflation calculations from retail price index (RPI) to consumer price index (CPI).

Housing associations and co-ops are also predicted to lose about £50m a year through rent loss from increased arrears. Jobless tenants will be among the hardest hit, including those with disabilities and complex support needs, according to SFHA.

Tenants on low incomes, especially those with children and larger families in particular, are also expected to face hardship.

MSPs last night backed the SFHA’s concerns and warned that the housing benefit shake-up would lead to a sharp rise in homelessness in Scotland.

SNP MSP John Wilson said: “The UK government’s welfare reform programme will target the most vulnerable in our communities and will cause further problems for those in receipt of council tax benefit. The cuts proposed will drive many into homelessness.”

Labour MSP Richard Baker said: “The SFHA is entirely correct to say that these changes are going to be highly destructive to many families in Scotland.”

A DWP spokeswoman said that the report fails to take into account the overall impact of welfare reform, which is designed to put “fairness back to the system and make better use of the social housing stock”.