Government’s own report admits housing benefit cuts will force people out of Central London

23 07 2010

The government has admitted that its planned cuts to housing benefit entitlement may make it harder for claimants to find housing and could force families to move further from where they work.

Last month’s Budget introduced a cap on the level of Local Housing Allowance (LHA) paid to claimants, and cut the level of LHA to the 30th percentile of rents in each area, rather than the median – reducing the number of properties that claimants will be able to afford.

Today the Department for Work and Pensions (DWP) published its equality impact assessment into the changes, which admitted that the cuts would hit some families hard.

The report said: “The Government recognises that some households, particularly in very high cost areas, may have to move as a consequence of these measures. In London, some households may need to move from central London to outer London Boroughs or neighbouring local authorities which are not impacted by the overall caps.

“There could also be knock-on impacts for outer London boroughs that could be faced with an increased number of new Housing Benefit customers needing access to additional services such as schools and health care.”

The report also warned that some claimants may struggle to find suitable accommodation due to the reduction in the number of affordable properties under the new, lower LHA rates. However, the report added that the department expects around a third of properties to still be affordable, except in more expensive areas where the cap will kick in.

Claimants who are in employment may have to move further from where they work. “There could also be negative impacts for Housing Benefit customers who are working if they have to move to an area where they need to extend their commute to their place of work,” the report said. “This impact may be more pronounced in inner London than elsewhere … However, a more positive impact is that moving to more affordable accommodation could encourage households to take up employment.”

The Budget also ended payment of LHA for five-bedroom properties, and today’s report warned that this move could cause overcrowding for a small number of families. Currently 7,338 households receive benefits at the five bedroom rate, out of over one million claimants.

Tonight Citizens Advice housing policy officer Liz Phelps said the report proved the government’s housing benefit cuts would increase poverty and homelessness:

“The government’s own assessment confirms many of our worst fears about the impact these cuts to housing benefit will have, and the dangers of rushing through fundamental changes on this scale without consultation or any pilot schemes to test the effects.

“There can be no doubt that the combined effect of these cuts will lead to a sharp increase in rent arrears and homelessness, with the potential to spark a housing crisis in places such as London where the cuts will have the biggest impact. Among those worst affected will be some of the most vulnerable households and people doing low paid but vital work in the capital. Only seven per cent of rents in central London will be affordable within the new housing benefit limits.

“Worryingly, the government’s impact assessment skates over some potentially major effects of the changes. Rent arrears and evictions are likely to rise sharply once the changes come into force, yet there is little consideration of the impact on local councils, whose homelessness services will be under enormous increased pressure, with reduced scope to find housing solutions in the private rented sector because of the cuts – and all this at a time when local authorities themselves will be facing budget cuts.

“Nor is there any assessment of the impact on the private rented market. The Minister has expressed the hope that the cuts will result in a reduction in rent levels, but no information has been provided to support this view.”

Citizens Advice’s full statement can be read here.

The report said that the DWP would carry out further assessments into the economic impact of the changes, focusing on the impact on local authority housing departments, mobility, homelessness and overcrowding.

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