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The impact of changes to housing benefit in Wales

Government should carefully monitor impact of housing benefit changes

17 October 2013

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The Welsh Affairs Committee says that the Government should carefully monitor the impact of housing benefit changes.

In a report published today, Thursday 17 October 2013, the Commons Welsh Affairs Committee highlighted some of the potential problems which the housing benefit changes could cause and recommended that the government keep a careful eye on them.

Housing benefit in Wales

The costs of housing benefit currently makes up more than a tenth of the UK Government’s expenditure on welfare, with costs forecast to reach £25 billion by 2014–15. The number of claimants in Wales has steadily increased over the past five years, and currently over 250,000 people in Wales receive housing benefit, approximately 8% of the population. The Government has introduced several measures aimed at reducing housing benefit expenditure.

The Government’s policy on under-occupation came into force in April 2013 and is now a reality for social housing tenants in Wales. The Government estimates that 40,000 tenants in Wales will be affected by the policy, representing 46% of working age housing benefit claimants living in the social rented sector. This is the highest proportion of any region in Great Britain.

Conclusions

The Committee says:

  • The under-occupancy policy affects proportionally more housing benefit claimants in Wales than elsewhere in Great Britain and the Committee heard that that there could be a shortage of one and two bedroom homes in Wales to re-house everyone who wants to downsize as a result of the policy. If local authorities are struggling to find alternative smaller accommodation for tenants Government should undertake a speedy review of this policy.
  • The UK Government policy on under-occupancy makes it increasingly urgent for the Welsh Government to continue with its house-building programme, with a particular focus on the building of smaller sized properties: obviously this is a long-term solution that would require additional resources.
  • If no social housing is available, tenants may need to move to the private rented sector. Government needs to monitor rental costs in the private rental market in Wales following the introduction of the policy.
  • The costs of moving disabled households who require the adaptations is a concern, and Government should closely monitor the impact of the policy on local authorities and disabled tenants with adapted properties to determine whether there is a case for exempting them from the policy.
  • The Government’s proposal to pay housing benefit direct to social tenants under Universal Credit may result in some tenants being unable to manage their rent payments and falling into debt. If this happens on a large scale, the direct payments policy will be a failure. The Committee recommends that the Government provide for housing benefit to be paid direct to the landlords in certain circumstances, for example after a specified period of non-payment.

Chair of the Committee

David Davies MP, Chair of the Committee, said:

"The aims of this policy are laudable: to manage the unsustainable rate of increase in housing benefit expenditure and to ensure that the existing social housing stock is efficiently used. However, we were struck in this inquiry by the particular situation in Wales, where there seems to be a shortage of one and two bedroom accommodation for people who will be affected to move into to avoid under-occupancy. The Government needs to ensure that this is workable.

We are also concerned that plans to pay housing benefit to tenants under the Universal Credit may actually make it more difficult for some people to manage their budgets. Some provision should be made for this portion of benefits to be paid directly to landlords, especially where a tenant is late paying rent. There needs to be some kind of assurance, some stability, to keep social landlords in the housing market.

We received contrasting evidence about the merits of this policy in Wales, where the population is sparser and the housing profile is unlike other parts of Britain, such as London. Obviously this is a contentious issue and I am happy that the Committee found cross-party agreement for this report. There is one point in the report, the one paragraph on rent control, which I personally cannot support and which was opposed by Conservative members, However, I respect the views of the majority of the Committee and present it on their behalf. I am keen to focus on the practical issues we all agree need to be addressed to ensure that the social housing market in Wales works, for tenants and landlords alike."

Further information

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