LGA survey suggests councils will have to spend more money helping families asking for help to make ends meet
The impacts of the reforms are likely to
be most strongly felt in areas with the highest dependence on benefit such as
Great Yarmouth (pictured), according to the report. Photograph:
Alamy
Local authorities will be forced to cut spending on infrastructure and social care to support households losing out through the government’s welfare reforms, according to a study on the impact of benefit changes.
Under a quarter of the 1.18m English workless households affected by housing benefit cuts will be able to mitigate the impact of the reforms by moving to a cheaper property or finding a job, a Local Government Association survey has found.
The report also raises doubts about the effectiveness of Iain Duncan Smith’s universal credit scheme, which aims to ensure claimants are always better off working, by suggesting it was “unlikely to significantly increase employment”.
Sharon Taylor, chairwoman of the LGA’s finance panel, said councils would be forced to raid other budgets, which were already being squeezed, in order to help tenants suffering as a result of housing benefit changes.
“Unless more is done to create new jobs and homes, households will be pushed into financial hardship and we will see a huge rise in the number of people going to their councils asking for help to make ends meet.
“Local government can help generate the necessary jobs and new homes but the government has to give councils more influence over employment schemes and more freedom to borrow to build new houses.
“Demand for discretionary housing payments will significantly outstrip the money the government has made available to councils to mitigate the changes. This will have a massive impact on local government budgets,” she said.
The study – conducted for the LGA by the Centre for Economic and Social Inclusion – estimated that the income of households claiming benefit will be £1,165 a year – or £31 a week – lower in 2015/16 as a result of welfare reforms excluding the universal credit.
Overall 45% of working age households receive one of the main benefits or tax credits and 59% of welfare cuts will fall on households where someone has a job.
“The impacts of the reforms are likely to be most strongly felt in areas with the highest dependence on benefit – the north-east, parts of London and a swath of coastal towns and cities including Thanet, Tendring, Great Yarmouth, Scarborough and Torbay,” the report said.
According to the study the effect of housing benefit changes, including the overall benefits cap and the size criteria – the so-called bedroom tax –will affect 1.71m households, 1.18m of which contain no one in work.
The study suggested that just 155,000 workless households may mitigate the effects by finding employment, and 115,000 by moving.
“Even at the highest scenario, a large majority of the impacts of reforms affecting housing costs for households out of work are unlikely to be met through claimants finding work or moving home,” the report said.
“And at more plausible estimates, at least four out of every five households are likely to need further assistance in order to deal with the impacts of welfare reform – with cumulative financial impacts in excess of £1bn per year,” the report states.
The government has made around £185m available to councils for discretionary housing payments (DHPs). But councils have urged the government to re-evaluate the DHP fund to ensure supply better matches local demand.
The LGA has also said rules limiting how much councils can borrow should be relaxed to enable the construction of up to 60,000 new council homes over the next five years, and asked for councils and businesses to be given more influence over government employment schemes in order to tailor them to local needs.
The report acknowledged that the universal credit would result in a “modest increase” in average household incomes because more people are anticipated to take up benefits, but indicated it was unlikely to result in more people taking up work.
“There is a high degree of uncertainty on what the impacts on employment may be from universal credit,” the report said. “Most estimates suggest that universal credit is unlikely to lead to any significant impact on employment.”
The TUC general secretary, Frances O’Grady, said: “The government has tried to sell its welfare reforms on the back of mistruths and nasty stereotypes. However, this research exposes what a devastating impact its policies are having on communities throughout the country.
“Ministers are not cracking down on cheats as they claim, but destroying the safety net that our welfare state is meant to provide for those who fall on hard times through no fault of their own.
“The government’s attack on social security provision is not only hurting those unable to find work. Millions of working families are seeing an even bigger reduction in their financial support.
“Rather than addressing the shortage of jobs and affordable housing that is blighting many areas, ministers are slashing local authority budgets and expecting councils to deal with the fallout from their reforms.”
