Homelessness – Impact of the Welfare Reform It introduces a new Universal Credit which will substitute most of the current benefits system and limits the total amount of benefit a person can claim.
The Universal Credit will start from October 2013 for new claimants.
It introduces the Benefit Cap, Size Criteria (Bedroom Tax) and Direct Payments which will be simplified below;
Bedroom Tax – Size Criteria
This is the ‘Under Occupation Penalty’ for Housing Benefit Claimants in the social rented sector. This means that claimant with any spare bedrooms will have their Housing Benefit cut.
The Welfare Reform Act gives the Government the power to introduce new size criteria (also known as ‘under-occupation penalty’ or ‘Bedroom Tax’) for housing benefit claims in the social rented sector.
The reduction is 14% per week for one spare room and 25% per week for two or more spare rooms. Any household deemed to have more bedrooms than they require, as defined by the criteria, will lose a proportion of their housing benefit. Hence, the higher the rent the higher the amount of money that will be deducted from Housing Benefit each week.
The Bedroom Tax will affect working age households who live in a Council or Housing Association home. It is estimated that the Bedroom tax will affect 670,000 working age social tenants.
The Welfare Reform Act 2012 also introduces Direct Payments.
Universal Credit (Job Seeker’s Allowance, Employment Support Allowance, Housing Benefit, Child Benefit, Child Tax Credit, Carer’s Allowance) will be paid directly a month in arrears to the claimants. The Government wants to see several social housing tenants receiving the money in their hands rather than choosing to have their benefits paid direct to their landlords. The government argues that this will encourage individual to manage their own budget and ease the transition into work by replicating a monthly salary.
The cap was introduced in April 2013 and put Benefit Cap as follows; £500 per week (£26k per annum) for lone parents and couples with or without children. £350 per week for single people without children. From October 2013 all claimants will be transferred to the Universal Credit and the cap will combine the following;
• Job Seeker’s Allowance
• Employment Support Allowance
• Housing Benefit • Child Benefit
• Child Tax Credit
• Carer’s Allowance
The Cap will not comprise of the following;
• One-off payments
• Non-cash Benefits
• Passported Benefits, such as free school meals
• Council Tax Benefit.
The Department for Work and Pensions (DWP) estimates that affected households will lose an average of £83 a week – nearly £4,500 per year – with 17% of those affected losing more than £150 a week.
The DWP estimates that about 67,000 households will be affected by the measure in 2013/14 rising to 75,000 in 2014/15. In 2013/14 this means that 90,000 adults and 220,000 children will be affected. It is expected that 44% of those affected will live in the social rented sector and 56% in the private rented sector.
The impact of the Welfare Reform (Universal Credit) on vulnerable people will be as follows;
- Increased arrears level and debt for tenants already living on low incomes.
- Increased court proceedings and ultimately eviction.
- Increased family tensions, relationship breakdown and youth homelessness.
- Increased in financial difficulties for vulnerable people especially those accustomed to being paid weekly.
- Additionally; It will penalise unemployed young people who are staying at home at a time of high unemployment.
It will fail to safeguard families that have experienced bereavement or redundancy, as current protections will be decreased or removed completely. It will ultimately have impact on the level of homelessness in our society due to increase rent arrears and eviction proceedings.
The Welfare Reform Act will make life tougher for the most vulnerable people in our society. Your generous donation would enable us to assist the most vulnerable people in our society. It is still early days but the horrible consequences of the Welfare Reform is already being felt amongst homeless people across the country.