Wednesday, 24 November 2010

Labour's Stance on Housing Benefit Reforms

Labour is in favour of reforms to Housing Benefit. In fact it is only two years since we introduced the Local Housing Allowance to reform the system and in the March Budget Alistair Darling moved to change the way that rent entitlements were calculated so that big increases in house prices at the very top of the market didn’t skew spending on Housing Benefit.

We have made it clear that where we judge the Government’s proposals to be fair, proportionate and effective in assisting the transition into work we will support them. However, where the Government’s proposals fail to meet the criteria of fairness and hinder transitions into work we will oppose them vigorously.

External organisations in the Housing sector have issued strong criticism of a number of the Governments proposals, with Shelter, Crisis, Citizens Advice Bureau and the Charter Institute for Housing saying:

“We support the government’s aim to make work pay and simplify benefits, but these cuts will undermine these objectives by reducing people’s ability to find and keep employment and because they fail to take account of the needs of disabled people, pensioners and carers who are unable to work.”

London Councils estimate “more than 82,000 households, many of them in work but on low income, could lose their homes [as a result]. This could equate to as many as 250, 000 Londoners.”

A Shelter report examining the impact of the following housing benefit proposals concluded that “many claimant households [will be shifted] from around or just below the 60% median income poverty line into severe poverty – pushing an additional 84,000 households below £100 per week per couple. These households include 54,000 children.”

Shelter have predicted that of up to £120m more will be spent on the cost of temporary accommodation for families moved from their homes as a result of the Governments package of proposals. Criticism of the Government’s proposals has also come from Mayor of London’s Director of housing who says this measure “risks increasing homelessness which the GLA estimates could rise by 48 percent in London [resulting] in an additional bill for £78 million spent on temporary accommodation in the city.”

The housing benefit bill increased as a result of the economic downturn because as people lost their jobs or were forced to work reduced hours, they needed help with their housing costs to stop them from becoming homeless.

As the Building and Social Housing Foundation have pointed out:

“Housing benefit has remained remarkably consistent at around 14 per cent of the benefits bill for many years and most of the increase over the last 18 months has been down to an increase in the number of claimants, which is exactly what we would expect to happen in response to a recession.”

Effective long term solutions to reducing the housing benefit bill are affordable housing and following through on the Rugg Review of the private rented sector initiated by the Labour Government.