The Welfare Up-rating Bill
passed its Second Reading in the House of Commons on 8 January by
328 votes to 262, and will begin its Commons Committee Stage on 21
The Bill puts into effect the Government's intention, announced
in the Autumn Statement, to increase most working-age benefits,
including Housing Benefit, by just 1 per cent in 2014/5 and
2015/16. A 1 per cent increase for 2013/14 has already been imposed
by the Autumn Statement itself.
What this means is that the "applicable amounts"- the personal
allowances and premiums - used in the calculation of housing
benefit will be increased by 1 per cent in April rather than the
2.2 per cent increase in the Consumer Price Index that would
otherwise have applied.
Not a huge change in the first year, but the cumulative impact
over 3 years imposes a significant cut in the real value of
benefits, which just happens to coincide with the introduction of
Universal Credit and a switch to payment of help with rent direct
to the tenant.
Because other working-age benefits are also being limited to a 1
per cent annual increase for the next three years, tenants
receiving Universal Credit will have even less to meet living
expenses after their housing costs have been met.
Evidence from the Housing Benefit Direct pilots, about which I blogged before
Christmas, suggests that direct payments will push up arrears
substantially - on average more than doubling them to 8 per cent.
The impact could be much greater once these benefit restrictions
start to kick in.
For tenants hit by the bedroom tax or the overall benefit cap the
cumulative impact will be still more dire. And private tenants will
be hit both by restrictions on the applicable amounts and on the
maximum rents used in the calculation of Local Housing
At present, LHA is subject to local maxima calculated by reference
to the bottom 30 per cent of rents on new private sector lettings
in the area. This approach will continue for 2013/14, but in the
subsequent two years, any increase in rents will be capped at 1 per
cent. This can only increase the challenge faced by councils
seeking to secure accommodation for homeless families on low
incomes in the private sector.
Whatever one thinks of the government's argument that it is fair
to restrict the benefits payable to the very poorest in society
because many people's wages have increased by less than inflation,
it is clear that they either have not considered or do not care
much about the impact of their proposals on councils' ability
successfully to carry out their housing functions.