Impacts of Welfare Reform – A Scottish snapshot

The Scottish Government published their final report on the impacts of Welfare Reform on the people of Scotland . There has been a Statutory Duty on the Scottish Government to produce an Annual Report on the impacts of the UK Welfare Reform Act 2012 on the people of Scotland since 2013.

The June 2017 Annual Report provides a detailed summary of each measure brought in by the Act, along with evidence of the impact of each of these measures on different groups. Areas covered include:

• UK government welfare reforms
• Financial impacts of welfare measures
• Local Authority level impacts of latest welfare measures
• Impact of welfare reforms on equality groups
• Impact of welfare reform on income inequality and poverty
• Scottish Government mitigation
• Assessment of low income benefit measures
• Assessment of disability and incapacity benefit measures
• Assessment of housing related benefit measures

Key Findings in relation to Housing

Bedroom Tax

The impact has been mitigated at a cost to the Scottish Government, so the negative financial impacts on households and landlords should not have transpired in the majority of cases. Around 71,000 households are affected by the bedroom tax in Scotland.

Housing benefit recipients have an average weekly reduction of £12.35 (February 2017). Around 20,000 (85%) have one spare bedroom and around 11,000 (15%) have two or more bedrooms.

Of those affected, around 53,000 are single person households, 11,000 are households with children and around 8,000 are couples without children. Analysis using the Family Resources Survey suggests that around 80% of households affected in Scotland contain an adult with a 'Disability Discrimination Act' recognised disability

Changes to Local Housing Allowance

The report refers to recent research by the Chartered Institute of Housing  that shows people have faced a growing gap between the LHA they receive and the rent they pay since April 2012. In a number of parts of the UK, the rate of LHA paid means that people can only afford to rent in the bottom 10% of the PRS market - this is before the effect of the LHA freeze from April 2016.

In addition, the 2012 welfare reforms mean that single people under 35 without dependants, with some exceptions, are only eligible for Housing Benefit in the private rented sector based on the cost of living in shared accommodation, rather than in a self-contained property.

Local Housing Allowance Cap for Social Sector Tenants

The introduction of the Local Housing Allowance cap in the social rented sector represents a policy aim of the UK government to reduce the level of financial support available to social sector tenants and bring support in line with that available to private sector tenants. Although not a provision of the Act, the policy is expected to have a significant impact on the housing sector. Particular attention is drawn to the impact on those in Supported Accommodation and tenants under 35.

Removal of housing benefit for 18-21 year olds (Universal Credit)

Scottish Government analysis indicates that there are currently fewer than 1000 people on housing benefit who would be ineligible for the housing element of UC if the UK Government’s policy was in place in their area at the time of their first application. This is based on DWP data on single 18-21 year olds in the Social or Private Rented Sector with no child dependents and not known to be exempt from the under 35 Shared accommodation Rate, in August 2016. The final figure, taking into account all exemptions is likely to be substantially lower.

The policy only applies to new claimants of full service UC, so the current recipients of support through housing benefit (or the live service of UC) will not be affected. Any numbers based on current caseload are indicative of the maximum likely scale of impact, once the policy is fully rolled out, and once all live cases are those which have commenced on the full service.

The Scottish Government is committed to restoring housing benefit for 18-21 years old and fundamentally disagree with the removal of the housing costs for young people which may result in putting them into a crisis and homelessness situation; currently mitigations in place in the interim.

Wider impacts of welfare reform

Policies such as the freeze in LHA rates, the bedroom tax the LHA cap for social sector tenancies, and the rollout of Universal Credit all have the effect of reducing the ability of tenants to pay their rent in full and on time; Rent arrears relating to the impact of welfare reform are of considerable concern to landlords and local authorities. In addition, there is some evidence from areas where Universal Credit has been fully rolled out (full-service) that rent arrears have increased. 

The 100 page report can be viewed on the Scottish Government website.