Welfare Reform

Reforms to the Welfare State will start to take effect from April 2013 and will affect millions of people throughout Britain. We examine the changes to see how they will impact on people living and working in Hackney.

Ever since the formation of the modern day welfare state politicians have fallen over themselves to seek to reform the system, to draw the boundary between the deserving and undeserving poor. This government is no different, embarking on a crusade to change the benefit system which will see the biggest raft of reforms in our modern history.

But behind the rhetoric of the lazy benefit scrounger the changes for many will mean the difference between being able to make ends meet and in the worst cases destitution.

The Tories are besotted with the benefit system and more importantly reducing the cost of it to tax payers. Ever since Norman Tebbit’s ‘on your bike speech’ in 1981 the attacks on welfare have grown more steady and more malicious, focussing on the small minority of those who choose to play the system rather than the millions of people, in work, who need benefits to top up their otherwise low pay.

The changes which will begin to be phased in this coming April and by 2017 anyone who receives benefits of any kind will receive a Universal Credit each month.

One of the biggest changes will be the benefit cap. This stands at £500 per week for those with a family and £350 for single people. It means that no ones total weekly benefits will exceed this cap.

The benefits included in the cap are many and varied but include elements such as Carers Allowance and Child Tax Credit.

In Hackney 1067 households will be adversely affected by the cap losing between £1 and £221.79 per week.

The double whammy for the borough is that the difference will be subtracted from the Housing Benefit meaning that the authority will have to take the hit in its funding through loss of benefit revenue.

This could result in many people having to leave the area to be re-housed in cheaper districts. The Government has said that it believes no one on benefits should be able to live in a property that a working family on average wages cannot afford. However this principle ignores the fact that rental prices, since the sell off of huge numbers of social housing in the 80s are driven by unregulated market forces rather than the need for people to live in houses. Many people who have lived in Hackney for generations, in areas which were once less salubrious than they now are could face forced eviction from their family home because the rent prices in the area have been driven up by trendy pancake shops rather than any real change in their personal living conditions.

Another big change is fixed to under occupancy in the social rented sector. This has been dubbed the ‘Bedroom Tax’ and applies to people (except pensioners) who live in houses with spare bedrooms. In Hackney 4179 households will be affected, losing a percentage of the housing benefit dependant on the number of spare rooms in the house. There will be a 14% reduction to HB for one additional room and 25% for the second.

This will again result in a large reduction in HB revenue for Hackney Homes who currently have 2255 affected households on their books.

Government says this is about freeing up properties to help ease the pressure on large housing waiting lists however it fails to address the real problem which is again a lack of state owned social housing.

It will impact most on those people who have brought up a family whose children have since left home and will again mean that many people will have to move out of their family home or find the shortfall from other means.

Council Tax Benefit will also be abolished from April replaced by Council Tax Support. All councils are developing their own scheme but are being asked to do so with 12.5% less funding than last year. In Hackney the council is proposing a blanket 15% cut for all claimants (except pensioners). If the proposal is adopted 28000 households will be affected with most losing 15% in their current benefit, about £174 a year for those living in a band C property.

Binding all these elements together is the Universal Credit which will combine and replace all current benefit strands for all claimants by 2017 (all new claimants from April 2014).

The payments will be made monthly as oppose to the current weekly arrangements and paid to a single ‘nominated person’ in the household. The benefit will be processed centrally in massive processing centres and will be updated via the internet with limited face to face or telephone contact.

One risk is that in households which are not used to budgeting on a monthly basis or where perhaps there are drink/drug problems the nominated person may not pay their bills in time or at all. This coupled with the large reduction, in some cases, of benefits received could see large numbers of people falling into rent arrears for example.

In a borough like Hackney with 15485 council tenants currently receiving Housing Benefit and over £70 million being paid into rent accounts this could result in significant revenue reduction for the local authority as a whole leading to even more cuts.

In areas where pilots have been taking place (Southwark and Lewisham for example) councils have reported using a much greater resource to collect much less rental income than normal.

Another concern is that in households where there are domestic violence problems women could be totally cut off from any form of income by abusive partners who take on the nominated person status.

These changes are not based on need and will hit those who rely on benefits to top up their income the hardest. Instead of dealing with a lack of decent full time work and poor housing the Tories, as cynical as ever, are taking on the little man but would have us believe they are doing it to maker Britain ‘fairer’. Ask yourself; is it really fair to force people out of the area they have made their home and make people poorer?


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One response to “Welfare Reform

  1. Pingback: Massive cuts to benefits in Hackney! « HACKNEY ALLIANCE TO DEFEND PUBLIC SERVICES

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