What do welfare reforms mean for you?

 

Dr Bert Provan, Researcher at the Centre for Analysis of Social Exclusion (CASE) at the London School of Economics, looks closely at how welfare reforms are affecting the business models and operations of social housing providers and other businesses.


What do welfare reforms mean for you?Over the last two years, the Government has introduced a raft of often controversial welfare reforms, several relating to housing, including the under-occupancy charge (or ‘bedroom tax’), the benefit cap and the Universal Credit, due to be rolled out fully by 2017. The latter means significant changes in the way that rents are paid.

Changes require proactive social landlords

“Welfare reforms are shifting the nature of the relationship between social housing providers and their tenants”, explains Dr Bert Provan from the Centre for Analysis of Social Exclusion (CASE) at the London School of Economics.1 “Whereas Housing Benefit – a subsidy to meet rent payments - has traditionally been paid directly to the landlord, in the future this will be included in one Universal Credit (UC) payment and paid to the claimant.” The intention is to make people responsible for their own lives by paying them the rent money, to pass it on to their landlord. This means multiple rent demands and collections, in place of one monthly cheque from Housing Benefit departments.

“Of course, social landlords depend on getting the rent in, and much of that comes from housing benefit. The changes to the way housing benefit is assessed and paid mean that social housing providers are having to take a much more proactive and personalised approach to their tenants, both working and unemployed.”

To develop a more personal relationship with every client, many social housing providers are increasing their support for tenants to access and remain in employment, and providing additional money advice. This will require more staff and will potentially place a greater strain on the resources of social housing providers.

Housing providers’ concerns for the future

Following the introduction of welfare reforms to date, the levels of arrears have not been as serious as expected, with many social housing providers successfully managing the impact, says Dr Provan. However, the roll-out of UC is a logistical minefield, he warns. “Faced with the ambition of this project and the challenge of a new computer system, social housing providers are concerned about whether it will work and how it will affect rent revenues.”

The risks, he says, are not only to the financial viability of social housing providers – eventually if tenants on UC falling into rent arrears are evicted they can be replaced with others more likely to pay the rent. “However, that potentially creates a wider social problem, with the poorest left vulnerable to homelessness.”

Capital investment by social housing providers might be affected too. “When we talk to associations, there is a risk that money could be diverted into greater day-to-day support for tenants. This is money which could otherwise be used to support capital investment such as house building.”

However, he says, if UC works well, it could be beneficial, complementing housing associations’ social mission to create thriving, aspirational communities where people help themselves and one another.

Universal Credit also impacts on employers

A wider roll-out of UC, should it continue as planned, will place a greater onus on employers, regardless of size, to ensure they provide accurate and timely information. Workers on low incomes can have variable pay each month due to varying hours and overtime, and UC has to be re-assessed every month based on information from employers.

“Businesses will have to be making monthly real-time returns to HMRC about their employees, who will depend on that to get their benefits,” Dr Provan notes. A social duty will therefore rest firmly with employers.

Your business can tap into local talent

Social housing providers being more proactively involved in their tenants lives might create positive opportunities for small and medium-sized businesses across a range of sectors to tap into local talent, reckons Dr Provan. “Housing associations are increasingly helping their tenants to get into work through apprenticeships and job training, with a number of them now running schemes to provide job-ready candidates for local businesses.

“So, businesses in a range of sectors who would like to take on new employees while enhancing their corporate social responsibility should get in touch with local housing associations and work out what might be a common agenda – it could make good commercial and social sense.”

Dr Provan’s opinions reported here are his own, and do not necessarily represent that of the London School of Economics.

Footnotes

1. Dr Bert Provan is co-author of the report The impact of welfare reform on social landlords and tenants (Joseph Rowntree Foundation, June 2014). See www.jrf.org.uk/publications/impact-welfare-reform-social-landlords-and-tenants

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