The Con-Dem coalition have wasted no time in attacking the welfare system and consequently the most vulnerable in our society. Amongst the most controversial proposals are the changes to Housing Benefits and in particular the impact of a reduction of 10% in Housing benefit to those that have been on Jobseekers Allowance for more than 12 months. Housing organisations and the Citizens Advice Bureau are universally agreed that the changes proposed undermine current committments to ending homelessness and reducing poverty. The Department of Work and Pensions have undertaken their own equalities impact assessment on the government's proposals, which supports the concerns of the welfare rights organisations.
There are various proposals relating to Housing Benefit, but I would like to examine in detail the impact of reducing Housing Benefit by 10% on those that have been on JobSeekers Allowance for more than 12 months in Wrecsam County Borough Council. For ease of calculation I will assume that all JSA claimants are single, living in one bedroomed private sector accommodation and in receipt of the Local Housing Allowance for Wrecsam.
The current rate of JobSeekers Allowance for a single person over 25 years of age is £65.45 a week. As at November 2009, there were 3,400 JSA claimants in Wrecsam who were claiming on average £60.85 each a week, which equates to a total of £206,000 a week or £10.8 million a year for Wrecsam.
The Local Housing Allowance for a one bedroomed flat in Wrecsam is £86.54 a week, therefore under government proposals, a claimant who has been on JSA for over 12 months can expect to lose 10% Housing benefit which is £8.65 a week or a 14% reduction in income. That is the reality of the government's proposals. A 14% reduction in income would be a worry for anyone but for someone who only gets £65 a week then a 14% reduction is a massive hit. These proposals will only increase individual poverty and the likelihood of becoming homeless. Additionally it will reduce benefits to the local economy of £1.5 million which if equated across Wales is a significant reduction in economic activity and spending power.
What is particularly worrying about the government's proposals is that they haven't been thought through and they are unequal. Those on JSA are not the only ones entitled to Housing Benefit, but so are those aged 60 plus who are entitled to Pension Credit.
Pension Credit is awarded to those over 60 years of age who are on a low income, the current rate of guaranteed Pension Credit is £132.60 a week and anyone on PC also gets full housing benefit. Additionally one can have savings of £16,000 and still receive guaranteed Pension Credit and thus full Housing Benefit.
So let's compare the situation of 2 unemployed single people living in Wrecsam, one is aged 59 and the other aged 60.
The 59 year old has no savings and gets £65.45 JSA and £86.54 Local Housing Allowance towards their rent. After 12 months the LHA is reduced by 10% which equates to a 14% reduction in income.
The 60 year old who has no income but savings of £16,000, gets £132.60 per week guaranteed Pension Credit together with £86.54 LHA towards rent which is NOT reduced by 10% after 12 months.
These two examples illustrate the unfairness and inequality within a small part of the welfare benefits system and the government's proposals will only compound this inequality.I find it really hard to understand how socially minded Liberal Democrats within the coalition can support measures that INCREASE poverty and inequality.