Impact of UK Government welfare cuts

Households renting in the private and social sector have been severely affected by UK Government welfare policies, a new report shows.

The Impact of UK Welfare Policy on Housing report highlights the negative effect of Universal Credit on both tenants and landlords, due to the major increase in rent arrears. In East Lothian for example, 72% of social housing tenants claiming Universal Credit were in arrears, compared to 30% of all tenants.

In addition, the UK Government’s freeze on local housing allowance rates – a benefit paid to private rental tenants  – has also substantially limited households ability to afford rent on properties.

The Scottish Government funds the full mitigation of the bedroom tax, which would otherwise affect over 70,000 individuals who would lose an average of around £650 a year, as well as providing additional funding for direct mitigation of welfare reforms, wider direct support for those on low incomes and advice and other services.

Housing Minister Kevin Stewart said:

“Almost half a million Scottish households receive some form of financial support for their housing. It is clear that UK Government welfare cuts are having a devastating impact, with money taken from the pockets of people across the country, pushing them into crisis and debt.

“We are doing all we can, with the powers we have to protect those on low incomes from these devastating UK Government cuts - spending more than £125 million this year alone to do so. This includes £62 million to fully mitigate the ‘bedroom tax’, help for those impacted by the freeze in local housing allowance, as well as providing support for low-income households. 

“This report builds on previously published evidence of the undue pressure on people that UK government changes to our welfare system are causing, including housing. We want to ensure everyone has access to a safe, warm place to call home – as part of that, the UK Government must urgently change course.”

Background

The Impact of UK Welfare Policy on Housing report is the third in a series of reports looking at the impact of UK welfare reforms. The first report focused on the impact on families, and the second report on the impact on disabled people. 

In the private sector there are limits in the maximum housing benefit payable against rent, set in relation to household size and local market rents – the Local Housing Allowance (LHA) rates. The LHA rate was reduced as part of the coalition government welfare reform, to the 30^th percentile of market rents, and has remained frozen since 2015.