Social tenants are set to 'lose hundreds of millions of pounds' because of the UK Government's welfare reforms, a report said

(UKPA) – 17th August 2012

Low-income families and the disabled will be among the hardest hit by the pending abolition of housing benefit, a report has claimed.

Social tenants will “lose hundreds of millions of pounds” as a result of the UK Government’s welfare reforms, according to the Scottish Federation of Housing Associations (SFHA).

Housing benefit will be phased out from April 2013 and substituted with the new universal credit, a single payment which will replace the current range of working age benefits. But the new order could result in “significant financial losses” to tenants on low incomes living in housing association and co-operative properties, the SFHA said.

The Department of Work and Pensions (DWP) has urged caution over some of the report’s “assumptions” and said the changes are necessary to prevent its housing benefit bill spiralling to £25 billion by 2015.

SFHA’s new report – The Impact of Welfare Reform on Housing Associations and Housing Co-operatives in Scotland – states that welfare reforms will cost working-age tenants between £123 million and £228 million by 2017.

Maureen Watson, director of policy at the SFHA, said: “The findings of our report lay bare the real financial loss to working-age tenants in our sector, who are already on low incomes and many of whom are currently struggling with their finances. The report also makes disturbing reading for our members, housing associations and co-operatives, who are charitable or not-for-profit providers of social housing and related services the length and breadth of Scotland.”

Their tenants are predicted to lose about £33.5 million a year in housing benefit alone and a further £50 million a year as a result of switching inflation calculations from RPI to CPI. Housing associations and co-ops are also predicted to lose about £50 million a year through rent loss from increased arrears.

Jobless tenants will be among the hardest hit, including those with disabilities and complex support needs, according to SFHA. Tenants on low incomes, especially those with children and larger families in particular, are also expected to face hardship.

Some of the report’s “assumptions” may turn out to be incorrect once the reforms are fully settled, according to the DWP. A spokeswoman said that the report fails to take into account the overall impact of welfare reform, which is designed to put “fairness back to the system and make better use of the social housing stock”.

Graeme Brown, director of housing charity Shelter Scotland, echoed the SFHA’s concerns over welfare reforms. He said: “This report clearly illustrates the scale of the damage and hardship being forced on tens of thousands of households across Scotland and the destructive impact it could have on local economies and communities.” Mr Brown said Shelter’s helpline was already busy with calls from worried tenants, adding: “As these changes hit home, we expect the number of calls to keep rising.”

Press Association