Impact of welfare reform changes in London

By: GfK & NPI  Published: June 2014


Shelter commissioned NPI and GFK to conduct two separate studies into the impact of welfare reform changes in London. This research was funded by Trust for London. GFK conducted a longitudinal study following sixteen families privately renting in London, who are in receipt of housing benefit. The study looks at what impact national policy changes are having on these families household income. The NPI study examined what impact changes to local housing allowance (LHA) are having on households in London, given the context of higher housing costs in the capital. The study looked at the impact of the changes on disposable income, work incentives and spending on housing benefit.

Summary

The studies found that:

  • For many households in London Universal Credit is unlikely to counter the effects of the LHA changes, regardless of how much work is done.
  • London’s high rents mean even if households work more hours they cannot possibly neutralise the impact of the LHA changes.
  • The national LHA cap can leave those working full time below the poverty line.
  • Lower LHA rates do nothing to improve the incentive to enter paid work.
  • Social housing has the highest work incentive as well as the lowest cost to government.
  • The research found a growing sense of insecurity amongst the families studied. There was a strong fear of eviction or homelessness amongst a number of the families interviewed.
  • Many participants reported feeling stuck, unable to move because of the costs of moving and the lack of affordable alternative accommodation.
  • There was a low understanding and awareness of discretionary housing payments.
  • Those affected by a reduction in LHA felt there was little they could do until they were evicted by the landlord or taken to court for rent arrears.

 

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