What will be the impact of welfare reform?

I’ve been talking to tenants, community groups and councillors about the likely impact of welfare reform in Wolverhampton. 

We all appear to be thinking along the same lines – that Wolverhampton is likely to be particularly hard hit.

Why? Well, we have nearly double the national average unemployment and 70% of Wolverhampton Homes tenants are on housing benefit. In fact 36% of working age tenants are on full housing benefit – compared to just 20% nationally. And a significant proportion of our tenants have a disability or are vulnerable in one or more ways.

We estimate that an extra £3.95m extra “cash” will need to be paid by tenants – either as a result of benefit cuts or because the benefit will go direct to them rather than paid on their behalf direct to their rent account.   This includes £2.4m as a result of under-occupation of family homes. 

Although last year was our best ever year for rent collection and the average debt per tenants is among the best nationally (and we have worked hard with tenants to have a really good payment culture) – what will happen when we have nearly £4m more to collect?

Everyone involved in supporting tenants locally feels there is a real risk of serious arrears. It could be as high as 20-25% of the £4m. That’s £lm less income for the Council –  fewer new homes, reduced services or delayed improvements and major repairs. Although thank goodness the decent homes programme is quite safe. And that’s not including the cost to Wolverhampton Homes of employing more staff to support tenants,  to deal with arrears or the cost of all the additional transactions.  

Of course work has already begun to raise tenants’ awareness, pass on budgeting skills and encouraging moves to different sized homes – although with the mismatch of the stock size to peoples’ needs and the overall shortage of housing, this sadly isn’t a realistic option for many.

We can go a long way to encourage tenants to be more resourceful, move to monthly budgeting and become internet savvy – with rent always being the priority, but everyone I have spoken to shares the view that dealing with this financially and practically will be a step too far for many folk.

I'll write another post soon about the steps we are taking, but in the meantime it would be interesting to hear other peoples’ views while we continue to develop new approaches to help mitigate this difficult situation.