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08 January 2015

Welfare reform has left Welsh tenants stuck in poverty trap

Changes to the welfare system have hit Welsh social housing tenants harder than anywhere else in the UK according to a new report published today by the Wales Audit Office.

Acknowledging the findings, Community Housing Cymru (CHC), the membership body for housing associations in Wales, says it will continue to lobby for a fairer welfare system for Wales and for more investment in services such as the ‘Your Benefits are Changing’ (YBAC) campaign, which despite limited investment, can demonstrate success in mitigating some of the worst effects of welfare reform.

Stuart Ropke, Group Chief Executive of CHC said: “The findings in this report are worrying but unfortunately not a surprise. Our members have been working hard to support tenants since before the Welfare Reform Act came into being in 2012.”

“We’ve always known that Wales is disproportionately affected by these reforms and we now know that as a result of the removal of the spare room subsidy and the introduction of the benefit cap, 51 per cent of tenants are reporting an increase in their debt levels.”

The report also highlighted that Welsh households pay five percent more for electricity than the rest of the UK and that there has been an increase in the use of food banks, with 48 per cent of referrals because of issues around income and benefits. Digital exclusion in Wales is highlighted as higher than elsewhere in the UK with 39 per cent of social housing tenants having no access to a PC.

Stuart said: “These factors combined mean many tenants are struggling to make ends meet and rent arrears in the social housing sector have increased by £5.3m. 60 per cent of landlords have also seen an increase in management costs to help mitigate against Welfare reform – a double financial blow for the sector.”

Responding to claims that there has been little increase in the supply of smaller properties, limited use of the private rented sector to improve tenure mobility, and a mixed picture of how landlords are supporting affected tenants into employment,

Stuart added, “This research was undertaken between December 2013 and March 2014 and members have continued to support tenants over the last year.”

“We’ve received additional funding from Welsh Government to build smaller properties but development work takes time. The majority of tenants affected do not want to be rehoused in private-rented properties and even if they did, this would cost the tax payer more in the long run, with tenants receiving more in local housing allowance than housing benefit.”

He added: “Housing associations have also been working with Welsh Government on their Lift Project to get tenants back into work and many members also run their own job clubs to support tenants.”

CHC welcomes the recommendation that more needs to be done to promote the ‘Your Benefits are Changing’ (YBAC) helpline, which was set up by CHC to communicate the reforms and provide independent and free advice to those affected.

“The YBAC campaign has been really successful in communicating complex, consistent messages and reducing poverty by maximising people’s income. It has been adopted by over 100 organisations including housing associations, local authorities and charities. Over the past 12 months, the YBAC money advice team have given advice to 1,655 people who collectively are now almost £530k financially better off. Almost 60,000 people have visited the YBAC website and during the summer of 2014, a YBAC budget bus initiative toured sixteen venues around Wales, offering independent advice and support to more than 8,000 people.”

YBAC has worked in partnership with Dwr Cymru providing water debt advice and with the Wales Illegal Moneylending Unit to communicate the dangers and risks to people turning to loansharks to resolve financial pressures.

Stuart concluded: “We believe problems as a result of welfare reform will only be exacerbated by direct payments and the roll-out of Universal Credit. We will continue to work with members and partner organisations to support tenants on all fronts with the introduction of Universal Credit, and continue to make the call for a fairer welfare system for Wales."

To read the press release and full report from the WAO please visit http://www.wao.gov.uk/news/welfare-reform-changes-are-having-significant-impact-social-housing-providers-and-tenants