By Richard Johnstone | 3 October 2013
Cuts to Housing Benefit as a result of the government’s welfare cap could leave councils in London with a £25m bill to provide extra support to homeless people, a report has warned today.
London Councils’ analysis of the likely benefit reductions stated that the £30m increase to Department for Work and Pensions’ discretionary housing payments fund, intended to mitigate the impact of the cuts, would not be enough to meet extra costs imposed on councils nationwide. The funding equates to only 8% of the total spending reduction in 2013/14 as a result of the £26,000 annual limit on benefits.
In order to protect communities, London Councils said there was a need for ‘a serious, full and fair assessment of the additional financial burdens’ placed on local authorities as a result of the cap, under the New Burdens regime.
Today’s Tracking welfare reform report stated that 4,600 London households, who have either been homeless or at risk of it, could be unable to pay rent in their temporary accommodation.
Following the nationwide rollout, any reductions needed in order to stay within the limit are made to housing benefit.
In regular rental accommodation, inability to pay rent would lead to arrears and eviction proceedings.
However, where the cap is applied to those in temporary accommodation, any rental shortfall falls to the local council, meaning payments would need to be met from overall council budget.
London Councils chair Jules Pipe warned this could reduce the funding available for a host of other local services. Meeting the average shortfall of £105 per week per household would potentially leave authorities in the capital £25m worse off each year, he said.
‘London local authorities have been working hard to communicate with their residents about the government’s welfare changes, offering them advice and helping people to get into work.
‘Despite this, we are seeing more and more people falling into rent arrears and being evicted from their homes, which is devastating for local people and financially damaging to local services. If each London borough were to see just a small rise in the number of cases of urgent housing need, then that could result in tens of millions of pounds being drained away from essential services to cover the cost.’
The report is published as Department for Work and Pensions figures revealed that, in the period from the introduction of the benefits cap on April 15 to the end of August, 8,400 households had been affected by it.
