Professor Christina Beatty and Professor Steve Fothergill Centre for Regional Economic and Social Research Sheffield Hallam University Housing Studies Association Conference, York 6 th April 2016 The uneven impact of welfare reform on places and people

Welfare reform and austerity Uneven impact of welfare reform – individual measures – total impact – by place – by household type – by tenure How much will be offset by other changes? An assessment Overview

Financial crisis and world recession 2008/09 Overhaul of the welfare system was central to deficit reduction plan for new Coalition Government in 2010 –Emergency Budget June 2010; Spending Review October 2010 –21 st Century Welfare, DWP, November 2010 –Universal Credit: Welfare that works, DWP, November 2010 –Welfare Reform Act 2012; Welfare Benefits Uprating Bill 2013 Conservative Government have continued the cut back – 2015 Emergency Budget and Spending Review – 2016 Budget - tried but failed Welfare reform not new - already underway by previous Labour government –Need a modern welfare state: Welfare to Work, New Deals, 'rights and responsibilities', increased conditionality, making work pay –Freud Report 2007, Gregg Review 2008 –Welfare Reform Act 2007, Welfare Reform Act 2009 National context for welfare reform and austerity

Current research funded by – Oxfam – Joseph Rowntree Foundation – Sheffield Hallam University Outturn of pre-2015 welfare reforms to March 2016 – Updates 'Hitting the Poorest Places Hardest' 2013 – FT, Scottish Parliament, SHU Anticipated impact of post-2015 welfare reforms by 2020/21 Anticipated impact of all pre and post-2015 welfare reforms by 2020/21 New evidence

Our estimates are firmly grounded in: – HMRC budget announcements – DWP Impact Assessments and Equality Impact Assessments – For pre-2015 reforms updates since original announcements in subsequent budgets and out-turn figures Government administrative statistics − NOMIS, DWP STAT-XPLORE, HMRC, ONS See statistical appendix of report for all details of reforms, data sources and methods Document the impacts, not comment on merits Methods

Housing Benefit: Local Housing Allowance Housing Benefit: Under-occupation SRS (‘bedroom tax’) Housing Benefit: Non-dependant deductions Household benefit cap Council Tax Support Personal Independence Payment Employment and Support Allowance Child Benefit Tax Credits 1 per cent up-rating Pre-2015 reforms

Estimated annual financial loss by March 2016 from pre-2015 reforms Loss (£m pa) Tax Credits 4,210 Child Benefit 3,030 1 per cent uprating 2,700 Housing Benefit: LHA 1,670 Personal Independence Payments 1,190 Employment and Support Allowance 650 Council Tax Support 370 Housing Benefit: ‘bedroom tax’ 360 Non-dependant deductions 210 Household benefit cap 100 TOTAL 14,490 Source: Sheffield Hallam estimates based on official data

LHA cap in social rented sector 'Pay to stay' Housing Benefit: year olds Mortgage interest support Benefit cap (new reforms) Tax Credits Universal Credit thresholds Employment and Support Allowance (new reforms) Benefit freeze Post-2015 reforms

Estimated annual financial loss by 2020/21 from post-2015 reforms Estimated loss £m p.a. Benefit freeze 4,010 Universal Credit thresholds 3,220 Tax Credits 2,115 Personal Independence Payments (1) 1,680 Employment and Support Allowance 640 Benefit cap 495 Mortgage interest support 255 ‘Pay to stay’ 240 LHA cap in social rented sector 225 HB: year olds 40 TOTAL 12,920 (1) Additional post impact of pre-2015 reform Sources: HM Treasury, Impact Assessments and Sheffield Hallam estimates based on official data

Anticipated financial loss by 2020/21 from post reforms Average loss per affected h'hold/individual £ p.a. Personal Independence Payments (1) 2,600 HB: year olds2,600 Benefit cap2,350 ‘Pay to stay’1,850 Mortgage interest support1,500 Employment and Support Allowance1,300 Universal Credit thresholds1,050 Tax Credits1,050 LHA cap in social rented sector 750 Benefit freeze 500 (1) Additional post impact of pre-2015 reform Sources: HM Treasury, Impact Assessments and Sheffield Hallam estimates based on official data

£m percentage of 2020/21 total , , , , , Timing of additional financial losses arising from post reforms Source: Sheffield Hallam estimates based on official data

Average financial loss £ p.a. Pensioner couple 40 Single pensioner 40 Couple – no children 200 Couple – one dependent child 900 Couple – two or more dependent children1,450 Couple- all children non-dependent 200 Lone parent – one dependent child1,400 Lone parent – two or more dependent children1,750 Lone parent – all children non-dependent 250 Single person household 250 Other – with one dependent child1,130 Other – with two or more dependent children1,360 Other – all full-time students 0 Other – all aged Other 300 Source: Sheffield Hallam estimates based on official data Anticipated loss in from post-2015 welfare reforms, by household type

Number of working age households, GB, millions, 2011 Estimated working age loss £m p.a. Average loss per working age household £ p.a. Social rented sector 3.6 6,200 1,690 Private rented sector 4.1 3, Owner occupied12.2 3, Anticipated loss in arising from post-2015 welfare reforms, by tenure Sources: Census of Population and Sheffield Hallam estimates based on official data

£m p.a. Benefit freeze2,250 UC thresholds1,300 Tax credits 850 Personal Independence Payments 750 Employment and Support Allowance 310 Benefit Cap 280 ‘Pay to stay’ 240 LHA cap in social rented sector 190 HB: year olds 20 Mortgage interest support 0 Total6,200 Anticipated loss in to working-age households in the social rented sector arising from post-2015 welfare reforms Source: Sheffield Hallam estimates based on official data

Estimated loss arising from pre-2015 welfare reforms by March 2016, by district Source: Sheffield Hallam estimates based on official data

Estimated loss arising from pre-2015 welfare reforms by March 2016, by district Loss per working age adult £ p.a. TOP 10 DISTRICTS Blackpool 720 Westminster 680 Knowsley 560 Brent 550 Middlesbrough 550 Hastings 540 Barking and Dagenham 540 Torbay 530 Enfield 530 Hartlepool 520 BOTTOM 10 DISTRICTS South Oxfordshire220 Winchester220 South Northamptonshire220 Wokingham210 Aberdeenshire210 Guildford210 Hart210 Aberdeen210 Shetland200 Cambridge190 Great Britain360 Source: Sheffield Hallam estimates based on official data

Anticipated loss by arising from post-2015 welfare reforms, by district Source: Sheffield Hallam estimates based on official data

Anticipated loss by arising from post-2015 welfare reforms, by district Source: Sheffield Hallam estimates based on official data Loss per working age adult £ p.a. TOP 10 DISTRICTS Blackburn with Darwen560 Blackpool560 Barking and Dagenham530 Bradford510 Knowsley500 Sandwell500 Oldham490 Birmingham490 Leicester490 Middlesbrough490 BOTTOM 10 DISTRICTS South Northamptonshire 160 Mole Valley 150 South Oxfordshire 150 Elmbridge 150 Surrey Heath 150 Guildford 150 Wokingham 150 South Buckinghamshire 140 Richmond upon Thames 140 Hart 130 Great Britain320

Relationship between deprivation and anticipated financial loss in from post-2015 welfare reforms, by local authority Sources: Sheffield Hallam estimates and University of Cambridge adjusted IMD for GB

Anticipated loss in to working age households in the social rented sector arising from post-2015 welfare reforms, by district Source: Sheffield Hallam estimates based on official data

Anticipated loss in to working age households in the social rented sector arising from post-2015 welfare reforms, by district Source: Sheffield Hallam estimates based on official data Loss per working age SRS household £ p.a. TOP 20 DISTRICTS Newham2,740 Barking and Dagenham2,670 Enfield2,610 Leicester2,600 Blackpool2,570 Luton2,570 Birmingham2,530 Sandwell2,500 Blackburn with Darwen2,500 Bradford2,440 Oldham2,420 Middlesbrough2,400 Burnley2,360 Knowsley2,350 Merthyr Tydfil2,350 Thanet2,340 Boston2,330 Brent2,320 Peterborough2,290 Hull2,290 Great Britain1,690

LHA cap in social rented sector – anticipated impact to Source: Sheffield Hallam estimates based on official data

‘Pay to stay’ – anticipated impact to Source: Sheffield Hallam estimates based on official data

Benefit cap (extension) – anticipated impact to Source: Sheffield Hallam estimates based on official data

Anticipated loss by arising from all pre and post-2015 welfare reforms, by district Source: Sheffield Hallam estimates based on official data

How much will be offset? Reduction in social sector rents – 1 per cent a year reduction for four years (England only) – affects landlords income rather than HB tenants – about 1/3 tenants not on HB will benefit from lower rent – government estimates £12 a week or £600 a year gain (£900m a year) BUT – widening gap between social sector and market rents means that higher- income tenants may face even bigger payments under the new ‘pay to stay’ Discretionary Housing Payments – £800m over 5 year period - on average £160m p.a. BUT – £495m from the lower Benefit Cap alone by 2020/21 – DHP temporary, but welfare reforms permanent

How much will be offset? Personal tax allowances – increase from £10,600 in 2015/16 to £12,500 by 2020/21, worth £380 a year BUT – many in low paid part-time work already below these tax thresholds – will not benefit those on out-of-work benefits – half of this amount might be expected anyway if increases in line with inflation National Living Wage – from April 2016 £7.20 per hour for 25yrs+ - will benefit 2.7m low paid workers in short run (£25 per week, £1,275 per year if FT) – aspiration to increase to £9 per hour by 2020 BUT – UC tapers and revised thresholds will increase withdrawal rate of support

How much will be offset? Extension of free childcare. – from September 2017, increase from 15 to 30 hours a week for working parents of 3 and 4 year olds – worth up to £2,500 a year per child – tax-free childcare up to £2,000 per child from early 2017 – net cost to the Exchequer is estimated to be £585m a year in BUT – households with dependent children estimated to lose £10.7bn p.a by – won't benefit those out of work Overall – Goes some way to offset financial loss – But the winners and the losers are unlikely to be the same people – Unlikely full loss will be offset in this way

Reduced income for tenants – higher rent arears? – some tenants affected more than others - sick or disabled, large families – some places affected more than others - local policy responses Incentive for some tenants to move – mismatch in supply and demand for smaller properties, shared accommodation? – reduce social mix of tenants? Added costs and consequences – 'pay to stay' - implementation costs, but additional income stream for HAs, increase in right to buy? – rent collection more difficult? – wider support services squeezed? Covering the higher cost of supported or specialist housing – LHA caps, 1% rent reduction Universal Credit: direct payments, local knowledge/support, wait period and delays in payment, full roll-out Unintended consequences for social housing providers

An assessment Just under half of the financial loss from post-2015 reforms is estimated to fall on working-age SRS households Some of the loss will be offset but winners and the losers are only sometimes the same people Treasury at the heart of the reforms – disability benefits – in-work benefits – Housing Benefit Long-term processes and consequences Displacement Quality of housing and services provided not acknowledged, but likely to be compromised What next? – Universal Credit? – Back to Beveridge?

shu.ac.uk/files/welfare-reform-2016.pdf Dataset: Report: reform.2016#!/vizhome/Impact_1/Maps Interactive maps: Contact details: Professor Christina Beatty CRESR Website: