THE BENEFIT CAP IN LONDON - HEADACHES ON THE HORIZON? Philip Clifford London Councils LSE London Seminar 16 January 2012

BACKGROUND

London Councils

Welfare reform – key changes Local Housing Allowance (LHA) New caps on the total amount of housing benefit that can be claimed; max 4 bedrooms. Single childless claimants under 35 now subject to single room rate Definition of ‘affordable’ changed from median to 30 per cent of market rent Universal Credit Proposed introduction in 2013 Integrates: jobseekers allowance, housing benefit, child benefit and child tax credit. Total benefit cap of £350 per week single person households and £500 per week for family; only applies to working age workless households.

Economic context

Political context

The cap and London

DOES THE CAP FIT?

The commission Aims Determine the impact of the Local Housing Allowance (LHA) and Universal Credit (total benefit) cap on housing affordability in London Explore the impact of household choices on public services Methodology Quantitative analysis of 480,000 housing benefit records Established ‘living cost benefits’ based on adjusted 2011 cap (£467.26) Qualitative research using four ‘task and finish’ groups Children and Young People Adult Social Care Housing Community Cohesion

Extent of impact across London

Split between LHA and UC

Scale of impact

Larger workless households

Mitigations

Summary of findings Over 130,000 households impacted by either LHA or Universal Credit (total benefit) caps The Universal Credit cap has a much greater impact on affected households In particular, it disproportionately impacts on larger families Initial assumptions regarding geographic impact not borne out by evidence Exemption of child benefit from Universal Credit would reduce impact, but taking account of London’s higher median wage has greater effect.

POTENTIAL IMPLICATIONS

People Vulnerable households face difficult choices Do they… Overcrowd? Move home? Split? Enter the labour market? Absorb the shortfall? Exceptional difficulty in accurately forecasting response of households…

Borough services Housing Temporary accommodation Housing supply Overcrowding Adult Social Care Labour market flexibility Mental health Service demand Children & Young People Child poverty, safeguarding Discontinuity of provision School Community Cohesion Displacement Competition Miscommunication

Borough finances

CONCLUSIONS

Headaches on the horizon?

Lessons… The implications of a one-sized cap highlight the tensions between national policy and the realities of geographic variation. Welfare reform offers an insight into the unfolding process of politics and its interaction with policy formulation Future impact likely to be significant and require long term measurement

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