Sadiq Khan wants Welfare reforms to protect PRS tenants

The Mayor of London, Sadiq Khan, has called on the government to stop the roll out of Universal Credit, after new analysis from City Hall showed welfare cuts over the last decade have led to a rise in the number of people in London forced into homelessness. Last year, 8,855 people were seen sleeping rough on the streets of London by outreach workers, more than double the number in 2010/11.

Since 2010, governments have made a series of cuts to welfare which have hit people’s ability to sustain a tenancy. These include cuts to Local Housing Allowance, the Benefit Cap, the ‘Bedroom Tax’ and the introduction of Universal Credit*.

The new analysis from City Hall shows that private renters claiming Housing Benefit, including those who work, will receive an average of £1,400 less a year by 2020/21 than would have been the case without the changes in Local Housing Allowance introduced over the last nine years. It also shows that:

• In Inner East and North London, this figure rises to £3,950;
• Households also subject to the Benefit Cap face a shortfall of £5,450;
• Social housing tenants subject to the Bedroom Tax will receive an average of £1,050 less.

These reductions in support contrast with steep rent increases in the private rented sector over the same period. The average rent for a two-bedroom private rented home in London was £6,600 a year higher in 2018/19 than in 2010/11.

The creation of Universal Credit in 2013, introduced to replace a range of existing benefits including Housing Benefit, has led to further barriers to claimants maintaining a secure, long-term housing tenancy. As well as increasing the use of sanctions, the introduction of Universal Credit has meant:

• It takes longer for claimants to receive support than was the case with Housing Benefit, which may make landlords more reluctant to let to them;
• Monthly payments can make budgeting more difficult, because low-income households typically budget over time periods shorter than a month; and
• The amount of money to which some claimants are entitled, from elements of Universal Credit other than housing support, is lower than it would have been previously. This puts a further squeeze on household budgets, potentially forcing claimants into arrears.

Research shows that households receiving Universal Credit are much more likely to receive help from a local authority because they are homeless, than households receiving Housing Benefit. Meanwhile, landlords have reported that the roll out of Universal Credit and the associated delays in assessment and payment make them even more reluctant to let to benefit claimants. The full impact of Universal Credit will not become clear until the roll out is complete in 2023.

The Mayor of London, Sadiq Khan, said: “The Government’s introduction of Universal Credit has been an unmitigated disaster and should be stopped before it forces any more Londoners onto the streets.

“This report sets out in stark detail the brutal impact of nearly a decade of welfare cuts on the lives of Londoners. Whilst it is the actions of central government that is causing the rise in rough sleeping, it’s London that is left to pick up the bill. That’s why these draconian cuts must be reversed immediately.

“We are doing all we can to help Londoners affected by high rents, but without the powers to do more we need the Government to play their part. They should urgently reverse their damaging benefit cuts, overhaul tenancy laws to make them fit for purpose, and give me the power to bring in the rent controls Londoners so urgently need.”

Dan Wilson Craw, Director of Generation Rent: “Without a reliable housing benefit system, Londoners on low incomes are getting into debt, going without food and heating or being forced to move out of neighbourhoods they grew up in.

“This is fuelling physical and mental ill-health, and, by disrupting educations, devastating the prospects of thousands of children. The government might think it has saved money by stripping renters of support, but the costs of the human misery it creates, through temporary accommodation, the NHS, and social services, are mounting. The government must now scrap the benefit cap so that everyone can cover their essential payments.”

Councillor Victoria Mills, Southwark Council Cabinet Member for Finance, Performance and Brexit, said: “We have long been aware of the impact that Universal Credit is having on our most vulnerable residents. Our ‘Safe as Houses’ reports highlight that Universal Credit is still creating poverty and stress for those already on the breadline. All three waves of research show the biggest problem is the five week waiting period and the fact Universal Credit payments are made monthly in arrears.

“How is anyone expected to survive in London with no money for five weeks, not least those who are already seriously struggling financially?

“More fundamental change is needed to Universal Credit – people shouldn’t be waiting so long to get their payment and there’s no reason they should have to be paid monthly. We will continue to urge government and the DWP to make radical changes to tackle this broken system.”

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