Welfare Reform Could Cost Families Hundreds of Millions

The UK Government’s changes to welfare payments will put at risk efforts to improve social housing and build new affordable homes, and cost families in Scotland hundreds of millions of pounds, the Scottish Parliament’s Finance Committee will hear today (Wednesday 20th June 2012).

While the reforms are intended to save money for the UK Government, they could have a huge negative financial impact on tenants in some of Scotland’s poorest communities, and on social landlords.

Over two-thirds of working age households in housing association/co-operative tenancies rely on Housing Benefit to pay all or some of their rent. (2) Inevitably, costs of collecting rent will rise as the reforms come into effect.

Evidence presented by the Scottish Federation of Housing Associations (SFHA) ahead of appearing at today’s meeting of the Finance Committee, shows that changes to housing benefit could cost households in our sector at least £220 million by 2016-17. (1)

Mary Taylor, Chief Executive of the Scottish Federation of Housing Associations, said:

“The main objective of the UK Government’s welfare reform agenda has been to reduce public spending but the combined effect represents a significant loss to individual households and to local economies.

“Not only will the changes make life harder for tenants, they will also put at risk rental income for housing associations and co-operatives, affecting their ability to provide good quality housing and services. Tenants will also need additional support, to try to prevent rent arrears getting out of control. The implications for housing providers are massive.

“What’s more, the risk to rental income will impact on our sector’s ability to repair and improve existing homes and to repay loans already taken out to build much-needed affordable homes, as well as making it harder to raise finance to build new homes. This is at a time when there are 335,000 households on Scottish housing association and co-operative waiting lists.”(3)

Dr Taylor concluded:

“Obviously there are limits to what the Scottish Parliament or Government can do as these are Westminster policies, but our politicians can play an important role in making sure the UK Government understands the impact of decision on communities and social landlords in Scotland.

“SFHA is working with the Scottish Government, the Department of Work & Pensions and others to minimise some of the risks. We are calling on the Scottish Government to help with the cost of advice to social tenants through a series of national promotional campaigns about the welfare reform changes; to promote the use of bank accounts and credit unions among tenants; and, as the new benefits system moves online, improve and support access to the internet for tenants.”

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For further information, contact Claire Munro on t: 0141 567 6244 m: 07771926778 or e: cmunro@sfha.co.uk

Visit our website at www.sfha.co.uk

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NOTES:

1) Data supplied to SFHA by IS4 Consultancy, publication forthcoming.

2) Figure supplied to SFHA by IS4 Consulting, publication forthcoming.

3) Statistics supplied to SFHA by the Scottish housing Regulator (05 July 2011) based on data in the 2009-10 Annual Performance and Statistical Return

4) Housing associations and co-operatives are not-for-profit bodies regulated by the Scottish Housing Regulator.

5) The SFHA was established in 1975 and has around 170 members providing affordable housing and wider community services in Scotland, as well as a further 200 commercial members. The SFHA is owned by its membership and exists to support the work of housing associations and co-operatives in Scotland by providing services, advice and good practice guidance.

6) The SFHA is the voice of the principal builders and managers of new affordable housing for rent in Scotland. Housing Associations own and manage around 40% of the country’s affordable rented housing stock, over a quarter of a million homes across Scotland.

Contact: Claire Munro
Phone: 0141 567 6224
Email: cmunro@sfha.co.uk
Website: http://www.sfha.co.uk