Welfare System

This Assembly notes than on the 1st April the Government will introduce the largest change to the welfare system since the 1940s, which will have a significant impact on Londoners, including:

• All increases to working age benefits, including tax credits, capped at 1% rather than the retail price index, which will adversely affect the household budgets of over six million families with children .

• An overall benefit cap of £26,000 per annum on 14 key benefits, including bereavement benefits, jobseeker’s allowance, severe disablement allowance, and widows’ pensions , to be introduced first in Bromley, Croydon, Enfield and Haringey. There are fifteen London boroughs with over 1,000 households affected  by the benefit cap and 29,000 households across capital will be impacted upon by the changes . Family Action has stated that this benefit cap overwhelmingly fails the Prime Minister’s family-friendly policy test .

• Uprating Local Housing Allowance (LHA) by the Consumer Price Index, rather than by rent inflation, meaning that the value of LHA is likely to be eroded over time as inflation in private-sector rents routinely exceeds CPI – between 1997 and 2007, for example, average rents increased by 70%, while the CPI rose by just 20%.

• Cuts to housing benefit of 14% for social tenants deemed to have one extra bedroom and 25% for two or more extra bedrooms . The government’s impact assessment estimates a loss on an average of £56 per month for council tenants and £64 per month for housing association tenants, and it is unclear how the change can be made to achieve its stated of end of overcrowding, given that 80,000 households in London are in under-occupancy against 260,000 households in over-occupancy. 

• The localisation of council tax benefit to councils with a 10 per cent cut in funding. Further, with funds no longer being ring-fenced , the changes may result in suffering for the vulnerable as temptation to divert funds arises in local government from the falling level of central government grant.

• The localisation of the Discretionary Social Fund, which will no longer be ring-fenced. Councils can, should they see fit, divert funds away from the vulnerable to cross-subsidise other local government services, which is more likely within the context of falling central government grant.

• Introduction of personal independence payment (replacing Disability Living Allowance). The Government has expressed a wish to reduce the costs of DLA by 20%. It is suggested that this will mean 20% of those currently claiming will not qualify for PIP when it is introduced, or alternatively (as the government has not yet set the rates for PIP), it is possible they will reduce the amount of the benefit .

• Cuts to legal aid, which could leave 77,000 Londoners unable to secure independent advice on welfare

This Assembly is deeply concerned that the Mayor has failed to oppose these changes, and has failed to ensure the public has enough information to understand their impact on London. This Assembly therefore calls on the Mayor of London to begin monitoring and publishing information on the impact of these reforms in London, including the following trends:

• Households living in B&Bs for more than six weeks

• Households being moved to another London borough or outside London due to cuts in their benefits, details on whether those households include children or other vulnerable people, and any pressures that develop on local services as a result

• The availability at as detailed a level as possible of private rented homes let at rents that fall within benefit levels and by landlords willing to house benefit recipients

• The availability of Temporary Accommodation

• Details of Discretionary Housing Payments and any shortfalls

This Assembly also calls on the Mayor to lobby Government as a matter of urgency to ensure that the welfare system supports people trying to live in London’s dysfunctional and disproportionately expensive housing market.