Households claiming benefits will be £31 a week worse off by 2015/16 according to a study commissioned by the Local Government association. Fewer than a quarter will be in a position to reduce their losses by finding work or cheaper accommodation according to the report.
The study, which is the first ever assessment of the cumulative impact of the Government's welfare reforms, compares the financial impact on benefit recipients in a given area with the local job opportunities and potential to move into cheaper accommodation.
Carried out by the Centre for Economic and Social Inclusion for the LGA, the study shows that by 2015/16 the income of households claiming benefit will be lower on average by £1,615 per year (£31 per week). However, a shortage of jobs and affordable homes in many areas means that four out of every five of those households are likely to need some form of assistance from their council to help them cope with the reduction in welfare.
It is estimated that the combined impact of housing reforms on these tenants is likely to be £1 billion each year. So far £155 million has been made available to councils via Discretionary Housing Payments (DHPs), which represents just £1 in every £7 of the impact of housing reforms on tenants. The Government's recent announcement of an additional £25 million to support tenants is welcome, but does not significantly alter the picture.
The LGA, which represents more than 370 local authorities in England and Wales, warns that unless more is done to generate new jobs and build much needed affordable and social housing, helping households cope with the welfare reductions will syphon money away from local services such as caring for the vulnerable and elderly, fixing the roads and picking up the bins. Local services are already facing the deepest cuts in the public sector, with a 42 per cent real terms reduction in councils' grant from central government across the life of this Parliament.