Continued financial capability support in Wales is vital
The Wales Co-operative Centre runs a number of projects that promote financial inclusion and that provide advice on money management. These projects are a key part of the Centre’s role in developing and implementing solutions to strengthen communities and promote inclusion in Wales. Jo Lovell, who manages one of these financial inclusion projects, blogs about todays BBC News report on tenants affected by a housing benefit cut in England.
BBC News has today reported that “More than half of tenants affected by a housing benefit cut in England were in arrears five months after the changes were introduced.
“Some 59% of tenants – more than 300,000 – were in arrears, analysis for the Department for Work and Pensions (DWP) found. But a DWP spokesman said “around 50% of Housing Association tenants were in arrears before the changes.”
The government said its reforms were tackling “welfare dependency”.
The changes to housing benefit in England, Scotland and Wales – dubbed the “bedroom tax” by critics, but described by Ministers as the removal of a “spare room subsidy” – were introduced in April last year.
If tenants are deemed to have one spare room, the amount of rent eligible for housing benefit will be cut by 14%. Those with two or more spare bedrooms have had reductions of 25%.
One in five people in arrears had paid nothing towards this. Researchers found widespread concern that those who had paid, had borrowed or made cuts to other essentials.
People were already struggling to manage their finances, but the introduction of the bedroom tax has only exacerbated this situation. Back in November 2014, Community Housing Cymru reported that “78% of their members had seen a spike in rent arrears since the introduction of the bedroom tax.” Now 15 months on from its introduction, we are really starting to see the true long term impact on both tenants and housing providers.
Our experience here at the Wales Co-operative Centre, tells us that tenants will find ways to make up additional payments in the short term, but they can’t sustain them over the longer term. To keep a roof over their heads, tenants will either have to make cuts in spending, and for some this will be the choice of heating or eating, whilst others will be forced to make the ill informed choice of borrowing money (usually at a high interest rate), which will ultimately push them into further financial difficulties and an increased risk of becoming homeless.
It seems to me that there are several different issues here:
- The lack of affordable housing for tenants to downsize
- Tenants financial capability
- Training for frontline workers
Through the various projects managed at the Wales Co-operative Centre, we are supporting all of the above issues.
Through our Tackling Homelessness through Financial Inclusion (THFI) project, we are working closely with tenants and housing providers to improve peoples financial capability and access to advice and support they require, but this can be very challenging as it requires a change in behaviours, and we know all to well this doesn’t happen overnight. Our Financial Inclusion Champions project is helping to address the training needs of frontline workers in Wales, whilst our Co-operative Housing project, is keen to work with people interested in establishing a pioneering co-operative housing scheme. That could address the lack of appropriately sized affordable housing.
This report certainly highlights the need for more resources to be made available to support tenants who are struggling to make ends meet, training for frontline workers and for more community led affordable homes to be build.