Richard Capie, CIH Director of Policy and Practice said: "While we believe that the new simplified system can play a key role in supporting people into work and off welfare, a key element that needs to be got right is support for housing costs. The housing part of any credit will be for people both in and out of work. It is a key element of support for low income working people who are renting privately in areas where housing costs are otherwise unaffordable. It is important that housing costs are able to reflect local housing markets."
CIH is particularly concerned that the introduction of the new out of work benefit cap at £500 per week does not take into account the massive variation in housing costs that exists around the UK and will create hardship for families.
Richard Capie continued: "Our calculations show that in 20 per cent of communities in England it will be difficult for households to pay their current rents. This will have a particularly severe impact on families with children. We would expect to see greater arrears, debt and evictions. Families will face the inevitable choice of living in overcrowded, poorer conditions in their current community, or having to move away from areas where they have established networks and children are in local schools."
CIH is warning that if the housing element of the new Universal Credit is not sensitive to local housing costs it will not only impact on individuals but also have implications for private and social landlords and jeopardise access to private finance to build new homes.
Richard Capie concluded: "We need welfare reform that lasts and that individuals and businesses can plan against. The risk is that the approach to housing costs in the current plans won’t be sustainable and will require further adjustments in future."
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