130,000 families face £475 housing benefit unemployment penalty

As part of the Government’s radical overhaul of the benefits’ system, people who claim jobseeker’s allowance for 12 months will have their housing benefit automatically cut by 10% – leaving unemployed households to make up the shortfall in their rent.

The University of York, in a report commissioned by the Federation, estimates 133,000 unemployed households in England will be affected by the cut. The figures are released ahead of the publication of the Welfare Reform Bill, which will set out how the government plans to significantly reduce the country’s overall benefits’ bill.

The Federation, which represents England’s housing associations, fears the policy could plunge thousands of jobless families into poverty, debt and even force them out of their own homes as they struggle to make up the shortfall in rent following the cut.

In some of the most deprived areas of the country there are 45 claimants for every job vacancy – meaning the chances of finding work after a year locally is remote. Nationally, there are 6.7 claimants for every vacancy.

Claimants will be penalised regardless of the state of the local jobs market and how hard they have tried to find work.

And with the Government looking to move large numbers of people from incapacity benefit onto jobseeker’s allowance as part of its drive to cut the country’s benefits’ bill – the number of people who will be forced to pay the £475 penalty is likely to be far higher than 130,000.

The average current weekly housing benefit payment for someone also claiming jobseeker’s allowance is £91.35 But under the measure, which is due to be introduced in April 2013, those people would have to find an extra £9.14 to cover the shortfall. Over a year this would total an average of £475.

For those claiming the maximum housing benefit for a four bedroom home, that penalty would be £2080 a year, and £1768 a year for a three bed.

The Federation estimates that a single claimant 25 or over would be left with just £56.31 a week to pay for all their household bills, food and transport costs – if they were forced to make up the 10% shortfall in their rent.

Those aged 16 – 24 would be left with £42.71 a week if they have to make up 10% of their rent.

Liberal Democrat Deputy Leader Simon Hughes has publicly criticised the policy and led a backbench revolt against the plan when he voted against introducing the 10% cut following a Commons debate last year.

Despite losing the vote, there remains significant opposition to the proposal from Liberal Democrat MPs who remain optimistic that it could still be ditched.  

Federation chief executive David Orr said: ‘With unemployment high and the outlook for the economy bleak, the Government should not penalise the poor and vulnerable for failing to find work when there simply aren’t enough jobs to go round.

‘There is no logic to cutting housing allowances for people who fail to find work.  The present system allows for cuts to be made to job seeker’s allowance for those who refuse to work. 

‘To reduce the housing allowance for those out of work means punishing people for failing to find a job in a very difficult job market.

‘The proposal is unfair, unjust and will heap further misery onto households already under huge financial pressure. People should be encouraged into work, but threatening the homes of those who are unemployed isn’t the right way to go about it.’

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0 thoughts on “130,000 families face £475 housing benefit unemployment penalty

  1. Matt Driscoll

    Its about time the government started penalising these layabouts instead of us wroking our pants off to keep them all happy