Comment: The government’s triple-whammy on the poor

By Alison Garnham

We all want to see families move into secure employment and out of poverty. But to do this, we need an increase in affordable childcare, better targeted employment programmes, and a programme of housebuilding to tackle London's high rents. What we have right now looks like a collection of policy measures that will only serve to make families’ lives harder.

The much debated Welfare Reform Act received royal assent earlier this year, but, many of the changes won’t take effect until April 2013.  In a new report from Child Poverty Action Group and Lasa, we examine the likely impact of a range of these reforms on London families, based on interviews with local authorities and advice agencies throughout the capital.

We look in particular at three of the reforms. Firstly, caps to local housing allowance (LHA) restrict the level of support that families can receive with their rents to the 30th percentile of rents within a local area. Secondly, the benefit cap will restrict the total amount of support received by a household to £500 a week for families with children and £350 for single people. Thirdly, under-occupation penalties will reduce the level of support for families in social rented housing if they are deemed to have an extra bedroom.

The benefit cap that has received most attention. The limit of £500 it places on total benefit receipt will cause significant problems for families faced with London’s high housing costs (private sector rents are 36% higher than the UK average), and for local authorities searching for accommodation for homeless families.

We found that many London authorities were considering sending families to live outside the capital, research backed up by the Guardian. We’re worried about the impact this will have on children’s education, and on families’ social networks.

We’re not the only ones – Mayor Boris Johnson this week warned that he may mount a campaign against large-scale movements of families taking place.

One of the key aims of the changes is to reduce expenditure on housing benefit, in part by driving down rent levels. Rent levels in London rose by seven per cent last year, and local authorities predict that as housing benefit expenditure falls, their costs will rise, as they struggle to prevent or deal with increased levels of homelessness.

Many described the changes as simply transferring costs from central to local government.

Government argues that the under-occupation penalties will reduce overcrowding in the capital. But authorities told us that many families hit by the cap may choose to move into smaller – and overcrowded – accommodation in order to stay close to social networks.

There are 260,000 households in London living in overcrowded accommodation but a maximum of 80,000 households in London who will be hit by under-occupation penalties. Local Authorities told us that this was a problem that could only be solved with a significant increase in housebuilding.

Will the reforms help families move into work? The government argues that they’re increasing work incentives by cutting the amount of support that people on benefits receive, making the gains to employment greater.

The high cost of childcare in the capital, 24% higher than in the UK, means that for many families, work still won’t pay. And the change in eligibility criteria for working tax credit in April 2012, requiring couple families to work 24 rather than 16 hours a week, means that many working families are struggling to find the additional work to protect them from cuts in support.

Alison Garnham became chief executive of Child Poverty Action Group in September 2010. Prior to that, she was the CEO of Daycare Trust – since June 2006. Prior to this, for nine years, she was the director of policy, research and information at One Parent Families (now Gingerbread).

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