Beatty, Christina

Gore, Anthony

Powell, Ryan

Sanderson, Elizabeth

Sheffield Hallam University Research Archive

   OVERVIEW	 ritain	is	undergoing	a	major	overhaul	of	its	welfare	 system.	The	scale	and	pace	of	change	is	substantialand	rapid.	Welfare	reform	is	central	to	the	coalitiongovernment’s	deficit	reduction	plan	and	wasestablished	as	a	key	policy	area	in	the	early	stages	ofthe	coalition	coming	into	being.	Primarily,	the	focusof	welfare	reform	is	on	those	of	working	age	andaffects	those	in	work,	especially	those	in	low-paidwork,	as	well	as	those	who	are	claiming	out-of-workbenefits.	When	the	present	welfare	reforms	have	come	into	fulleffect	it	is	estimated	that	they	will	take	nearly	£19bn	ayear	out	of	the	national	economy,	equivalent	to	£470a	year	for	every	adult	of	working	age	in	the	country.The	Bill	Sargent	Trust	commissioned	this	research	tounderstand	the	extent	to	which	the	welfare	reformscurrently	underway	will	impact	on	low	incomehouseholds	and	those	in	housing	need	across	Hampshire,including	Portsmouth	and	Southampton.	The	estimatesare	based	on	government	national	impact	assessments,   The Impact of Welfare Reform in Hampshire  Full report freely available from: www.bstrust.org.ukTreasury	estimates	of	savings	made	and	the	distribution	of	claimants	across	Hampshire.	This	report	makes	no	attempt	to	comment	on	themerits	of	each	of	the	reforms	but	it	does	provide	anoverview	of	government	documentation	on	ten	keyelements	of	the	benefit	changes	underway.The	report	provides	evidence	as	to	the	scale	of	financialloss	across	all	districts	in	Hampshire,	how	this	variessignificantly	by	place,	and	estimates	the	numbers	ofindividuals	or	households	affected	by	each	of	thewelfare	reforms	by	the	time	they	have	been	fullyimplemented.The	financial	loss	in	Hampshire	of	the	reforms	will	bejust	over	£400	million	a	year	when	the	reforms	arefully	implemented,	equivalent	to	£360	a	year	for	everyworking	age	adult	in	Hampshire.	The	cumulative	impactof	the	reforms	will	have	severe	consequences	for	many	low	income	households	in	Hampshire	in	terms	of	their	ability	to	meet	essential	costs	such	as	those	related	to	housing,	energy	and	food.		   EXECUTIVE  SUMMARYFor	individuals	least	able	to	gain	a	foothold	in	thelabour	market,	often	due	to	compounding	issues	suchas	long-term	health	problems;	lack	of	skills,	qualificationsor	recent	experience	in	the	workforce;	their	ability	toadjust	to	the	new	regime	may	be	more	limited	than	those	who	are	closer	to	the	jobs	market.	It	is	importantto	remember	that	it	is	not	just	the	households	directly	affected	by	the	welfare	reforms	that	will	be	impactedupon	by	the	changes.		The	loss	of	benefit	income,	which	is	often	large,	will	have	knock-on	consequencesfor	local	spending	and	thus	for	local	employment.The	greatest	impact	is	likely	to	be	in	the	most	deprived	local	areas	and	a	key	effect	of	welfare	reform	willtherefore	be	to	widen	the	gaps	in	prosperity	betweenthe	more	affluent	and	relatively	deprived	local	areaswithin	Hampshire.	 			he	financial	loss	in	Hampshire	as	a	result	of	the	 			reforms	is	substantially	less	than	some	of	thehardest	hit	parts	of	the	country.	However,	there	aresignificant	variations	in	impacts	within	Hampshire	withcertain	local	authorities	and	local	areas	within	districtshit	much	harder	than	others.	There	will	be	local	neighbourhoods	with	concentrations	of	benefit	claimantswhere	the	financial	loss	to	individuals,	families	andthe	local	community	will	be	substantial.•	 When	the	present	welfare	reforms	have	come	into	 full	effect	they	will	take	just	over	£400	million	a	 year	out	of	the	local	economy.	•	 The	financial	loss	is	equivalent	to	£360	per	year	for	 every	working	age	adult	in	Hampshire	which	is	 substantially	below	the	national	average	of	£470	 per	year	in	Great	Britain.		•	 In	the	main,	the	loss	of	income	for	individuals	 directly	affected	by	the	changes	will	be	substantially	 larger	especially	for	those	affected	by	changes	to	 incapacity	benefits,	Disability	Living	Allowance	and	 the	benefit	cap.•	 Portsmouth	has	the	greatest	financial	loss	relative	 to	the	size	of	the	working	age	population,		 equivalent	to	£450	per	working	age	adult	per	year;	 in	Southampton,	Havant	and	Gosport	the	equivalent	 figure	is	between	£430	and	£440	per	working	ageSUMMARY Of ThE OVERAll IMpACTS	 adult	per	year.•	 In	absolute	terms,	Southampton	is	hit	the	hardest	 of	all	Hampshire	districts	with	a	loss	of	£73	million	 a	year,	more	than	five	times	the	amount	in	Hart,	 although	the	working	age	population	in	Southampton	 is	just	over	three	times	the	size	of	Hart.	•	 The	greatest	impact	is	likely	to	be	in	the	most	 deprived	local	areas	within	Hampshire	and	welfare	 reform	is	likely	to	widen	the	gaps	in	prosperity	 between	the	best	and	worst	local	areas	within	 Hampshire.	•	 Over	a	quarter	of	all	Lower	Super	Output	Areas	 (LSOA)	in	Portsmouth	and	Southampton	will	lose	 more	than	£600,000	a	year.•	 The	financial	loss	in	nine	LSOAs	in	Portsmouth,	 Southampton	and	Gosport	will	be	more	than	 £1	million	per	year.•	 Four	benefit	reforms	account	for	over	three	 quarters	of	the	estimated	financial	losses	in	 Hampshire:	incapacity	benefits,	Tax	Credits,	Child	 Benefit	and	the	1	per	cent	up-rating	of	benefits.•	 The	loss	of	benefit	income,	which	in	certain	 neighbourhoods	is	very	large,	will	have	knock	on	 consequences	for	local	spending	and	thus	for	local	 employment	which	in	turn	will	add	a	further	twist	to	 the	downward	spiral	of	some	local	 neighbourhoods.SUMMARY Of ThE IMpACTS Of IndIVIdUAl BEnEfIT REfORMSHousing Benefit: Local Housing Allowance (LHA)•	 The	reforms	to	LHA	involve	changes	to	the	rules	 governing	assistance	with	the	cost	of	housing	for	 low-income	households	in	the	private	rented	sector.	 The	new	rules	apply	to	rent	levels,	‘excess’	payments,	 property	size,	age	limits	for	sole	occupancy,	and	 indexation	for	inflation.•	 A	third	of	all	households	living	in	the	private	rented	 sector	in	Hampshire	receive	Housing	Benefit.	Therefore	 large	numbers	of	households	are	affected	by	these	 changes:	just	over	30,000	households	in	Hampshire.•	 The	reforms	to	LHA	account	for	8	per	cent	of	the	 total	impact	of	welfare	reforms,	amounting	to	a	loss	 to	the	local	economy	of	over	£32m	per	annum.•	 Gosport,	Portsmouth,	Rushmoor	and	Southampton	 are	the	worst	affected	districts	within	Hampshire	 in	terms	of	financial	loss	per	working	age	adult.•	 Key	considerations	for	Hampshire	in	the	immediate	 future	will	be	the	availability	of	affordable	PRS	 accommodation	across	the	county,	and	the	 willingness	of	landlords	to	let	to	LHA	tenants	faced	 with	a	sizeable	shortfall	between	their	LHA	 entitlement	and	the	rent	charged.Housing Benefit: under occupation in social housing •	 The	under-occupation	measure	introduces	new	 rules	governing	the	size	of	properties	for	which	 payments	are	made	to	working	age	claimants	in	the	 social	rented	sector	(widely	known	as	the	‘bedroom	 tax’).	These	rules	already	apply	to	Housing	Benefit	 (LHA)	tenants	in	the	Private	Rented	Sector	(PRS).•	 The	measure	affects	over	9,000	households	 representing	a	total	loss	to	the	Hampshire	economy	 of	£7m	per	annum.Council Tax Benefit•	 Council	Tax	Benefit	reform	involves	reductions	in	 the	entitlement	of	working	age	claimants	arising	 from	a	10	per	cent	reduction	in	total	payments	to	 local	authorities	from	central	government.		 The	benefit	new	localised	system	introduced	is	 called	Council	Tax	Reduction.•	 This	measure	only	affects	claimants	in	eight	of	 Hampshire’s	13	local	authority	districts.	The	other	 five	authorities	-	Basingstoke	and	Deane,	East	 Hampshire,	Hart,	Test	Valley	and	Winchester	-	have	 chosen	not	to	pass	the	ten	per	cent	reduction	on	 to	claimants.•	 The	localisation	of	Council	Tax	support	accounts	 for	two	per	cent	of	the	total	impact	of	all	welfare	 reforms,	a	loss	of	£6m	per	year	to	the	Hampshire	 economy.	•	 The	worst	affected	districts	in	Hampshire	are	 Gosport	and	Portsmouth	in	terms	of	the	relative	 loss	per	working	age	adult.Incapacity benefits (IB)•	 Incapacity	benefits	reforms	involve	the	replacement	 of	IB	and	related	benefits	by	Employment	and	 Support	Allowance	(ESA),	with	more	stringent	 medical	tests,	greater	conditionality	and	time-	 limiting	of	non-means	tested	entitlement	for	all	but	 the	most	severely	ill	or	disabled.•	 The	impacts	of	these	measures	are	huge	both	in	 Hampshire	and	nationally.	They	account	for	one	 fifth	of	the	total	impact	of	all	welfare	reforms	in	 the	county	with	over	21,000	claimants	affected.•	 Some	of	those	claimants	will	lose	all	of	their	 entitlement	to	any	benefit;	others	will	lose	a	 proportion.	•	 The	reforms	will	amount	to	claimants	in	Hampshire	 collectively	receiving	£78m	a	year	less	by	2015/16.	 Southampton	alone	will	lose	£16m	and	Portsmouth	 £13m.•	 The	characteristics	of	those	affected	-	long-term	ill	 health	and	labour	market	detachment	-	mean	that	 it	will	be	extremely	difficult	for	many	to	secure	 suitable	and	sustainable	employment	in	an	 increasingly	competitive	labour	market.Disability Living Allowance (DLA)•	 DLA	reform	involves	its	replacement	by	Personal	 Independence	Payments	(PIP)	as	the	basis	for	 financial	support	to	help	offset	the	additional	costs	 faced	by	individuals	with	disabilities.	PIP	also	 entails	more	stringent	and	frequent	medical	tests	 for	claimants.•	 The	changes	will	a	have	a	significant	impact	in	 Hampshire	affecting	21,000	individuals	and	amount	 to	a	loss	to	the	local	economy	of	£33m	a	year	by	 the	time	the	changes	are	fully	implemented.		•	 The	impact	of	DLA	changes	in	the	context	of	wider	 welfare	reform	accounts	for	8	per	cent	of	the	total		 financial	loss	to	residents	in	Hampshire.•	 The	impact	across	Hampshire	mirrors	that	of	the	 IB	reforms	with	concentrations	in	districts	with	a	 greater	legacy	of	heavy	industry	and	manufacturing.•	 The	overall	impact	of	the	bedroom	tax	is	less	 significant	than	most	of	the	other	welfare	reforms	 accounting	for	just	2	per	cent	of	the	total	impact	of	 all	welfare	reforms	in	Hampshire.		•	 Havant,	Portsmouth	and	Southampton	are	the	 worst	affected	districts	within	Hampshire	in	terms	 of	the	relative	loss	per	working	age	adult,	a	 reflection	of	the	distribution	and	concentration	of	 social	housing	within	the	county.•	 A	key	challenge	in	mitigating	the	effects	of	under-	 occupation	will	be	the	ability	of	social	housing	 providers	to	place	affected	tenants	in	suitable	 alternative	accommodation.		Non-dependant deductions•	 Non-dependant	deductions	refers	to	increases	in	 the	deductions	from	Housing	Benefit,	Council	Tax	 Benefit	and	other	income-based	benefits	to	reflect	 the	contribution	that	non-dependant	household	 members	are	expected	to	make	towards	the	 household’s	housing	costs.•	 The	impact	of	these	changes	is	twofold	with	6,400	 households	affected	and	7,500	non-dependants	 living	in	those	households.•	 The	financial	impact	in	Hampshire	is	broadly	 comparable	in	scale	to	that	of	the	under-occupation		 measure:	the	changes	account	for	2	per	cent	of	 the	total	impact	of	all	welfare	reforms	and	amount	 to	an	estimated	financial	loss	of	just	over	£7m	 per	annum.•	 The	rise	in	non-dependant	deduction	rates	for	 Housing	Benefit	is	equivalent	to	an	84	per	cent	 increase	between	2010/11	and	2013/14.•	 In	terms	of	non-dependents	those	affected	are	 more	likely	to	be	single,	to	be	men	and	to	be	on	 an	income	of	less	than	£180	per	week.Benefit Cap•	 The	household	benefit	cap	introduces	a	new	 ceiling	on	total	payments	per	household,	applying	 to	the	sum	of	a	wide	range	of	benefits	for	working	 age	claimants.	This	is	equivalent	to	£350	for	a	 single	person	households	without	children	or	£500	 per	week	for	couples	or	lone	parent	households.•	 Although	the	benefit	cap	has	attracted	significant	 media	attention	it	affects	a	relatively	small	number	 of	households	in	Hampshire:	750	households	in	all.		•	 This	measure	has	the	least	financial	impact	of	all	 the	different	reforms	introduced	amounting	to	a	 loss	of	£3m	per	year	to	the	local	Hampshire	 economy.	•	 While	the	numbers	affected	are	small	the	impacts	 can	be	quite	severe,	especially	for	households	with	 large	numbers	of	dependants.	With	this	in	mind	 BME	groups	which,	for	various	cultural	and	 religious	reasons,	tend	to	have	larger	families	are	 likely	to	be	disproportionately	affected.	•	 Over	half	of	the	affected	households	are	estimated	 to	be	resident	in	the	districts	of	Havant,	Portsmouth	 or	Southampton.•	 DLA	changes	are	particularly	problematic	given	 the	cumulative	impact	of	the	range	of	welfare	 reform	measures.	While	DLA	is	meant	for	the	 additional	costs	of	living	and	mobility	for	 individuals	with	disabilities,	recent	evidence	 suggests	that	it	is	often	used	for	other	essential	 items	in	the	face	of	financial	pressures.	DLA	is	 increasingly	used	by	recipients	for	items	such	as	 food,	heating	and	meeting	rental	payments	as	 incomes	are	squeezed.	A	reduction	or	loss	in	 payment	could	therefore	have	dire	consequences	 for	claimants	on	low-incomes.Tax Credit Reforms•	 A	raft	of	changes	to	Child	Tax	Credit	and	Working	 Families	Tax	Credit	(WFTC)	-	paid	to	lower	and	 middle	income	households	-	were	introduced	 including	altering	thresholds,	withdrawal	rates,	 supplements,	income	disregards,	backdating	 provisions,	reductions	in	the	payable	costs	through	 the	childcare	element,	indexation	and	up-rating	 from	2011/12	onwards.•	 Over	100,000	households	in	Hampshire	will	be	 affected	to	some	degree	by	the	reform	of	the	Tax	 Credit	system	resulting	in	a	financial	loss	to	the	 Hampshire	economy	is	£82m	a	year.•	 The	financial	loss	in	Hampshire	due	to	Tax	Credits	 reforms	is	equivalent	to	£72	per	working	age	adult	 per	year.•	 If	families	with	children	claiming	WTCs	were	 affected	to	the	same	extent	as	nationally	 (12	per	cent)	by	the	change	in	the	requirement	to	 work	at	least	24	hours	between	them,	then	 approximately	would	be	4,800	families	in	 Hampshire	would	be	affected	by	this	measure	alone.•	 Tax	Credits	have	played	a	key	role	in	supplementing	 low	income	for	many	families	and	households	 across	Hampshire	and	the	effects	of	their	reform	 will	to	various	extents	impact	on	all	of	those	 recipients.Child Benefit Reforms (CB)•	 Child	Benefit	is	subject	to	a	three-year	freeze,	and	 withdrawal	of	benefit	from	households	including	a	 higher	earner.•	 The	removal	of	Child	Benefit	from	households	 with	a	high	earner	has	a	higher	than	average	 effect	in	more	affluent	parts	of	Hampshire	 contributing	to	an	overall	financial	loss	of	£82	 million	a	year.	•	 All	212,700	CB	recipients	in	Hampshire	are	affected	 to	certain	extent	by	the	freezing	of	CB	rates.•	 An	estimated	35,000	or	one	in	twenty	of	all	 households	in	Hampshire	are	likely	to	be	affected	 by	the	reduction	or	loss	of	CB	from	households	with	 a	higher	earner	and	approximately	25,000	of	these	 will	lose	all	their	CB.The one per cent up-rating of working ageWelfare Benefits •	 The	annual	up-rating	of	value	of	most	working-age	 benefits	will	be	restricted	to	one	per	cent	for	three	 years	from	2013.•	 This	reform	accounts	for	18	per	cent	of	the	overall	 financial	loss	to	the	local	economy	from	welfare	 reform,	equivalent	to	£73m	per	year,	or	£65	per	 working	age	adult	per	year.•	 For	those	in	the	lowest	ten	per	cent	income	bracket	 the	reduction	will	be	equivalent	to	a	two	per	cent	 reduction	in	their	overall	net	income.The Bill Sargent Trustc/o	create,	First	WessexPeninsular	House,	Wharf	Road,	Portsmouth	PO2	8HBT: 023 9289 6793M:	07717	720265E:	geoff.phillpotts@firstwessex.orgwww.bstrust.org.ukCharity	number:	1042611																																																																																															DESIGN	MBD	DEC	2013	9751is supported byThe impact of welfare reform in Hampshire: executive summaryBEATTY, Christina <http://orcid.org/0000-0003-0943-9979>, GORE, Anthony <http://orcid.org/0000-0002-0997-7198>, POWELL, Ryan and SANDERSON, Elizabeth <http://orcid.org/0000-0003-1423-1670>Available from the Sheffield Hallam University Research Archive (SHURA) at:http://shura.shu.ac.uk/29259/Copyright and re-use policyPlease visit http://shura.shu.ac.uk/29259/ and http://shura.shu.ac.uk/information.html for further details about copyright and re-use permissions.

The impact of welfare reform in Hampshire: executive summary

http://shura.shu.ac.uk/29259/1/impacts-welfare-reform-hampshire-exec.pdf

The impact of welfare reform in Hampshire: executive summary

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