Families in social housing are shouldering the burden of public debt reduction
The seemingly endless post-Budget fallout centred on granny, pasty, charity, church renovation and static caravan taxes has obscured the growing financial plight of those on low incomes or dependent on benefits.
Despite lifting some low earners out of tax, the Budget’s long-term legacy is unlikely to be the improvement of the lot of low income households, many of whom live in social housing. These households are in effect ‘Poor in Perpetuity’ or ‘PiPs’, who were surviving on low incomes before the Credit Crunch but have seen their living standards fall further in its wake.
It is social housing tenants, and others on low incomes, who are shouldering the burden of public debt reduction through localised austerity exacerbated by the largest cuts targeted at local government and social housebuilding, through rising unemployment and because of stagnant incomes at the lower end of the scale.
Research by the Human City Institute, supported by social housing providers the Aster Group, Trent and Dove and Trident Social Investment Group, reveals that the majority of social housing tenants, who had very low incomes in 2008, have seen their incomes significantly eroded by more than one tenth since; equivalent to £17 per week. Austerity measures introduced to reduce the public deficit are making the social housing PiPs squeak with the coming welfare reforms likely to deepen their plight.
Tenants are also experiencing worsening levels of economic inactivity, rising rates of benefit reliance and have little in the way of savings to fall back on in a crisis. There has been a downwards trend in economic activity in social housing in recent years. The ‘net’ economic activity rate – excluding retired tenants – has fallen from 41 to 37 percent since the international financial crisis began. Today, 53 percent of tenants have incomes that are wholly derived from benefits with 16 percent having incomes partly derived in contrast to 50 and 13 percent respectively four years ago.
Our research also shows that changes in the welfare system, especially the introduction of the ‘Bedroom Tax’ are likely to deepen the poverty of tenants even further. Between 400,000 and 600,000 social housing tenants of working age in England will be affected by the ‘Bedroom Tax’ equating to between 13 and 20 percent of all tenants in England and between 25 and 35 percent of those of working age. The ‘Bedroom Tax’ will be most keenly felt in the North of England followed by the Midlands and the South- West. On average, £14 a week will be lost to those affected tenants, rising to an average of £22 for those ‘under-occupying’ by two or more bedrooms.
Social housing tenants have few assets upon which they can depend in times of crisis – two thirds have no savings at all, and of those who do, almost half have less than £1,000. With the Social Fund gone, tenants are left with few options at a time of need except to seek out loan sharks or take up high interest loans from doorstep lenders or from payday loan companies charging massive rates of interest, putting further pressure on incomes already stretched to breaking point.
It is clear from our research findings that we are not ‘All in it Together’. Social housing tenants, among the poorest in society, have been severely affected by the Credit Crunch and the two subsequent recessions. Austerity measures and welfare changes are making tenants’ plights worse.
Many will see further erosions of their incomes and growing debts in the coming years and their ability to sustain tenancies will be called increasingly into question. The next few years are going to be very hard for tenants across the country as the ‘PiPs’ are squeezed.