Families in the Capital are facing a half-a-billion pound bombshell as benefits cuts start to hit tens of thousands of households.
Cuts in a range of welfare payments – including child benefit, tax credits, housing benefit and disability living allowance – will see the average Edinburgh household losing £2170 by 2016.
Sweeping changes enforced by Westminster will see some families lose out by far more as a range of benefits are slashed and some losing payments altogether. Among those hardest hit will be people living in houses deemed to be too big for them.
That net loss to households across the city adds up to an estimated £482 million in a move which Capital leaders warned would create widespread hardship and harm the city economy.
Alastair MacLean, the council’s director of corporate governance, said the half-a-billion pound loss would have “serious multiplier effects” in the economy, leading to:
• Increased poverty and hardship;
• Increased need for benefits advice, advocacy services and debt advice;
• Greater demand on health, social work, housing and homelessness services.
The net loss to the local economy has been calculated by council officials from current government statistics and takes into account changes in benefit payments, some of which date back to 2011.
Some of the biggest cuts will come about as a result of the so-called bedroom tax which will cut housing benefit payments to households with spare bedrooms.
The aim of the policy is to encourage people to move into smaller homes, freeing up larger council properties for families.
A severe shortfall of one-bedroom properties across Edinburgh means housing benefit for around 200 tenants will be cut by up to 25 per cent, despite having no option but to remain in “under-occupied” accommodation.
Last week, the city council joined nine other Scottish authorities by pledging not to evict its tenants who fell behind on rent accumulated through bedroom tax arrears. But fears have now emerged that the lenient approach risks sending “mixed messages” that it is permissible not to pay rent.
A precedent was set in 2009 when Stirling Council introduced a similar no eviction policy which was scrapped after just 18 months after rent arrears soared by 140 per cent.
Today, it can be revealed that the no-eviction policy could cost the city up to £4 million in unpaid or late rents which would equate to 100 housing management jobs, a £4m cut in capital investment, or reduced borrowing capacity of up to £50m.
Councillor Ricky Henderson, convener of health, social care and housing at the City Chambers, said the welfare shake-up was taking money “directly out of the pockets of the poorest people in Edinburgh”.
He said: “By definition, people on benefits are at the poorer end of society, and I would go further and say that not only is this taking money from the poorest families, but that this money won’t be [going] into local economies.
“The evidence is that poorer people tend to spend a greater proportion of their income locally because they don’t have flats in Marbella and can’t jet off to Las Vegas.
“Some of this money would have gone to the council in rent, but most of the other money would be spent in shops and services.”
On the bedroom tax, Cllr Henderson questioned whether it would be “morally right” to evict a council tenant “whose only offence was that the government had moved the goalposts”.
Figures from 2011-12 show that 15,500 households in Edinburgh – 60 per cent of all applicants – required a one-bedroom home. The annual number of one-bedroom city properties available to rent is around 500.
Cllr Henderson said the UK Government’s welfare policy was an “example of people coming up with changes and not fully appreciating the impact they were going to have” nor the “realities of the housing market at this level”. He added: “If they were in possession of those facts it’s difficult to know why they decided to go ahead with the changes.”
To counteract the expected fall-out from welfare reforms, the city plans to introduce a series of measures to assist tenants, including house exchanges, flat sharing and discretionary housing payments on a case-by-case basis to help residents meet rental payments in the short term. But compounding the pressure on local authorities, a pilot project being trialled at Edinburgh-based Dunedin Canmore Housing Association is transforming how housing benefit is administered. Rather than being paid directly to the claimant’s landlord, the Universal Credit scheme would see a lump sum deposited into a tenant’s bank account and it would be their responsibility to pay rent and manage their budget.
Cllr Henderson said the scheme would have a “pretty big impact”.
“Now this money is going to drop into [tenants’] bank accounts and they are going to have to make the necessary arrangements to pay their bills,” he said. “If [the tenants] are not good at that or have other things in their lives that take a priority, decisions could be made that are not in their interest in the long term but might make sense to them in the short term.”
Council plans ‘no eviction’ policy
CITY chiefs are set to rubber stamp plans to protect council tenants who fall foul of the bedroom tax.
A cross-party motion led by the Greens called for a “no eviction” policy and creation of a working group monitoring the impact of the welfare reforms and measures to support tenants.
City leaders are set to back the motion at a meeting on Tuesday.
Concerns have been raised that many more people could be made homeless from the policy. In 2011-12, 93 council tenants faced losing their homes through eviction action.
City officials predict welfare reform will result in a £6-8 million loss of income per year for the housing revenue account, or £43m over the next five years.
Figures show that 3353 council tenants are under-occupying their property by one bedroom, with 498 tenants under-occupying by two or more bedrooms in Edinburgh.
‘It’s the blanket approach that annoys me’
A FATHER-of-three who is recovering from bowel cancer says he cannot sleep for worry over how the welfare reforms will affect him.
Maurice Scullion, 46, faces losing £15-a-week in housing benefits and reductions to disability living. He was allocated a two-bedroom council flat in Magdalene five years ago after becoming ill, but fears the cuts mean he will be forced to give it up.
His twin sons Sean (pictured) and Callum, 16, and nine-year-old Luke (pictured), stay in the second bedroom at weekends and during school holidays.
He said: “I have already made all the adjustments to my finances that I can, like keeping the heating off until the boys come at weekends. I can’t do anything else.
“The bowel cancer has left me with all sorts of complications that mean I can’t work but nobody seems to care. My son Sean is autistic and needs routine like coming to visit me but I worry he won’t be able to do that for much longer.
“I know savings have to be made but its the blanket approach that really annoys me.”
He contacted his local MP Sheila Gilmore, who suggested he write to David Cameron. The Prime Minister’s response only served to heighten his anger.
“It was a uniform letter talking about the problems with housing in England for starters. It just shows how little they seem to care about individuals when they can’t even get that I’m in Scotland.”