Dealing with the impact of increased homelessness caused by housing benefit cuts could cost local authorities in Wales more than £23m this year, a leading housing and homelessness charity has warned.
Shelter Cymru has calculated the number of people likely to be affected and the direct costs that could be imposed on local authorities as a result of changes to the local housing allowance system (the type of housing benefit paid to people in the private rented sector), due to be introduced this year.
Director of the charity John Puzey said: “We know from the Department for Work and Pensions’ own figures that nearly every person in Wales who receives local housing allowance will be worse off by an average of nine pounds a week. Many of these already make up a shortfall of around £23 a week between their benefit and the cost of their rent.
“Meanwhile, 67 per cent of landlords in Wales say that they would not be able to reduce their rent to retain LHA tenants. This could mean up to 32,515 people being forced to move when the cuts come in later this year as they would be unable to negotiate a cheaper rent in their existing home.”
The charity cites a poll carried out for Cambridge University, which shows that 26 per cent of people would go to their local authority first for help if they were unable to keep up with their housing costs. In Wales, this would translate to 8,454 households approaching their council for assistance.
“The initial cost to councils of dealing with such an approach is £167 per case, so dealing just with new approaches would cost more than £1.4m,” said John Puzey.
“Then, if the household is found to be in ‘priority need’, it costs the council around £5,300 per case per year. This rises to £6,413 for households with children. These are just the direct costs to local authorities – you can’t put a price on the disruption and trauma to the families and individuals involved.”
In April – June 2010, 44 per cent of households that approached their council were found to be in priority need and of these 47 per cent were households with dependent children.
The charity estimates that this could mean 3,720 households classed as ‘priority need’, made up of 1,972 households without children and 1,748 with children.
“We have argued all along that the housing benefit cuts are a false economy and will essentially just transfer spending from Westminster to Wales, said Mr Puzey.
“Like everyone else in this time of public spending cuts, local authorities are having to make some very tough financial decisions, so this will be an extra cost that they can ill-afford,” he added.
