Social housing families spiraling into debt in wake of government's welfare reforms

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The government's huge shake-up of the benefits system is pushing families in social housing into greater levels of debt as they struggle to cope and find work, a major study has revealed.

Tenants have seen the amount they owe increase since October, while almost half report having no money left each week once essential bills have been paid.

The findings are revealed in the third report from Real Life Reform – a study by social landlords into the impact of the Tory-led coalition's welfare reforms on up to 100 households across the north of England.

Interviews conducted in January with 83 tenants – the majority of whom have been tracked since the study began last July – revealed:

• 77% of households are in debt and the average owed by residents who have taken part in previous rounds of the study is now £2,943 – up 28%.

• £34.41 is the average weekly debt repayment – an increase of 58%.

• 18.5% of income is spent on fuel costs, compared to the national average of 5.1%.

• 46% of participants report having nothing left each week to live on once rent and essentials such as food and bills have been paid.

• 69% of households spend less than £40 per week on food and nearly a third of households spend less than £20 per week on food.

• Use of local shops has halved with less than 5% of participants using them.

• 60% of active jobseekers applied for between 20 and 40 jobs in the last three months but 71% were not offered an interview.

• 70% of applicants for discretionary housing payments have been successful.

Ten housing providers are working on the Real Life Reform to investigate how changes to the benefits system are affecting their tenant’ health, housing, wellbeing, finances, education and employment prospects.

Case studies are being interviewed by housing officers once every three months for at least 18 months so that their experiences can be tracked. 

The landlords hope the study’s ongoing findings will allow them to better understand the impact on tenants and shape their own policies, influence decision-making and inform national policy-makers.

A detailed questionnaire has been developed, along with ethical guidelines, with support from The University of York’s Centre for Housing Policy.

Andy Williams, director of neighbourhood services at Liverpool Housing Trust and chair of the Real Life Reform steering group, said: “Householders are falling into more debt, including some taking money from loan sharks, and it’s a real concern that people are having to borrow to cope with the cost of everyday living.

“In our first report in September, people said they’d resist falling further into debt, yet just six months later this picture has emerged. 

“Nearly 8 out of 10 people in the study owe money. With an underlying average debt of £2,943, some may never pay this off given that they have, on average, as little as £3 left at the end of each day for food.”

The study is also being supported by the Northern Housing Consortium, which is sharing the research findings with the government, MPs and other key policy-makers.

NHC chief executive Jo Boaden said: “Real Life Reform has been following our households for nine months now and this, our third report, provides a powerful update. 

“We have been engaging with parliamentarians over the course of Real Life Reform, using evidence from the research to show how the reforms are affecting people and what operational or policy changes may need to be considered.

“Employment opportunities remain a key strand of the research. We will be working with NHC members and stakeholder partners to explore how the housing sector and Job Centre Plus can further improve the work-seeking experience which, as our report demonstrates, can provide such a positive impact on an individual or family’s life.”