Benefit cuts leaving poor working families facing ‘major crisis’ - with some given just 50p per week for housing

Reductions to benefits have created a ‘major crisis’ for poorer families and children in poverty, a Work and Pensions Select Committee has heard.

The decrease in allowances has meant that in some parts of the country, families are being given as little as 50p per week in housing benefit, leaving them at severe risk of poverty and homelessness.

More needs to be done to prevent working households from falling into poverty, as worklessness has fallen in many parts of the country in recent years while poverty has not, MPs were told.

‘A major crisis’

Local government leaders are also calling for the Department for Work and Pensions (DWP) to share data on Universal Credit, as there is currently no way for councils to identify some households which are in need of extra support.

Charlotte Ramsden, President of the Association of Directors of Children’s Services and Strategic Director for People at Salford City Council said: “The benefit changes that have happened in the last few years have reduced in real terms the income that is available to families.

“We had the spare bedroom tax issue, the reduction in the benefit cap, the two child policy issues, all of which have meant that the actual income available to families on benefits has reduced, and it has a particular impact on families with three or more children.

“So that has been a major crisis for families who were already poor.

“In Salford specifically, the impact of those benefit changes which were able to track through housing benefit, we had families on 50p per week on housing benefit. If we hadn’t intervened, those families would have been homeless.”

Worklessness and child poverty

Witnesses also said that while worklessness does often lead to poverty - most poverty is among those in working families.

Desmond Swayne MP noted that while half of workless households were in deep and persistent poverty, only 9 per cent of working households were in the same situation, according to a report by the Social Metrics Commission.

Will Tuckley, Chief Executive of Tower Hamlets council, said: “It’s probably worth highlighting that whereas worklessness has declined steeply at least until Covid, poverty has remained pretty high.

“In Tower Hamlets it fell from 28 per cent at the end of 2005, to just over 11 per cent by December 2018, but we hadn’t seen a corresponding drop in child poverty.

Ramsden added: “The increase in children living in poverty where one or both parents are working is a real concern and we know that’s grown even more where children are living in lone-parent families but where that parent is working.

“There is something there, about an increase in poverty despite working which needs to be addressed.”

Gavin Mullin, the Commissioning Officer for Children and Families at Cambridgeshire County Council and Peterborough City Council said that the issue goes beyond unemployment in his experience.

He said: “[In Cambridgeshire] we’ve still got a relatively low percentage of people claiming unemployment, what we do have though is a large amount of people - an ever-growing number of people - who are on really low paid jobs or zero hour contracts and they fall into the same category as our unemployed residents where they find themselves at a crisis point and need additional support.”

Better information-sharing

One of the things which could be done to help local governments better intervene in cases of poverty and crisis is better information sharing between central government and local councils.

Asked whether the DWP should share more information, witnesses said that Universal Credit data would help them to offer more “flexible and rapid” responses to mitigate child poverty.

Tuckley said: “We don’t know which families are subject to the benefit cap, so we can’t reach out to them.

“We know which have council tax arrears but not Universal Credit deductions, so it’s difficult to give debt advice they want, and we can’t get in touch as we do with others, to make sure they’re claiming all theyre entitled to and can therefore avoid crisis.

Ramsden said: “We have data that enables us to do strategic responses, but not to do rapid flexible responses to mitigate impending crises.

“There’s a huge opportunity for DWP to work with us in a different way, using the data it has to allow us to be much more flexible and rapid in mitigating child poverty. “