The new benefit cap will not only make people poorer - it will harm their health
For many families living on very low incomes who rely on state support to help pay their rent, it’s just got even harder to make ends meet. A new benefits cap was introduced on November 7 in Britain, lowering the maximum amount of social security that families are now able to receive from the government in a single year from £26,000 to £20,000, with a higher rate of £23,000 for those who live in London. This change is not being phased in gradually: it is an immediate reduction that will leave many of the estimated 88,000 affected families struggling to pay their rent.
The new cap will exacerbate the social and economic fallout from Britain’s housing affordability crisis because many of those affected will be living in high-rent areas. Around 20% of those experiencing reductions under the new cap are estimated to live in London.
The new benefits cap will make a difficult situation worse. Since 2010, the number of people seeking assistance because they are homeless has steadily risen in the UK. In 2015, 43,000 households were forcibly evicted – the highest number since records began in 2001.
One missing component in the current debate is how the cap will affect the health of those hit by the new rules. The government’s impact assessment of this change to the benefit cap does not adequately consider health and so to understand how this policy change could impact the health of those affected, it’s useful to look at an earlier change to housing benefit.
Cuts to local housing allowance
In April 2011, the Conservative-led coalition government introduced reforms that reduced local housing allowance for some people. Imagine you were living in the private rental sector and the average local market rent was £1,000 per month. Before the reform you would have been eligible to receive up to £500 per month (with some caps in place based on the size of the residence). After the reforms this would have fallen to only £300, potentially creating a £200 shortfall each month. Almost exactly like the new benefits cap, these reforms reduced incomes without changing rents.
Conversations with people affected by these changes showed a clear pattern. One 35-year-old working parent in Perth told researchers: “If it was a struggle before, it’s going to be worse now … but you just keep going don’t you? You find the money from somewhere.” But not everyone was able to do this.
Harm to mental health
In our recently published analysis, we used these housing allowance reforms as a kind of natural experiment to look at how the cuts affected people’s health.
We followed two groups in the UK over time. First, all renters in the private sector who were receiving housing benefit and so were affected by the reforms – 36,859 people. And second, renters in the private sector who were not receiving housing benefit and so were not affected – 142,205 people.
We tracked the mental health of these two large groups using data from the Annual Population Survey, which forms the basis of the Labour Force surveys of the Office for National Statistics. In these surveys, people are asked to report any health problems they experience, such as depression or anxiety, so we were able to use these data to explore changes in how often people report experiencing these health problems, before and after the reforms.
We found that those affected by the policy change had a greater increase in mental ill health – 1.8 percentage points – across this period than those who were unaffected. To put this into perspective, 26,000 additional people in the UK were tipped into living with depressive symptoms because of these reforms. The health effects of the reform were greatest in areas of the country hit hardest by the cuts in spending, such as inner London and other urban areas – the same places that will be hit hardest by the new benefits cap.
Worse to come?
Unfortunately, these reductions in the local housing allowance were only the beginning. Since then, other reforms have been introduced which have reduced the level of financial support received by those claiming housing benefit. These included the 2013 “bedroom tax”, under which benefits are reduced if a person has a spare bedroom, and changes to age-based eligibility, introduced in 2012.
The housing crisis is not only a matter of bricks and mortar, there is a real human cost. Some families have to separate because they cannot afford to live in the same home. Some parents can’t afford to give their children fresh fruit and vegetables. Evictions that erode social networks can then lead to unemployment and push people into poorer quality housing. And financial strain increases the risk of poor mental health.
Evictions, unemployment, and poor health also all place an additional burden on other parts of the public purse. The new benefit cap will not only exacerbate the effects of the housing crisis, but by leading to poorer mental health, it may not even save any money. Unfortunately, as further reforms to housing benefit are rolled out, there may be worse to come.
Aaron Reeves, Associate Professorial Research Fellow in Poverty and Inequality, London School of Economics and Political Science; Emma Baker, Associate Professor, School of Architecture and Built Environment, University of Adelaide, and Rebecca Bentley, Associate Professor, Centre for Health Equity, Melbourne School of Population and Global Health, University of Melbourne