We can all agree that the country has to live within its means. This applies, of course, to the single largest area of public expenditure, welfare. I also believe that it is now accepted, across all parties, that the amount we were spending on welfare had grown out of kilter with what we as a country could afford and indeed what was both fair and proportionate.
The necessity for this change can be perfectly illustrated here in Westminster. In this one borough, we witnessed a 60% increase in the number of housing benefit claimants, since its introduction in 2008, to some 6,000 households and worth some £280 million per year. This figure equated to over 10% of the total national expenditure spent on housing benefit. Before the start of the welfare reforms, over 1,000 households in Westminster were in receipt of £500 or more per week in housing benefit. Only 4% of the working population earn the £75,000+ per year required to afford rents at this level.
Of course, Westminster is uniquely affected by welfare reform, with some of the highest priced real estate in the UK and we have seen the effects of housing benefit caps more acutely than many other areas.
That’s why these unique circumstances have led us to develop a unique approach to dealing with the reforms which we are setting out today – a fair approach that balances the need to reduce benefit expenditure with the need to support people through the changes and to help people out of dependency so that they are able to take more control of their lives.
Our approach is based on four principles or ‘FAIR’ for short:
Fairness – doing what’s fair and right – 100 families were receiving over £1,000 per week in benefits to live in Westminster before the changes; four families were in receipt of more than £2,000 per week. Now no-one receives more than the LHA caps and we have reduced the housing benefit bill by £40million per year.
Aspiration – We want to break the cycle of dependency and help people to access the many employment opportunities in Westminster. We are connecting people with 1,200 jobs through our Workplace Coordinators and Employability Passports.
Investment – We are investing in both people and housing. Our housing renewal programme will bring regeneration to four areas of Westminster and build 1,200 new homes, 800 of which will be affordable whilst our family recovery scheme is investing in troubled families by helping people to get into work and off benefits.
Responsibility – We recognise that people may need to make difficult decisions about where they can afford to live. We are providing support and advice to help inform these choices but we are encouraging people to take responsibility for their decisions and look to renegotiate their rent with their landlords, get back into work or look for more affordable accommodation
Where we have the power to do so, we have tried to insulate residents from the effects of some of these changes. We have not passed on the Council Tax Benefit cuts for example and instead absorbed these ourselves. We are embarking on an ambitious regeneration programme across the city which will create new homes and jobs, and we are providing support and advice to those affected by changes to the benefit system.
We have also set the lowest Council Tax of any council in any part of Britain, recognising that for many, particularly on low or fixed incomes, Council Tax is one of their largest financial outgoings. The document we are launching today illustrates our approach to implementing changes to the welfare system and also to ensure that people clearly understand their responsibilities but also what the council will do in helping them to navigate these changes.