The House of Commons Work and Pensions Committee has released a report examining the welfare safety net. Debt charity StepChange shares a number of its concerns and recommendations, and joins the committee in urging the DWP to:
Take measures to ensure deductions from benefits do not worsen problem debt for the most vulnerable - more than two thirds (71 per cent) of StepChange clients say these deductions have caused them hardship, with many struggling to pay for essentials like food, clothes and heating
Ensure debt repayments are taken into account in all future poverty measurements
Increase the rates of frozen benefits in line with the Consumer Price Index plus 2 per cent, then uprate benefits at least in line with inflation
Restore Local Housing Allowance rates to a level where 30 per cent of rented homes in any area are affordable to everyone, alongside ensuring benefits are tethered to the real cost of living. Seventy-two percent (72 per cent) of StepChange clients receiving Local Housing Allowance report it does not cover their rent; a figure which rises to 90 per cent among those renting privately
Peter Tutton, Head of Policy at StepChange Debt Charity, said: "The Work and Pensions Committee rightly call out the gaping holes in a safety net too many are falling through. Time and again, we see our clients falling into problem debt due to a lack of financial resilience to life shocks like redundancy and illness.
"Our latest research shows that people who had experienced a life shock in the past two years were three times as likely to be in problem debt than those who had not.
"Clearly, the capacity of the welfare safety net to prevent people falling into debt is at breaking point. That’s why we echo the committee in calling on the government to thoroughly scrutinise the close links between debt and poverty.
"We need to see debt repayments taken into account in all future poverty measurements, while DWP must ensure deductions from benefits do not worsen problem debt for the most vulnerable. Finally, as the benefits freeze begins to thaw, we must see an increase in Local Housing Allowance to a level where market rents are genuinely affordable to people on low incomes."
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