House of Commons - Communities and Local Government Committee

Select Committee on Communities and Local Government Committee Written Evidence

Memorandum by the National Housing Federation (SRH 29)

INTRODUCTION—THE ROLE OF HOUSING ASSOCIATIONS

The National Housing Federation represents housing associations in England. Between them our members provide two million homes for five million people. They build better homes and more sustainable neighbourhoods Housing associations are independent, not for profit social businesses.

SUMMARY

The housing association sector, in responding to the Treasury's Comprehensive Spending Review 2007 announcement, has fully embraced the challenge and sought to develop a 10-year vision for the sector. A significant element of our response involves the provision of housing and housing services, including the provision of rented housing.

The need for rented housing should be met, but in the context of truly mixed communities, at prices that are affordable to those in need of housing and unable to provide it for themselves. It is only through the provision of mixed communities that we will create true sustainability, with places where people want and are able to live and work both now and into the future.

This will only be achieved through:

— The provision of public subsidy in the volumes necessary to meet the high levels of need currently experienced and forecast for the future. The Federation believes there is a need for around 80,000 new affordable homes per year, with 55,000 being social rented homes and 25,000 low cost home ownership homes.

— A coherent land supply and planning system, delivering developable land with planning permission, at the right price, in the right place and with the right level of subsidy available.

— A strategic approach to the delivery of housing in all regions to meet a broad range of needs, based on robust evidence and analysis.

— Well-researched analysis of supply and demand for a range of supported housing across, for example, age, ethnicity, household type, and disability etc, alongside a clearer picture of scale of existing stock that can be remodelled to meet changing needs of older people and new demands of homeless, excluded groups. There is also a need for additional stock to address move-on needs and current silt-up within existing supported housing projects.

— Having an appropriate level of properly skilled individuals available to deliver sustainable communities across the country.

— Housing and services appropriate to the needs of all communities.

The Federation recognises and supports the need to meet people's aspirations and understands that there is a group of people for whom neither social renting nor owner-occupation is an option. This is why we support continued funding for Low Cost Home Ownership products. Since 1990, HAs have enabled in excess of 60,000 households to buy their own homes through this method and, more recently, have assisted more than 20,000 key workers through the Starter Home Initiative and Key Worker Living Programmes.

Investment in housing provided by HAs is secure into the long term because housing associations have long-term interests in, and commitment to, their neighbourhoods and are community anchors.

The Federation believes it is essential to retain a financially viable affordable housing sector able to invest long term in the communities in which they work. This must include the sector having access to sustainable and affordable rental streams, and control over the use of assets and surpluses.

In determining its priorities and policies, Government should concentrate on the delivery of truly sustainable communities rather than on the continual pursuit of "the numbers game", ie the pursuit of ever higher numbers of affordable housing units for lower subsidy, often at the expense of: quality; diversity; sustainability; and local priorities, in both urban and rural contexts.

1. The level of public funding required to meet social housing needs

The Federation's latest assessment of the level of demand for affordable housing suggests a national demand for around 80,000 new affordable homes per year for the next 20 years. This level of demand is driven in particular by factors, including:

— continuing population and household growth; and

— a continuing trend towards living in smaller households, leading to increased demand for housing from a given population.

The Barker Review89[91] of housing supply, whose final report was issued in March 2004, used a similar methodology to that applied in our assessment, with initially similar results. That analysis however, applied assumptions with which we would disagree, including:

— Barker assumed an increased role for the private sector rented sector;

— Barker assumed that one third of newly arising households would already be in some form of housing and would not need social housing;

— The Federation takes a different approach to the treatment of those households who are currently inappropriately housed (the backlog) and the time allowed for this work to be completed.

This leads us to different conclusions on the overall demand for new affordable housing.

The Federation's assessment of demand is based upon work using the Cambridge Centre for Housing and Planning Research (CCHPR) demographic model of housing need carried out in 2005. This has been updated using more recent household formation forecasts. The total demand for affordable housing is calculated from two components:

— Affordable housing to meet need from newly forming households; and

— Affordable housing to meet the backlog caused by insufficient provision in the past.

The combination of the elements provides an estimate of total current need that is close to 100,000 new homes per year. However, the Federation recognises that a number of factors constrain delivery of ever larger programmes, including;

— The supply of available suitable land;

— Providers' capacity to add resources to public subsidy by borrowing and using reserves;

— Capacity within the construction industry due to competing priorities from; preparation for the 2012 Olympics, increased public investment in infrastructure and other construction projects; and

— Capacity within the sector to manage and deliver ever larger capital programmes.

This assessment includes a separation between demand for social rented and "intermediate market" housing (in their work CCHPR refer to the "intermediate market" meaning, what is more usually referred to as Low Cost Home Ownership). Allowing for these constraints, the Federation believes there is a need for a programme of around 80,000 new affordable homes per year, approximately 55,000 of which should be social rented homes and 25,000 "intermediate market" homes. The current Housing Corporation two-year capital funding programme is set to deliver approximately 84,000 homes, half the size of our recommended programme, for a budget of £3.9 billion. At current levels of public subsidy and using existing delivery models, we believe that a programme of the size we are recommending would cost in the region of £4 billion per year.

The current programme's outputs are split between 45,000 social-rented and 39,000 low-cost home ownership (equivalent to our "intermediate market") homes, which in our view is an over emphasis on the demand from the intermediate market.The Federation supports the implementation of the National Housing and Planning Advice Unit90[92] (NHPAU) tasked with responsibility for promoting a broadly agreed methodology for determining national and regional demand for housing. If the Unit is to be a success it must deliver consensus and maximise focus on resources, delivery and planning, as opposed to methodology disputes on determining the level of demand.

In addition to the above statistical evidence in support of increasing the subsidy for affordable housing, the following data suggests a housing market in crisis across the country. There are also, however, regionally specific issues that should not be ignored, despite the need to deliver increasing levels of housing in the overheating southern and London markets.

Table 1

	Housing need
Regions	Householdson housing register	Homelessness acceptances 2004-05	Households in temporary accommodation
England	1,543,509	120,860	101,020
North East	89,747	7,940	820
North West	200,600	17,360	2,850
Yorkshire & Humberside	227,430	13,430	2,210
East Midlands	137,095	9,120	2,950
West Midlands	137,992	14,050	2,330
East	129,184	10,150	7,550
London	309,072	26,730	63,120
South East	181,196	12,420	12,110
South West	131,193	9,680	7,080

These statistics (Table 1) demonstrate that in excess of 1.5 million households are currently on housing waiting lists, equivalent to almost 7% of the total number of households in England. In addition, this number is increasing by 120,000 or 8% per year. In excess of 100,000 households are housed in temporary accommodation, of which more than 80% are in London and the south.

Within the demand for rented accommodation described here, delivered within truly sustainable communities, housing and services should meet the needs of people with a wide range of support requirements. The level of this support must be identified at regional and local levels and appropriate resources made available. However, the provision of additional homes is not always the answer, and of equal importance is the provision of resources to meet support needs and, more importantly, the co-ordination of these two facets to ensure adequate, appropriate and sustainable support.

Although commentators tend, for ease, to identify northern and midlands regions as being areas of low demand and southern regions being areas of high demand, this is far from a uniform picture. There are within northern regions areas with severe high demand and consequential affordability issues. One such "hot spot" being Castle Morperth, in the North East, where house prices are 80% above the regional average and 17% above the national average. This should not, however, be taken as evidence that the need for the work of Housing Market Renewal Pathfinders is over. Far from it. These are long-term projects needing continued public investment to enable remodelling of existing housing stock and, in some circumstances, demolition. Activity of this type should be carried out following full local consultation and, wherever possible, the support of the community.

There is a clear need for rented-supported housing as well as more standard, general needs rented properties. The ODPM Review of Supporting People Programme concluded that "There is undoubtedly unmet need for vulnerable groups..." and work on the Supporting People distribution formula demonstrated that demand for Supporting People services outstrips supply, even in areas where the distribution formula suggests that less resources are required.

The provision of new affordable accommodation is not the only means of meeting the need for this type of housing. Of significant importance is the funding of remodelling91[93] of existing provision to make it fit for purpose.

2. The relative funding priority being given to social rented housing as opposed to shared ownership and other forms of below market housing

The work mentioned previously to estimate the overall level of demand for affordable housing, included an estimate of both "social rented" and "intermediate market" housing. The difference between these two elements is calculated through the use of an income measure, to determine ability to access Low Cost Home Ownership (LCHO) products. The calculated ratio of Social Rented:Intermediate Market nationally is approximately 2:1. The mix between tenure types at a regional level (determining funding decisions) and on individual schemes should be calculated according to local need and scheme financial viability.

The characteristics of current new entrants to the social housing sector demonstrate the continuing need for a low cost rented sector. Data show that in 2004-05 (the last year for which summary data is available) 57% of new entrants to social rented housing were eligible for housing benefits, with 51% wholly dependent on state benefits for their income. 92[94] For lone parents, who accounted for 21% of all lettings, this figure rose to 69%.

With only 13% of new tenants in full time work and only 12% in part time work, incomes remained unsurprisingly low. Mean incomes for all new households were £181 per week with 20% having incomes of less than £80 per week.

The social rented sector continues to be an important source of housing for single-person households who are, often by their nature, unable to compete in the wider housing market. In 2004-05, 34% of lettings were to single-person households with a further 15% of lettings to older, single-person households. Single-person households had low mean incomes of just £132 per week, with 46% earning less then £80 per week.

These figures conclusively demonstrate the difference in characteristics between households entering social rented housing and those entering assisted home-ownership schemes. Comparable data for 2004-05 show that 95% new shared-owners/Homebuy purchasers were in full time employment and that all incomes vary slightly by scheme; new assisted owners had average incomes of around £30,000 per annum (£580 per week).

The Federation believes that these figures, along with the demographic assessment of need discussed above, demonstrate the need for the majority of resources for new, affordable housing should be concentrated on providing new, social-rented accommodation.

In meeting the need for LCHO we need to be careful, that in seeking to reduce the grant take needed per home provided, we do not unnecessarily seek to over-use cheaper forms of LCHO which do not add to the total number of homes available. Products which provide mortgage support for customers purchasing on the open market are a useful tool for accessing home ownership for some, but they do not contribute to new supply, and are also less value for money to the public purse over time, as detailed in the recent National Audit Office report, (A foot on the ladder, 2006).

Currently, housing associations use LCHO as a tool in achieving mixed tenure developments. It produces balanced and sustainable mixed tenure developments and also helps deliver financial viability across tenures. This is not by using New Build HomeBuy93[95] to subsidise social rent, but by using its viability to enable housing associations to generate stronger land values than on exclusively social-rented development. Any reduction in subsidy for New Build HomeBuy is likely to result in a reduction to the supply of social rented (on mixed tenure schemes) as well as NewBuild HomeBuy.

True levels of demand for LCHO should be determined at a regional level and incorporated into housing strategies and appropriate products developed to meet this need. In addition, each region should be able to develop its own priority groups94[96] and products to match, to ensure that they are locally appropriate. The Federation welcomed the relaxation of targeting specific funding and homes to a strict key-worker definition, which did not enable housing associations to meet local needs, or create mixed and balanced communities.

HAs are key to the delivery of affordable LCHO products by attracting in private finance to stretch public subsidy, taking risks with their developments to ensure that they meet the local need in terms of price, product and volume.

3. The geographical distribution of subsidies for affordable housing

The Federation believes that the most recent method for distributing housing subsidies includes significant improvements compared to previous systems. Of particular importance are the restriction of political influence to determining of national priorities and the use of objective measures to distribute these resources between the English regions. The method also combines the resources available for each region into one pot, which is then used within the region to meet its own identified priorities, putting decision making in the region, where it is most effectively delivered.

The capital subsidies made available through the single regional housing pot are not the only resources available for providing and supporting housing (others include resources to Housing Market Renewal (HMR) Pathfinders95[97], resources to growth areas, new settlement infrastructure resources etc). We believe that to achieve improved clarity about the resources available and their regional distribution information on these various resources should be aggregated and published.

Capital subsidies for the provision of affordable housing need to meet a wide spread of different needs across the country and it is this that has made it extremely difficult to agree the distribution of these resources. Of equal concern is that each area of the country also receives the resources to meet its own priorities and the ability to determine those locally.

Any system to determine the geographical distribution of resources needs to be:

— objective, transparent and well understood;

— outside of the political spending decision process; and

— based on the most up to date and robust data available.

The reason for the difficulty in agreeing the distribution methodology is the desire to maximise resources in any one region. If, however, the resources available were substantially increased (as per our answer to Q1) we believe that this becomes less of an issue.

Moves towards longer term and more strategic regional funding, the subject of recent consultations and discussions, are welcomed, subject to certain important safeguards:

— Local, regional and national accountability mechanisms need to put in place.

— Tensions between national, regional and local priorities must be identified and effectively managed.

— Resource and capacity to deliver must be assessed to minimise wastage.

— Consistency of outcome must be ensured by ensuring that local decisions are made within a national context and framework.

— Resources to develop regional integrated strategies must be available to ensure proper cohesion between different funding stream decisions.

— Consistency between regions is important for consistency of outcome and vital for the confidence of delivery agents working across regional boundaries.

— Equity between regions is important and distribution formulae should be reviewed periodically to ensure confidence is maintained.

The Federation is concerned that a focus on high demand issues, particularly those in London and the south, should not divert much needed resources from midlands and northern regions. There is a need for new housing supply in all regions and it is also important to ensure that sufficient resources are also available to support the re-development and re-modelling of existing homes.

4. The future role for local authorities as builders and managers of social housing

Housing associations (HAs) should remain the provider of choice for affordable housing for the following reasons:

— Due to their track record and regulated status they are able to deliver excellent value private finance, thus increasing the long term value and viability of the new housing offered. In addition, housing association borrowing, currently totalling in excess of £35 billion, does not count against the Public Sector Borrowing Requirement (PSBR).

— They have an excellent track record over decades in delivering high quality, excellent value for money, complex programmes, delivered to meet the needs of communities all over the country.

— Being social enterprises rooted in the communities they serve, housing associations are excellently placed to deliver both properties and services that meet the needs and aspirations of those communities.

— They have a long track record in delivering increased value by recycling and reinvesting the proceeds of prudent sales of un-needed properties as part of well researched asset management strategies.

The Federation believes these arguments demonstrate that HAs are best placed to deliver excellent quality, good value, affordable housing in sustainable communities.

Housing associations are proving themselves equally to be managers of choice for social housing tenants with:

— Nearly one million homes having been transferred from LA ownership to HAs.

— HAs now owning nearly 50% of all the social housing stock available across the country.

— Tenants of HAs are regularly and consistently more satisfied with the service they receive from their landlord than are those of LAs.

A total of 297 tenant ballots regarding landlord transfer have been held, of which 230 have resulted in a yes vote, equivalent to 77%.

The current important and strategic role that local authorities perform as local housing enablers should continue. Their role (often jointly with others) in carrying out and commissioning Housing Market Assessments96[98] (HMAs) is vital in the determining of regional needs and priorities. These focused and strategic roles should not be jeopardised by the introduction of wider roles risking the diffusion of impact.

The effectiveness of local authorities in fulfilling their roles is often largely as a result of their ability to work in close partnership with others. In the provision of supported housing it is imperative that LAs work with housing associations and the voluntary sector, as a large majority of supporting people contracts are held by these organisations.

5. The effectiveness of different social housing models including traditional local authority housing, ALMOs, housing co-operatives and housing associations

Housing associations (HAs) should remain the provider of choice for affordable housing for the following reasons:

— they have an excellent track record over decades in delivering high quality, excellent value, complex programmes, delivered to meet the needs of communities all over the country;

— due to their track record and regulated status they are able to deliver excellent value private finance, thus increasing the long term value and viability of the new housing offered;

— being social enterprises rooted in the communities they serve, housing associations are excellently placed to deliver both properties and services that meet the needs and aspirations of those communities; and

— they have a long track record in delivering increased value by recycling and reinvesting the proceeds of prudent sales of un-needed properties as part of well researched asset management strategies.

LA tenants across the country have been voting to approve the transfer of their homes to housing associations to such an extent that there will soon be more homes owned by HAs than by LAs. By that point, in excess of one million homes will have been transferred. HAs are therefore clearly the landlord of choice, on a wide number of fronts, for those in need of affordable housing. HAs are delivering increasing numbers of new, affordable homes per year with greater certainty of delivery, improved value for money and improved quality of construction and design.

As we have argued previously in this evidence, we believe that there is a great deal of currently unmet housing demand, and the resources to deliver homes to meet that need should be made available. We would support any initiative that provides an opportunity to do this, providing it meets the following tests:

— Offers at least equivalent (not counted on PSBR, equivalent rates and costs etc) access to private finance.

— Offers at least equivalent guarantees regarding the permanence of the funding remaining in affordable housing.

— Offers at least equivalent value for grant per unit and per person.

— Offers at least equivalence of non-public resources being levered in to supplement public funds.

6. The role and effectiveness of private rented housing in meeting housing needs

Private rented housing meets the needs of a small section of society. Mainly, this is concentrated amongst those who are young and upwardly mobile, and mobile both economically and geographically. The availability of this form of housing provision is of benefit to our national economy as it provides great flexibility and mobility; however, it needs to be recognised that it is rarely the tenure of choice for those seeking greater stability and to settle down.

Because the most common way of renting in the private sector involves having successive six month contracts, it does not suit those in need of long-term, secure housing, especially those with children who are likely to be seeking a greater level of stability. So whilst fulfilling a need within the overall housing market, private rented housing is very much a niche provision, amounting to slightly more than one in 10 of dwellings in England. Its role and effectiveness must therefore be assessed in the context of that niche provider situation.

Truly sustainable communities require a mix of housing and tenure types; providers and planners should ensure that this mix is optimised. Anecdotal evidence suggests that in some new settlements and areas of high new provision, tenure planning is being challenged due to large scale speculative activity in the private sector. This situation needs to be monitored to ensure that appropriate responses are available, should they prove to be needed.

The private rented sector has, as a result of the lack of affordable housing, developed a role as back-up to mainstream affordable housing providers. In fulfilling this role however, the standard of accommodation provided is often of poor quality.

The Federation does not believe that private rented housing can be used to replace the role currently played by the social rented sector.

7. The priorities and effectiveness of the Housing Corporation (HC), English Partnerships (EP) and the Regional Housing Boards (RHBs) in responding to housing needs

This section of our evidence needs to be viewed in the light of the possible merger between EP and HC, and a copy of our response to that review has been appended. You will note that we concentrated on the outcomes from any new agency and the communities invested in.

Housing Corporation

The Housing Corporation has an excellent track record in delivering large, complex capital programmes, working closely in partnership with housing associations, local authorities and others.

The Housing Corporation should concentrate its investment efforts towards:

— Ensuring that equivalent outcomes for tenants, residents and their communities are achieved, irrespective of the status of the original provider of the homes.

— Ensuring the long term nature of building sustainable communities in pursuit of short term subsidy reductions.

— Lobbying for the right levels of subsidy to deliver the high levels of new affordable housing necessary to meet current and forecast levels of demand.

— Ensuring that the long term viability or independence of affordable housing providers are not jeopardised in pursuit of increased resources to support public subsidy.

— Working closely with stakeholders to ensure that regional and national strategies truly reflect the various issues and develop solutions and products to meet those issues.

— Reducing the burden of bureaucracy and regulation so as to provide affordable housing providers with the freedom to be innovative and responsive to the needs identified in different communities.

— Putting in place infrastructure and processes that will allow efficient and effective delivery of the programme and minimise scrutiny and interference.

The Housing Corporation has developed a good understanding of the need for supported housing and has often acted as a "champion" for this part of the sector and, in particular, the need for a stronger link between capital and revenue funding streams.

Regional Housing Boards

Established in the Sustainable Communities Plan, Regional Housing Boards (RHBs) have responsibility for the development of regionally focussed housing strategies, used as the basis for decision making over the resources available to them. Because Regional Housing Strategies (RHS) are so important to the delivery of sustainable communities and balanced housing markets, they need to be well evidenced so that the decisions taken on the basis of them are the best possible. In many cases the RHSs are improving and work needs to be done to ensure that all improve whilst meeting a minimum "fit for purpose" standard.

The Federation welcomes the forthcoming link-up between Regional Housing and Planning bodies, and looks forward to this delivering improved co-ordination of evidence base and activity. In order to ensure this, steps need to be taken to ensure that housing and planning are held in equivalent esteem, to ensure parity of outcome.

The representation of various stakeholders on the new combined bodies needs to be considered to ensure equitable treatment and optimal access to expertise, decision-making and outcomes for local communities.

The variety of strategies developed within each region needs to be sufficiently integrated to ensure successful outcomes for communities and citizens. This must include: those dealing specifically with housing issues, for example: regional housing strategies; homelessness strategies; supporting people strategies; those dealing peripherally with housing; planning and spatial strategies as well as those with cross-over points with housing, for example, economic strategies.

English Partnerships

EP has a good track record in working with private sector partners and needs to work harder to establish partnerships with the providers of affordable housing. This is already beginning to happen in the Milton Keynes South Midlands (MKSM) Growth area where EP is a large land-holder. This model of closer working should be replicated across the country.

8. The role and effectiveness of the planning system, including section 106 agreements in the provision of rented housing and securing mixed tenure housing developments

One of the greatest barriers to increasing the supply of new affordable housing is access to good value land which is, in part, due to the planning system.

In an attempt to solve this problem, there needs to be an increase in the supply of land for affordable housing needs. Methods for achieving this include: increasing the availability of sites for affordable housing; and increasing the supply of land for housing, provided policy reinforces that affordable housing be provided on site in kind.

Surplus land within the public sector should not be auctioned to the highest bidder, and in support of this all parts of the public sector should be steered by Government to note that the social benefit and value for affordable housing needs to be discounted from the market value of land for disposal. This must include Treasury revising their best consideration rules to further recognise added social value.

Other available methods include: tax measures to stimulate increased land supply including a "land value tax" on developable sites as an incentive to release land for affordable housing; equally, a newly merged HC/EP should adopt a more consistent and socially oriented approach to land acquisition and disposal.

In order for Housing Associations (HAs) to be able to take advantage of any opportunities presented to them, they need to be freed to optimise the amount of land for affordable housing. Government should therefore provide HAs with greater powers to acquire and bank land, using grant and their own resources, and encourage HAs to acquire and bring forward land by continuing to ensure their control and use of surpluses through equity growth and prudent disposal.

In exchange for these increased freedoms the sector will be able to offer the delivery of affordable housing at a faster rate and at a reduced cost to the taxpayer. In the longer run, by investing in HAs any returns, can be used to grow further housing supply or invest in neighbourhood services.

The Federation is encouraged by some of the early versions of Planning Policy Statement 397[99] (PPS3) and looks forward to being able to engage in the forthcoming consultation into its final form and implementation. However, in spite of extensive consultation on the policy, the practice guidance document giving interpretational steers remains confidential. We have concerns that there may be unintended, adverse consequences, including unnecessary planning appeals and delays to the delivery of new homes if development practitioners and planning authorities are not fully involved in the development of the practice guidance.

The principal that land value uplift as a result of planning permission should contribute to the costs of development within the local community, which underpins Government's Planning Gain Supplement (PGS) proposals, is a good one and is supported by the Federation. This principal, however, runs the risk that it will deplete the value available to contribute to Section 106 deals and thus reduce the affordable housing produced. Contributing to affordable housing should therefore be a top priority for the revenue gained this way. If applied to all developments, however, including those supported with public subsidy, it will result in public subsidy being used to pay "tax" to a different public body. The Federation would therefore suggest that this situation be avoided by provision of an exemption for all schemes in receipt of public subsidy. As mentioned below, we believe that the best way of securing a long term benefit for the local community from planning permission for housing developments, is through the use of robust Section 10698[100] (s 106) agreements requiring in-kind and on-site provision of affordable housing.

The Federation believes that the evidence shows that s 106 agreements have proved to be a very effective means for increasing the provision of affordable housing, in kind and on site, and this success should not be diluted by the introduction of other forms of subsidy. In order to further improve their effectiveness it would prove beneficial to develop national standards for these agreements, and to limit the resources needed to conclude individual agreements. Section 106 agreements are proving especially important in the delivery of affordable housing in areas of high housing demand, where a large proportion of the new affordable housing is provided through these agreements. On-site, in-kind provision is therefore vital to this supply.

9. The effectiveness of housing benefit as a means of providing access to rented housing to those in need

Designing a system to make rents affordable to households on lower incomes has always proved problematic. The current Housing Benefit system is far from ideal, but particularly following recent alterations, works relatively well alongside capital funding for new housing as part of a "mixed economy" of publicly subsidised housing provision.

As it stands, the current Housing Benefit system is still too complex and continues to suffer from administrative problems at the local level, although problems with both of these have improved recently. Despite this, Housing Benefit does go some way towards enabling recipients to be exposed to housing cost price signals whilst at the same time ensuring that the system delivers work incentives, although we believe these are too weak and should be strengthened.

We have welcomed the range of simplification measures introduced by the government to make the housing benefit more effective. These measures have had a positive effect on the performance of local authorities, with over 50% meeting the national standard for processing claims. Nevertheless, a significant proportion of authorities are not. In addition, there are aspects of the housing benefit scheme in need of simplification. Our proposals are set out below:

— Non dependant deductions: Government should end the non-depended deductions scheme, or reduce the six income levels. Another option would be to limit deductions to a fixed portion of the rent.

— Interim payments: Authorities should provide compensation to claimants who fall into rent arrears as a result of the authority's failure to make interim payments when they have received all relevant documentation.

— Earning disregards: Government should increase the levels of earning disregards to encourage housing benefit claimants to take up work opportunities.

— Local discretion: In recognition of the growing number of local authorities providing better housing benefit administration, Government should introduce an incentives scheme to encourage improvement across the board. This could include the implementation of ideas raised by the Audit Commission (Housing Benefit: the National Perspective, 2002) suggesting that efficient authorities be given discretion in piloting simplified regulations, and fraud prevention.

— Rent referrals: Change housing benefit regulations that allow housing association rents to be referred to the Rent Officer to reflect the requirement of the rent restructuring regime and the housing market realities of low demand areas.

— Single Room Rent: Government should urgently review the continued effectiveness of the Single Room Rent system, especially given the marginal effect of the 2001 changes on the quality of properties available to people under-25—Department for Work and Pensions (Research into the Single Room Rent Regulations, 2005).

— Staffing issues: Government should develop an accreditation scheme for housing benefit assessors and improve their remuneration to address staffing issues in local authority housing departments, including the disparity in pay between permanent and contractual staff.

— Providing incentives into work by utilising the suggestions included in the GLA/Thames Gateway project "Working Futures", looking at subsidising high rents in temporary accommodation.

— Rent deposit schemes for those leaving supported housing and moving into private rented accommodation due to a lack of appropriate affordable housing.

— Removal of the 16 hours rule which prevents many young people from pursuing education whilst in receipt of housing benefit.

Annex 1

We have included some statistical information which we believe backs up some of the statements we have made in this submission and these tables are also include in our "National Housing Timebomb" document published this summer, a copy of which is submitted with this document.