Written evidence submitted by Danny Hardie
Incentives to work and access to low paid work:
- The current earnings disregards have been frozen
since 1988. The introduction of an additional earnings disregard
connected to persons working above 16-30 hours and set at £17.10
made a huge difference to claimants. It would be a huge incentive
if earnings disregards could reflect net income from the minimum
wage. Currently a single person has only £5 disregarded,
which after deductions makes little over one hours work. There
after, they loose 85p in benefit for each £1 earned. This
is a disincentive to increasing hours as a claimant is so marginally
better off.
- If Local Housing Allowances exclude claimants
from some areas, it is likely that claimants will be deterred
from taking low paid jobs as the travel costs would be a disincentive.
Levels of rent:
- Social housing rent levels in Peabody range between
£70-£140 per week, depending on property size and tenure.
However, at minimum wage levels, a 35 hour week pays only £204
before deductions. Therefore once utility bills and Council Tax
considerations are made, many claimants feel worse off. One has
to consider the hidden costs of employment also, such as travel,
lunches, clothing and withdrawal of concessionary rates for travel
and leisure once employment commences.
Deductions for non dependents:
- Many of my clients already struggle to make up
the shortfalls in non dependant deductions. It must be remembered
that many non dependents have debts which they are attempting
to service — often a reason to reside with the claimant
in the first instance. Careful consideration should be made about
non dependent deductions as it could adversely impact on housing
demand The 1988 Social Security Act which restricted benefit payments
to the under 18s led to many young people being forced to leave
the family home. If a repeat of this were to happen it could increase
demand for private rented accommodation, pushing up prices and
the overall housing benefit budget, at a time when it is needed
to be contained.
Housing entitlement based on family size for working
age social housing tenants':
- This is an attractive idea, in that it potentially
releases family sized accommodation to families. There are two
aspects of concern to this however. Firstly, it is often persons
over 60 who are under occupied and this scheme doesn't address
that at all. Secondly, if we are to restrict housing benefit in
the social rented sector to bedroom related needs, we need to
ensure that there is an adequate level of social rented one bedroom
properties for claimants to downsize into. At present there are
frequently more two bedroom properties in the social rented sector
than one bedroom properties. Without the availability, rent arrears
are likely to accrue as residents struggle to meet a shortfall
whilst waiting to downsize.
Reducing Housing benefit awards to 90% of the
initial award after 12 months of receiving Job Seekers Allowance:
I am extremely troubled by this proposal. Job Seekers
Allowance stands at £64.45 per week for a single person or
£102.75 for a couple. Claimants under 25 get a reduced rate
of £51.85 per week, whilst couples under 25 receive between
£51.85 and £78.30 per week.
Claimants who have failed the Work Capability Assessment
for Employment and Support Allowance, may be moved onto Job Seekers
Allowance. However, whilst not having limited capability for work,
they may still face barriers. Other claimants may not have the
skills to take the employment opportunities' available. Lone parents
with a child over seven will also be expected to claim Job Seekers
Allowance. Those over 60 will be claiming Job Seekers Allowance
as the retirement age is moved back.
The impact for these clients would be enormous. In
times of high unemployment, an employer will understandably favour
a candidate without health problems, dependents or on the cusp
of retirement. Therefore claimants who fit these categories face
disadvantage. To then cut there Housing Benefit entitlement seems
unreasonable. In the social rented sector this could entail between
a £7-£15 shortfall to be made up from a low income base.
It could be a useful sanction, if applied for non
compliance with a Job Seeking Direction however. An across the
board fixed cut would not incentivise claimants — rather
it would either increase rent arrears and debt, or lead to claimants
looking to get on to ESA or Income Support again to avoid it.
Government contribution to Discretionary Housing
Payments scheme increasing by £10 million in 2011-12 and
£40 per year thereafter:
Clearly this is welcome, as the Discretionary Housing
Payment scheme has proved a lifeline for many of my clients. Often
by giving a small top up to Housing Benefit entitlement, over
say six months, a client can clear other debts and manage financially
in a sustainable way thereafter. It also assists when claimants
first find employment, and need to find a sustainable budget,
assisting with financial inclusion.
The only areas of concern I have noted are these:
- As a discretionary scheme, which like the Social
Fund, is cash limited, there is no certainty of the size or length
of time of an award in advance. This makes it difficult to plan
a "potential budget".
- There is clearly going to be high demand from
Private Sector claimants, which could marginalise Social Rented
claimants.
- Without knowing how much of a budget each local
authority has, it is very difficult to know if maladministration
is at happening. With only the right of a review, and not an independent
review, it is unlikely that a refusal has any chance of being
changed.
- If the Independent Review Service (or equivalent)
could be given powers to examine Discretionary Housing Payments,
a sense of fairness and independent scrutiny would be added.
Impact on older people, large families and overcrowding:
Whilst it is not possible to predict exact consequences
on various groups, it is possible to consider likely implications.
These could include:
- Families returning to the homes of older relatives,
which could prove beneficial. However, such persons would then
become non dependents and this could create overpayments and hardship
through non dependent deductions.
- Larger families could in theory benefit from
a release of family sized social rented accommodation, however
since much of what is still available as social rented homes are
occupied by those over pension age, this isn't likely to make
much of an impact.
- Overcrowding is likely to become worse as large
families are forced into smaller homes at a cost met by the Local
Housing Allowance. This could then mean further demand on the
Social Rented Sector, as overcrowding gives priority for re-housing.
Without tackling the supply side of social rented housing, this
will increase.
- It is likely that ethnic minority claimants,
particularly those from the Indian subcontinent, who tend to have
larger families, will be especially hard pressed by the changes.
- Community cohesion is likely to be stretched
as demand rises for social housing, and the cheaper end of private
sector housing. Ghettos of low income and benefit dependence are
likely to take root in the traditionally cheaper parts of the
country, further compounding social exclusion.
- Low paid, low skilled employment may become even
less attractive as the travel costs to reach the workplace make
taking up such jobs unattractive.
29 July 2010
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