Changes to Housing Benefit announced in the June 2010 Budget - Work and Pensions Committee Contents


Written evidence submitted by Papworth Trust

EXECUTIVE SUMMARY

1.  Papworth Trust is concerned at the proposals to reduce Housing Benefit to 90% for claimants of job seekers allowance of one year or more. This will impact greatly on tenants and housing associations, with no clear guidance about what assistance will be provided to those who are unable to make up the shortfall in rent. Whilst we understand the principle behind this measure is to encourage benefit recipients into the labour market, this penalty offers no support to those vulnerable people who are genuinely struggling to find work.

2.  For a long time Papworth Trust has been concerned about the outcomes of the Work Capability Assessment (WCA) which suggest it is a flawed assessment. Our concern was further compounded by the announcement of changes to Housing Benefit. We believe the WCA has so far demonstrated its inability to correctly assess the fitness to work of particular groups, including people with mental health issues, fluctuating conditions and learning disabilities. We are concerned that vulnerable people are being wrongly placed onto Jobseeker's Allowance (JSA) meaning they receive a lower sum of benefits and less support to find employment, and it will now have a significant impact on their housing benefit after the first twelve months. Until the failings of that assessment are corrected, we do not believe other parts of the benefits system should be linked to its outcome.

3.  When responding to this inquiry Papworth Trust believes that other changes in the welfare reform agenda must also be taken into account such as the moves to a single benefit system. At present, Housing Benefit recipients have the option to request that their payment is directly sent to their landlord. We believe this is an important feature which many recipients opt to take up, given it removes the temptation to spend their rent money elsewhere. We believe this right to request must be retained in the development of any future system.

DETAIL

Reductions in Housing Benefit for tenants in receipt of Jobseekers Allowance for more than 12 months

4.  Papworth Trust is concerned that the proposal to reduce Housing Benefit to 90% for JSA claimants of 12 months is regressive. This will impact greatly on tenants and housing associations, with no clear guidance about what assistance will be provided to those who are unable to make up the shortfall in rent. Whilst we understand and fully support the principle behind this measure to encourage benefit recipients into the labour market, this penalty offers no support to those vulnerable people who are genuinely struggling to find work.

5.  According to the Office for Disability Issues[40] disabled people are far less likely to be in employment. Although there have been significant improvements in the employment rates of disabled people in the last decade, the employment rates of disabled people are around 47%, compared with around 77% of non-disabled people. Given the economic downturn, we already experience a large number of job seekers applying for any vacancy. We are concerned that the measure to reduce housing benefit after one year is punitive and offers no support to vulnerable people into work in these difficult times.

6.  Under the proposals it remains unclear what assistance the Government will provide those tenants who are unable to make up the sudden shortfall in rent, and what assistance will be given to housing associations who will potentially experience an upsurge in arrears. Unless we can be sure there are appropriate jobs available, the number of people needing support will rise. Housing Benefit claimants will be faced with a clear choice: either go into debt or move. Moving is not cost-free or always possible; therefore the option will be harder to reach for those who do not have sufficient funds. For the housing provider, we and other housing associations will be faced with the additional cost burden entailed with collecting arrears.

Work Capability Assessment

7.  Papworth Trust is extremely concerned with the failings of the current Work Capability Assessment, the assessment by which claimants are placed on either JSA or Employment and Support Allowance (ESA). We believe many disabled people are being wrongly placed onto JSA, meaning they receive less money and support to find work. We believe the assessment is based entirely on a person's physical capability and is unable to recognise the impact of learning disabilities, fluctuating conditions or mental health issues. We have vast experience of clients being wrongly assessed, confirmed by the DWP's own statistics[41] and the high volume of claimants winning appeals against their decision. Our concerns are further compounded by the realisation that this assessment will now have far reaching consequences to other benefits than originally anticipated.

8.  In July 2010, Papworth Trust chaired a roundtable discussion with other disability charities and employment providers to share our concerns about the WCA outcomes. As a result, Papworth Trust will be leading an industry-wide submission to Professor Malcolm Harrington's independent review of the Work Capability Assessment.

9.  Papworth Trust urges the Government to delay the proposal to reduce housing benefit until the WCA has been reviewed and changes are implemented. If it is not delayed, we feel the housing benefit reduction would fall disproportionately on the most vulnerable people in society.

21st Century Welfare

10.  Papworth Trust welcomes the principles behind moving to a single benefit system, and will be responding separately to the DWP's consultation on "21st Century Welfare". We support the moves towards an integrated system, given the current one is disparate, and both confusing to understand and administrate.

11.  In designing the move to a single benefit system Papworth Trust urges the Government to retain the option which allows Housing Benefit recipients to have their rent paid directly to their landlord. We encourage our tenants to opt for their Local Authority to pay their rent to us directly, believing that this removes the temptation to spend rent money on other things. In the longer term, entering rent arrears not only causes financial difficulties but can mean that a tenant is unable to move until the arrears are cleared.

16.  Papworth Trust believes the introduction of a Transition into Work payment should help ease the move into work. We would urge the Government to use this opportunity of reviewing the current system, to ensure that the continuation of benefits from being "out of work" to "in work" is made automatic. The delay time for "In Work Benefits" commencing, specifically Working Tax Credits, tends to be anything between four and eight weeks. When completing a Better Off Calculation with clients to encourage them to return to employment, the difference between it being viable financially or not usually depends on them being in receipt of Working Tax Credit. Therefore we often find that with the current one-month Housing Benefit run on, it is sufficient for the first month but it can be financially difficult by the second month. Consequently an extension to the period they remain on Housing Benefit would be highly beneficial and allay some of the concerns of our client group.

17.  Papworth Trust believes that the extension of Housing Benefit for three months is the right length of time and should ensure that Working Tax Credit is up and running. We do not believe that a three month period would encourage cyclical unemployment for customers claiming Incapacity Benefits or ESA. Instead, we believe that a three month run-on would be a welcome support mechanism whilst they await their first wage slip and/or Working Tax Credit payment.

CHANGES TO THE LOCAL HOUSING ALLOWANCE (LHA)

18.  As a social landlord, the changes to Papworth Trust's rents are dictated through the Government's rent formula[42]. At present, the rent formula and the Local Housing Allowance (LHA) are entirely separate. Therefore from a purely price perspective, we do not expect to be affected by the proposed changes to LHA.

19.  The Committee will be aware that LHA is paid to low income households who are renting a room or property from a private landlord. LHA is therefore designed to help those people who are unable to live in social housing, perhaps due to a lack of suitable social housing in that area. We are therefore concerned that any moves to reduce LHA will create an unmanageable increase in demand for social housing for that local rental area.

20.  If LHA is reduced, tenants will be required to make any shortfall in their rent. If they are unable to do so, they will need to look for a new property. This will lead to increased demand for affordable housing. Unless the Government matches its plans to reduce LHA with plans to create more affordable housing, the rented market will not be able to cope. Papworth Trust is concerned that standards may slip within the unregulated private market, and people will be forced to move to cheaper areas and further away from employment centres, falling heavily on the most vulnerable in society.

21.  Whilst the Government is considering sweeping changes to Housing Benefit, Papworth Trust believes it is time to consider plans to introduce regulation to private landlords. We are aware there are many private landlords in existence who have a much greater housing stock than ourselves, some reaching over 1,000 properties. Combined with this they may also target specific and vulnerable groups, including older people, and it is vital there are measures in place to protect these groups. Drawing on our own experience, we see that the majority of vulnerable people living in unsuitable accommodation are private tenants, not with social landlords. We would therefore argue that these tenants need protecting as much as, if not more than, social housing tenants do.

DEDUCTIONS FOR NON-DEPENDENTS

22.  Papworth Trust agrees with the concept behind the proposals to bring deductions for non-dependents in line with inflation, but would like more detail on how this change will be implemented and how the Government will work to ensure the result does not fall disproportionately on housing associations. We have made the assumption that non-dependents will be earning and therefore contributing towards the household costs. Therefore it is only right that Housing Benefit should be reduced to take account of this. However, we would urge the Government to introduce this increase gradually over a number of years. We predict any shock in changes to income may cause unnecessary problems for housing associations that will be forced to recoup any housing arrears from this.

HOUSING ENTITLEMENTS AND THE ISSUE OF SOCIAL MOBILITY

23.  Papworth Trust is sceptical about how plans to better reflect the family size for working age people in the social sector will work in practise. Reducing overcrowding must always be a key priority; however more detail is needed as to how the Government plans to set the criteria and offer incentives to existing tenants to move. In our experience, there is not a deluge of one and two bedroom properties on the market. Therefore how will we incentivise existing tenants to move, if there are no desirable properties into which they can move?

24.  Papworth Trust is concerned that the Government has started its thinking with the underlying assumption that everyone has, or has the capability of having, social mobility across the housing sector. This is simply not true of the current social rented housing market. Lettings policies prioritise applicants according to key criteria (including whether a person is homeless, problems of overcrowding and other "urgent needs") and it is based on these criteria that a decision will be made on who will receive an offer of a property. In addition to this policy, tenants are often required to prove that they have a local connection—either working within the area, having lived in the area for at least six months, or having family members who have been resident in the area for a significant period of time. Until these robust criteria are reviewed, and possibly relaxed, it will be difficult for tenants to ever have true 'mobility' within the social housing sector.

25.  Disabled people often have additional barriers to overcome in requesting a move, which has been termed in the past as the rules of "ordinary residence". Disabled people can be prevented from moving home or moving from residential care to independent living because such a move must be agreed by their Local Authority of origin as to whether they will continue to support and pay for their care needs. They are entirely at the mercy of their Local Authorities.

26.  We believe there is also an age-related consideration that needs to be taken into account. In our experience, older people tend not to want to face the upheaval of moving and in practise there is an upper age limit which will need to be considered.

27.  Until all of these considerations are reviewed and clear proposals are put in place to overcome them, Papworth Trust does not believe the Government will achieve its ambitious view of social mobility in the social housing sector.

ENTITLEMENT FOR AN EXTRA BEDROOM FOR NON-RESIDENT CARERS

28.  Papworth Trust welcomes the proposal which will see disabled people who need a non-resident carer entitled to funding for an additional bedroom. This is long overdue. We have campaigned for the system to recognise the role of the non-resident carer; the house is their place of work and being asked to sleep on the sofa is unacceptable.

29.  We believe this proposal presents an opportunity to go a step further with a fuller review of the fair size criteria to recognise that disabled people need to occupy a property that is fully accessible to their needs. By example, disabled people may require additional rooms to meet their medical needs or to accommodate additional storage demands. The fair size criteria needs to be more flexible and go beyond the current policy of looking at the number of people living in that property.

3 September 2010


40   Office for Disability Issues website, key facts and figures for employment. Back

41   DWP: Employment and Support Allowance: Official Statistics, July 2010 Back

42   Currently set at RPI +/- 2%. Back


 
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