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


Written evidence submitted by Disability Benefits Consortium (DBC)

EXECUTIVE SUMMARY

1.  The Disability Benefits Consortium (DBC) is concerned that the planned changes to Housing Benefit and the reductions to Support for Mortgage Interest announced in the June Budget risk leaving thousands of disabled people facing shortfalls in their rent or mortgage payments and in extreme cases being forced to leave their home.

2.  The recent report from the Institute for Fiscal Studies suggests that the cuts announced by the Government will disproportionately affect the most vulnerable in our society, which includes those with a disability receiving benefits. Acknowledging this report in addition to our own concerns, the DBC would urge a rethink of the measures announced, taking into account the needs of disabled people.

CONTEXT

3.  Many disabled people already face restricted housing options, in many cases needing adapted properties, with for example ground floor access, ramps or parking, and accommodation near to accessible transport and informal support networks.

4.  Disabled people are twice as likely to live in poverty as non-disabled people and face additional costs associated with their disability. They are also less likely to be in work than non-disabled people, with just 50% of disabled people in work compared to 80% of the rest of the population; employment rates vary further according to impairment, for example, fewer than 7% of people with a learning disability are in work. Additionally, once in employment, statistics show that disabled people also earn less than their non-disabled counterparts. These and other factors leave many disabled people relying on Housing Benefit to meet their housing costs.

IMPACT

5.  Reducing the amount of financial support available through Housing Benefit will further reduce the number of suitable properties affordable to disabled people in receipt of housing benefit and risks leaving some disabled people living in inappropriate accommodation and away from their support networks. It also risks forcing people out of homes that have already been adapted, potentially wasting scarce public funding allocated through the Disabled Facilities Grant.

6.  The current equality impact assessment looks only at the number of disabled people likely to be affected and not at the impact on disabled people in comparison to other groups.

7.  Whilst the proposed changes are aimed at reducing spending we believe that they carry hidden costs that will offset any reduction in the benefits bill. For example, increased pressure will be placed on local authorities as many people are left unable to afford suitable accommodation.

8.  The changes are also likely to have an impact on the future of housing provision in the private rented sector, with many landlords less likely to be willing to let to people on benefits. Landlords already associate people on benefits with rent arrears, and this is only likely to become further pronounced once the cuts to housing benefit become a reality. This will make finding suitable housing for those most in need even more difficult at a time when social housing is under great pressure.

NEXT STEPS

9.  The Government needs to build on the existing equality impact assessment for the changes to Housing Benefit and take into consideration how the impact will vary for different groups.

10.  The Government also needs to carry out a further assessment of the projected savings from the proposed changes to identify whether these are absolute savings or whether costs are simply being deferred to other bodies and organisations.

11.  If the changes were to go ahead the Government must implement safeguards to ensure disabled people are not disproportionately affected. These include:

  1. (a)  Recognising that the majority of disabled people face additional housing costs through the introduction of a "housing premium" for disabled people. This premium would be based on the additional housing requirements of disabled people, such as the need for ground floor access, accessible local transport or access to informal support from family and friends.
  2. (b)  A gradual transition to the new rates to help people adjust to the impact these changes will have on their income.
  3. (c)  Allowing for an extra bedroom in families with a disabled child. We welcome the announcement made in the June Budget that from April 2011 Housing Benefit claimants with a disability and a non-resident carer will be entitled to funding for an extra bedroom where this is an identified need. We would now like to also see a concession made to allow an additional bedroom for an overnight carer for families with a disabled child, and where the child requires a separate room due to disability-related needs. Given the already overcrowded conditions that many families with disabled children live in and the need for more space, for example, for equipment, this would be a reasonable adjustment to the policy.
  4. (d)  Ensuring that people who experience additional barriers to finding employment due to their disability are not unfairly penalised if their JSA claim exceeds 12 months. We know that the stringency of the new Work Capability Assessment means that many more disabled people, some of whom will face significant barriers to employment, will be receiving JSA. The reality for some of these people will be that it will take much longer than 12 months to find a job. To ensure that these individuals will not be unfairly penalised by this policy, one possible option would be to take an individual's job search record into account, such as whether or not they incurred any sanctions, before deciding to impose the 10% reduction.
  5. (e)  A further increase (above the amount announced in the June Budget) in the Government contribution to Discretionary Housing Payments to ensure that where necessary individuals can be supported by local authorities on a long-term basis.
  6. (f)  A requirement that local authorities must show that suitable alternative accommodation exists that meets the needs of the disabled person and that it is reasonable for them to move before being able to restrict eligible rent from the 50th to the 30th percentile. This would implement a similar arrangement to the current housing benefit rules governing pre-1996 tenancies and would recognise that disabled people often have additional accommodation requirements compared with non-disabled people (and therefore are restricted as to where they can move to). This would also mean local authorities exercise responsibility and consider accommodation needs fully as well as ensuring that cheaper suitable alternative accommodation is available. This rule applies to people who have been continuously receiving HB for the same accommodation before January 1996 and are in a "protected group" (at least the qualifying age for pension credit; or satisfying any of the tests for being incapable of work or having a limited capability for work; or have a child living with them for whom the are responsible) and therefore offering greater security for some citizens.

12.  Although not part of this consultation, the DBC would also like to highlight our concerns at the reduction in Support for Mortgage Interest (SMI) payments announced in the Budget and laid down in regulations on 20th July without further public consultation.

13.  According to the explanatory memorandum to the regulations only 50% of those claiming SMI will have all of their mortgage interest payments covered in the future. The rest of those claiming SMI will face a shortfall in their mortgage payments of at least 10%, with some experiencing a shortfall of more than 40%.[55]

14.  The National Housing Federation has suggested that there are currently 64,000 disabled people receiving SMI who could potentially be put at risk of arrears and homelessness due to the changes in SMI payment.

15.  The purpose of the proposed changes is to prevent people receiving "over payments" on their mortgage. However, simply lowering the rate paid by the Government will not in itself address this and will in effect threaten the provision of mortgages for those with long-term disabilities. Already, providers of HOLD (Home Ownership for people with Long term Disabilities) schemes are withdrawing from the market as a result of the changes in SMI and the Local Housing Allowance.

16.  The DBC believes that the Government needs to look at more comprehensive reform of SMI. One possible option would be to set SMI at the rate that an individual's mortgage is set, as long as the mortgage terms are reasonable (for example, over 20 years). This would mean that financial support offered through SMI would directly match an individual's mortgage costs. To ensure SMI payments reflected any change in mortgage rates we would suggest that it should become the responsibility of banks to provide documentation of mortgage rates to the DWP on a 6-monthly basis, and repay any overpayments directly to the DWP.

17.  The Government also needs to take action to ensure that changes to SMI do not make it harder for those on benefits or low incomes to secure mortgages. We would like to see the Government work with banks, in particular those it supported through the recent recession, to ensure access to good quality mortgage products for those on benefits or low incomes.

18.  The Disability Benefits Consortium would welcome the opportunity to expand on our concerns in more detail.

3 September 2010


55   Explanatory Memorandum to the Social Security (Housing Costs) (Standard Interest Rate) Amendment Regulations 2010, p 3. Back


 
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