Written evidence submitted by Crisis
EXECUTIVE SUMMARY
- We have a dedicated employment team which successfully
supports vulnerable people into employment. Crisis is therefore
very concerned that the proposed changes to Housing Benefit will
seriously undermine this work by affecting people's ability to
find and sustain accommodation in the private rented sector, leading
to an increase in hardship and homelessness and by putting additional
barriers in the way of people's progress to work.
- According to the DWP's own Impact Assessment,
which covers only some of the first wave of cuts (the cap on all
property sizes, restriction of bedroom entitlement to four bedrooms,
removal of the excess payment and moving to the 30th
percentile) nearly a million households across the country will
lose an average of over £600/year. This is a huge amount
for people on low incomes particularly given that 48% of LHA claimants
already face a shortfall between their benefit and the rent of
an average of £23/week. Although London will face the most
significant cuts to benefit levels, it is important to note that
these cuts are a nationwide issue affecting claimants across the
country.
- The effects highlighted in the Impact Assessment
however, are just the tip of the iceberg. We are very disappointed
that the Government has made only a limited assessment of the
impact of the changes rather than looking at the total package
and what the impact will be in other areas, particularly in housing
policy.
- We believe that the combination of the proposed
changes will put a severe strain on some of the poorest and most
vulnerable households across the country, increase hardship and
homelessness, have significant implications for community cohesion,
increase rather than remove barriers to work, adversely affect
charities, local authorities and social and private landlords.
- What's more they are unlikely to generate the
cost savings envisaged as costs accrue in other areas including
through homelessness, temporary accommodation, hostel places,
personal debt, education, health, social services and criminal
justice. We are also very concerned that the cuts to Local Housing
Allowance will seriously reduce the future use of the PRS to house
homeless and vulnerable households.
- We appreciate that in the current economic climate
spending, including that on Housing Benefit, must be scrutinised
more and targeted better. We have long called for reform of HB
to better support housing stability and to remove the barriers
to work. We also recognise the political imperative to address
the issue of a few exceptional cases of very high benefit claims
but believe there are already existing powers to tackle this issue
and it is important to acknowledge that it is not these handful
of cases which are behind the increase in the HB Bill. If the
Government is serious about reducing the bill it needs to understand
and address the underlying reasons for the rise, namely the sharp
increase in rents, driven by a desperate shortage of housing and
deliberate Government policy. We are concerned that in trying
to reduce spend on HB, the Government is actually undermining
the fundamental objective of HB which is to help people on low
incomes meet their housing costs.
- Crisis therefore strongly believes the Government
should reconsider these cuts. As well as considering alternatives
for reform of Housing Benefit, we believe at the very least there
needs to be serious consideration given to how to mitigate the
worst impacts of these changes and how best to communicate with
claimants.
Incentives to work and access to low paid work
Housing Benefit is currently a major barrier to people
moving into work and is overdue for reform. However, we are very
concerned that, as the DWP's own equality impact assessment highlights,
even the first tranche of cuts to LHA could worsen this situation
and that "there could be negative impacts for Housing Benefit
customers who are working if they have to move to an area where
they need to extend their commute to their place of work"[56].
We believe that there will be a similar impact on claimants currently
out of work who may have to move away from training and employment
opportunities, putting further barriers in the way of their journey
to work.
Furthermore, given that the cuts to LHA will take
effect on the anniversary of a household's claim, there is a clear
disincentive for a household to change their circumstances by
taking up work or increasing their hours before this point. If
a claimant was to take up work during this period, not only would
they see their benefit reduced sharply as their income increases,
but this would be compounded by a reduction in the amount of Housing
Benefit to which they were entitled. This would amount to a significant
reduction in their entitlement and a clear disincentive to work.
Crisis knows only too well that the longer someone is out of touch
with the labour market, the harder their journey back to work
and we are concerned that the cuts to LHA will act as a disincentive
to people taking up work before the anniversary of their claim.
The 10% cut to HB for anyone who has been on JSA
for a year risks punishing all claimants, regardless of their
situation or the progress and effort they are making to find employment.
This seems against the very principles of fairness particularly
at a time when unemployment looks set to rise and when in some
areas it is likely to be especially difficult to find work particularly
for those who face disadvantage in the labour market, such as
people in poor health or with a disability. There is a fundamental
injustice in a measure which punishes people regardless of the
efforts they may be making to improve their situation and find
work.
There are currently over 200,000 claimants who would
be affected by this move[57],
a figure which is likely to increase as more claimants are moved
from inactive benefits onto JSA. Whilst we understand that Government's
intention in introducing this measure is that it is a work incentive,
we do not believe that the purpose of housing benefit should be
to encourage people into work. The housing benefit system is already
complicated enough without it trying to achieve further policy
aims such as an increase in households in work.
This measure is likely to particularly impact upon
those furthest from the labour market, who may be making every
possible effort to move towards work. It is unlikely to be an
effective work incentive but instead will greatly affect people's
housing stability and could in fact undermine their efforts to
find employment. Nearly half (47%) of participants in the Transitional
Spaces Project for example (a Treasury funded project that supported
homeless people and ex-offenders into work and private rented
housing) had been on JSA for more than 12 months when joining
the programme. It is unlikely this programme would have had the
success rates it did in helping people into work if participants'
benefit were cut at just the point when they were trying to move
into work and they were at risk of losing their accommodation.
Instead, we would like to see the introduction of
proposals which were being considered by the previous Government
and those which were proposed by the Centre for Social Justice
to help remove barriers to work. These included the introduction
of fixed payment awards for those in work, extended benefit run
on when a claimant moves into work and bringing down Marginal
Deduction Rates so that work always pays.
Levels of rent, including regional variations
The cost of Housing Benefit (HB) is expected to rise
to £20 billion this year[58]
with Local Housing Allowance (LHA) costing £2.6 billion in
2009-10[59].
However, despite recent headline-grabbing figures, the average
HB award in the private sector is just £109.25 per week and
for social tenants £72.60[60].
Furthermore according to Government figures, 48% of people on
LHA already face shortfalls between their benefit and their rent,
with the average shortfall being £23/week[61].
We recognise that there is an issue with a small number of very
high rents but these exceptional cases should not form the basis
of policy and instead rent officers should be encouraged to use
the existing powers they have to deal with them.
It is important to understand the reason for the
rise in the housing benefit bill which is largely as a result
of steep increases in rents in both the social and private sectors.
In the social sector this is as a result of deliberate Government
policy and in the private due to economic factors and the severe
shortage of housing. Between 97-98 and 07-08 the average private
sector rent rose by 63% from £79-week to £129-week.[62]
For many years now, capital spending on new social and other house
building has been reduced and policy has instead focused on subsidising
the individual household — therefore it is no accident the
Bill has risen as Housing Benefit has long been taking the strain
of rent increases.
More recently, the economic downturn and an increase
in unemployment has also led to a rise in the housing benefit
bill. During the economic downturn, as is to be expected, more
people have needed the support of housing benefit with the number
of claimants rising from 4 million to 4.7 million. According to
the BSHF the rise in working age claimants accounts for nearly
70% of the increase in the Housing Benefit bill in the economic
downturn.
Housing benefit should act as a safety net to ensure
that people's residual income is protected, that they do not face
hardship and that they can access suitable housing. Crisis therefore
believes that it is right that in a time of rising unemployment,
as more people need the support HB provides, the Bill responds
by rising. Far from it being a sign of the system not working,
we believe it in fact demonstrates a well functioning system which
offers support to those who need it when they need it.
There are currently significant regional and local
variations in rent levels which are largely determined by economic
factors and the local housing market. If Local Housing Allowance
rates are uprated, as proposed, by the Consumer Price Index (CPI),
rather than in relation to local rents, as rents generally rise
faster than CPI, over time LHA rates will be eroded. Additionally,
the link between housing benefit and rent will be broken and,
as rents vary widely and rise at different levels in different
parts of the country, benefit levels will cease to reflect local
rent levels.
This will mean that in many areas housing benefit
will no longer meet people's housing costs. We are deeply concerned
at the impact these changes may have on people's ability to find
and sustain accommodation in the PRS in the medium to long term.
What's more such a move is likely to be very difficult to reverse
as evidenced from the more than 30 years it has been since the
link between the state pension and earnings was broken.
Shortfalls in rent
Housing Benefit is vital in supporting people with
their housing costs and in ensuring people's housing stability.
We are very concerned that these cuts will have serious consequences
for some of the most vulnerable people in society who are the
least able to afford them. Nationally Government's own impact
assessment shows that 936,960 households (100% of LHA claimants)[63]
will lose out as a result of the first tranch of cuts alone (the
removal of the £15 excess, the caps and the move to 30th
percentile). These cuts will see the average 1 bedroom claimant
lose £11-week and the average London claimant lose £22-week[64]
on top of existing shortfalls.
But this is just the tip of the iceberg. The second
wave of cuts will have a similar and potentially even worse impact.
With nearly half of claimants already facing a shortfall between
their benefit and the rent of an average of £23-week, these
cuts will leave many people facing hardship and making choices
between paying bills, putting food on the table, falling into
debt, getting into rent arrears, moving to a cheaper property
or area (if they are able to secure alternative accommodation)
or in the worst instances facing homelessness.
We are very concerned that, particularly at a time
of growing youth unemployment, increasing Non dependent deductions
(NDDs) will force more young people out of the family home. There
is widespread agreement that NDDs are unfair as they are imposed
at the same rate regardless of the rent due. Non payment by the
non dependant is common, meaning that they are a frequent cause
of rent arrears as well as family tension and pressure to move
out of the family home.
It is perverse to adopt a measure which will punish
young, unemployed people and cause family break up and homelessness.
What's more, it is doubtful whether the level of savings envisaged
will actually be generated and this measure could in fact end
up costing more as non-dependents move out of the family home
and make HB claims in their own right. This also poses issues
around new household formation and the pressure this will place
on an already overstretched housing system.
Young people also face other significant disadvantages
in the housing benefit system. Under 25 year olds who are only
entitled to the lower shared room rate (SRR) are already more
likely to face shortfalls between their benefit and the rent than
older claimants. DWP commissioned research found that 87% of all
SRR claimants faced a shortfall, averaging £35.14 per week.[65]
Younger claimants also face greater challenges in making up these
shortfalls because of the lower rate of their personal allowance.
In many parts of the country, SRR property is not available at
all and one bedroom properties are completely unaffordable, meaning
young people are left facing homelessness.
Given that the SRR is rightly excluded from the caps,
we would urge the Government to think again about further reducing
the already very low level of Housing Benefit to which under 25
year olds are entitled. We strongly believe that the SRR should
not be reduced to the 30th percentile.
Levels of eviction and the impact on homelessness
services
It is likely that significant numbers of households
will find themselves needing to move homes, with some households
facing eviction and homelessness. Not only will this have a real
impact on individuals but it will also place a strain on councils
who will need to re-house a significant number of households within
a short timeframe and will have real cost implications for local
authorities and CLG.
As well as the cuts being likely to lead to an increase
in homelessness, they will also reduce the ability of local authorities
and other agencies to prevent and resolve homelessness. As the
cuts bite and the PRS becomes less and less affordable to those
on Housing Benefit and landlords choose to switch to a more stable
and lucrative section of the rental market or exit it altogether,
the ability of voluntary organisations and local authorities to
continue to house people will be dramatically reduced. This will
mean a reduction in the valuable resource that private renting
currently offers to local and central government wishing to house
homeless and vulnerable households, not least given the severe
shortage of social rented housing.
In 2009, of the 75,520 households helped to find
alternative accommodation by local authorities' homelessness prevention
work, half were offered PRS accommodation[66].
Undermining the ability of the PRS to house vulnerable
people will have a huge and detrimental impact on existing and
future efforts to tackle and prevent homelessness and rough sleeping
across England — particularly for single people who are
not a priority for social housing and for whom the PRS has often
been the only housing option open to them. This is likely to mean
an increase in the use of costly temporary accommodation (reversing
much of the progress that has been made in recent years), a silting
up of hostel places (again a costly form of accommodation) and
even greater pressure on social housing waiting lists. In many
instances the cuts will simply shift costs from one part of the
housing benefit bill, Local Housing Allowance, to another, temporary
accommodation or supported housing but at a higher cost to the
taxpayer and with significant harm and disruption to the individuals
involved.
With an increase in households facing homelessness
and presenting at local authorities' housing options teams, Crisis
is concerned that single homeless people are likely to fall even
further to the bottom of the pile with considerable implications
for levels of rough sleeping. Not only is rough sleeping hugely
damaging for the individual (as evidenced by the average life
expectancy of a rough sleeper being just 42) but it is also costly
to society. Housing benefit cuts are also likely to have a serious
impact on progress towards the target of ending rough sleeping
by 2012 to which Boris Johnson is committed and the Government
is supportive.
The changes are likely to mean increased costs in
other areas too such as health, social services, criminal justice
and so on. Landlords and the court service will also face additional
costs associated with rent arrears and eviction proceedings. Individuals
needing to move will have to find a deposit, cover removal costs
and so on, which will be particularly difficult for people on
low incomes.
Community cohesion and pressure on services
Many claimants will struggle to find accommodation
they can afford and certain areas, including much of London, are
likely to become a no go area for claimants, particularly larger
families, with significant implications for mixed communities
and community cohesion. Only 7% of properties will be affordable
in Central London[67].
Moving vulnerable people far from city centres may
decrease LHA spending in the short term, but at the risk of removing
them from education, training and work opportunities, voluntary
and public services and social support networks. If the cuts to
housing benefit lead to movements of people on the scale that
is being predicted then not only will communities be displaced,
but public services as well as housing stock in cheaper areas
will be placed under greatly increased strain with an increased
demand for school places, social services, health services and
so on.
This will in turn have significant implications for
community cohesion not least due to the likely pressure on public
services in such localities. It will also mean considerable additional
costs across a range of areas.
Impact on social landlords and social housing
The cut to HB for those who have been on JSA for
more than a year is likely to mean that unemployed tenants struggle
to meet their rent liability. This will put severe strain on private,
local authority and other social landlords. The only alternative
to claimants facing increased shortfalls when their housing benefit
is cut would be for those housing providers, particularly social
landlords and hostels to absorb the reduction themselves, with
the likely consequence that they would have to cut other services
- often those very services which help tenants prepare for moving
into work. One hostel provider for example has estimated that
nearly a quarter of its 1500 residents have been claiming JSA
for more than 12 months and that either itself or its clients
would therefore need to find an extra £287,000 per year.
The provider believes that this is likely to be met by cuts in
their voluntary funded employment programmes which will mean clients
are even less likely to be able to move into work.
Given the huge demand for social housing, measures
to help address under occupancy are to be welcomed. However, we
are concerned that limiting working age HB entitlement to reflect
household size will effectively force people out of their home
without them being offered a suitable alternative. We also do
not believe that Housing Benefit should be trying to achieve the
policy aim of tackling under occupancy which we believed is better
addressed by other means.
We are also concerned that this reduction in HB is
not dependent on the tenant being offered another suitable property.
It is not yet clear whether social landlords will prioritise under
occupying tenants in allocations policy and if they do what the
impact will be on others in housing need. Moreover, housing pressures
mean that there may simply not be alternative accommodation options
available for these tenants. There are concerns that this will
effectively end security of tenure by making it impossible for
the tenant to sustain their tenancy.
Again, rent arrears are likely to rise, causing difficulties
not only for the household but also the social landlord. The size
of the anticipated saving suggests that this measure is expected
to affect large numbers of households.
Discretionary housing pot
Whilst we welcome an increase in the Discretionary
Housing Pot, £40m/year is a fairly insignificant amount set
against the scale of the cuts. Modelling by the Chartered Institute
of Housing shows that the pot would only support around 60,000
households in England, 1.5% of the total caseload.
CASE STUDY
This case study illustrates the likely impact of
the cuts on an individual already facing shortfalls between their
benefit and the rent who is likely to face homelessness when the
changes come into force. This will be costly not only for the
individual involved but also the local authority.
One of Crisis' clients, James Cummings, is a 50-year-old,
who lives in a one-bedroom flat in Ilford, has already seen LHA
in the borough cut from £155 to £149 a week and struggles
to make up the £18 difference for his £167-a-week rent.
Mr Cummings, who was homeless before being given a flat by Redbridge
council, is now extremely concerned that he may be forced to move.
He said: "Any change in a downward direction
in terms of allowances is going to hit me hard. I get £64
a week in jobseeker's allowance, and have to make up the
difference in rent out of that. If things change any more, I may
move out of London, for cheaper rent and living costs. At the
moment I'm stuck, as I am unable to save because I have no spare
cash, and so can't get a deposit, which means no landlord would
take me on. Before, the council paid as I was homeless, but now
I have a property, so they would not pay again, and if I made
myself voluntarily homeless they wouldn't have a duty to look
after me, so I could not even move anywhere cheaper."
"Currently I have 11 months to go, but the landlord
may put the rent up because of the Olympics or something and I'd
be stuck. I would have to pay what I could until I was evicted….I'm
right on the borderline at the moment. It is terrible. At
the moment I have to find £18, but next year, who knows?
I don't have a clue, and I know I'll be at my wits' end when it
gets closer to the time."
SUMMARY AND
RECOMMENDATIONS
Crisis has long argued that Housing Benefit needs
reforming to reduce its complexity, so that work always pays and
to better support housing stability. We recognise that there is
also an issue with a small number of very high rents, particularly
in parts of London but we believe that rather than introducing
cuts across the board, rent officers should be encouraged to use
the powers that are already available to them.
Crisis is very concerned that the changes to Housing
Benefit proposed in the Budget will cause hardship for some of
the most vulnerable in society, will store up problems for the
future and end up costing more as social problems such as homelessness
result. Crisis therefore recommends the following:
1. Alternatives
- The Government should reconsider these damaging
cuts so that the most vulnerable are protected and that cuts are
not made in such a way that they store up social problems down
the line.
- In order to bring down the Housing Benefit bill,
Government must address the historic undersupply of housing and
take measures to increase new housing supply of all types but
particularly social housing.
- Rent officers should be encouraged to use their
existing powers to tackle the few exceptional cases of very high
benefit claims. Local authorities should also work closely with
claimants and landlords to assess the quality of properties and
the amount of rent that is therefore appropriate.
- Housing Benefit should be reformed to simplify
the system and remove barriers to work. We would like to see the
introduction of fixed payment awards for those in work, extended
benefit run on when a claimant moves into work and measures to
bring down Marginal Deduction Rates so that work always pays.
2. Transitional measures
Whilst we strongly oppose them, if the cuts are to
go ahead we believe that there are measures which could help to
minimise the impact and smooth the transition for those households
affected.
- In those areas where the cuts to benefit levels
are the greatest, we would like to see transitional measures put
in place so that only new claimants are affected. As well as being
beneficial for the individuals involved, reducing the number of
households who need to move would lessen the burden on local authorities.
- Serious consideration should be given as to how
best to protect vulnerable claimants, particularly existing ones
who have been deemed unable to manage their own finances under
the safeguarding criteria or those who are receiving support from
a support worker or PRS Access scheme. We would like to see such
claimants being exempt from the changes to Housing Benefit.
- We believe that as the vast majority of Shared
Room Rate claimants already face significant shortfalls between
their benefit and the rent, SRR should be exempt from the move
to the 30th percentile.
- If Non Dependent Deductions are to be uprated,
this must be done in a clear and transparent way by an agreed
measure. At the very least, NDDs should be reformed so that they
are proportional to the level of rent due.
- Given the very tight timescale involved and the
fact that claimants affected by the caps will be affected again
by the move to the 30th percentile later in the year,
we would like to see the introduction of the caps moved back to
October 2011.
- Caps should be uprated in line with rent inflation
otherwise over time the limits will become significantly lower
in real terms.
- Broad Rental Market Areas should be reviewed
to ensure that 30% of the properties in each local authority area
are available to claimants.
- Additional support and resources should be made
available to assist claimants, especially those with vulnerabilities.
Additionally there needs to be a significant increase in funding
for homelessness prevention work. DHP should be proportionally
allocated to those authorities worst affected.
- We would like to see the reintroduction of choice
over who Housing Benefit is paid to, which would help to mitigate
some of the impacts of these cuts, by for example incentivising
landlords to continue to rent to tenants in receipt of LHA. The
ending of direct payments to landlords has been opposed by many
tenants, landlords, and voluntary sector organisations and when
in opposition the Conservatives committed to reinstating choice.
- There should be clarification on the guidance
around intentional homelessness for individuals facing rent arrears
and eviction as a result of the cuts.
3. Communication measures
- There must be clear and timely communication
to the individuals affected about the change to their benefit
entitlement. Particular attention should be paid to vulnerable
claimants, especially those whose benefit goes direct to the landlord.
Vulnerable claimants' support workers should be made aware of
the changes to their entitlement and appropriate advice and assistance
provided.
- The Government's lack of data and limited analysis
of the impact of the changes is particularly disappointing. We
believe that in the future the Government must be open and transparent
about the impact of the cuts and must undertake careful monitoring
and reviewing. We would like to see, for example, a change to
the P1E Statutory homelessness form so that it records households
whose homelessness is as a result of a reduction to their housing
benefit entitlement. Any increase in rough sleeping or wider homelessness
should also be monitored to see if it as a result of these changes.
3 September 2010
56 DWP (July 2010) Equality Impact Assessment Housing
Benefit. Back
57
National Housing Federation ( July 2010) http://www.housing.org.uk/default.aspx?tabid=212&mid=828&ctl=Details&ArticleID=3046 Back
58
UK Housing Review 2009-10, Housing Benefit expenditure and plans
for Great Britain, http://www.york.ac.uk/res/ukhr/ukhr0910/tables&figures/pdf/09-114.pdf Back
59 Hansard(25March2009)cc454W. Back
60 DWP
(June 2010) Statistical Summary. Back
61
Hansard (05 March 2010) cc1422W-1423W. Back
62 CLG(2009)SurveyofEnglishHousingPreliminaryResults2007-08. Back
63
DWP (July 2010) Impact of changes to Local Housing Allowance from
2011. Back
64
Ibid. Back
65
Harvey J and Houston D, Research into the single room rent restrictions,
DWP 2005. Back
66
CLG (2009) Homelessness Prevention and Relief: England 2008-09 Back
67
DWP (July 2010) Impact of changes to Local Housing Allowance from
2011. Back
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