Written evidence submitted by The Salvation
Army
SUMMARY
1. This response focuses on the proposal to reduce
housing benefit (HB) by 90% of the initial award after 12 months
for claimants receiving Jobseeker's Allowance (JSA), from April
2013.
2 The Salvation Army states in the strongest
terms that if this restriction is applied to those in hostel accommodation,
it will be extremely hard or even impossible for those affected
to afford to stay in a hostel. This will prevent hostels from
operating as a "social safety net", and will result
in more rough sleeping and hostel closure.
3. This restriction in HB is likely to result in
more evictions and people being made homeless generally as a result
of not being able to meet the 10% shortfall in housing benefit.
4. Hostel accommodation provides a safe environment
for homeless people to stabilise their life, address the causes
of their homelessness, and prepare for re-settlement, and where
possible, a return to work. However HB levels for hostel accommodation
are typically higher than for private or socially rented accommodation.
5. If HB for hostel accommodation is restricted
to 90% for persons in receipt of JSA for over 12 months, it is
likely that a person who has been evicted would be less able to
afford to meet a 10% shortfall in HB for a hostel than for the
accommodation from which they were evicted (because a 10% shortfall
in HB for a hostel is likely to be more than a 10% shortfall in
private or socially rented accommodation.
6 Individuals who have been receiving JSA for
12 months will be deterred from entering hostels, or may enter
hostels only to be evicted shortly after, because they are unable
to afford to meet the 10% shortfall in addition to the ineligible
charges.
7. Others who enter the hostel after a shorter period
of receiving JSA may be forced to "drop out" part way
through the rehabilitation programme if they cannot afford to
meet the 10% shortfall once they have been on JSA for 12 months.
This creates more rough sleepers and perpetuates the "revolving
door" of homelessness
8. Additionally, hostel landlords are likely to recover
less income from their rental charges, due to non-payment of shortfalls,
evictions and abandonment, but will be prohibited by regulations
from increasing the charge to compensate. This will threaten the
financial viability of hostels, particularly in the current climate
when Supporting People funding is also being severely cut back.
9. his removes the "safety net" of
hostel accommodation, and makes it likely that homelessness and
rough sleeping will increase. This in turn is likely to result
in an increase in antisocial behaviour and crime rates, and reduced
social cohesion as addictions and mental illness go untreated
in the homeless population.
BACKGROUND:
THE SALVATION
ARMY AND
ITS CLIENT
GROUPS
10. The Salvation Army (TSA) began as a Christian
Mission in 1865, and assumed the title The Salvation Army in 1878.
The Salvation Army carries out its social work activities under
The Salvation Army Social Work Trust, which is a registered charity.
11. TSA has dealt with the homeless client group
for over 100 years, and currently manages over 70 hostels throughout
the UK, providing over 3,200 beds per night. We provide short-term
supported accommodation, for homeless people, (predominantly single
homeless).
12. TSA has not directly registered as a housing
association with the Tenants Services Association, but has Investment
Partner Status with the Homes and Communities Agency (meaning
that it can access capital funding to build and renovate accommodation).
13. Virtually all TSA's residential homeless projects
meet the definition of hostel as defined in housing benefit regulations.
Those that cannot be classified as hostels are resettlement flats
and do not meet the definition because they are self-contained.
[72]
14. Approximately 40% of the accommodation we manage
is directly owned by TSA. The remaining 60% is owned by registered
social landlords and TSA acts as the landlords agent - these are
classified as "excluded tenancies".
[73]
15. Virtually all our accommodation is "exempt
accommodation" [74]
under HB regulations (because it is provided by a housing association
or voluntary organisation and care, support or supervision is
provided).
16. All except one of our hostels receive Supporting
People funding. Overall, our residential homeless projects receive
roughly equal amounts of Supporting People and Housing Benefit
(in excess of £20 million per annum from each)
17. All our residents have support needs. Many initially
arrive with chaotic lifestyles, have a history of drug/alcohol
abuse, have been rough-sleeping, have mental illnesses, or have
complex needs.
18. To reflect the cost of providing accommodation
to this client group, and the higher level of services provided,
our charges can be significantly above the Local Housing Allowance
rate.
19. A rough survey of current residents suggests
that approximately 50% are in receipt of Jobseekers' Allowance,
but the length of time that they have been receiving this benefit
is not readily available. The other main benefits are Employment
Support Allowance and Pension.
IMPACT
ON THE
SALVATION ARMY
OF THE
ANNOUNCED 90% RESTRICTION
IN HB FOR
THOSE RECEIVING
JSA FOR MORE
THAN 12
MONTHS
20. In the financial year 2009-10, The Salvation
Army received approximately £22 million income from residents'
housing benefit. If we were to lose 10% of this, the loss would
be £2.2 million which is a significantly prohibitive sum
to the organisation.
21. A snapshot survey of some of our hostels suggests
that, at present, approximately 50% of our residents are in receipt
of JSA, but we cannot readily access data to show how many have
been in receipt of JSA for more than a year.
22. The next main benefits are Employment Support
Allowance (ESA) and Pension. We do not know whether the proportion
of residents on JSA / ESA will change in future, and whether receipt
of ESA will affect HB rates.
23. We anticipate that in the majority of cases it
would not realistically be possible to recover the 10% shortfall
in HB from the resident. A 10% shortfall in HB would be £12-£20
per week, depending on the hostel, and this would be in addition
to ineligible charges of up to £35 per week.
24. This would be unaffordable in most cases, and
certainly unaffordable for those aged under 25 or having deductions
applied to recover previous HB overpayments.
25. We anticipate that we would not be able to recover
the loss in housing benefit by increasing hostel charges. Where
we manage hostels in partnership with a housing association, or
have directly accessed HCA capital funding, HCA rent-setting regulations
prohibit rental increases exceeding specified parameters. In all
cases, Local Authority (LA) Departments are likely to restrict
HB if the annual increase in charges significantly exceeds the
rate of inflation.
26. This announcement of the proposal to restrict
HB comes at a time when our other major source of income for homeless
hostels, Supporting People (SP) grant, is also subject to severe
cuts.
27. As all SP funding is now subject to tender, there
is no guarantee of any SP funding. Where we have existing contracts
we are being asked to manage funding cuts of up to 20%, and are
being offered shorter term contracts, and annual renewals.
28. Our Trustees are no longer willing or able to
commit significant sums to subsidise Government funded programmes
for the homeless client group, and are allocating funding according
to where it will have the greatest social impact, which is not
necessarily the area of greatest need.
29. The Salvation Army has already withdrawn from
providing three homeless hostels since April 2010, in London,
Bolton, and Darlington, and other services are under threat of
closure.
IMPLICATIONS
OF THE
ANNOUNCED CHANGE
FOR:
Incentives to work and
access to low paid work
30. The Salvation Amy recognises that for those who
have been out of work for a short period, the proposal to restrict
HB to 90% of the original award after 12 months in receipt of
JSA may have an impact in encouraging those who have been unemployed
for a short period back to work. These people are not far removed
from the work market, and it would be less of a leap for them
to re-enter employment.
31. It is debatable whether the announced restriction
in HB will have an impact for those who have been out of work
for a longer period, whose work skills have deteriorated, and
who would find it much harder to find work. The announced change
to restrict HB to 90% may just increase hardship, without affecting
motivation or ability to find work.
32. Without further refinement, those who are attempting
to make themselves more work-ready by entering work training programmes
would still be penalised by these provisions. There would be no
incentive to undergo training to improve prospects of work.
33. For those who fall out of work, it will be harder
for them to maintain an existing tenancy or access new accommodation
(see "Landlord Confidence" below).
34. Landlords will be become less willing to renew
a tenancy or offer a new tenancy to a person who is in receipt
of JSA, due to the increased risk that HB will be restricted and
rental income lost.
35. Once a person has been in receipt of JSA for
over a year, the restriction in HB would make it much harder for
them to secure affordable accommodation. The lack of a fixed address
would severely impair the ability of a person to find employment,
regardless of how genuinely they desire to find employment.
36. For homeless people and hostel residents, the
announced reduction in HB almost certainly will not create an
incentive to work, and would actually act as a disincentive to
stay in hostel accommodation, where they can engage in rehabilitation
and support programmes aimed at re-integrating them into society
and becoming work-read. Perversely, the proposed restriction of
HB to 90% will create a financial barrier for homeless people
to enter a hostel, and an incentive to "drop out" of
hostel accommodation on the anniversary of their HB award, because
meeting the 10% HB shortfall in addition to the HB ineligible
charges will simply be unaffordable.
37. Hostels provide support to residents to
stabilise their lives, support in engaging with professionals
to treat addictions and mental illness, life-skills training and
links with education establishments and work-training programmes.
All of these bring a person closer to being "work ready".
With no fixed abode, and without the support provided by hostel
support staff, a homeless person can find it virtually impossible
to find work.
Shortfalls in Rent
38. Due to the fact that many individuals who enter
hostels are at a point of crisis in their lives, have an extremely
chaotic lifestyle, and need to be provided with a safe, controlled
environment, and a healthy diet, hostels provide a higher level
of housing services than general rented accommodation. This often
makes hostel accommodation more expensive to provide than mainstream
private or socially rented accommodation.
39. This has long been recognised by housing benefit
regulations, and is why there are specific regulations relating
to hostels and "exempt accommodation". Charges and HB
levels for hostel accommodation are often higher than for other
accommodation.
40. Housing benefit rates for TSA's hostel accommodation
typically range from £120 to £200 per week, so a 10%
shortfall would equate to £12 to £20 per week.
41. Ineligible charges at TSA's hostels typically
range from £10 to £16 for self-catering accommodation,
and £26 to £35 for half board accommodation.
42. The amount a person who has been in receipt of
JSA in excess of 12 months would therefore be responsible for
paying at a Salvation Army hostel is shown in the table below:
Table 1
AMOUNT A PERSON IN RECEIPT OF JSA FOR 12
MONTHS WOULD HAVE TO PAY FOR TSA HOSTEL ACCOMMODATION
| 10% restriction in HB per week.
| Ineligible charge per week | 10% shortfall in HB plus ineligible charge
| |
£12-£20 | Self catering:
£10-£16
| £22-£36 | Plus in some cases £9.90 to cover deductions to recover previous HB overpayments
|
|
Half board:
£26-£35
(includes £15.50 meals deduction)
|
£38-£55 |
|
Table 1: Amount a person in receipt of JSA for 12 months would
have to pay for TSA hostel accommodation
43. In many cases, hostel residents have previously been overpaid
HB at a former address, and LAs usually recover this at the rate
of £9.90 per week. They are also responsible for making up
this shortfall in their housing benefit.
44. JSA rates are currently:
- £65.45 for those aged 25 or over.
- £51.85 for those aged under 25.
45. It would be hard for individuals who have been in receipt
of JSA for more than 12 months to afford the self-catering hostel
accommodation.
46. It would be very hard for over 25s to afford half board hostel
accommodation, and potentially impossible to for under 25s to
afford half board hostel accommodation.
47. Homeless people in receipt of JSA for more than 12 months
would be deterred or prevented from accessing hostel accommodation
because of an inability to pay ineligible charges and the shortfall,
and those in receipt of JSA for a shorter period could be forced
to "drop out" once their claim reaches the one year
mark.
48. This could lead to the situation whereby only those who have
been receiving JSA for less than one year, or those receiving
other benefits could afford to access the "safety net"
of hostel accommodation.
49. Perversely, those who have been in receipt of JSA for more
than 12 months would be unable to stay in hostel accommodation,
where they would receive support to access the professional support
services, treatment programmes, and training opportunities to
enable them to return to independent living and the work market.
These people would be more likely to become rough sleepers and
entrenched homeless.
Levels of evictions and the impact
on homelessness services
50. The proposal to restrict HB to 90% for those in receipt of
JSA for more than 12 months will inevitably lead to increased
rental arrears and more evictions being sought by landlords.
51. How the courts will respond to these cases, and whether evictions
will actually be granted is unknown. There are suggestions that
a legal challenge could be mounted on the grounds that a power
to impose a penalty that could result in a person losing their
home on the basis of failing to meet "an administrative deadline
to find work" could contravene the European Convention on
Human Rights.
52. We are unclear whether a person evicted due to failure to
pay rent, but who was unable to pay in full because of a 10% restriction
in their HB award, would be considered as statutory homeless for
the purposes of LA re-housing.
53. Whatever the outcomes of the above, we anticipate that the
proposal to reduce HB awards by 10% would result in more individuals
being unable to pay their rent in full, becoming homeless and
presenting themselves as in need of accommodation.
54. For a person who has been evicted due to rent arrears, and
who has been in receipt of JSA for 12 months, the 10% restriction
in HB will create a barrier to accessing emergency hostel accommodation,
because it would be harder for them to afford a 10% shortfall
in HB at the hostel rate than for the accommodation from which
they have been evicted. This is because HB rates for hostels are
typically higher than for private or socially rented accommodation.
55. It is possible that only those in receipt of other benefits,
or in receipt of JSA for less than 12 months, would be able to
afford to live in a hostel.
56. This barrier to accessing hostel accommodation could lead
to the creation of a homeless population who cannot afford to
enter emergency accommodation, and instead become street homeless
or set up squats. LAs would then be forced to commit financial
resources from other budgets to address the issues that would
arise as a result of this.
57. Because of the risks to HB revenue, even landlords who accept
tenants receiving HB will prefer those who have been in receipt
of JSA for only a short period, making it harder for LA Homeless
Services to place the longer term unemployed. This would be compounded
by the other measures being introduced, to set the LHA at the
30th percentile, and increase rates in line with the Consumer
Price Index rather than the Retail Price Index, both of which
would make it harder for benefit claimants to access affordable
housing.
58. Those who do enter a hostel and go through the resettlement
programme would find it harder to move on, due to an unwillingness
of private landlords to accept the risk of accepting a tenant
who has been receiving JSA for a longer period, and the other
LHA measures. This could result in LA-funded hostels "silting
up" with residents, and/or individuals dropping out of the
resettlement programme back into a more chaotic lifestyle, and
reverting to a cycle of homelessness due to an inability to move
on from hostel accommodation, and an inability to pay the 10%
shortfall in hostel rate HB once they have been in receipt of
JSA for a year.
Landlord Confidence
59. Due to the high risk that the level of HB will be restricted,
there will be a financial disincentive for all types of landlord
to provide accommodation to tenants who are in receipt of JSA,
rather than other benefits. Even if courts do allow evictions
to be granted for non-payment where the failure to pay has been
partly due to a 10% restriction in HB, landlords will be aware
that court action will be lengthy and costly and they are unlikely
to be able to recover arrears.
60. The reluctance of some private sector landlords to accept
tenants in receipt of HB will be exacerbated, and fewer properties
will be made available to JSA recipients. Properties may increasingly
be let for 6 months rather than a longer period, so that the landlord
can terminate the tenancy more easily to avoid a reduction in
HB if the tenant should fall out of work. This will result and
a higher turnover of tenancies, which is a less efficient use
of available housing resources for society generally.
61. For providers of socially rented accommodation, there will
also be a disincentive to accommodate residents in receipt of
JSA, due to the very real risk that HB income will be reduced.
Housing associations will be restricted by HCA rent-setting regulations
from increasing their charges significantly to recover the loss
in HB revenue, and are likely to be forced to accept the loss
in revenue. Working age tenants will become a higher risk category,
and to avoid lost revenue social landlords could be incentivised
to convert stock from general needs accommodation to accommodation
for the elderly or incapacitated, or if there are no outstanding
HCA capital commitments, de-commission and sell-off general needs
stock.
62. Hostel landlords will be affected by the same factors as social
landlords, and are likely to experience a reduction in HB income
as a direct result of benefit being restricted by 10% for a proportion
of residents. Hostel landlords are also unlikely to be able to
recover losses by increasing charges, due to HCA restrictions,
or HB departments' refusal to accept "unreasonable increases"
in charges. Although hostels may try to enforce payment of the
10% shortfall by the resident, this is less likely to be successful
because payment of 10% of the hostel HB rate may be totally unaffordable,
as hostel HB rates are generally higher than other accommodation.
63. In recent years, LAs have increasingly taken over the assessment
and referral of homeless persons, and direct access hostels are
now far less common. Local referral and admission agreements may
force hostels to admit residents that are known to be unable to
meet the shortfall, with the result that hostels cannot avoid
losing income, and the resident is set-up for eviction from the
start of the tenancy.
64. All of the above effects on landlord confidence will limit
the availability of accommodation for those in receipt of JSA
for more than 12 months. Perversely, those in receipt of JSA for
more than 12 months will be less likely to be able to afford to
access the "safety net" of hostel accommodation than
mainstream accommodation.
65. For landlords of supported accommodation, this proposed restriction
in HB comes at a time when the main other source of income, Supporting
People (SP) grant is also subject to severe cuts. LAs are asking
providers to manage funding cuts of up to 20% on existing contracts,
SP contracts are being awarded for shorter periods, and the need
to put services out to tender means that there is no guarantee
of SP funding at all. Providers of supported accommodation are
finding it increasingly hard to manage services under these conditions
with these levels of financial risk, with the very real result
that services are being closed.
66. The Salvation Army has itself ceased providing three hostel
services in Bolton, Darlington and London since April 2010, with
other services under threat of closure.
67. Once hostel provision has been lost it is very costly and
difficult to replace.
Community Cohesion
68. If the restriction of HB to 90% for those receiving JSA for
over one month is applied to residents of hostel accommodation,
many of those people will be unable to afford to live in hostel
accommodation.
69. Those who are already homeless will be deterred from entering
hostel accommodation, and those in hostel accommodation at the
anniversary of their JSA award may be forced to "drop out"
without completing the rehabilitation and resettlement programme.
70. It is The Salvation Army's opinion that this will perpetuate
the cycle of homelessness and lead to the creation of more entrenched
rough-sleepers and lead to a number of other social problems and
with very serious consequences for society as a whole:
- More street homeless.
- More begging.
- More antisocial behaviour.
- More mentally ill people on the street, not engaging with
treatment services or taking appropriate medication.
- More homeless drug and/or alcohol abusers, not accessing professional
support networks, or taking advantage of the stable environment
and encouragement provided by a hostel to undergo rehabilitation
and/or appropriate treatment.
- More drug abusers sleeping rough or squatting, leading to
"drug houses" and public health issues of discarded
sharps and drug paraphernalia.
- More crime, in order to fund addictions, and homeless lifestyle.
- More squatting generally, with associated anti-social behaviour.
In The Salvation Army's opinion, these are some of the likely
outcomes from the proposed reduction in HB.
RECOMMENDATIONS
71. We strongly recommend that proposal to restrict HB to 90%
of the original award for those in receipt of JSA for more than
12 months should not be applied to residents of hostel accommodation.
Hostels act as a "safety net" to save people from rough-sleeping,
and prepare them to return to mainstream accommodation and work.
72. To make hostels unaffordable by manipulating HB rates for
individuals at a time when they are most vulnerable and not "work
ready" is counter productive to all back to work and homelessness
goals.
73. If it is agreed that a financial penalty should be applied
to encourage those in receipt of JSA for more than12 months back
to work, The Salvation Army recommends that the financial penalty
should be applied through JSA itself, and not through housing
benefit. In this scenario, consideration should then be given
to how incentives will apply to those who enter training schemes
to improve their employment prospects.
6 September 2010
72
HB Regulation 2.(1). Our services meet the definition of "hostel"
because they are non-self-contained-accommodation, with meals
provided, or facilities for cooking, and are managed or owned
by a registered housing association, or managed by a voluntary
organisation or charity that provides care/support/supervision
aimed at rehabilitating or resettling residents within the community.
Back
73
HB Reg 14 (4)(b) and Schedule 2 paragraph 3. Back
74
Qualifies as "exempt accommodation" because it
is owned by a housing association/registered charity/voluntary
organisation and care, support, or supervision is provided by
the same body. HB and CTB (Consequential Provisions) Reg's 2006
Schedule 3 paragraph 4 (10)). Back
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