Written evidence submitted by Child Poverty
Action Group
- (i) Housing benefit was the subject of attention
by the previous government, and a green paper: "Supporting
people into work: the next stage of Housing Benefit reform"
was published for consultation. As its title suggests, the paper
shared some of the concerns behind the budget proposals put forward
by the coalition government, and in particular the rising cost
of housing benefit, and the aim of introducing work incentives.
We attach our response to the DWP's consultation to this evidence
by way of background.
- (ii) In 2009 the HB regulations were amended
so as to limit the number of bedrooms allowed for in the LHA size
criteria for any one household to five. Many of the same concerns
arose in relation to that as arise in respect of the further proposed
reduction to four bedrooms. We attach our response to the SSAC
consultation on the amendments to the regulations from February
2009 by way of background.
- (iii) Also in 2009 the proposal was made
to remove the provision allowing claimants to keep up to £15
above the level of their contractual rent. Following adverse publicity
the decision was taken to postpone this change to April 2011.
Although this is not one of the changes from the budget 2010 it
forms part of the background to the changes to housing benefit
and we attach a copy of our response to the SSAC consultation.
- (iv) The Social Security Advisory Committee
is consulting on changes to the regulations in relation to the
changes scheduled to take place in October 2010 and April 2011.
These are the removal of the £15 excess, applying caps to
the one to five bedroom LHA rates, capping the rate payable at
the four bedroom rate, and setting the LHA rates at the 30th percentile.
- (v) Although the consultations are separate,
the DWP has produced a lengthy explanatory memorandum, including
an Equality Impact Assessment (EIA) and draft regulations in relation
to the SSAC consultation that are referred to here by way of background.
Overall the DWP estimates that 99% of cases assessed under the
LHA, numbering 1.02 million at March 2010, will be affected by
the changes in some way, with an average overall loss of £12
per week.
- (vi) We are asked to comment on particular
aspects of the changes, and we focus here on the areas which are
within our expertise, in particular incentives to work, and access
to low paid work, shortfalls in rent, effects on disabled people
and carers, large families and overcrowding, and to a lesser extent,
levels of evictions and homelessness. We also consider the likely
impact on the government's obligations to meet its child poverty
targets under the Child Poverty Act 2010.
- (vii) In our response to the last green paper
on housing benefit we said that:
Housing need is a major contributor to child poverty.
Housing benefit is a vital tool in preventing families from falling
into housing need, and is an essential component in the government's
stated aim to eradicate child poverty by 2020. We submit that
any reform of housing benefit needs to safeguard claimants and
their children and to take account of the over-arching principles
behind the housing benefit scheme, set out at paragraph two of
the consultation document as preventing homelessness, supporting
mixed communities and supporting the provision of homes in the
social rented sector.
- (viii) The measures announced in the budget
are primarily designed to cut costs[75].
The purpose is to save £1 billion. Claims are made that they
will have other effects as well, which will be beneficial, such
as preventing HB claimants from living in accommodation which
is out of the reach of low income working households, and tackling
excessively high rents. These claims seem dubious; low income
working households can claim HB[76],
and CPAG has always argued that high rents need to be tackled
through housing legislation, and not through the benefit system.
It also seems clear the majority of these changes will undermine
the stated purpose of the HB scheme.
- (ix) The changes will take effect immediately
for new claimants and generally on the anniversary of the claim
for existing claimants. However, changes in circumstances such
as the make-up of the household, or a change in address, may bring
the changes into effect earlier. This means that existing claimants
may suddenly face the prospect of homelessness on the anniversary
of their claims, or earlier changes in circumstances. The DWP
has said it will work with other agencies to make sure claimants
are kept informed of the changes. Claimants may well have entered
into fixed term tenancy agreements of one, two or three years
on the basis that the rent fell within that paid by housing benefit
only to find that a subsequent change in legislation renders the
property unaffordable.
- (x) As a package it seems that large families
will lose out the most from these changes; on average £57
per week, see Appendix D page five of the DWP's Explanatory Memorandum,
which says that there will be around 8,000 larger households which
will lose out. In our view the changes clearly discriminate on
grounds both of household size and against BME claimants.
- (xi) London is the geographical area where
the changes will have most impact with an average loss of £22
per week overall. This is bound to result in further ghettoisation
of claimants in poorer areas.
- (xii) In our view, despite the government's
claims to the contrary, the budget proposals will increase child
poverty, and cannot be reconciled with the government's obligation
to eradicate child poverty by 2020 under the Child Poverty Act
2010. A recent report by the Institute for Fiscal Studies[77]
has shown that "low income households of working age lose
the most from the budget changes because of the cuts to welfare
spending." In addition, research carried out by Shelter[78]
and the TCU shows that these changes will drive more families
with children into poverty, or deeper levels of poverty, and that
they will most adversely affect those who are already most vulnerable.
The new measures:
1.1 From October 2011 LHA rates will be set
at the 30th percentile of local rents (instead of the median)
1.2 The impact of these changes is set out at Section
3 of Annexe D to the DWP's explanatory memorandum to SSAC. The
measure is estimated to affect about 82% of LHA cases, with an
average loss per household of £9 per week. Given that this
comes on top of existing shortfalls, and that the applicable amount
for income support for a single claimant of income support or
jobseekers' allowance is £65.45, this represents a substantial
loss from a claimant's already inadequate income.
1.3 It seems from the figures given by the DWP that
a smaller percentage of larger households will lose, but their
losses will be greater than those of smaller households; so for
a shared room 94% of claimants will lose, and the loss will average
£6 per week; for a four bedroom house, 48% of claimants will
lose, and the loss will average £20 per week. The loss jumps
to £36 for 39% of five bedroom households (to be abolished
altogether from April 2011).
1.4 Housing benefit claimants only have access to
the lower half of the privately rented market even under the current
rules. The DWP believes that the change to 30% will be mitigated
by claimants being able to renegotiate their rents. This is based
on the idea that there is some leeway in this market because landlords
have artificially increased their rents to LHA levels. This is
supported by the Local Authority Omnibus Survey—Wave 20
page 35, figure 4.5 which shows 69% of the respondent local authorities
thought landlords were doing this. However, in the EIA, the DWP
accepts that 43% of claimants get excess LHA, which would indicate
that in a high percentage of cases, landlords are not raising
their rents to the level of the LHA.
1.5 Even if some landlords will accept lower rents
for their properties, there is no evidence about how many of them
will be prepared to do this. It seems likely this measure will
result in homelessness, especially in areas of high housing demand,
either because claimants cannot find properties to rent in the
first place, or because when the LHA rates on which their claims
are based are reduced on the anniversary of their claims, they
will be unable to meet the shortfall in the rent.
1.6 This measure may also encourage overcrowding
since claimants may try to mitigate the reduction in LHA rates
by renting cheaper properties which are smaller than they need.
2.1 Deductions for non-dependents will be up-rated
in April 2011 on the basis of prices. This will reverse the freeze
in these rates since 2001-02
2.2 Our understanding is that by 2014 non dependent
deductions are to be up-rated to the levels they would have been
at had they not been frozen since 2001-02.
2.3 In our experience, the fact that deductions are
made for non-dependents, and especially for adult family members,
is a part of the housing benefit rules that claimants find difficult
to understand. This often results in overpayments because claimants
do not realise that they need to report the fact that adult family
members have moved in with them. In addition, the "broad
brush" approach taken to assessing the income of a non-dependent
can result in rough justice.
2.3 Levels of non-dependent deductions are already
high and it is possible for the claimant's HB entitlement to be
wiped out altogether by them. Problems are also caused where the
claimant cannot ascertain the income of the non-dependent, and
maximum deductions are made as a result. Increasing levels of
deductions is likely to cause further hardship, and potentially
homelessness where the non-dependent is unwilling to make up the
shortfall in the rent and the claimant is unable to do so.
3.1 From 2013-14 Local Housing Allowance rates
will be uprated in line with the Consumer Price Index
3.2 Our understanding is that this will replace
changes to the local housing allowance on the basis of local market
rents.
3.3 Historically, up-rating of rent restrictions
in the housing benefit scheme has been based on market rents.
Given that the purpose of housing benefit is to cover the claimant's
liability for rent, this seems sensible. It does not, therefore,
make sense to change the basis for up-rating the LHA to the CPI,
which although it includes rent, is otherwise based on a variety
of goods which have no relevance to the housing benefit scheme.
The likely result of this is that LHA rates will bear little or
no relationship to the rents claimants have to pay, and the housing
benefit scheme is intended to fund.
4.1 From April 2013 housing entitlements for
working age people in the social sector will reflect family size
4.2 This is a proposal to extend the current
size criteria that govern the size of property claimants are entitled
to claim housing benefit for to the social rented sector, ie to
council and housing association accommodation. At present there
are no restrictions on the size of property that can be paid for
through housing benefit for these tenancies.
4.3 There has already been a report that a London
local authority has been contacting council house tenants in properties
which are considered too small for them, advising them that under
the government's plans they may have to move into smaller accommodation,
and offering them the option of moving now with a choice of where
to live, or face moving in future without any choice[79].
This seems to have caused tenants considerable distress.
4.4 One of the case studies in the report illustrates
why council and housing association tenants are likely to find
this proposal distressing; a widow who has lived in her property
for 22 years and who uses her one spare bedroom when her grandchildren
come and stay. Council and housing association tenants with their
greater security of tenure are likely to have longer associations
with the properties where they live and therefore greater emotional
ties to them than those renting in the private sector.
4.5 We would submit that the size criteria are
too restrictive in any event, for the reasons set out in our response
to the DWP consultation on the last green paper, attached. In
our view they should be amended to allow some discretion on the
size of property a claimant is allowed, before any consideration
is given to extending them to the social rented sector.
4.6 In our view this change is likely to result
in homelessness since claimants will face shortfalls in their
HB that they are unable to meet and they will face eviction as
a result. Elderly and disabled tenants will be in priority need
of re-housing, but not all tenants will fall into these categories,
and some may not be re-housed.
5.1 Housing Benefit awards will be reduced
to 90% of the initial award after 12 months for claimants receiving
Jobseekers Allowance from April 2013
5.2 This amounts to a draconian penalty for claimants
in receipt of JSA for 12 months or more. As we pointed out above,
benefit levels are already inadequate, and JSA claimants will
not be able to meet the additional shortfalls they will face.
It is likely that many claimants will go short of basic necessities
including food, and/or face homelessness.
5.3 The TUC has pointed out that this cut is
likely to adversely affect the long term unemployed, including
24,000 disabled people who have been moved off incapacity benefits
and onto jobseekers' allowance, and 68,000 lone parents who have
children aged five or six and will be moving on to JSA from other
benefits from October 2012[80].
5.4 Children living in households affected by
disability are amongst those most at risk of poverty, as are those
living in one parent households[81].
It therefore seems likely that this measure will adversely affect
children living in poverty, drive further households containing
children into poverty and additionally will hinder the government
in meeting its child poverty targets.
6.1 From April 2011, Housing Benefit claimants
with a disability and a non-resident carer will be entitled to
funding for an extra bedroom
6.2 This is one budget measure we welcome. It
will be very helpful for many disabled claimants with carers who
currently face uncertainty about how an extra room for a carer
will be funded. It will be awarded where the claimant gets attendance
allowance or higher rate DLA care component.
6.3 We understand 10,000 claimants will benefit
from these proposals.[82]
However, we further understand that the benefit for some disabled
claimants will be offset by other losses elsewhere, and that some
could even get less HB than before, particularly in London.
6.4 We would have liked this proposal to go further
and in particular to cover additional groups of claimants needing
extra rooms, particularly disabled couples and children unable
to share, see submission to the DWP consultation attached.
7.1 From April 2011, LHA rates will be capped
at £250 per week for a one bedroom property, £290 per
week for a two bedroom property, £340 per week for a three
bedroom property and £400 per week for four bedrooms or more
7.2 On the basis of the DWP's evidence, in Central
London this measure will result in the collapse of HB for tenants
in the private rented sector; whereas currently 52% of private
sector accommodation is available to HB claimants, after the changes
come into effect this figure will fall to 7%[83].
The Inner London Boroughs will also face substantial falls in
availability of PRS accommodation. Outer London Boroughs seem
to be affected in line with the rest of the country.
7.3 There are therefore concerns that this measure
will cause mass migration out of central London, either to outer
London Boroughs, or out of London altogether. This will result
in ghettoising benefit claimants in poorer areas and making Central
London a no-go area for HB claimants.
7.4 This measure does not chime with Ian Duncan
Smith's comments to the effect that the workforce should be more
mobile; see Reuters for 27 June 2010. If areas where employment
can be found such as London, are barred to benefit claimants,
that will make mobility in search of work less and not more likely.
The DWP accepts that claimants could have further to commute to
work. The measure therefore seems likely to act as a work disincentive.
8.1 The Government contribution to Discretionary
Housing Payments will be increased by £10 million in 2011-12
and £40 million in each year from 2012-13
8.2 This triples current expenditure on DHPs,
and the increase will doubtless mitigate some of the harshest
effects of these changes for some claimants. We understand that
payments are to be targeted on the areas that most need them.
8.3 We do not yet know whether any of the groups
affected by the changes will be excluded from help from DHPs.
Nevertheless these increases are clearly inadequate to deal with
the hardship that will be caused by these changes when set against
an overall reduction in HB of £1 billion.
8.4 Further, we are of the view that discretionary
payments are no substitute for benefit entitlement as of right.
They are less generous in that local authorities can take any
income into account including disability benefits in determining
eligibility. If the local authority's budget for the year is used
up, they may not be available at all. DHPs require an additional
claim, can take a long time to assess, and where they are refused,
local authorities' review procedures are also often lengthy.
9.1 From April 2011 the five bed rate of the
LHA will be removed so the maximum LHA rate will be the four bed
rate
9.2 This change has not been included in the
list of changes included in this consultation, but we address
it as part of the background to the changes.
9.3 The DWP accepts that families with children
will be disproportionately affected, as will BME groups[84],
although they argue the number affected overall is relatively
small. In our view, this measure discriminates against large families
and against BME groups.
9.4 Our response to SSAC's consultation on the
HB Amendment Regulations (2009) dated 6 February 2009 is appended.
Many of the same considerations will apply. However, the problems
this further restriction will cause are likely to become much
more acute. This measure is likely to cause overcrowding as larger
households try to fit themselves into smaller accommodation they
can afford, or splitting of larger households into smaller units,
potentially at greater expense.
9.5 This measure will impact on children living
in large families, which are defined as families with three or
more children. These children are at high risk of poverty, 42%
after housing costs, and they make up 40% of children living in
poverty[85].
It therefore seems likely this measure will make what is already
a bad situation substantially worse, and will have a particularly
negative impact on the government's ability to meet its child
poverty targets.
6 September 2010
75 See Equality Impact Assessment page 4. Back
76
The DWP is carrying out research about the behaviour of low income
working households, which has not yet been published, but preliminary
findings indicate that these households usually rent properties
with rents at 90% or more of the LHA rate (see p 34-35 of the
Explanatory Memo and page 7 EIA) Since the DWP also says that
43% of HB claimants receive excess LHA, this suggests that quite
a high proportion of HB claimants also rent properties at rents
lower than the LHA. See further below. Back
77
The Distributional Effect of Tax and Benefit Reforms to be Introduced
Between June 2010 and April 2014: A Revised Assessment page 1. Back
78
We currently only have access to background notes on research
Shelter has obtained from the Cambridge Centre for Housing and
Planning Research at the University of Cambridge, which shows
that 54,000 children will move into income bands below the minimum
income guarantee of £100 per week. Back
79
Guardian Friday 6 August 2010. Back
80
TUC press release 5 September 2010 Housing cuts for long-term
unemployed will hit at least 194,000 vulnerable adults a year. Back
81
38% and 52% respectively, see Table 5 Child Poverty the Stats;
Analysis of the latest poverty statistics; CPAG Policy Briefing:
October 2008. Back
82
Pp 16-17 EIA. Back
83
See Explanatory Memorandum Appendix D page 16. Back
84
Paragraph 42 DWP Memorandum page 14. Back
85
Child Poverty: the Stats; Analysis of the Latest Child Poverty
Statistics, CPAG Policy Briefing October 2008 p10 Back
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