Written evidence submitted by Age UK
ABOUT THIS
CONSULTATION
In the June 2010 Budget the Coalition Government
announced a range of changes to Housing Benefit. Overall these
are expected to cut expenditure by £220 million in 2011-12
rising to £1,760 million in 2014-15.i
The following changes are due to come into effect
in 2011-12:
- The imposition of a cap on Local Housing Allowance
(LHA) based on numbers of bedrooms (April 2011).
- The removal of the £15 weekly excess provision
already announced by the previous Government (April 2011).
- Calculation of LHA rates so that only 30% of
the private rented market, in any location, will be covered by
LHA (October 2011).
- A staged increase in deductions for non-dependents
from 2011.
- Adjustment to the LHA size criteria to allow
an extra bedroom for a non-resident carer if the disabled person
has a need for overnight care (April 2011).
- Funding to local authorities for discretionary
housing payments will increase by £10 million in 2011 and
by £40 million a year after that.
Further changes are planned in the future:
- From 2013-14 LHA rates will be uprated in line
with the consumer price index rather than on the basis of local
rents.
- From April 2013 Housing Benefit for people of
working age in the social rented sector will be restricted if
they are considered to be under-occupying.
- From April 2013 Housing Benefit awards will be
reduced by 10% for people who have been claiming Jobseeker's Allowance
for more than 12 months.
The Work and Pensions Committee's inquiry asks about
the implications of the changes for: incentives to work and access
to low paid work; levels of rent; shortfalls in rent; evictions
and homelessness services; landlord confidence; community cohesion;
disabled people, carers and specialist housing; and older people,
large families and overcrowding.
AGE UK'S
KEY POINTS
AND RECOMMENDATIONS
The wider impacts of the reforms must be considered
before changes to Housing Benefit are made including the impact
on other national and local provision and the availability of
suitable affordable housing that meets the needs of older people.
While a minority of older people live in the private
rented sector the number is likely to grow. Older tenants are
more likely to be living in poverty and in poorer housing conditions
than older people outside of this sector.
Age UK is very concerned about the impact of the
LHA changes on older and disabled private tenants. Some 8% - around
80,000—of those subject to the LHA are older people.
If older tenants have a shortfall in rent and are
unable to move to cheaper accommodation they may end up with such
low incomes that their health is at risk.
Many older tenants will find it difficult to find
suitable alternative affordable accommodation with access to family,
friends and local facilities.
If the changes do go ahead then the Government needs
to look at ways to mitigate the impact such as: higher levels
of LHA for vulnerable groups, transitional measures, improved
housing information and advice services, and a higher budget for
discretionary housing payments.
Age UK strongly supports the proposals to allow LHA
to fund an extra bedroom for a resident carer. This should also
apply to couples who need separate bedrooms due to disability
or medical need.
We are concerned that changes to non-dependent deductions
could result in older Housing Benefit claimants facing a shortfall
in rent.
The proposal to restrict Housing Benefit for people
receiving Jobseeker's Allowance for more than a year is likely
to particularly affect unemployed people aged over 50. Age UK
believes this group needs support rather than financial penalties.
If the changes go ahead there should be close monitoring
of the effects for individuals and more widely including the impact
on the private rented sector, homelessness, unemployment and pressures
on local services.
1. INTRODUCTION
AND BACKGROUND
1.1 Age UK welcomes the opportunity to respond
to the Work and Pensions Committee's inquiry. The changes were
announced in the June 2010 Budget in the context of the Government
wanting to restrict spending on Housing Benefit, provide better
work incentives, and produce a system that is fairer for those
who do not rely on welfare.
1.2 The proposed changes will cut spending on
Housing Benefit but some of the savings could be offset by pressure
on other services including local authority provision. The Equality
Impact Assessment states that the DWP is looking at the wider
impacts. These will need to be considered before any changes take
place.
1.3 The Government should also consider the supply
of suitable housing. For example it needs to be recognised that
a key factor in the increased use of the private rented sector
by older people, particularly in more expensive parts of London,
is the lack of affordable social and retirement housing in the
right location.
1.4 Housing Benefit provides vital support to
many low income older people. The Government needs to show how
it can maintain its commitment to protect vulnerable groups while
reducing benefits aimed at low income households.
1.5 In this response we focus on aspects of the
changes which will affect older tenants for whom work incentives
are of little relevance. Before looking specifically at the benefit
proposals we first provide some background about older private
tenants.
Older people in the private rented sector
1.6 Traditionally, older private tenants have
been given much less attention than other groups living in the
sector. It is often seen as a tenure for mobile younger people
of working age moving between different types of accommodation.
Yet, it is estimated that there are over 500,000 older people
living in the private rented sector, which is comparable to numbers
living in the retirement housing sector. This figure is likely
to rise and landlord agencies, such as the National Landlords
Association, are already looking at the implications of a continued
rise in demand from older people.ii Many older people
have been encouraged to retire to private rented accommodation
due to location and promised access to LHA. Although many have
assured shorthold tenancies they expect to remain in the same
accommodation over the long term. Older people may have moved
to what was a low rent area to be close to family but have seen
rents rapidly escalate over time due to area improvement and a
shortage of alternative accommodation. They have not deliberately
settled in a high rent area. This is true of both regulated and
assured shorthold tenants.
1.7 Older private tenants face some of the worst
housing conditions in comparison with other tenures. The English
House Conditions Survey (2006) showed that 1.2 million properties
in the private rented sector were non-decent (46.8% of the overall
total). Older private tenants are also more likely to be in poverty
than other older people. After meeting their housing costs 30%
of older private tenants are in poverty (defined as income below
60% of median income) compared to 24% of social rented sector
tenants and 16% of all older people.iii In addition,
older private tenants have had limited access to housing related
support provided under Supporting People, including help with
repairs and adaptations.
2. IMPACT OF
REFORMS TO
LHA
2.1 In May 2010 there were just over one million
LHA private sector tenants. Information about the impact of the
reforms in 2011-12 is set out in the Impact Assessmentiv
and Equality Impact Assessment.v These show that virtually
all LHA benefit claimants lose out once changes are rolled out
as compared to the current position. The average loss will be
£12 a week. Losses vary across the country with 12% of LHA
recipients in London losing £30 a week or more.
Older people affected
2.2 Around 1.6 million people aged 60 and over
receive Housing Benefit. Most of these are in the social rented
sector or in regulated private tenancies so will not be affected
by changes to the LHA. However even though only 8% of those subject
to the LHA are older people this still amounts to around 80,000
claimants, of whom nearly 52,000 are in receipt of Pension Credit
guarantee. Most of these will not yet be aware of the planned
changes but we are already starting to hear from people who are
concerned about the likely impact.
A woman in her 70s with health problems moved
out of London and is now very happy in her property in East Anglia.
She had expected to live there for the rest of her life or until
she needs to move to receive care. She has heard about the changes
and as her rent is in line with median rent levels she is concerned
that if LHA rates are linked to the 30% level she will not be
able to afford her rent. She is worried about the effort and expense
of moving but also that she might have to move to cheaper accommodation
in a rougher area where she would not feel secure or to a poor
quality property that would worsen her health problems. She described
her landlord as very good but cannot see him reducing the rent
saying he is a businessman not a social worker.
(Phone call to Age UK)
2.3 The introduction of rent caps would particularly
affect people in London as just 7% of private rented sector properties
in Broad Rental Market Areas would be available within the LHA
limit after reform. Up to now Age UK has received relatively few
enquiries about LHA under the current system but we would expect
to hear of many more cases such as the one below if the reforms
are introduced.
An older woman moved to her present accommodation
in London 12 months ago. Her rent is higher than the LHA but she
has been able to meet the shortfall from her Pension Credit. Her
landlord does not know she is on Housing Benefit and she thinks
he wouldn't be very happy with this. She does not want to move
because she is settled in her home and it is close to her son.
Unfortunately the area in which the lady lives has been reassessed
by the council and the LHA has been reduced considerably. The
woman now receives £130 less per month making her home unaffordable
as this leaves her with less than £40 a week to live on.
(Inquiry to local Age Concern)
2.4 People whose rent is within the new LHA levels
are still likely to lose in cash terms due to the withdrawal of
the £15 excess. People on low incomes often budget carefully
and take out commitments based on their fixed incomes and a drop
in income could have a detrimental impact.
2.5 The proposal to index the LHA to the Consumer
Price Index in 2013-14 is likely to exacerbate the problem as
over time maximum rent levels covered by the LHA will reduce.
Unless the changes have a significant downward impact on rent
levels, an increasing number of low income private tenants will
find it difficult to find decent affordable accommodation.
3. SHORTFALLS IN
RENT
3.1 Where under any proposed changes older private
tenants find their benefit is restricted they have a number of
options: meeting the shortfall from their regular income, trying
to negotiate with their landlord, looking for help with the shortfall
or moving to cheaper accommodation.
Using income to meet the shortfall
3.2 Older private tenants are already at greater
risk of poverty than other pensioners. The numbers facing financial
difficulties are likely to increase if people end up meeting shortfalls
in rent from Pension Credit or other income. People's health may
be at risk if they cut down on essential items such as heating
and food. They are also at risk of increasing social exclusion
and poor mental health as restricted income can limit the ability
of older people to get out and about and to socialise.
Negotiating with landlords
3.3 We are not able to assess whether any restriction
in LHA will have a general impact on rent levels or enable individuals
to negotiate with landlords for a reduction. This is likely to
vary across the country depending on local demand for rented accommodation.
However it is likely that many older tenants will be reluctant
to try to negotiate a lower price especially if there is limited
alternative accommodation around. Where people are happy in their
accommodation they will not want to upset their relationship with
their landlord by trying to reduce the amount of rent they pay.
Meeting the shortfall
3.4 The planned increase in discretionary housing
payments will help some who are facing shortfalls but the increase
by £10 million in 2011-12 and by £40 million a year
from 2012-13 represents a very small sum compared to expected
cuts of £220 million in 2011-12 rising to around £1.8
billion by 2014-15. Alternatively people may look for help from
family, friends or charities. Many older people will be reluctant
to ask for support often preferring to cut costs rather than seek
help. In any case, given the current financial climate available
support will be limited.
Housing options and vulnerable groups
3.5 Part of the intention of the reforms is to
further encourage tenants to "shop around" and negotiate
a lower rent. We are concerned that this could result in older
tenants having to move to substandard accommodation in poor areas
away from friends, family and facilities. It will be particularly
challenging for those who suffer from ill heath or a disability
and may need access to a nearby hospital or local care and support
services. Older tenants currently living in accessible or adapted
accommodation may find it difficult to find comparable lettings
in other areas given the reduction in choice as a consequence
of reform.
3.6 Many older tenants do not have access to
housing information and advice services or the internet and will
find it extremely difficult to identify suitable housing options.
Even where they receive information about available properties
for some it will be physically difficult to travel around to see
potential new homes.
3.7 We are also concerned about the implication
for extended families, particularly in the BME community. Older
people often play a key role in maintaining and caring for their
family or rely on their family to receive care and support themselves.
A lack of options for families could remove this support structure,
create hardship and may consequently put an increasing burden
on statutory services over the longer term.
3.8 There may be particular problems for older
homeless people who may have physical or mental health issues,
perhaps combined with drug and alcohol problems. To live independently
they may require regular access to ongoing specialist resettlement
support from a local agency.
3.9 Where people are unable to meet their rent
or find suitable accommodation this could result in rent arrears
and in some cases eventually in eviction. This would not only
cause great distress but put extra pressure on local authorities
and homelessness services.
4. COMMUNITY COHESION
4.1 The suggested reforms are likely to push
older and younger private sector tenants on low incomes away from
parts of London and other high rent areas. This outcome fails
to recognise the vital role that many who receive benefits, including
older people, play in promoting community cohesion for example
through voluntary work, as carers for disabled people, or looking
after grandchildren so their parents can work.
4.2 We are also concerned that if rent restrictions
force younger people out of expensive areas this could have a
knock on impact on older relatives. Where families have lived
in areas in London or other high rent areas all their life, older
local authority tenants may have family members who have moved
out to private rented accommodation supported by Housing Benefit—in
some cases topping up low pay. If younger members are forced to
move away this would also impact on their relatives.
5. SAFEGUARDS
5.1 As set out above we have serious concerns
about the impact of restricting Housing Benefit. If the proposed
changes do go ahead we believe that the Government should look
at ways of protecting vulnerable groups such as older and disabled
claimants and ensure that if people are forced to move they receive
the help they need to find decent alternative accommodation near
friends, relatives and support networks. Older people on low incomes
who have little opportunity to improve their financial circumstances
should not face being made homeless or find themselves in accommodation
that is detrimental to their health and well being.
Measures that could provide support include:
- Higher levels of LHA where people are vulnerable
for reasons such as disability or have a particular need for support.
- Transitional measures to cushion the impact.
This could be through introducing the changes gradually or applying
them to only new claims.
- Increased provision of housing information and
advice around housing options and financial support.
- An increased budget for discretionary housing
payments.
- Clear personalised communication about any changes
that could reduce benefit provided well in advance.
5.2 We would also like further assurance that
the rights of regulated tenants will be protected from the impact
of further reform. Many regulated tenants who already experience
hardship are extremely anxious about the implications of further
reform.
6. EXTRA BEDROOM
FOR NON-RESIDENT
CARER
6.1 Age UK strongly supports the change that
will allow LHA to fund an extra bedroom where the claimant or
their partner is disabled and requires a non-resident carer to
stay overnight. This change is estimated to help around 10,000
people. Older tenants will particularly benefit as just over half
of those with non-resident carers are older people. This change
is likely to be widely welcomed by individuals and organisations
and we note that the Select Committee in its last inquiry into
LHA asked for further action on this issue.
6.2 We believe that this provision should also
be extended to couples where disability or medical need means
that sleeping in separate rooms is important in order to allow
both partners sufficient rest.
7. NON-DEPENDANT
DEDUCTIONS
7.1 We understand the principle behind reducing
benefit when there is a non-dependent living in a property but
are concerned that in practice older benefit recipients can end
up with a shortfall. If the changes are also intended to apply
to Council Tax Benefit then this will exacerbate the problem for
tenants and homeowners. The assumption is that a non-dependent
should contribute some of their income to the household but there
is no guarantee that this will actually happen. An older tenant
may be reluctant to ask for payment from a non-dependent—perhaps
a son or daughter living with them—if they are receiving
support or companionship or if the non-dependent has financial
difficulties. Furthermore the non-dependent system is complicated
so the claimant and/or the non-dependent may not fully understand
why deductions are made. Before changes are made the Government
should look in more detail at the scheme and its impact to ensure
that the system is fair and better understood.
8. RESTRICTION FOR
JSA CLAIMANTS
8.1 The proposal to restrict Housing Benefit
by 10% after one year for people receiving Jobseeker's Allowance
(JSA) could particularly affect older unemployed people who often
face major barriers in getting back to work including age discrimination,
poor skills and a lack of tailored support and training opportunities.
Age UK believes this group needs support rather than financial
penalties.
8.2 Recently published Labour Market Statistics
showed that over two in five (43%) of unemployed people aged 50
and over—a total of nearly 170,000 people—have been
out of work for more than a year.vi This is the highest
rate of any age group. Furthermore, a study in 2006—before
the recession—showed that men out of work in their 50s have
only a one in five chance of being in a job two years later.vii
8.3 The number of older unemployed people is
likely to increase as a direct result of the migration from Incapacity
Benefit to Employment and Support Allowance. Around one million
people aged 50 or over receive Incapacity Benefit and some will
be newly classified as unemployed and moved to JSA at a time when
there is great competition in the labour market. Many of these
will have been receiving Incapacity Benefit for some time and
be a great distance from the labour market.
It is essential that the Work Programme adequately
supports these claimants and helps them to improve their skills,
but even so there will be many who will not be able to find work.
8.4 JSA is only paid if someone has entered into
a jobseeker's contract and is complying with the directions. Therefore
in order to receive benefit people must already be actively taking
steps to find work. Levels of JSA are low—the basic rate
of income-related allowance for a single person over 25 is just
£65.45 a week. We are concerned that older long-term unemployed
tenants will face major problems in returning to work but will
have to find 10% of their rent from this low figure. This could
force people deeper into debt and poverty, restrict spending on
essentials such as a warm home and a healthy diet and increase
social isolation. The increased stress could further reduce prospects
of finding employment.
9. CONCLUSIONS
9.1 We understand that the Government needs to
reduce spending and is concerned about the increasing Housing
Benefit bill. However we are concerned that as proposed the changes
will affect vulnerable low income older people and others and
will not necessarily achieve the aims of providing greater incentives
to work and a fairer benefit system. Social security support for
rent needs to be considered in a broader context including the
provision of adequate affordable housing.
9.2 If the changes go ahead there should be close
monitoring of the effects for individuals and more widely including
the impact on the private rented sector, homelessness, unemployment
and pressures on local services.
6 September 2010
REFERENCES
i Budget 2010 HM
Treasury.
ii Tenure Trends
in the UK Housing System, Building and
Social Housing Foundation, 2010.
iii Households
below average income 1994-95-2008-09 DWP,
2010.
iv Equality Impact
Assessment of Housing Benefit DWP, 2010.
v Impacts of Housing
Benefit proposals: Changes to the Local Housing Allowance to be
introduced in 2011-2012 DWP 2010.
vi Market Statistics,
ONS, Aug 2010.
viii English Longitudinal
Study of Ageing 2006.
| 
