Written evidence submitted by Westminster
City Council
SUMMARY
1. Westminster City Council is in full support
of the proposed changes to the housing benefit payments made under
the Local Housing Allowance (LHA) scheme which were announced
in the Emergency Budget of 22 June 2010. The City Council is concerned
that the current system contributes to the inflation of rental
costs for some in the rented sector who are not Local Housing
Allowance beneficiaries. The City Council is also concerned about
the national increase in Housing Benefit payments to £21
billion and considers this some of the rise in recent years has
been driven by the introduction of the Local Housing Allowance.
2. The City Council also welcomes the government's
recognition that the local authorities most affected by the caps
will need additional funding for discretionary housing payments
(DHP) and our submission focuses on measures to manage out the
existing Local Housing Allowance system, particularly through
the use of the DHP.
3. The City Council believes that there is a
strong case for allocating a large proportion of the additional
funding available for 2011-12 and the years thereafter to Westminster
because the caps will affect benefit recipients living in Westminster
more than any other local authority in the country. Additional
DHP funding will help manage the transition in Westminster, limit
the impact on homelessness services and allow the continuation
of established initiatives awarding DHP to help housing benefit
recipients moving into work—particularly in central London.
SUBMISSION
4. The following table shows, for each local
authority affected, the number of benefit recipients who will
lose out specifically because of the LHA caps as opposed to the
restriction to 30th percentile of rents. Local authorities where
the caps only produce losers because of the removal of the five-bedroom
LHA rate have been excluded in order to highlight the council's
most affected by the caps. The table shows that Westminster has
the highest number of claimants affected.
| Local authority |
Number of claims where HB will reduce |
| Westminster | 4,010 |
| Brent | 2,070 |
| Wandsworth | 1,790 |
| Kensington & Chelsea | 1,650
|
| Hackney | 1,570 |
| Camden | 1,090 |
| Tower Hamlets | 970 |
| Ealing | 940 |
| Hammersmith & Fulham | 710
|
| Islington | 680 |
| Barnet | 440 |
| Hounslow | 190 |
| Haringey | 150 |
| Lambeth | 100 |
| Richmond upon Thames | 90 |
| Merton | 60 |
5. The above information is taken from the Department for
Work and Pensions' report on the proposed changes to the Social
Security Advisory Committee (tables 18 and 19 showing the impact
of restricting LHA levels to the four-bedroom rate and applying
weekly caps). The data is based on local authority caseload figures
for March 2010 and the City Council's own records shows that there
were 4,590 benefit recipients affected by July 2010.
6. The next table taken from the Department for Work and Pensions'
report shows the number of losers by accommodation size and the
average shortfall between existing LHA rates and the capped amounts.
| Local authority | Accommodation size and average shortfall (£ figure in brackets)
|
| 1-bed | 2-bed
| 3-bed | 4-bed |
5-bed |
| Westminster | 2,030 (£85)
| 1,270 (£149) | 530 (£269)
| 130 (£392) | 50 (£659)
|
| Brent | None | 1,180 (£37)
| 480 (£73) | 200 (£142)
| 210 (£189) |
| Wandsworth | None | 1,060 (£9)
| 420 (£33) | 170 (£94)
| 140 (£202) |
| K & C | 890 (£84) |
570 (£158) | 140 (£290)
| 40 (£417) | 10 (£641)
|
| Hackney | 10 (£55) |
1,020 (£10) | 290 (£12)
| 100 (£29) | 150 (£131)
|
| Camden | 210 (£67) |
590 (£62) | 210 (£106) |
50 (£158) | 30 (£262) |
| T. Hamlets | None | 730 (£9)
| 200 (£10) | 20 (£29)
| 20 (£79) |
| Ealing | None | 520 (£20)
| 210 (£58) | 90 (£113)
| 120 (£157) |
| H & F | 10 (£58) |
520 (£15) | 120 (£50) |
40 (£128) | 20 (£282) |
| Islington | 70 (£73) |
450 (£43) | 110 (£88) |
30 (£134) | 20 (£283) |
| Barnet | None | 180 (£33)
| 110 (£70) | 30 (£123)
| 120 (£88) |
| Hounslow | None | 80 (£10)
| 30 (£38) | 30 (£49)
| 50 (£87) |
| Haringey | None | 60 (£36)
| 10 (£63) | None | 80 (£103)
|
| Lambeth | None | 30 (£9)
| 10 (£37) | 30 (£12)
| 30 (£126) |
| Richmond | None | 50 (£9)
| 10 (£35) | 20 (£21)
| 10 (£115) |
| Merton | None | 10 (£7)
| 10 (£36) | 10 (£21)
| 30 (£93) |
7. The information shows that the amount of shortfall between
existing rates and cap should, in addition to the number of losers,
be taken into account in the calculation of the DHP distribution
formula. For example both Wandsworth and Hackney have a large
number of losers living in one-bedroom accommodation but the amount
of the shortfall is £10 a week or less compared to £149
a week in Westminster. Also relatively small weekly shortfalls
make it more likely that a landlord will accept a reduced rent.
This is because landlords will compare the cost of eviction and
voids against income they will lose through receiving a lower
rent.
8. The information from the DWP's report shows that Westminster
experiences the combined effects of having the highest number
of losers and the largest shortfalls. Kensington & Chelsea
are similarly affected by large shortfalls but have significantly
fewer losers in comparison to Westminster: 1,650 losers in Kensington
& Chelsea and 4,010 in Westminster.
9. The City Council will use the extra DHP funding it receives
to limit the number of vulnerable tenants becoming homeless as
a result of the caps. We recognise that in many cases sustaining
an existing tenancy with an award of DHP will only be a relatively
short-term measure. But it is a vital measure to give vulnerable
people more time to plan for moving home and to avoid a large
volume of new homelessness applications being made in same time
frame.
10. In Westminster we anticipate that some landlords will
accept a reduced rent when the caps are introduced—particularly
if there is the incentive for landlords to receive the LHA directly,
but it is inevitable that a proportion will also choose to withdraw
their properties from the housing benefit market. That outcome
is more likely for larger properties where the shortfall between
the cap and the median is greater and the reduced availability
of larger properties in the central London private rented market
means that landlords will be able to obtain higher rents from
non-housing benefit tenants.
11. Given this range of factors, it is difficult to assess
with any accuracy at this time the effect on Westminster's homelessness
numbers resulting initially from the fall out of existing private
sector tenants following the introduction of the new caps from
April 2011. While Westminster will be doing everything possible
to mitigate the effect of these changes, it is clear that the
new caps coupled with the need to take on new Temporary Accommodation
contracts and end the majority of our existing Temporary Accommodation
contracts which will be no longer be viable from April 2013, that
some financial support will be necessary if the burden of these
changes is not to unfairly fall on Westminster Council taxpayers.
12. Extra DHP funding will also help minimise the number of
evictions, particularly from larger (three-bedroom and above)
properties, of vulnerable tenants who would have priority need
if they were to become homeless. Minimising such evictions will
provide an opportunity to manage out the existing system and reduce
the potential additional strain on the City Council's homelessness
service. Preventing a proportion of larger households from being
made homeless in central London at the same time will also assist
London as a whole because it alleviates the effect of boroughs
competing to procure large properties in outer London.
13. Although households living in larger properties are the
group most obviously affected by the proposed caps, the City Council
also anticipates that extra DHP funding could be utilised to prevent
single vulnerable people from being made homeless. For example,
of the total LHA caseload of 5,952 there are currently 329 pensioners.
Although this number is relatively small, the City Council would
have a homelessness duty to every pensioner who presents themselves
as homeless as a result of the caps. The City Council could therefore
seek to target those pensioner cases to ensure that everything
is done to prevent homelessness wherever practicable. We will
take a similar approach to vulnerable disabled tenants (681 disabled
LHA claimants in Westminster).
14. The number of homelessness acceptances can also be restricted
by a change to legislation allowing local authorities to discharge
their duty to house homeless families into the private sector
without requiring the applicant's consent. There is a range of
good quality, affordable housing available in the private sector
across London and this change would be in the spirit of the new
caps.
15. Finally, the City Council is committed to maintaining
a genuine mixed community within the borough and promoting work
as the best option to families claiming state benefits. In recent
years Westminster has a strong record of delivering on these principles
through starting building at least 500 new homes—the majority
of which will be provided for affordable housing, developing a
housing renewal programme—through which we aim to provide
additional homes and better opportunities for residents, and has
created an intermediate rent scheme to support low income individuals
and couples on to the housing ladder.
16. DHP also supports the transition into work for tenants
in both the private and social rented sectors and sustains employment
in the longer-term. For example, of Westminster's total LHA caseload
of 5,952 there are 1,814 households receiving partial housing
benefit because they are in work. The City Council is already
awarding DHP to a significant number to assist in sustaining work.
It is critical that the City Council receives a significant amount
of extra DHP funding so that we can continue to encourage housing
benefit recipients to move into and sustain work in central areas,
whilst also addressing the consequences of the LHA caps.
17. In conclusion, there is a strong case for the introduction
of the caps, particularly providing greater value for money to
the taxpayer in a time of economic austerity and removing the
anomaly of workless families living in accommodation beyond the
means of more than 95% of the working population.
18. There is also strong case for allocating the greatest
share of the extra DHP funding to council's such as Westminster
with large parts of its borough within the central London rental
area. Doing this will help London as a whole to manage out the
existing system by mitigating against high volumes of families
needing larger properties moving from central to outer London
at the same time in the process putting a strain on local services
such as health and education. The formula for distributing the
extra DHP should therefore not be based solely on a headcount
of the number of losers. Instead the amounts of shortfall between
existing LHA rates and the caps should also be taken into account.
6 September 2010
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