Written evidence submitted by National
Federation of ALMOs
SUMMARY
The National Federation of ALMOs recognises the need
for overall reform to the welfare system given both the financial
disincentives to work for some claimants as well as the complicated
and bureaucratic nature of the system. However, the NFA is not
convinced that the current proposals are the best way of reforming
the system and believe instead that many of the proposals will
not have the outcome that the government desires and may cost
the public purse more in the long run.
ALMOs work with some of the most vulnerable households
in the country and encounter some of the issues that households
face when applying for Housing Benefit. They have a lot of evidence
about how things actually work on the ground and therefore wish
to be part of an on-going dialogue with government to ensure that
any proposed reforms are fair to people who are trying their best
but who currently need the extra support that the welfare system
and Housing Benefit in particular gives. We would urge the government
to re-consider its proposals in light of the concerns within the
sector and work with landlords and tenants to reform the system
in a fairer and more structural way.
IMPLICATIONS OF
THE EMERGENCY
BUDGET ANNOUNCEMENTS
Incentives to work and access to low paid work
The NFA is unconvinced that any reductions in Housing
Benefit will help motivate people to find work. Many long-term
unemployed people will have a number of issues to overcome in
order to be able to get work and will undoubtedly need additional
help and support to do so, but reducing their Housing Benefit
by 10% after 12 months is a punitive measure which is unlikely
to help.
In these challenging economic times we believe it
will be even harder for the long term unemployed to secure employment
as they will be competing for jobs with more experienced jobseekers.
A 10% cut in income for a family or individual already on a very
low income could dramatically affect their ability to satisfy
their basic needs, especially where the family includes children.
Rather than cuts to basic benefits, which are already
meagre, we would prefer a clearer and simpler method to calculate
the financial gains from work and for people to receive the necessary
support that they need to be successful in gaining employment.
Our members already support training and employment packages for
both the long term unemployed and young people leaving school
or college and believe that these types of approaches are much
more successful in getting people into work than punitive benefit
cuts.
One of the issues that our members come across frequently
with their tenants is the sorts of Housing Benefit problems that
can be caused by a series of low paid temporary periods of work
followed by a period of unemployment, which often leads to periods
of unpaid rent whilst Housing Benefit claims are made and arrears
which build up whilst the tenant does not know how much rent they
need to pay. This effect of uncertainty and anxiety over losing
their home due to rent arrears coupled with the prospect of not
earning enough to be better off in work seems to play a role in
some individual's decision to look for or take up employment.
This cannot be addressed simply through cutting benefit entitlements,
this requires a much more fundamental and structural change within
the system.
Levels of rent, including regional variations
The NFA does not think that these proposals will
have any effect on the rent levels in the social housing sector
and we are unable to comment on the effect of the changes to the
Local Housing Allowance on private sector rent levels.
Shortfalls in rent
The NFA is concerned that the proposed increases
to the non-dependent deduction will cause shortfalls in rent.
There is a concern regarding whether a tenant and non dependant
will agree on who will meet the shortfall in rent and the impact
this will have on the level of rent arrears. The indication is
that these rises will be quite steep and this could become quite
difficult for many tenants. Non dependents are typically adult
children still living with their parents and it may well have
implications on family formation and the pressure on independent
accommodation if adult children are asked to pay more than their
fair share of the rent (i.e. a room in a shared house rather than
the full rent).
Our members request that these changes in benefit
are fair and clearly communicated so all parties understand to
whom the benefit entitlement is for and who needs to pay the shortfall
in the rent. This situation can often lead to problems with arrears
or elderly and low income tenants trying to find the money themselves
rather than ask their offspring for rent. It is also believed
that some claimants are more likely to ask their non-dependants
to move out or be driven to fraudulently claim they have moved
out to avoid the deduction.
Due to the additional problems our members anticipate
with this change, it is likely that our members will need to introduce
additional income management support to aid understanding of these
proposals.
The NFA is also highly concerned about the proposed
10% cut in Housing Benefit for long term job seekers and the impact
that will have on arrears. These families will not have any other
additional income from which to make up the shortfall in rent
and if they are still unable to find work then it is very likely
that arrears will build up that they are unable to repay.
There may be a number of reasons why the tenant is
still receiving JSA after 12 months but in these challenging economic
times it will undoubtedly be very difficult for some people to
find work. Some areas of the country are likely to be affected
by this more than others and indications from the CIH are that
the Midlands and some parts of London have a particular problem
with long term unemployment. This seems like a particularly punitive
measure which may not have the desired effect of incentivising
people to find work. These households will vary but some of them
will include children and this is a cause of particular concern
to our members and their tenants. It is also expected that more
people will move onto JSA in future years as eligibility for Employment
and Support Allowance and Incapacity Benefit is restricted. This
could increase the numbers of households that will be affected
by this proposal.
The proposals to adjust benefit entitlement for working
age tenants according to family size from April 2013 may also
adversely affect arrears. Depending on the opportunities locally
to downsize, tenants may be left in situations where they are
unable to pay the full rent and start to get in arrears with the
rent. Mobility within the social sector is not as good as we would
like and it could prove difficult and take some time for these
households to find a suitable property to move to. Neither the
choice based lettings schemes or the allocations systems are currently
set up to allow people who need to downsize for financial reasons
sufficient priority to access a move relatively quickly and rent
arrears would undoubtedly build up. The irony is that in most
council transfer schemes households with arrears are ineligible
for a move thus making it impossible to move until the arrears
have been paid off. It is also very likely that further pressure
will be placed on the social housing waiting list by the changes
to Local Housing Allowances. This will mean that there would be
even less opportunities for existing tenants to move within the
sector.
Levels of evictions and the impact on homelessness
services
The proposed changes to Housing Benefit in the social
sector are likely to increase rent arrears within the sector and
thereby increase the likelihood of eviction for some tenants,
who are unable to remedy the situation either by moving or by
finding work and repaying the arrears. This will increase the
levels of homelessness and lead to greater costs to the public
purse in terms of temporary accommodation and upheaval in families
lives which could affect education, health and future employment
prospects.
ALMOs are also concerned about the repercussions
of cuts in the Local Housing Allowance in the private sector and
the effect that this will have on the social sector. We would
expect that the combination of proposed changes to the Local Housing
Allowance will result in an increase in the numbers on the waiting
list for social housing as people will find it more and more difficult
to secure themselves private sector accommodation within their
means. It is also highly likely that there will be an increase
in rent arrears and evictions rates in the private sector, increasing
homelessness and thereby further increasing the pressure on social
housing. If this happens and more homeless families need to be
accommodated in the social sector there will be less opportunities
for transfers and the mobility of the existing social housing
population will be severely restricted. Many councils, particularly
in London, make use of the private sector to house homeless households.
If they are prevented from doing this due to changes in the Local
Housing Allowance it is difficult to see how, in high demand places
like London, any existing tenants would get a transfer as all
available lettings would end up having to go to homeless households.
Landlord confidence
The biggest issue in terms of landlord confidence
for our members is the level of arrears these changes are likely
to bring about. It is important to remember that in council housing,
it is not only those tenants on Housing Benefit that will be affected
by these proposals, but all other tenants. If landlords cannot
collect the full rent they will not have sufficient finances to
manage and maintain the housing stock. This will undoubtedly have
an impact on their ability to do carry out some of their wider
activities, such as employment training and financial advice,
which could then have a counterproductive impact on other public
sector expenditure.
Community cohesion
The proposals to adjust benefit entitlement for working
age tenants according to family size from April 2013 are likely
to affect the more mature working age tenants whose children have
grown up and left the family homes. These tenants will have probably
lived in their homes for most of their adult lives and may expect
children to return to live them for periods of time in the future
(for example after university or after a martial breakdown). They
may also be responsible for caring for grandchildren and have
them to stay for periods of time. It will be very difficult for
any system which forces families to move due to financial constraints
to fully reflect the varying needs of each family and may result
in more pressure on the social housing system from grown up children.
It will not necessarily free up a large proportion of family homes,
as many of these are occupied by elderly tenants not affected
by this proposal. The NFA believes that councils and government
should use incentives and support to get households to move to
smaller accommodation rather than penalising those who want to
stay in their family homes irrespective of age of the tenants.
The NFA welcomes the stated increase in the discretionary
housing payments which may help in the most difficult cases. However
we do not feel that this makes up for the impact that some of
the government's proposals will have. Given the scale of the changes
in the private sector in some areas this money will not go very
far. Help for social sector tenants seeing a cut in their Housing
Benefit may not have the same priority locally as helping (probably
worse off) private sector tenants and given the discretionary
nature of the payments this can only ever be seen as temporary
assistance.
Disabled people, carers and specialist housing
The NFA welcomes the announcement that from April
2011, Housing Benefit claimants with a disability and a non-resident
carer will be entitled to funding for an extra bedroom which is
a positive proposal for this vulnerable group.
Older people, large families and overcrowding
The proposals to adjust benefit entitlement according
to family size will not affect elderly tenants. This is welcomed
by the NFA as it will prevent many elderly tenants from falling
into arrears. However, it would be more useful to think of how
under-occupying tenants of all ages could be persuaded to downsize
voluntarily, thereby freeing up much needed family sized accommodation
for the waiting list.
6 September 2010
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