Written evidence submitted by Affinity
Sutton
SUMMARY
Affinity Sutton has long advocated changes to Housing
Benefit that would simplify the system, reduce administrative
costs and provide incentives to work and reduce benefit dependency.
We eagerly anticipate the standardisation of Housing Benefit paid
straight to the landlord which is fully transparent and includes
some tapering to provide incentives to work.
We appreciate that the driver behind these proposals
is the need to control welfare benefit spending in general and
HB in particular but the measures proposed will put people's homes
at risk and affect some of the poorest and most vulnerable households
in this country. If cuts of this magnitude have to be made they
should be well considered and not rushed through for the sake
of expediency.
Any squeeze on rental income caused by arrears caused
by reduced HB payments will have a negative impact on the ability
of social housing providers to maintain community initiatives
and activities as well as provision of essential maintenance and
repairs services. In particular, there is a considerable risk
that lenders will regard the possibility of diminished rental
incomes as unacceptable and will seek to limit their involvement
and increase their interest rates.
1. In April 2011 Non-Dependant Deductions will
begin to Increase, Reversing the Freeze in these Rates Since April
2001
If rates are to be brought up to the level they would
have been without the freeze by April 2014, the increases are
likely to be relatively steep.
Non-dependant deductions are one of the factors that
account for the shortfall between Housing Benefit (HB) and the
contractual rent charge. For residents in social sector housing
on "passporting" benefits there are very few other elements
that contribute to this shortfall (ineligible service charges
and overpayment recovery being the only other factors). The regulations
and the way they are applied can penalise those HB claimants who
are unable to provide the administering authority with acceptable
evidence of non-dependant income which results in the highest
deduction being applied. The rules make it imperative that the
financial transaction between the non-dependant and the tenant
takes place consistently. Where this does not happen the tenant
can end up in severe hardship and accrue rent arrears. The reversal
of the freeze on the non-dependant rates may increase the financial
hardship of those tenants where this is already an issue.
Working age residents in the social sector who "evict"
their non-dependants as a solution to this problem may then find
themselves subject to the size-related restriction proposed for
April 2013.
The non-dependant increases also apply in Council
Tax Benefit (CTB) with the same attendant consequences of hardship
and debt.
2. "Reforming of the gateway" to Disability
Living Allowance (DLA) from April 2013 is expected to produce
a 20% reduction in the number of people receiving this benefit
Besides the direct negative impact on the income
of these claimants, this will have a significant knock-on effect
on their entitlement to means tested benefits. This includes the
application of non-dependant deductions to the HB and CTB entitlement
of claimants who have previously been exempt from these charges.
3. The sum allocated by Government for Discretionary
Housing Payments (DHPs) will increase by £10 million in 2011
and by £40 million a year thereafter. This is aimed at giving
greater flexibility to local authorities (LAs) to help more customers
who face a shortfall in rent because of changes to the HB rules
The increase in the DHP budget is welcome but represents
a fraction of the savings expected to be made by the other cuts.
It is also highly likely that in spite of this increase there
will be less DHPs awarded to tenants of social sector landlords
as LAs use the budget to meet expected shortfalls caused by the
changes to LHA.
4. Size-related rent restriction in social sector
housing
The proposal to introduce a size-related restriction
on the level of HB a household may receive based on their accommodation
needs will, for some tenants, create a shortfall between the HB
award and the contractual rent. Whilst this may contribute to
better use of housing stock, where a tenant cannot be re-housed
locally in suitable accommodation this may force potentially vulnerable
residents to move away from their area to downsize and avoid rent
arrears; this could result in other forms of hardship where tenants
move away from social and family networks.
Administration and regulation of this would be costly
and resource intensive. Some form of regular census will be required
to identify the number of people residing in each property and
guidelines will be needed to clarify what is considered under-occupation
to trigger this reduction. The information will have to be kept
up to date and acted upon frequently, implying a further cost
burden to all those involved in resourcing this.
Affinity Sutton already provides under-occupying
tenants with opportunities to downsize as do many other Housing
Associations and Local Authorities. There is a risk where a tenant
wants to move but there are no smaller properties available as
Housing Associations may face problems with collecting rent.
5. 10% cut in Housing Benefit after 12 months
on Jobseekers Allowance
The proposed reduction of HB by 10% for those who
have been on Jobseekers Allowance (JSA) for over 12 months will
affect some of the most vulnerable households. This move will
generate a shortfall that tenants may struggle to meet causing
them to fall into arrears. The proposal introduces an indiscriminate
financial punishment to those who are long term unemployed irrespective
of the efforts they have made to re-engage with the labour market.
Although the JSA caseload is currently falling it is likely to
increase as a consequence of the Employment and Support Allowance
(ESA) migration exercise and the erosion of Income Support for
single parents.
6. From October 2011 most single parents whose
youngest child is aged five or over will no longer be eligible
for Income Support (IS); the replacement benefit will be JSA or
ESA. Single parents who migrate to JSA will be expected to meet
certain labour market conditions condition of entitlement. Most
single parents who migrate to ESA will be expected to be preparing
for a return to work
JSA and ESA, claimants who do not meet the work conditions
run the risk of losing entitlement to these benefits which will
have a knock-on effect on HB. Claimants may also experience difficulties
if the migration from IS on to the replacement benefit is not
seamless.
7. An objective medical assessment will be introduced
for all new and existing DLA claimants over a three year period.
This will bring DLA into line with ESA in terms of the health
assessment
ESA is the most commonly appealed benefit accounting
for 8,000 tribunals per month. This is twice the number of the
next most appealed benefit, DLA, which has seven times more claimants.
40% of ESA decisions are reversed at the tribunal stage. The appeals
process is already lengthy and will become subject to additional
pressures as a consequence the ESA migration programme. The number
of appeals of this type is also likely to increase significantly
if a similar medical test is introduced into DLA. This proposal
comes at a time when there are plans to merge tribunal and court
services and with the possible closure of some court and tribunal
venues due to cuts in the judicial service budget.
8. Local Housing Allowance
— April 2011
- LHA levels will be restricted to the four bedroom
rate. Expected savings £65 million.
- Weekly LHA rates will be capped as follows:
- £250 for a 1 bedroom property
- £290 for a 2 bedroom property
- £340 for a 3 bedroom property
- £400 for a 4 bedroom property
This is almost exclusively a London issue (of the
21,000 claimants affected 17,000 of these are in London —
DWP).
9. The £15 weekly excess provision will be
removed. Previously, HB claimants could receive LHA up to £15
per week above the level of the contractual rent. Affects 47%
of LHA claimants. Average loss £11 per week. Expected savings
£145 million
10. The size criteria will be amended to allow
an additional bedroom when a disabled claimant has a non-resident
carer and an established need for overnight care
This is a welcome move and will help HB claimants
with the additional housing costs created by this need. It will
also free up amounts of DHP where this has previously been used
to address the rent shortfall for claimants in these circumstances.
It is noted that that was initially put forward in the consultation
paper "Supporting people into work : the next stage of HB
reform". Another proposal in that paper, the introduction
of the Transition Into Work Payment Period which as an organisation
we considered to be a positive incentive for those moving off
long term benefit into work appears to be no longer part of the
reform agenda. We feel there is still a place for this and that
it would be far more effective in encouraging the long term unemployed
into work than the 10% cut in HB.
— October 2011
11. LHA rates will be set at the 30th percentile
of local rents. Previously the 50th percentile has
been used. Expected savings £425 million
Reducing the section of the market available to HB
claimants will place additional pressures on Local Authority homeless
sections and social sector housing providers at a time when demand
is already at record levels. In areas where there is a high proportion
of benefit dependency the bottom 30% of the market is likely to
become saturated and tenant choice severely restricted.
Taken as a whole the 2011 LHA changes will affect
almost one million HB claimants who will lose on average £600
per year. More than half of these claimants are on "passported"
benefit and already living on minimum levels of income.
— April 2013
12. LHA will switch to CPI indexation. Expected
savings £390 million (but generating far greater savings
over subsequent years). Currently LHA rates are based on local
rent levels; this proposed change will break the link between
HB and actual housing costs. Typically rent inflation has outstripped
CPI and should this trend continue the effect will be to squeeze
the 30% of the private sector rented market that will be theoretically
available.
Latest information from LAs shows that homelessness
has increased as a result of LHA. Authorities have also reported
a significant increase in the amount of contact they are having
with citizens advice bureau about homelessness and many considered
that the LHA had had the effect of increasing rent arrears and
social rented sector waiting lists. Just under half of LAs said
that since the introduction of LHA landlords were less willing
to let property to HB customers. The proposed changes to LHA will
serve to increase these trends.
The financial implications of this budget on our
customers could be significant. The private rented sector will
become unaffordable in many areas in London and the South East
placing an additional burden on social sector housing providers
at a time when budgets are expected to be cut. Some HB customers
will need to move out of expensive areas which could result in
pockets of deprivation in the areas they move to.
6 September 2010
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