House of Commons - Work and Pensions Committee

Changes to Housing Benefit announced in the June 2010 Budget - Work and Pensions Committee Contents

Written evidence submitted by National Housing Federation

1. INTRODUCTION AND SUMMARY

2. We have marshalled our submission according to the headings set out in the Committee Terms of Reference.

3. We understand the drive to reduce the tax payer's bill for Housing Benefit and the "desirability of fairness" between the housing a working person could expect to afford and that which someone on benefits could afford'[159]. However, we are extremely concerned that the proposals announced in the Budget will push people into severe hardship and debt with many people forced to move and cram into poor quality over-crowded properties. As a result, we feel that these proposals may make it more difficult for people who are out of work to gain employment and for those in jobs to keep them. We also believe that while there may be short-term budget savings, in the long-term the tax payer will foot a mounting bill as the toll on people's physical health, stress levels, job prospects, educational attainment and the ability to draw on and provide support to family members all take effect.

4. In the DWP's own impact assessment 939,220 claimants will lose an average of £12 per week (includes the removal of the £15 excess announced in the March 2010 Budget) or 642,160 will lose an average of £9 per week if you just consider the measures announced in the June 2010 budget.[160]

5. In summary:

The proposal to cut Housing Benefit after 12 months for claimants receiving Jobseeker's Allowance should not be introduced. It is too crude a measure to incentivise employment. It could have the very opposite effect, as people's health and employment prospects are likely to deteriorate as they are pushed into extreme hardship. We show as a result that people will be unable to cover other basic living costs.
The Government should not move to setting Local Housing Allowance at the 30th percentile as it will mean that people in low paid work will be forced out of some areas. As a result they may find they can no longer retain their jobs, as it would be impractical, or too costly, to commute over that distance.
It is not proven that simply applying a guillotine at the 30th percentile will bring private sector rents down. Our analysis suggests that not all claimants could squeeze into the bottom third of the market, given claimants are estimated to occupy around 39% of the private rented sector stock. The risk is that households will be forced into extreme hardship to maintain payments and will fall into debt, rent arrears or be forced to move and cram into smaller housing. This is likely to have a negative impact on people's health, educational attainment and anxiety levels. Our evidence shows this will all come at a cost to the tax payer too.
The impact of the Budget proposals will be to swell the demand for social housing as people are priced out of renting suitable homes in the private rented sector. It will increase homelessness with all the disruption that this entails to people's lives and the prospects of their children. It will push up the costs of temporary accommodation.
One way in which to keep the Housing Benefit bill down is to build more social housing where rents would be well within the new caps proposed for the private rented sector. The Government should invest £9.5 billion across the next four-year spending review period to support housing associations' investment of £12.5 billion to build 150,000 new affordable homes.
Black and minority ethnic groups are likely to be disproportionally affected, as they are currently over-represented amongst Housing Benefit claimants in the private rented sector and at the same time, the average household size is higher amongst some non-white groups. The Government should not proceed with the proposals until their impact has been more fully considered.
The proposal to allow claimants with a disability to receive Housing Benefit for an extra room for a carer to stay over is welcome. However, the wider reforms will have a negative impact on the income of disabled people, their employment prospects and the range of housing choices open to them. It could also impact on the viability of specialist housing designed to support people to live independently and begin to address their underlying problems. Our evidence shows this could ultimately cost the tax payer more as the demands on acute and emergency services will rise.
Housing associations who provide support services are reporting that their clients who previously claimed Incapacity Benefit are being pushed onto Jobseeker's Allowance. This is affecting people with deep seated mental health and substance abuse problems. It is difficult to see how many of these individuals would be taken on by employers in the current job market. We show how the employment and training services associations have provided do challenge and support people to aspire and move into work. But we also show that forcing people to contribute 10% of their housing costs after a year is not going simply to lead to their employment.
The new Work Programme should be structured to ensure that resources are targeted at supporting those groups who are the furthest from the job market, such as people with mental health problems.
The proposal that housing entitlements for working age people in the social rented sector will reflect family size, will mean in our estimation that 332,000 housing association tenants could face a stark choice of having to make up the shortfall in their rent or move.
It would be doubly iniquitous to impose a benefits financial penalty on tenants who are under-occupying without opening up opportunities for them to move. While recent Government proposals to boost mutual exchanges will help, we set out how legislation governing access to housing should be reformed so there are more opportunities for existing tenants to transfer. We also show how social landlords can do more to support and incentivise under-occupiers to move.

INCENTIVES TO WORK AND ACCESS TO LOW PAID WORK

Our analysis of the impact of the proposals

6. The proposal that Housing Benefit awards will be reduced to 90% of the initial award after 12 months for claimants receiving Jobseeker's Allowance is too crude a measure to incentivise employment. Perversely it could even have the very opposite effect, as people's health and employment prospects are likely to deteriorate as they are pushed into extreme hardship.

7. The average weekly Housing Benefit received by someone in receipt of Jobseeker's Allowance is £102 (if you discount the £15 excess that can currently be retained) and for a person living in a one bedroom property the figure is very similar at £101. This suggests that a single claimant over 25 years of age would be left with just £55.25 to live on per week and that those between the ages of 16 to 25 merely £41.65 if they have to make up 10% of their rent, according to the Federation's analysis based on Jobseeker's Allowance rates and the Government's impact assessment of the changes.[161] In our view, these changes would leave people with barely any money to live on after the costs of eating and heating their homes as shown in Table 1 (which adds up to £54.12 for a single person of working age) based on the items members of the public think should be covered by a household budget in order to achieve the minimum socially accepted standard of living.[162]

Table 1

SUMMARIES OF THE MINIMUM INCOME STANDARD FOR FOUR FAMILY TYPES, APRIL 2010[163]

£ per week	Single working age	Pensioner couple	Couple + 2 children	Lone parent + 1 child
Food	44.34	58.53	107.13	51.71
Alcohol	4.69	7.93	6.49	3.73
Tobacco	0	0	0	0
Clothing	7.73	10.03	29.58	16.59
Water rates	4.93	5.82	5.7	7.73
Council tax	13.93	18.57	21.66	16.25
Household insurances	1.9	1.75	2.37	2.12
Fuel	9.78	11.54	20.09	17.84
Other housing costs	2.44	3.84	7.73	2.26
Household goods	10.35	12.13	18.96	17.86
Household services	4.42	9.7	9.81	3.91
Childcare	0	0	199.07	143.78
Personal goods and services	8.95	25.2	29.2	20.76
Motoring	0	0	0	0
Other travel costs	19.72	10	39.38	19.3
Social and cultural participation	42.16	47.18	104.73	53.68
Rent	52.62	65.45	71.18	66.04
"Headline" total—excluding rent and childcare	175.34	222.22	402.83	233.73
Total including rent and childcare	227.97	287.68	673.08	443.54
Totals excluding:
Rent, council tax, childcare (comparable to out of work benefits)	161.41	203.65	381.17	217.48
Rent, council tax, childcare and water rates (comparable to after housing costs in HBAI)	156.48	197.83	375.47	209.76
Council tax, childcare (comparable to before housing costs in HBAI)	214.04	269.11	452.35	283.52

8. Clearly people could not spend all their money on food and fuel and would have to divert money to other necessities such as toiletries, as well as replacing worn out shoes and household cleaning products. This would leave people with very difficult choices to make on a weekly basis and debt could only be avoided by skimping on necessities. Some weeks people would have to go without eating a balanced diet or heating their homes. There are numerous studies linking a poor diet to ill health, for example the Health Survey for England 2003 shows that people eat less fruit and vegetables as their income reduces, and that rates of stroke, long-term illness and diabetes increase.[164] Research also shows that cold homes are linked to ill health.[165]

9. Deteriorating health may push many people further away from the job market as studies show mental health problems, especially depression and anxiety, and physical health conditions to be barriers to work.[166]

10. Perversely this could end up costing the tax payer more than the perceived saving of having a single person on Jobseeker's Allowance contribute about £10 per week to their housing costs, as health costs will soar and more people may be found unfit to work.

11. With return daily bus fares in a number of cities over £3[167] and travel to work costs frequently higher in rural areas, people could simply be priced out of travelling in search of work too.

12. Jobseeker's Allowance claimants will be priced out of many areas as even rents in the bottom third of the market will be unaffordable, as shown by a look at what Local Housing Allowance rates would have been in June 2010 if calculated at the 30th percentile. A four-bedroom property at the 30th percentile would cost £229 per week in Cambridge while a two-bedroom Central London property would cost £415 per week to rent. A single person renting a one-bedroom flat in Reading would be paying around £138 per week at the 30th percentile rate as calculated against June 2010 Local Housing Allowance.[168] A family will have to choose between moving to a smaller property that does not match their household size, or moving further afield with all the disruption that would entail, for example having to uproot their children from schools, or take them further away from their grandparents who help out with child care. This could make finding and retaining employment even more difficult.

13. In addition, the effect of the proposed new caps and calculating Local Housing Allowance at the 30th percentile will mean that many people in low paid work, who rely on Housing Benefit to cover part of their housing costs, will be forced to move away from higher rent areas. As a result they may find they can no longer retain their jobs, as it would be impractical, or too costly, to commute over that distance, or because they can no longer call on family members for child care. Indeed the DWP's Equality Impact Assessment recognises that "there could also be negative impacts for Housing Benefit customers who are working if they have to move to an area where they need to extend their commute to their place of work. This impact may be more pronounced in inner London than elsewhere".[169]

14. If the motivation of this proposal is to incentivise work there is little evidence to prove that it will work—in the Government's own words "we do not currently have robust data that allows us to determine the extent of an impact on working households by area"[170] and there is much, as we have outlined above, to suggest that the proposals might make it harder for people to work. The Government has not set out a robust basis for its statement that "…moving to more affordable accommodation could encourage households to take up employment"[171] (our emphasis in italics).

15. In addition, the significant moves of population that could come in the wake of these proposals could hit public service provision, for example some newly built or modernised schools could find their rolls falling, while in other areas they could find it very difficult to absorb the new demand. GPs and Primary Care Trust services could also find that they have to handle abrupt changes in demand. The Government recognises, for example, that there could be knock-on impacts for outer London boroughs that "could be faced with an increased number of new Housing Benefit customers needing access to additional services such as schools and health care".[172]

The housing association offer

16. Housing associations could support more people into employment irrespective of their tenure, through apprenticeships, work pairings and other aspects of the proposed Work Programme. The National Housing Federation's first Neighbourhood Audit demonstrated that housing associations delivered 6,800 community projects through an investment of £435 million, benefitting the equivalent of one in ten of the population[173]. This included 574 employment and enterprise services benefitting 67,600 through the investment of £45 million. Among this work was training in building trade skills, work experience, Youthbuild and youth enterprise projects.

Case studies of what housing associations have found effective in supporting people into work

City West Housing Trust

City West Housing Trust, based near Manchester, works to ensure that the money invested in improving their housing also creates local jobs. They run a dedicated skills programme providing construction skills and training for local people, often leading to full-time employment with City West's contract partners. 200 jobs are expected to be created during the first five years of the programme.

The two-week training programme provides trainees with a set of construction skills and supports them to achieve recognised qualifications, including:

Construction Skills Certification Scheme (CSCS).
Health and Safety Level 2.
Manual Handling Awareness.
First Aid.
Asbestos Awareness.

Ryan

Ryan left school at a young age having found it hard to continue with his schoolwork after the death of his father.

After completing his GCSEs by working from home, Ryan applied to Salford Tech College to train as a joiner, but there were no available places. Ryan joined the City West Skills programme in order to gain skills across a number of trades, to set him up for his career. "The advice that I have been given has really helped me feel comfortable and confident in the work I am doing".

Ryan completed an intensive training course, and gained qualifications through practical workshop sessions, alongside classroom and computer-based assessments. He was given the opportunity to shadow professionals in the construction industry, and develop a range of practical skills. He has also received further on-the-job training and will have the opportunity to study at college.

The City West Skills Programme has so far been able to help Ryan and over 80 other recruits since its launch last October.

East Thames Housing Group

Routes to Work is a training and employment programme run by the East Thames Group, giving trainees the opportunity to experience a job first hand.

The programme includes three days of training to prepare people for the workplace, covering interview techniques, workplace behaviour and communication skills.

Trainees then spend two weeks in a work placement. The programme provides valuable new skills, up-to-date information for the CV, a reference when applying for new jobs and an on-the-job understanding of their chosen career.

Heather

Heather, who had been unemployed for over a year, took part in the Routes to Work scheme after seeing it advertised on the East Thames website.

Routes to Work gave Heather one-to-one support during her two week placement as an administrator with Bovis Land Lease at the Athlete's Village, with a point of contact available to answer any questions and to offer interview practice.

"The course helped me because I wasn't confident in interviews. They put us in groups of three, an interviewer, an interviewee and then someone to observe. Then we got feedback. It made me more confident."

After graduating from the scheme, Heather secured a permanent position with East Potential as an employment and training project officer.

Family Mosaic

Pathways2work is a project run by Family Mosaic Housing, in partnership with local agencies. The programme provides training and employment advice for residents and their families.

Matey

Matey is a lone parent living in Lewisham, who was finding it difficult to fit work around her child care arrangements. She was introduced to Family Mosaic's Pathways2work scheme by housing staff. Matey was given support and training opportunities, as well as advice in preparing her CV for job hunting. Following the Pathways2Work programme, Matey was successful in securing a position at the Princess Royal Hospital in Orpington as a Registered Mental Health Nurse.

Matey was delighted with the outcome, commenting: "If anyone needs help with looking for work, updating their CV or training courses they should go to Pathways2Work—it's a good service that they offer."

17. RECOMMENDATIONS

R1 The Government should not proceed with the proposal to require JSA claimants of 12 months or more to contribute 10% of their rent as it is not certain this will incentivise work, and may have the opposite impact as people's health and employment prospects suffer as they are pushed into severe hardship or forced to move.
R2 The Government should not move to setting Local Housing Allowance at the 30^th percentile from October 2011.
R3 The Government should seek to reduce the disincentives to work in the benefits system drawing on the analysis in the recent DWP paper, The State of the Nation: Poverty, worklessness and welfare dependency in the in the UK, May 2010.[174] But, this should not be done at the cost of penalising other people on low incomes.
R4 The Government should look at alternative ways of challenging and supporting people into employment through the Work Programme and through job creation, for example by investing in new social housing.

LEVELS OF RENT, INCLUDING REGIONAL VARIATIONS/SHORTFALLS IN RENT/LEVELS OF EVICTIONS AND THE IMPACT ON HOMELESSNESS SERVICES/AND LANDLORD CONFIDENCE

Our analysis of the impact of proposals

18. The proposed new caps are not sensitive enough to take into account the variations in rent levels in different housing markets as illustrated by the average losses in the DWP's own impact assessment. Losses range from £2 per loser per week for a one-room property in Rotherham, to £45 per week per loser in a one-bed property in Westminster, even when you confine the changes to those announced in the June Budget, excluding the removal of the £15 excess.[175]

19. There is some evidence to suggest that private sector landlords increased rents with the introduction of Local Housing Allowances, such that the tax payer may be paying more than should be necessary to support people on low incomes in the private rented sector. For example, according to the DWP's Equality Impact Assessment, the average housing benefit reward for Local Housing Allowance cases is over £9 per week more than for people still on the previous scheme for the private rented sector. It also reports that the Local Authority Omnibus Survey (forthcoming) finds that Housing Benefit managers say that some landlords are using the transparency of the arrangements to raise rents to the Local Housing Allowance level.[176]

20. However, it is not proven that simply applying new caps and a guillotine at the 30th percentile will bring rents down or "start to redress any tendency amongst landlords to capitalise on the transparency of the Local Housing Allowance arrangements".[177] If rents are not so elastic in a downward direction, the risk is that households will be forced into extreme hardship to maintain payments and will fall into debt and rent arrears. Some will reluctantly move, others will face eviction as a result, with the DWP's own impact analysis estimating that 100% of benefit claimants will be losers at an average of £12 per week if you include the removal of the £15 excess proposed by the previous government, while 642,160 will be losers at an average of £9 per week, if you just look at the announcements in the June 2010 Budget.[178]

21. The DWP's own impact assessment recognises that some households, particularly in very high cost areas, may have to move as a consequence of these measures.[179] But if rents are not elastic in a downward direction people could be unable to find suitable affordable alternative accommodation. The DWP's impact assessment shows that 774,970 of the Local Housing Allowance recipients will lose out simply from the reduction in the maximum payable from the median to the 30th percentile. It is difficult to see how all claimants could squeeze into properties in the bottom third of the private rented sector, as suggested by the Equality Impact Assessment statement that: "…in all areas except for the handful affected by the caps, around a third of properties will still be affordable to Housing Benefit customers."'[180] Set this against the fact that in England, Housing Benefit recipients are estimated currently to occupy around 39% of the private rented sector stock.[181]

22. Waiting lists for council housing have soared to 1.75 million households in recent years as social house building has failed to keep pace with the number of people who have been priced out of owner occupation. The impact of the Budget proposals will be to swell the demand for social housing, as more people will be priced out of suitable options in the private rented sector. Many of these people will look to join council waiting lists, and those who are evicted may apply for assistance from a local authority as homeless households. No doubt there will be legal test cases to determine whether being evicted because of a sudden benefit withdrawal post October 2011 (the date of calculating rents at the 30th percentile) or April 2011 (the date the new caps come in) will be deemed to be intentionally homeless. If households are accepted as unintentionally homeless and in priority need, because they either have children or have demonstrated a vulnerability, they will be owed a temporary housing duty by the local authority until they have secured settled accommodation, generally within social housing. Though this may provide a lifeline for some people, it will not have been without an impact on their health, well-being and educational prospects as the stress of being evicted from their home, having to live in temporary accommodation, possibly far from their existing community, before being re-housed somewhere different again, will all take their toll.

23. This is without considering the cost of temporary housing on the tax payer. Shelter has shown that there are additional costs associated with temporary housing, related to the additional take-up of out of work benefits, as well as the extra costs of GP services, all based on the impact of temporary housing on people's health and ability to work.[182]

24. The Government's Equality Impact assessment recognises that housing authorities may "experience difficulty finding suitable private rented sector accommodation locally for households that are accepted as homeless or at risk of homelessness", as a result of the Budget proposals.[183] This is because some authorities may not be able to find housing inside their local area that is within the caps and 30th percentile. This would mean that they would have to find accommodation in other council areas to meet their statutory duties to provide temporary homes for homeless people. Homeless people may, as a result, find themselves housed far from their children's existing school, from their workplace, families and support networks. All this will take a toll on people's life chances, as explored above. This could be compounded where the support services that are helping people to address their underlying problem are disrupted. It could also lead to unplanned demands on local services in the receiving borough, for example on schools, GPs and social services.

25. We welcome the fact that the DWP has worked with authorities and housing associations to acknowledge the importance of their private sector leasing arrangements for homeless households and is consulting on different caps and Local Housing Allowance rates for this type of accommodation, until at least 2013. This recognises that many local authorities and housing associations have entered into medium-term arrangements with private sector landlords. Beyond 2013, policy arrangements need to be found to avoid local authorities having to resort to placing large numbers of families out of the area, or in bed and breakfast accommodation for extended periods of time. This would be a perverse outcome as it would increase the costs to the public purse and push homeless families into much less suitable living arrangements.[184]

26. RECOMMENDATIONS

R5 The Government should not implement the new changes proposed in the June Budget for existing tenants in the private rented sector.
R6 One way in which to keep the Housing Benefit bill down is to build more social housing where rents would be within the new caps for the private rented sector, for example the average rent for a three bedroom housing association property is £78.51[185], against a proposed cap of £340. The Government should invest £9.5 billion across the next four-year spending review period to support housing associations' investment of £12.5b to build 150,000 new affordable homes.[186]
R7 The Government should ensure that in implementing any changes that local authorities can continue to secure suitable housing in their area for people to whom they owe a temporary accommodation duty.

COMMUNITY COHESION AND IMPACT ON BLACK AND MINORITY ETHNIC GROUPS

Our analysis of the impact of proposals

27. In relation to proposed changes to Housing Benefit that cap the Local Housing Allowances according to bedsize and remove the five bedroom rate, the DWP's own Equality Impact Assessment of the changes concluded: "as some ethnic minority groups tend to have a higher proportion of large families, these measures may impact on them disproportionately. However, limitations in current data prevent the scope to draw on quantitative evidence to establish the scale of this potential effect".[187] The DWP's impact assessment shows that the average loss per household increases with bedroom size.[188]

Table 2

AVERAGE HOUSEHOLD LOSS BY SIZE OF PROPERTY

	Average losses (£ per week) including removal of £15 excess announced in March 2010 Budget	Average losses (£ per week) of just the June 2010 budget announcements
Shared room	7	6
One-bedroom	11	7
Two-bedroom	12	9
Three-bedroom	15	11
Four-bedroom	22	22
Five-bedroom	57	71

28. The National Housing Federation believes that black and minority ethnic groups are likely to be disproportionally affected, as they are currently over-represented amongst households claiming Housing Benefit in the private rented sector (13% of Housing Benefit claimants in the private rented sector are from black and minority ethnic groups[189] relative to 7.9% of the general population.[190] At the same time, the average household size (and, therefore, room requirement) is higher amongst some non-white groups, including Bangladeshi, Pakistani, Indian, Black African and Chinese households as set out in table 3 below. It is probable that the requirement for larger homes amongst the general black and minority ethnic population is replicated amongst black and minority ethnic claimants of Housing Benefit in the private rented sector.

Table 3

AVERAGE HOUSEHOLD SIZE ACROSS GREAT BRITAIN BY ETHNIC GROUP[191]

Ethnicity	Average household size
Bangladeshi	4.45
Pakistani	4.10
Indian	3.30
Other Asian	3.18
Black African	2.74
Chinese	2.66
Mixed	2.46
Other White	2.43
Other Black	2.40
White British	2.31
Black Caribbean	2.26
White Irish	2.16
Other ethnic Group	2.80
All households	2.35

29. The Federation has written to request that the Equality and Human Rights Commission takes a view on the impact of these proposals.

30. RECOMMENDATIONS

R8 The Government should consider whether its own assessment has taken sufficient care to establish the likely impact on black and minority ethnic groups and whether further efforts should be made to draw conclusions based on alternative evidence sources.
R9 The Government should not proceed with the proposals in the Budget at the stage while their impact cannot be more firmly predicted.

IMPACT ON DISABLED PEOPLE, CARERS AND SPECIALIST HOUSING

Our analysis of the impact of proposals on disabled people

31. We welcome the Budget proposal to allow Housing Benefit claimants with a disability to receive Housing Benefit for an extra room so that a carer, though normally resident elsewhere, can stay overnight. However under the current proposals some disabled people will in effect be excluded from this, for example, the extra room rate would not be available where a family already receives the four-bedroom rate, and it will not be available to those who have an illness which prevents them from sharing a room with another family member. In some areas, where rents are high, the two bedroom Local Housing Allowance under the new calculations will be less than the current one bedroom rate, though the Government's Equality Impact Assessment suggests that only 1% would actually receive a lower Housing Benefit entitlement and a further 2% no net increase.[192]

32. 19% of Housing Benefit claimants in the private rented sector are disabled people. The wider reforms will have a negative impact on the income of disabled people, their employment prospects and the range of housing choices open to them. It could also impact on the viability of specialist housing designed to support people to live independently in the community.

33. Housing associations who provide support services are reporting that more and more of their clients who previously claimed Incapacity Benefit are finding themselves being pushed onto Jobseeker's Allowance. This is backed up by DWP's own analysis that, of the 1.5 million people expected to be migrated to the new Employment and Support Allowance regime, an estimated 23% will be found fit for work of which 50% will probably migrate onto Jobseeker's Allowance.[193]

34. In many cases, housing associations are reporting that this is affecting their clients with deep seated mental health and substance abuse problems and that it is difficult to see how many of these individuals would be taken on by employers in the current job market, or could sustain employment if they were. That is not to say that people should not be challenged and supported to address their underlying problems, and to aspire to work and keep jobs, but it must be recognised that forcing them to contribute 10% of their housing costs after a year is not going simply to lead to their employment. As illustrated above, it may compound the health difficulties people face and push them further from the job market. For many vulnerable people these proposals are also adding to their stress and anxiety levels as we have witnessed from the calls we have received at the National Housing Federation from disabled people and their relatives worried about the impact of benefit changes on their future.

CASE STUDY

St Mungo's Housing Association

St Mungo's Housing Association, the largest provider of homeless accommodation for single people in London, estimated that within its current tenant population 26% (383) are on Jobseeker's Allowance and 24% (351) have been on Jobseeker's Allowance for over 12 months. On the basis of these numbers they estimated the economic impact if the policy on those homeless people who have been on Jobseeker's Allowance for over 12 months.

St Mungo's clients would collectively need to find an extra £287,000 per annum. This equates to £820 per client per year or £15.80 per week. Based on the weekly Jobseeker's Allowance for people over 25, St Mungo's clients would need to spend an additional 24% of their income on housing.

St Mungo's reported that many people faced barriers to employment which could keep them out of work for over a year. For example:

23% have a significant medical condition.
51% have a mental health condition (diagnosed or suspected).
43% use alcohol problematically.
57% misuse prescribed drugs or use illicit drugs.

Of those whose education level is known, 34% had no qualifications.

35. The caps and move to Local Housing Allowances based on the 30th percentile will mean that disabled people across the country will be amongst those that have to make the choice between moving or making up the shortfall in their benefit from other sources. Some will not be able to make up the difference. Many disabled people will reach this point, or fall into debt or rent arrears, before other households because they already struggle with the additional costs of living with a disability, for example hiring taxis as public transport is too difficult to navigate, or keeping their home warm, or eating special diets.[194]

36. Disabled people are more likely than others to depend on local services for care, and on family and friends for support. Uprooting these people from their settled housing and their local communities could disrupt care networks and mean much greater demands are made on the NHS and social services in the area to which the displaced person is forced to move.

OUR ANALYSIS OF THE IMPACT OF THE PROPOSALS ON SPECIALIST HOUSING

37. Supported and sheltered housing offers an opportunity for vulnerable people including disabled people, people with a history of homelessness, people with mental health problems and women fleeing domestic violence, to live in the community with support and start addressing issues such as addiction or offending behaviour. Many people come into services after moving out of mental health hospitals or having been on the streets. If their Housing Benefit is cut then organisations providing supported housing will be faced with the dilemma of asking people to make up the shortfall in rent or taking legal action to evict them for arrears if they are unable to do so. Many associations will seek to make up the shortfall in revenue from charitable contributions, but it is far from certain that this could generate enough funding to keep such supported housing open. The blunt policy of cutting benefits risks jeopardising the very services that receive public funding to tackle homelessness and worklessness for vulnerable people. People need time with the help of support services to address their underlying problems, such as health and addiction issues.

38. To jeopardise these services would not only have a negative impact on the lives of many of the most disadvantaged people, but would also see public services having to pick up the costs. This is because the support services that housing associations and others provide are proven to have a positive impact on people's health (80% of clients of short-term services in 2008-09 improved their health) and longer-term employment prospects (61% accessed training or education)[195]. An evaluation of the cost benefits of the support services funded through the Supporting People programme estimated that investing £1.6 billion annually generated in year savings of £3.4 billion to the public purse by avoiding more expensive acute services[196].

HOUSING ASSOCIATION OFFER

39. The preventative support services that housing associations provide help people to stabilise their lives and access training and employment—this is a key element of the outcomes framework to which Supporting People funded services work.

CASE STUDIES OF WHAT WORKS IN SUPPORTING VULNERABLE PEOPLE TO STABILISE THEIR AND MOVE INTO WORK

Three Rivers Housing Association and the Richmond Fellowship - St. Stephen's Close

Three Rivers Housing Association and the Richmond Fellowship created a supported living service in County Durham to help people step down from psychiatric hospital to independent living. The service has eight self-contained flats with twenty-four hour support built around a communal space. Support helps residents to develop the skills to manage their own tenancies, become active in the community and live independently. The project provides four weeks of floating support to residents moving on to general needs accommodation to smooth their transition. It is estimated that St. Stephen's Close saves the wider health and social care system an average of £22,000 per client per year compared to residential care.

St Mungo's Housing Association

St. Mungo's Pathways to Employment programme was first established in January 2008, providing work and educational courses along with activity programmes. New residents to their hostels undergo an occupational health check, in order to assess their existing skills, abilities, and aspirations, alongside assessing the steps they need in order to be "work ready". With the support of a key worker, clients devise their own Pathways to Employment plan and, following the health check, are invited to participate in an activity programme to help them prepare for employment. The client is then referred to an on-site vocational guidance and coaching specialist who helps them work out the steps to achieving their employment and training goals.

Clients are also offered help with writing CVs, developing literacy, numeracy and other key skills, and searching and applying for jobs or training. St Mungo's provides appropriate clothes for job interviews for those who need them.

St Mungo's own evaluation found that, after nine months of the programme:

13% had gone into a full or part-time job.
6% had gained a work placement.
6% were doing voluntary work.
17% were taking a further education course.
14% were completing a vocational training course.

The Centre for Economic and Social Inclusion's evaluation of the Pathways to Employment pilot noted that many participants made "significant progress" towards employment and had been able to build their self-esteem and confidence as a result of participating in the scheme.[197]

Porchlight

Kent-based homeless charity Porchlight runs a four-month accredited Employability Programme aimed at making its own service users more employable. The course offers written assignments and volunteering or work placements within Porchlight projects. Seven participants from the Employability Programme (EP) have already gained employment.

The charity aims to recruit 20% of its workforce from its own service users, recognising the value of the first hand experiences former service users can bring to their jobs.

Barry - Trainee Support Worker, Porchlight

In early 2009, Barry moved away from Essex where he worked as a pub landlord, in an effort to leave behind his drug and alcohol addictions and make a fresh start.

"Things started getting too much. In the pub business drinking becomes an occupational hazard. I had to get away. I stayed with an ex-partner and also sofa surfed for three months with her friends."

Having learnt about Porchlight through friends, Barry made contact with the charity, which signposted him to support agencies to deal with his substance misuse. Barry went on the complete the four month Employability Programme, and was then successful in applying for a Trainee Support Worker position.

"The programme gave me the confidence and self belief that I could get back into work and in a totally different sector."

Barry now works with various different projects across the charity. He finds his past experiences very helpful in his work with vulnerable people.

40. RECOMMENDATIONS

R10 The proposed entitlement of Housing Benefit claimants with a disability to funding for an extra bedroom should be extended to cover couples who need to sleep separately because of a long-term health problem or disability.
R11 The proposed entitlement of Housing Benefit claimants with a disability to funding for an extra bedroom should be extended to cover the small number of households who would therefore need to live in properties above the four bedroom cap.
R12 The new Work Programme should be structured to ensure that resources are targeted specifically at supporting those groups who are the furthest from the job market, such as people with mental health problems.

Older people, large families and over-crowding

41. From April 2013, as housing entitlements for working age people in the social sector will reflect family size, this will mean tenants whose children have grown up and left home will be faced with the stark choice of having to make up the shortfall in their rent or having to move homes. Such households will tend to be older and may have grown very attached to the home they have made their own and brought their children up in. Moving could also uproot them from the places where they have family and friends, thus depriving their adult children of a helping hand or ready access to child care. It could mean that as these households grow older they can no longer draw on people for care and support. As well as having a detrimental impact on family lives this could also increase the cost to the tax payer as publically funded services may have to pick up the pieces.[198]

42. It will also disrupt people's networks of friends or communities of support by taking people away from the places where they enjoy social activities, or volunteer, or take part in neighbourhood activities, or practise their religion.

43. Our analysis estimates that there are currently 332,000 households of working age, in receipt of Housing Benefit who are under-occupying in housing association properties by one or more bedrooms (the same figures are not available for local authorities).[199] Of those, we estimate that 101,000 are thought to be under-occupying by two or more bedrooms, by what is known as the bedroom standard.[200]

44. We are currently conducting a survey of housing associations to get a more accurate picture of the level of under-occupation in their stock in the light of the Budget proposals. We hope to be able to share this fuller set of data with the Select Committee when it meets. At this stage we include three case studies to illustrate the range of under-occupation levels across different housing associations. We have chosen to look at under-occupation on several levels, including by one or more bedrooms as it is not clear from the Budget announcements, or subsequent discussions with the DWP, as to how accommodation will be judged to reflect family size. What is clear, from the phone calls associations have received, is the level of distress this proposal has caused amongst tenants, especially in the light of media reports that some councils are phoning up tenants who are under-occupying suggesting they must move.[201]

CASE STUDIES OF UNDER-OCCUPATION IN HOUSING ASSOCIATIONS

In one association in the West Midlands, it is thought that, from a sample of 11,460 properties, just under 30% of households (3,265) would be affected by the proposed changes. A large proportion of these (1,271) are currently in two bedroom properties with one spare room, some of whom may be couples planning to start a family, and others single parents with shared custody who need room for their children to come and stay.

Another housing association, based in the North of England, stated that 338 working age people in receipt of benefits were thought to have one or more spare room, out of a total of 4,197 households.[202]

In one London-based association it is estimated that, out of 6,724 properties, nearly 20% (1,318) would be affected by the proposed benefit changes for those of working age who are considered to be under-occupying. This represents considerable upheaval if all these families can no longer afford to stay in their homes. It means not being permitted to keep a room for returning grown-up children, or for children who will soon be too old to be expected to share. Of this total, an estimated 636 are currently in two bedroom properties and have just one spare bedroom, while nineteen are in a property with four bedrooms, with one room to spare.[203]

45. The current way in which social housing is allocated makes it difficult for social landlords to support moves by their existing tenants.[204] In 2008-09 only 14.1% of lettings by housing associations went to internal transfers, or to put it another way, 20,000 lettings were made to people transferring within their own stock in contrast to 120,000 to new applicants.[205] Over the same period, 30,000 lettings were made by local authorities to people transferring, out of a total of 152,000 lettings.[206]

46. This lack of mobility for social housing tenants comes about primarily because of the shortage of social housing, but also because existing tenants who want to move have to compete alongside new applicants. Council tenants requesting a transfer are required by s.159 of the Housing Act 1996 to go through the local authority allocation scheme alongside new applicants and in many cases housing association tenants do, especially where social landlords have pooled their properties through choice based lettings schemes. Few existing tenants, as the statistics above bear out, attract the level of points or priority banding to get re-housed this way. The problem was identified in the Conservative Party Housing Green Paper: "the social housing system is very bad at helping households to change their housing as their circumstances change. Applicants for alternative social housing have to compete with everyone on the waiting list, including anyone who is classified as homeless, rendering them essentially pointless".[207]

47. It would be doubly iniquitous to impose a benefits financial penalty on households who are under-occupying without opening up opportunities for them to move.

48. While recent Government proposals to boost mutual exchanges will help,[208] it may not work for all tenants who want to move, particularly those living in what might be deemed to be less popular properties or neighbourhoods. For that reason action is also needed to support internal transfers for existing tenants.

HOUSING ASSOCIATION OFFER

49. Housing associations are looking to negotiate nomination agreements with local authorities that allow them to create opportunities for existing tenants to move. Many are exploring how they can create chains of moves starting by one existing tenant household moving to a vacant property and on the back of that facilitating a series of moves for other tenants and for new applicants on the council waiting list. This need not reduce the number of homes that go to new applicants. But it moves away from the assumption that has operated in some areas that every vacancy, whether in a new development or because a tenant vacates a property, must automatically go to a person on the local authority waiting list.

50. Housing associations are also doing more to encourage people who are under-occupying to move to free up homes for existing tenants who are over-crowded and families on waiting lists, as explored in the Report of the Mobility Taskforce,[209] chaired by David Orr, chief executive at the National Housing Federation. Some are offering support and incentives to people under-occupying their homes to move to a smaller property. This may be paying the costs of moving, redecorating the new property or providing practical advice and support. There are also a number of landlords and housing authorities whose allocation schemes allow extra priority for under-occupiers to allow them to move more quickly if they are moving to a smaller property.

CASE STUDY OF WHAT WORKS IN SUPPORTING TENANTS TO MOVE

Sovereign Housing Association

Sovereign Housing Association provides and promotes good quality homes to appeal to older tenants who may be interested in down-sizing. Its Carnarvon Place scheme for over-55s has been successful in attracting older people who are down-sizing from family homes.

51. The Government's own Equality Impact Assessment shows that the largest average financial losses in the private rented sector will be amongst those currently occupying larger accommodation, as we have explored above. We predict that a high number of households will in effect be forced to move and that in order to be able to afford the rent (especially if they have to make a 10% contribution) they may cram into properties smaller than is suitable for their family. This is likely to exacerbate the already historically high levels of over-crowding with over 2.5 million people living in over-crowded housing.[210] It is disappointing that the DWP's Equality Impact Assessment only considers over-crowding in relation to the small number of people (7,338) currently receiving Housing Benefit at the five bedroom rate.[211] In reality the cumulative effect of these changes is that many more families, of different sizes, will become over-crowded so that they can afford to cover other necessities.

52. The impact of living in unsuitable and over-crowded housing on people's health, educational attainment and anxiety levels is well documented.[212] The CLG report The Impact of Overcrowding on Health and Education adds to that evidence of links between over-crowding and children's and women's mental health, as well as diseases. It also found evidence for a link between over-crowding and lower educational attainment.[213] Shelter surveyed a number of over-crowded families about their experiences. It found, for example, that 93% of severely over-crowded families felt that it was a cause of depression, anxiety or stress, and 79% felt that living in over-crowded housing harmed the education of their children.[214] The Shelter study Chance of a lifetime[215] also highlights a number of pieces of research that have made the link between over-crowded homes, stressed parents, lack of educational support for children and increased risk of dropping out from school. The RICS Tower Hamlets study identifies the problems caused by lack of private space in which to do homework, as well as the arguments and sleeplessness caused by forced sharing of bedrooms.[216]

53. This suggests that the costs to the tax payer of forcing families on low incomes into smaller properties may ultimately cost the tax payer more that the potential benefit savings.

54. RECOMMENDATIONS

R13 The Government should reform Part 6 of the 1996 Housing Act so that existing tenants wishing to move are no longer required to be routed via the local authority allocation scheme alongside new applicants.[217]
R14 Local authorities, with the partner housing associations, should set out how they will meet the needs of existing tenants who want to transfer, alongside new applicants. This should include creating chains of lettings starting with allowing one existing tenant household to move to a vacant property and on the back of that facilitating a series of moves for other tenants who want to move, and for new applicants.[218]
R15 Social landlords should put in place plans to help people who are under-occupying to move, based on dialogue with existing tenants so they understand the potential level of demand, options include:
1. offering more attractive housing choices from their existing housing stock
2. providing financial incentives to movers, and
3. facilitating the move (booking removals, re-fitting or offering new carpets/curtains etc.) to take much of the headache and cost of moving away.
R16 Social landlords and housing authorities should work more in partnership, and in conversation with government investment agencies, to build the needs of under-occupiers into their investment plans, including the provision of more attractive housing options for older people.
R17 Social landlords are encouraged to look at how their home, or stock, improvement plans can create properties that would be attractive options for people who want to downsize, including for older people looking for more manageable properties.

6 September 2010

159 Equality Impact Assessment: Changes to the Local Housing Allowance arrangements and Housing Benefit size criteria for people with non-resident overnight carers, DWP, July 2010. Back

160 Impacts of Housing Benefit proposals: Changes to the Local Housing Allowance to be introduced in 2011-12, 23, DWP, July 2010. Back

161 National Housing Federation analysis, August 2010, based on JSA rates and Impacts of Housing Benefit proposals: Changes to the Local Housing Allowance to be introduced in 2011-12, DWP, July 2010. Back

162 A Minimum Income Standard for the UK in 2010, Abigail Davis, Donald Hirsch and Noel Smith for Joseph Rowntree Foundation, July 2010. Back

163 Table 3 reproduced from A Minimum Income Standard for the UK in 2010, Abigail Davis, Donald Hirsch and Noel Smith for Joseph Rowntree Foundation, July 2010. Back

164 Health Survey for England 2003 http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/@dh/@en/documents/digitalasset/dh_4098909.pdf. Back

165 Fair Society: Healthy Lives: Marmot Review 2010, p.80. http://www.marmotreview.org/AssetLibrary/pdfs/Reports/FairSocietyHealthyLives.pdf. Back

166 Department for Work and Pensions, Research Report No 482 "Social housing and worklessness: Key policy messages" (2008) Del Roy Fletcher, Tony Gore, Kesia Reeve and David Robinson http://research.dwp.gov.uk/asd/asd5/rports2007-2008/rrep482.pdf. Back

167 National Housing Federation analysis of a sample of bus fares charged across the country from ringing bus operators, August 2010. Back

168 A selection of local authority areas from table 32: LHA rates calculated at the 30th percentile, England. Impacts of Housing Benefit proposals: Changes to the Local Housing Allowance to be introduced in 2011-12, 23 July 2010, DWP. Back

169 Equality Impact Assessment: Changes to the Local Housing Allowance arrangements and Housing Benefit size criteria for people with non-resident overnight carers, DWP, July 2010. Back