Written evidence submitted by Sunderland
City Council
1. IMPACT OF
THE CHANGES
TO HOUSING
BENEFIT
2. SUNDERLAND CITY
COUNCIL
2.1 Sunderland City Council welcomes the opportunity
to respond to this consultation. The Council covers a predominantly
urban area in the North East of England with a population of 281,700.
3. PURPOSE OF
THE REPORT
3.1 Sunderland City Council has looked at the impact
of a range of proposed changes to housing benefit, including the
Local Housing Allowance. However we believe it is also important
to consider other related benefit changes that will have a consequential
impact. We take the view that the total impact on the citizens
of Sunderland needs to be considered in the round and that each
of the changes mentioned will interact with others.
4. BACKGROUND
4.1 The Government has proposed a number of changes
to Housing Benefit (HB), described by the Department of Work and
Pensions (DWP) as the most significant and comprehensive reform
of HB since the scheme started in the 1980s.
5. IMPACTS OF
CHANGES
5.1 The bold headings in this section cover implications
that the Work and Pensions Select Committee has said it will focus
its enquiry on.
5.2 Incentives to work and access to low paid
work. As the changes may lead to people moving to areas
with lower rent levels, and as many of those affected may be people
likely to take up low paid work — there is a potential increased
dis-incentive to work for some if travel costs are increased as
a result of a move.
5.3 Levels of rent, including regional variations.
Our analysis suggests that, following the proposed changes, at
least 5% of private renting tenants in Sunderland who currently
get HB will not be eligible for full housing benefit to cover
their rent. (DWP figures suggest that the proportion of private
tenancies that could be met in full by HB will fall from 54% to
37%. However other figures indicate that 42% of private renters
in Sunderland currently get HB). The actual position is likely
to be worse than that. The 5% figure would only be achieved if
all tenants in receipt of HB were able to move to homes with the
lowest rents. That is unlikely to happen as tenants in receipt
of HB will be in competition with low income working households
for low rent properties.
5.4 There is a risk that an unintended consequence
of the changes may be to make it harder for low income households
that are not in receipt of housing benefit to obtain low rent
homes. This is because competition for lower rented properties
is likely to increase for the reason given above.
5.5 The single room rent Local Housing Allowance
in Sunderland is notably low: £45 currently compared to £61
in Tyneside, or to the national average of £69. Restricting
this single room rent allowance further — to £43 —
may raise the possibility of landlords being unwilling to improve
properties that are below a decent standard. LHA levels for other
property sizes are more comparable with levels in the rest of
the region. However they will also fall; raising similar possibilities
of reduced investment by private landlords.
5.6 Shortfalls in Rent
- If the proposed changes to the LHA were in place
currently, 4,510 private renting tenants in Sunderland would no
longer be able to get housing benefit based on their full rent.
- Private renting tenants in Sunderland would be
likely to get housing benefit based on Local Housing Allowances
that are less than their weekly rent:
| Up to £5 less
| | 2,376 |
| £5 to £10 less |
| 1,600 |
| £10 to £20 less |
| 496 |
| £20 to £30 less |
| 9 |
| Over £30 less |
| 29 |
| Total: | 4,510
|
| At least £5 less
| 2,134 |
| At least £10 less
| 534 |
5.7 Source: evaluation of indicative LHA figures provided by the
Valuation Office Agency and Sunderland City Council HB claimant
information.
- Of particular concern is those losing £10 per week (£520
per year) or more who are most likely to be affected by rent arrears
and potential homelessness; especially the 29 households who currently
live in five bedroomed homes and would lose £30 per week
(£1,560 per year) or more.
- In addition to the LHA changes people on Job Seekers Allowance
(JSA) who have been out of work for a year will lose 10% from
their Housing Benefit. This would affect 909 households in Sunderland
currently.
- It also seems likely that other changes will mean that around
900 households in Sunderland are likely to move from other benefits
to JSA. Some of that number may then also be affected by this
10% cut after a year.
5.8 The level of evictions and the impact on homeless services.
We are concerned that the changes are likely to lead to an increase
in rent arrears leading to an increase in homelessness and the
threat of homelessness, particularly for larger households.
5.9 This anticipated increase in homelessness may result in an
increased use of temporary accommodation — particularly
of bed and breakfast accommodation — resulting in increased
spending by the Council. The temporary accommodation currently
available to the Council — other than bed and breakfast
— is fully occupied. Any additional need for temporary accommodation
would, at least initially, have to be met by using bed and breakfast
accommodation.
5.10 In 2009-10 Sunderland City Council resolved or prevented
homelessness for 157 households by helping them to get private
rented accommodation. The changes are very likely to make it harder
for the Council to use that route. This may increase the time
that people spend in temporary accommodation — thus increasing
the total number of households in temporary accommodation at any
point in time. As explained above this would lead to an increase
in bed and breakfast accommodation use.
5.11 The possibility of increasing the provision of good quality
temporary accommodation (to allow us to avoid the use of bed and
breakfast accommodation) may require the use of capital resources
as well as Supporting People funding. Both those funding sources
are currently under pressure to meet other needs.
5.12 Increasing numbers of people with rent arrears will lead
to an increase in demand for welfare and debt advice services
which will be a further cost to the Council.
5.13 There is the potential for some amelioration of the impacts
if Sunderland is given an appropriate increase in Government funding
for Discretionary Housing Payments (DHPs). However, Sunderland's
allocations of funding for DHPs has fallen from £44,286 in
2009/10 to £42,023 this year. Also Sunderland's allocation
is lower than Newcastle's (£88,563) or Durham's (£104,518);
despite Sunderland having a higher level of housing benefit cases
in the private sector.
5.14 Landlord Confidence. The lower return that can be
expected by private landlords may lead to some of them deciding
to sell the homes rather than rent them out. This is particularly
likely to affect those properties with rent levels that are currently
below the LHA level, but that will be above it after the changes.
5.15 Community Cohesion. Financial exclusion is likely
to increase. An estimated £1,820 million will be taken
from the income of low income households nationally (forecast
government savings) with only an additional £55 million
being made available (through increasing the funding for Discretionary
Housing Benefit Payments and allowing an additional room for carers
to be taken into account when calculating HB).
5.16 Greater hardship will cause stress and anxiety for individuals
and communities. There is a risk that some people may be tempted
into illegal activities to meet their living costs.
5.17 Disabled people, older people and carers. There should
be a positive impact, through HB being increased to cover an additional
bedroom for non-resident carers for people with a disability.
We welcome this change.
5.18 Large families and overcrowding.
5.19 The estimated 534 households in Sunderland who will lose
at least £10 per week (£520 per year) all live in homes
with three or more bedrooms. The worst impacts of this change
will therefore be on larger households — eg families. Of
particular concern are the 29 households currently in five bedroom
homes that will lose £30 a week (£1,560 per year) or
more.
5.20 Tenants with larger families may be forced to move to cheaper
or smaller properties — potentially causing concentrations
of poverty and/or overcrowding.
5.21 There is also likely to be an adverse impact on the new government's
stated intention to eradicate child poverty by 2020,
and on Sunderland City Council's Child Poverty Strategy.
10 September 2010
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