Written evidence submitted by the Chartered
Institute of Housing
1. INTRODUCTION
1.1 CIH welcomes the Select Committee's enquiry
into the impact of the changes to housing benefit announced in
the June 2010 budget.
1.2 CIH is the professional body for people working
in housing. We are a charitable membership organisation with extensive
reach across all parts of the UK, covering rural and urban communities,
and every local authority area. We have a membership base of 23,000
individuals and every year we provide professional training and
services to more than 30,000 housing sector professionals.
1.3 We are unique in housing in that we have
a "domain" approach to our work - reaching out not just
to a particular sector, but to everyone who works in or is involved
with housing, communities and regeneration. This includes housing
associations, local authorities, ALMOs, private sector landlords,
umbrella organisations, tenants' organisations, academics, funders,
developers and members of the wider third sector (for example
refugee community organisations, housing advice centres, credit
unions, BME community organisations etc).
1.4 Our view's on the changes announced in the
June budget are informed by the concerns of our members about
the impact on their businesses and the people they work with and
for.
1.5 Our response in based on a body of research
and work that CIH has had underway for some time. Indeed, we have
long called for a closer examination of the way that housing support
is provided across tenures, including reforms of housing benefit.
We are therefore encouraged that the government has undertaken
work to look at benefit reform, including the role, cost and operation
of benefits to support individuals and families with housing.
1.6 We were however disappointed that the announcements
made in June appear to have been made in some isolation and in
advance of the fundamental welfare reform programme being driven
forward by the Department for Work and Pensions. The measures
announced in June will have a considerable and detrimental impact
on tenants and providers, yet the full implications appear to
have been poorly assessed before the decision to reduce funding
was announced. The motive appears to be reducing expenditure with
little co-ordination or regard for the purpose of the benefit
itself. We are also dismayed that while some impact assessments
have been conducted by government, no consideration appears to
have been given to the cumulative impact of measures, which taken
together, equate to much more significant changes than the individual
components. This is a significant oversight that downplays the
real impact of the reforms too date.
1.7 We are also not convinced that the necessary
steps have been taken to examine the important inter-relationships
between housing benefit, rents and new housing supply. Housing
providers and the lending community are both clear that changes
to housing benefit, in particular in the social sector, will have
important effects on business plans and the ability to service
existing debt as well as new borrowing. The off-balance sheet
borrowing undertaken by housing associations is of particular
importance, given its pivotal role in providing for the building
of new affordable housing. Changes to housing benefit will have
ramifications across other areas of public expenditure (for example
the impact and effectiveness of capital investment in new homes)
that need to be fully understood and quantified.
1.8 CIH is clear in recognising the over-riding
imperative and importance of cutting the deficit and controlling
public expenditure. This is a key consideration across all areas
of government programmes and it is right that housing finance,
in its entirety, should also come under scrutiny. With over 80%
of public money spent on housing going through housing benefit
it is particularly appropriate that this area is closely examined.
Moreover, significant concerns have existed for some time around
a housing benefit bill that has continued to rise in recent years.
1.9 Yet we must also acknowledge and consider
why this has been the case. This should be a starting point in
looking at housing benefit reform, not an after-thought. Housing
costs for all households, whether renting or owning, have increased
as we have failed to supply enough housing to meet the changing
needs of our population and economy. In this sense, the housing
benefit bill, as well as other economic and social costs, is a
price that we are paying for a wider inability to address provision
of sufficient housing across markets.
1.10 We must also acknowledge that housing benefit
has a distinct role in the welfare pantheon, in that it is necessary
to help people afford to live in an appropriate home, something
that isn't an optional extra. Indeed, given that housing benefit's
purpose is to support people with their housing costs, CIH questions
the shift towards making elements of housing benefit conditional,
for example around behaviour in seeking work.
2. THE BUDGET
MEASURES TAKEN
AS A
WHOLE
2.1 Our main concerns about the measures announced
in the Budget is that the package as a whole takes little account
of the primary policy objective for which housing benefit was
created: to ensure that low income households have access to accommodation
that reasonably meets their needs.
2.2 The measures appear to be overwhelmingly
driven by the need to pursue, and achieve, short-term budget savings.
We are not opposed to the pursuit of budget savings and we recognise
the clear economic need for savings across public expenditure.
We are however also clear that the measures being considered around
fuller welfare reform could make important progress in a better
service for consumers as well as better value for money for the
taxpayer. It is therefore disappointing that these cuts are separate
from what will be a more thorough and evidence based approach
to reform.
2.3 Indeed, it would appear that the process
has started from the position of a figure to be saved and the
measures have been contrived to generate it. The justification,
consequences and assessment of the impact have all followed later.
Little account appears to have been taken of the immediate costs
that will arise elsewhere (eg from increased homelessness) let
alone the long-term costs and the impact these measures could
have on the government's own longer term policy objectives around
welfare reform, community sustainability and housing policy.
2.4 Taken in isolation the justification for
each of the individual measures in the Budget package can appear
reasonable. Collectively however they lack coherence. For example,
setting the Local Housing Allowance (LHA) at the 30th percentile
is justified on the grounds that the bottom 30 per cent of the
market is a reasonable expectation for a household on benefit
(although the Department for Work and Pensions does not say what
proportion would be the minimum acceptable). The government's
impact assessment goes into great detail to demonstrate at least
30% of the market is available in every area. However, the inevitable
consequence of the LHA caps and the CPI cap is that over time
the proportion of the market that is available will shrink below
30%.
2.5 This is by no means the only element in the
package which raises the risk of contradiction in realising government's
stated ambitions. Raising non-dependant charges will encourage
young people to leave home, whereas the social sector size limits
are justified on the grounds that they will help ensure more efficient
use of the housing stock. Fixing the LHA at the 30th percentile
will supposedly encourage tenants to shop around for reasonably
priced accommodation but the abolition of the £15 excess
(announced before the Budget measures but of relevance) removes
an incentive to do so.
2.6 Likewise the LHA reforms are supposed to
encourage tenants to consider moving to less expensive areas and
this is likely to follow as benefit levels are constrained. However,
housing is cheapest where employment opportunities are the most
limited - JSA claimants will increase their risk of being caught
by the time-limiting provision if they move. In this, it seems
that whatever tenants do - including behaviour that would reduce
their housing costs or boost their employment opportunities -
they risk being penalised. This arguably runs contrary to government's
own work in encouraging tenants to be more mobile for employment
purposes, and to make work more attractive and accessible for
people currently on benefits.
2.7 Despite the pursuit of budget savings there
also appears to be little attempt to understand the reasons for
growth in the housing benefit budget. In the long-term this suggests
that the objective to control expenditure will not be a success.
The most likely outcome is that the long term spending pattern
for housing benefit will continue: sustained periods of growth
punctured by periodic spending crises and one off adjustments.
The result is arbitrary cuts which apart from the hardship they
cause to tenants and the damage to investor confidence also tend
to undermine benefit simplification and administrative efficiency.
2.8 In the long term what is needed is a more
stable system of housing support that helps both tenants and landlords
plan their finances with greater certainty.
2.9 We would also note that the DWP is not producing
an impact assessment of the whole package. Instead an assessment
has been made of the LHA measures being introduced during 2011-12
(as required by the SSAC). However, in terms of LHA reform even
this is partial as it takes no account of the effect of the CPI
cap on LHA rates from 2013. Assuming the LHA caps are not up-rated
in line with inflation the effect of both of these measures will
be to squeeze the supply available to LHA claimants from both
ends of the market (ie expensive and inexpensive).
2.10 We would expect that separate impact assessments
of the JSA measure and social sector size limits will follow once
the secondary legislation is published. At this stage it is however
unclear whether an assessment will be made of the CPI cap. For
technical reasons this may be exempt from referral to the SSAC.
No impact assessment may for example be made of the increases
in non-dependant charges because these are exempt from referral
to the SSAC.
2.11 The DWP has published an impact assessment
of the LHA measures being introduced during 2011-12. This includes
the combined effect of the LHA caps, the 30th percentile and abolition
of the £15 excess (which strictly speaking was not part of
the June budget but which is significant). CIH has looked at these
figures and identified those areas where the combined average
weekly loss is £15 or more for the main property types (one
bed, two bed and three bed properties which account for 88% of
the caseload). Our analysis shows that these substantial losses
are not just confined to London but also heavily affect the surrounding
counties and a number of other more distant areas as well (Scotland
and Nottinghamshire): see Table 2.1 for details.
2.12 The DWP's impact assessment shows that although
these very heavy losses are a minority of the LHA caseload (7%)
substantial numbers are still affected (over 68,000) and for the
majority of cases the average losses are still in excess of £10
per week. The total numbers losing more than £10 per week
on these three measures alone is in excess of half a million -
55% of the LHA caseload.
2.13 CIH believes it would be appropriate for
DWP to carry out an impact assessment that takes in to account
the full range of inter-relating measures that are contained in
the whole package. The cumulative elements of the measures clearly
outweigh the impact of the measures taken in isolation and a complete
picture is needed to fully understand the consequences for both
tenants and landlords.
Table 2.1
AREAS WHERE THE AVERAGE LOSS IS £15
OR MORE PER WEEK BY PROPERTY TYPE (ONE BED, TWO BED AND THREE
BED PROPERTIES ONLY)
| Estimated average loss per loser or notional loser, £ pr week
| 1 bed caseload | 1-bed
| 2 bed caseload | 2-bed
| 3 bed caseload | 3-bed
| Total caseload |
| Merseyside | |
| | | |
| |
| St. Helens | 1,340 | -15
| | | |
| 1,340 |
| | |
| | | |
|
| Nottinghamshire | |
| | |
| | 5,010 |
| Nottingham UA | 3,180 | -15
| | | |
| 3,180 |
| Erewash | 640 | -15
| | | |
| 640 |
| Broxtowe | 410 | -15
| | | |
| 410 |
| Gedling | 480 | -15
| | | |
| 480 |
| Rushcliffe | 300 | -15
| | | |
| 300 |
| | |
| | | |
|
| Cambridgeshire | |
| | |
| | 1,880 |
| Cambridge | 510 | -16
| 130 | -23 | 50
| -24 | 690 |
| East Cambridgeshire | 240 |
-15 | 210 | -17 |
70 | -17 | 520 |
| Huntingdonshire | |
| | | 170 |
-15 | 170 |
| South Cambridgeshire | 170 |
-16 | 250 | -21 |
80 | -21 | 500 |
| | |
| | | |
|
| Essex | |
| | | |
| 360 |
| Epping Forest | |
| | | 150 |
-19 | 150 |
| Harlow | | |
| | 140 | -16
| 140 |
| Uttlesford | |
| | | 70 |
-17 | 70 |
| | |
| | | |
|
| Hertfordshire | |
| | |
| | 730 |
| Broxbourne | |
| | | 180 |
-17 | 180 |
| Dacorum | |
| | | 150 |
-19 | 150 |
| East Hertfordshire | |
| | | 90 |
-16 | 90 |
| St Albans | |
| | | 60 |
-22 | 60 |
| Three Rivers | |
| | | 80 |
-24 | 80 |
| Watford | |
| | | 110 |
-21 | 110 |
| Welwyn Hatfield | |
| | | 60 |
-16 | 60 |
| | |
| | | |
|
| Suffolk | |
| | | |
| |
| St Edmundsbury | |
| 340 | -15 | 90
| -15 | 430 |
| | |
| | | |
|
| Inner London | |
| | | |
| 35,320 |
| Camden | 1,250 | -31
| 730 | -53 | 230
| -96 | 2,210 |
| City of London | 20 | -64
| | | |
| 20 |
| Hackney | 2,140 | -21
| 1,690 | -27 | 550
| -26 | 4,380 |
| Hammersmith and Fulham | 950
| -20 | 700 | -24
| 150 | -47 | 1,800
|
| Islington | 1,900 | -22
| 620 | -36 | 140
| -75 | 2,660 |
| Kensington and Chelsea | 1,200
| -67 | 620 | -147
| 150 | -281 | 1,970
|
| Lambeth | |
| 1,520 | -25 | 440
| -27 | 1,960 |
| Lewisham | |
| 2,900 | -20 | 1,070
| -20 | 3,970 |
| Newham | | |
| | 1,180 | -20
| 1,180 |
| Southwark | |
| 840 | -25 | 220
| -25 | 1,060 |
| Tower Hamlets | 2,130 | -19
| 990 | -29 | 350
| -27 | 3,470 |
| Wandsworth | 3,170 | -17
| 2,190 | -19 | 880
| -27 | 6,240 |
| Westminster | 2,490 | -73
| 1,360 | -140 | 550
| -262 | 4,400 |
| | |
| | | |
|
| Outer London | |
| | | |
| 25,360 |
| Barking and Dagenham | |
| | | 670
| -20 | 670 |
| Barnet | | |
| | 1,020 | -18
| 1,020 |
| Brent | 4,390 | -18
| 3,180 | -23 | 1,340
| -37 | 8,910 |
| Croydon | |
| | | 1,070 |
-21 | 1,070 |
| Ealing | | |
2,590 | -16 | 1,040
| -27 | 3,630 |
| Harrow | | |
| | 1,060 | -17
| 1,060 |
| Havering | |
| | | 420 |
-20 | 420 |
| Hillingdon | |
| | | 720 |
-20 | 720 |
| Hounslow | |
| 1,750 | -17 | 630
| -20 | 2,380 |
| Kingston Upon Thames | |
| 730 | -25 | 300
| -20 | 1,030 |
| Merton | | |
1,080 | -16 | 440 |
-21 | 1,520 |
| Redbridge | |
| | | 950 |
-22 | 950 |
| Richmond Upon Thames | |
| 630 | -24 | 170
| -21 | 800 |
| Sutton | | |
| | 350 | -20
| 350 |
| Waltham Forest | |
| | | 830 |
-20 | 830 |
| | |
| | | |
|
| Berkshire | |
| | | |
| 2,260 |
| Slough UA | |
| 1,270 | -15 | 500
| -16 | 1,770 |
| Windsor and Maidenhead UA |
| 350 | -15 | 140
| -17 | 490 | |
| | |
| | | |
|
| Buckinghamshire | |
| | |
| | 270 |
| Chiltern | |
| | | 40 |
-16 | 40 |
| South Bucks | |
| | | 50 |
-17 | 50 |
| Wycombe | |
| | | 180 |
-16 | 180 |
| | |
| | | |
|
| Hampshire | |
| | | |
| |
| Winchester | |
| | | 70 |
-17 | 70 |
| | |
| | | |
|
| Kent | |
| | | |
| 400 |
| Canterbury | |
| | | 210 |
-16 | 210 |
| Sevenoaks | |
| | | 90 |
-15 | 90 |
| Tunbridge Wells | |
| | | 100 |
-18 | 100 |
| | |
| | | |
|
| Oxfordshire | |
| | | |
| |
| Cherwell | |
| | | 200 |
-15 | 200 |
| | |
| | | |
|
| Surrey | |
| | | |
| 2,010 |
| Elmbridge | |
| | | 140 |
-24 | 140 |
| Epsom and Ewell | |
| | | 110 |
-21 | 110 |
| Guildford | |
| 510 | -15 | 170
| -22 | 680 |
| Mole Valley | |
| | | 60 |
-19 | 60 |
| Reigate and Banstead | |
| | | 120
| -18 | 120 |
| Runnymede | |
| | | 70 |
-23 | 70 |
| Spelthorne | |
| | | 130 |
-23 | 130 |
| Tandridge | |
| | | 80 |
-19 | 80 |
| Waverley | |
| | | 90 |
-20 | 90 |
| Woking | | |
410 | -16 | 120 |
-25 | 530 |
| | |
| | | |
|
| Sussex (East & West) |
| | | |
| | 5,260 |
| Brighton and Hove UA | |
| 3,040 | -16 |
830 | -19 | 3,870 |
| Hastings | |
| | | 360 |
-17 | 360 |
| Lewes | | |
| | 230 | -16
| 230 |
| Rother | | |
| | 190 | -17
| 190 |
| Chichester | |
| | | 140 |
-15 | 140 |
| Crawley | |
| | | 250 |
-16 | 250 |
| Horsham | |
| | | 90 |
-16 | 90 |
| Mid Sussex | |
| | | 130 |
-16 | 130 |
| | |
| | | |
|
| Avon | |
| | | |
| |
| Bath and North East Somerset UA |
| 630 | -16 | 160
| -18 | 790 | |
| | |
| | | |
|
| Dorset | |
| | | |
| 970 |
| Bournemouth UA | |
| | | 480 |
-15 | 480 |
| Poole UA | |
| | | 320 |
-15 | 320 |
| Christchurch | |
| | | 90 |
-15 | 90 |
| Purbeck | |
| | | 80 |
-15 | 80 |
| Devon | |
| | | |
| |
| Exeter | | |
| | 150 | -19
| 150 |
| | |
| | | |
|
| North Wales | |
| | | |
| |
| Isle of Anglesey / Ynys Môn |
| 320 | -15 | 120
| -16 | 440 | |
| Scotland (East coast) |
| | | |
| | 1,140 |
| Aberdeen City | |
| 230 | -16 | 50
| -16 | 280 |
| Aberdeenshire | |
| 290 | -16 | 140
| -16 | 430 |
| Angus | | |
| | 160 | -18
| 160 |
| Dundee City | |
| | | 270 |
-20 | 270 |
| | |
| | | |
|
| Scotland (Central belt) |
| | | |
| | 1,580 |
| East Dunbartonshire | |
| | | 70 |
-13 | 70 |
| East Lothian | |
| | | 110 |
-18 | 110 |
| East Renfrewshire | |
| | | 70 |
-18 | 70 |
| Edinburgh, City of | |
| | | 1,130 |
-19 | 1,130 |
| Renfrewshire | |
| | | 200 |
-16 | 200 |
| | |
| | | |
|
| Eilean Siar | |
| | | 10 |
-15 | 10 |
| | |
| | | | 10
|
3. IMPACT OF
THE MEASURES
IN ISOLATION
3.1 This section gives details of the impact of each of the
June 2010 budget measures in isolation rather than their cumulative
impact.
3.2 For those measures being introduced during 2011-12 that
relate to LHA and which are the subject of the SSAC consultation
the data is largely drawn from the DWP's impact assessment that
accompanied the consultation.
3.3 For the other measures we have relied on official statistics
where available or otherwise the Government's own research data.
LHA Caps and Four Bed Limit
3.4 We understand that one of the stated objectives of the
caps is to ensure that the benefit is sustainable. We believe
that if caps are to be imposed they should at least take account
of the regional differences in housing costs. It is because the
caps take no account of the wide variation in housing costs between
the UK countries and regions that they will have such a pronounced
and devastating impact on high value areas and in particular London.
3.5 The effect of this measure on London is multiplied because
the LHA rates feed into the housing benefit subsidy regulations[10].
The subsidy rules determine how much local authorities are reimbursed
for families re-housed in temporary accommodation under their
homelessness duties. Most (short-term) private sector leasing
schemes are funded in this way. Leases can be for up to ten years
in duration and many existing contracts will be affected when
the changes take effect. Some time delay is built in because the
rates of subsidy for each financial year are determined by the
LHA rates set the preceding January. So if (as expected) the caps
come into operation from April 2011 subsidy will not be affect
until April 2012.
3.6 London is particularly reliant on temporary accommodation
to manage its homelessness problems. This is not going to change
in the foreseeable future. In the first quarter of 2010 there
were 51,310 households in temporary accommodation in England,
39,030 (76%) were in London. As much as 85% of London's temporary
accommodation will be affected by changes to the subsidy rules.
Table 3.1
CASELOAD AFFECTED AND AVERAGE WEEKLY LOSS RESULTING FROM THE
LHA CAPS AND FOUR ROOM LIMIT IN LONDON
| Local authority | Caseload
| Average Weekly loss £ |
| Camden | 1,090 | -81.00
|
| City of London | 10 | -73.00
|
| Hackney | 1,570 | -22.00
|
| Hammersmith and Fulham | 710
| -35.00 |
| Haringey | 150 | -73.00
|
| Islington | 680 | -63.00
|
| Kensington and Chelsea | 1,650
| -138.00 |
| Lambeth | 100 | -48.00
|
| Lewisham | 120 | -68.00
|
| Newham | 90 | -48.00
|
| Southwark | 30 | -49.00
|
| Tower Hamlets | 970 | -11.00
|
| Wandsworth | 1,790 | -38.00
|
| Westminster | 4,010 | -147.00
|
| Barking and Dagenham | 30 |
-66.00 |
| Barnet | 440 | -62.00
|
| Bexley | 20 | -75.00
|
| Brent | 2,070 | -71.00
|
| Bromley | 30 | -72.00
|
| Croydon | 80 | -73.00
|
| Ealing | 940 | -55.00
|
| Enfield | 90 | -83.00
|
| Greenwich | 30 | -71.00
|
| Harrow | 90 | -73.00
|
| Havering | 10 | -81.00
|
| Hillingdon | 70 | -51.00
|
| Hounslow | 190 | -41.00
|
| Kingston Upon Thames | 50 |
-57.00 |
| Merton | 60 | -57.00
|
| Redbridge | 130 | -83.00
|
| Richmond Upon Thames | 90 |
-26.00 |
| Sutton | 10 | -66.00
|
| Waltham Forest | 70 | -58.00
|
| Total | 17,470 | -81.00
|
3.7 Because of the interaction with the subsidy rules, those
authorities that are worst affected by the caps, and who will
experience the biggest homelessness problems as a result, will
also take the biggest hit on their temporary accommodation budgets.
3.8 With the exception of the four-bed limit, the DWP impact
assessment shows that the caps as presently set will not have
an impact outside London.
3.9 However, importantly, if the caps are not up-rated in
line with inflation (let alone in line with increases in rent
levels) then this is likely to change and they may soon begin
to impact on other areas.
3.10 If the purpose of the 30th percentile reform is to ensure
that claimants have access to at least the bottom 30% of the market,
then the effect of the caps will be to reduce that proportion
which is available. Overtime if the caps are not up-rated in line
with inflation (and there is no mechanism for doing so) the rate
at which the available market shrinks will accelerate.
3.11 The four bed limit also hits hardest in London, but does
have some effect outside of London. Although the numbers of households
affected in each authority area are small, homelessness services
will find the task of identifying suitable accommodation particularly
challenging. The numbers are small partly because suitable accommodation
for larger households is so scarce.
3.12 Unlike smaller households where the shortfall created
by the change to the 30th percentile may be small enough for households
to manage, the losses are so large from the four bed cap that
homelessness is almost inevitable. The average weekly losses from
the caps for four and five bed properties are £137 and £74
respectively (or £90 and £63 if authorities that are
wholly or partly within the Central London BRMA are excluded.
3.13 In these circumstances, homelessness will be an issue.
If households trying to juggle their finances are unable to meet
their housing costs and have to make a homeless application their
local authority is obliged to consider whether their existing
accommodation is affordable. If it is not they must accept them
as being homeless[11].
3.14 Significantly, if there is no suitable accommodation
available to re-house a large family then the local authority
may be forced to re-house the household in two separate homes.
In these circumstances housing benefit would be payable on both
properties[12]. Perversely,
we could end up in a position whereby a provision which is designed
to make a saving actually ends up costing the tax-payer more whilst
causing distress for the individual families concerned.
3.15 We are also concerned about the equality impact of the
proposed caps. Our view is that they will have a greater adverse
impact on BME households and households headed by women. Larger
households are not just affected by the four bed limit. The proportion
of claims affected by the caps increases with property size. The
authority areas affected also tend to have higher than average
BME populations. In the eight worst London authorities affected
(which account for 80% of the London caseload) BME households
account for at least 20% of the population and in six out of the
eight it is at least 29%.
3.16 The DWP statement and impact assessment prepared for
the SSAC states that "it is not possible to provide the specific
impact of this measure on race equality due to limitations in
the data"[13]. We
do not understand why this is case because a full equality impact
assessment was produced in 2009 when the five bed limit was introduced[14]
and this included impacts for all property sizes. Indeed, this
work showed the impact of the measure on various groups for all
sizes of household, concluding:
3.17 "These figures demonstrate there is likely to be
a disproportionate percentage of customers from minority ethnic
groups entitled to six or more bedroom properties, raising concerns
of indirect discrimination […]. Taking five or more bedroom
characteristics as a guide […] The Department recognises
this disproportionate impact on ethnic minority groups, but considers
this to be justified […]"
LHA: Set at 30th Percentile of Local Rents
3.18 The DWP's impact assessment shows that in 81 local authority
areas the average loss will be £10.00 or more per week. These
81 areas account for 162,960 households (17% of the LHA caseload).
In a further 108 authorities (caseload 249,750, 26.6% of the total)
the average losses are between £8 and £10 per week.
In 354 authorities (81% of the LHA caseload) the average loss
is £5.00 or more per week. Table 3.2 shows the 81 authorities
where the average loss is £10.00 or more each week.
Table 3.2:
AUTHORITIES WHERE THE AVERAGE LOSS PER LOSER FROM THE 30TH
PERCENTILE REFORM IS £10 OR MORE PER WEEK.
| Table 18: Estimated number of LHA recipients losing or notionally losing
| Caseload affected | Average loss per loser (£)
|
| Avon | | |
| Bath and North East Somerset UA | 1,160
| -13 |
| | |
| Berkshire | 4,050 | -14
|
| Slough UA | 2,570 | -15
|
| Windsor and Maidenhead UA | 840
| -12 |
| Wokingham UA | 640 | -11
|
| | |
| Buckinghamshire | 2,700 |
-12 |
| Aylesbury Vale | 1,030 |
-10 |
| Chiltern | 370 | -13
|
| South Bucks | 310 | -17
|
| Wycombe | 990 | -12
|
| | |
| Cambridgeshire | 2,200 |
-14 |
| Cambridge | 330 | -20
|
| East Cambridgeshire | 450 |
-13 |
| Huntingdonshire | 920 | -11
|
| South Cambridgeshire | 500 |
-18 |
| | |
| Devon | |
|
| Exeter | 1,550 | -10
|
| | |
| Essex | 5,670 | -11
|
| Basildon | 1,830 | -10
|
| Brentwood | 420 | -11
|
| Epping Forest | 980 | -10
|
| Thurrock UA | 2,070 | -11
|
| Uttlesford | 370 | -12
|
| | |
| Gloucestershire | |
|
| Cotswold | 540 | -10
|
| | |
| Greater Manchester | 5,890 |
-10 |
| Salford | 3,920 | -11
|
| Trafford | 1,970 | -10
|
| | |
| Hampshire | |
|
| Winchester | 350 | -11
|
| | |
| Hertfordshire | 2,570 | -12
|
| Dacorum | 730 | -11
|
| St Albans | 480 | -13
|
| Three Rivers | 500 | -13
|
| Watford | 860 | -12
|
| | |
| Inner London | 37,450 | -24
|
| Camden | 2,060 | -31
|
| City of London | 20 | -18
|
| Hackney | 4,990 | -22
|
| Hammersmith and Fulham | 2,130
| -21 |
| Haringey | 4,460 | -11
|
| Islington | 1,310 | -34
|
| Kensington and Chelsea | 1,610
| -44 |
| Lambeth | 4,230 | -16
|
| Lewisham | 6,350 | -15
|
| Southwark | 1,550 | -20
|
| Tower Hamlets | 1,900 | -28
|
| Wandsworth | 3,190 | -26
|
| Westminster | 3,650 | -46
|
| | |
| Kent | | |
| Tunbridge Wells | 800 | -11
|
| | |
| Nottinghamshire & Derbyshire | 9,750
| -11 |
| Broxtowe | 1,150 | -11
|
| Erewash | 1,620 | -11
|
| Gedling | 1,400 | -11
|
| Nottingham UA | 4,860 | -12
|
| Rushcliffe | 720 | -11
|
| | |
| Outer London | 64,960 | -14
|
| Barking and Dagenham | 3,310
| -11 |
| Barnet | 7,120 | -11
|
| Bexley | 2,390 | -10
|
| Brent | 5,810 | -27
|
| Bromley | 2,910 | -10
|
| Croydon | 6,480 | -12
|
| Ealing | 4,330 | -19
|
| Enfield | 7,380 | -11
|
| Greenwich | 2,770 | -10
|
| Harrow | 3,400 | -13
|
| Havering | 2,330 | -11
|
| Hillingdon | 3,130 | -12
|
| Hounslow | 2,630 | -17
|
| Kingston Upon Thames | 1,240
| -21 |
| Merton | 2,270 | -14
|
| Redbridge | 4,550 | -13
|
| Richmond Upon Thames | 1,110
| -20 |
| Sutton | 1,800 | -12
|
| | |
| Oxfordshire | 3,020 | -11
|
| Oxford | 1,830 | -11
|
| South Oxfordshire | 670 |
-10 |
| West Oxfordshire | 520 |
-10 |
| | |
| Scotland | |
|
| Aberdeenshire | 420 | -12
|
| | |
| Suffolk | |
|
| St Edmundsbury | 690 | -12
|
| | |
| Surrey | 5,290 | -12
|
| Elmbridge | 960 | -11
|
| Epsom and Ewell | 650 | -11
|
| Guildford | 1,110 | -12
|
| Runnymede | 430 | -11
|
| Spelthorne | 830 | -11
|
| Waverley | 570 | -11
|
| Woking | 740 | -15
|
| | |
| Sussex (East & West) | 9,340
| -12 |
| Brighton and Hove UA | 7,260
| -13 |
| Lewes | 1,330 | -10
|
| Adur | 750 | -10
|
| | |
| Wales | 3,340 | -10
|
| The Vale of Glamorgan / Bro Morgannwg | 2,110
| -10 |
| Wrexham / Wrecsam | 1,230 |
-10 |
| | |
| Yorkshire (North) | |
|
| York UA | 1,220 | -11
|
3.19 Table 3.2 shows that the heaviest impacts of the 30th
percentile measure are not confined to London. Other counties
(1974 boundaries) seriously affected are: Cambridgeshire, Berkshire,
Buckinghamshire, Essex, Greater Manchester, Hertfordshire, Nottinghamshire,
Oxfordshire, Surrey and Sussex. There are few other isolated areas
from Aberdeen to Bath but it is too early to tell whether these
are a permanent feature of the local market or a one off quirk
in the figures for the particular month the sample was taken.
3.20 DWP has justified this measure partly on the grounds
that because the LHA rates are set at the 30th percentile claimants
will still have access to 30% of the market, indeed they go further
and claim that because the market clusters around the median in
most cases between 33% and 34% of the market will be available.
3.21 Shelter and other organisations have previously criticised
the (current) LHA rules because they maintain that although the
LHA is set at the median market rent this takes no account of
the landlord's willingness to let to potentially more risky tenants.
They contend that in reality a much smaller proportion of the
market is actually available to housing benefit tenants. If a
landlord perceives a prospective tenant to be high risk they may
demand a higher deposit that is out of the range of lower income
households. CIH has always been broadly supportive of the LHA
but this was based on purchasing power set at levels of at least
50% of the market, even if what was actually available was smaller.
Under the current system 43% of tenants are entitled to the excess
(of up to £15) which may help in their negotiations to secure
a property. However we would note that this will not continue.
3.22 Our view is that whatever rate the Government decides
is appropriate for LHA tenants (be it 30% or some other figure)
the lower the rate the more certain they need to be that proportion
of the market is actually available to claimants.
3.23 CIH has identified a problem with the evidence base used
for setting rents in some areas. This may be a reflection of a
small private rented market or a combination of other factors.
The problem is most acute for the rarer property sizes (shared
room, three bedroom and four bedroom properties).
3.24 In one case we found the LHA for the month in question
had been set on an evidence base of just six rents. In these circumstances
we do not see how the Department can confidently assert that the
rent is set at the 30th percentile that 30% of the market is actually
available. Whilst it is true that a small private rented sector
will translate into a small caseload, this will be of little comfort
to the individuals concerned if they cannot secure a place to
live. It may also mean that the local authority concerned has
to spend a disproportionate amount of time securing housing for
a small number of cases and this cannot be effective use of resources.
3.25 In June 2010 (the same month that the DWP used for 30
percentile impact assessment) CIH has identified 83 instances
in England where an evidence base of less than 100 rents was used
to set the LHA (Table 3.3). A further 167 LHA rates were set from
an evidence base of less than 250 rents.
Table 3.3:
BRMA AREAS IN ENGLAND WHERE THE EVIDENCE BASE TO SET THE LHA
WAS LESS 100 RENTS (LHA RATES JUNE 2010).
| BRMA | Evidence base
| Property size |
| East of England | |
|
| Huntingdon | 81 | 1 Bed
|
| Huntingdon | 98 | Shared Room
|
| Huntingdon | 66 | 4 Bed
|
| East Midlands | |
|
| Chesterfield | 58 | Shared Room
|
| Chesterfield | 89 | 4 Bed
|
| Lincolnshire Fens | 49 |
Shared Room |
| North Nottingham | 39 | Shared Room
|
| Northants Central | 89 |
Shared Room |
| Peaks & Dales | 93 |
4 Bed |
| North East | |
|
| Darlington | 54 | Shared Room
|
| Durham | 87 | Shared Room
|
| Northumberland | 23 | Shared Room
|
| Sunderland | 94 | 4 Bed
|
| North West | |
|
| Barrow-in-Furness | 78 |
1 Bed |
| Barrow-in-Furness | 17 |
Shared Room |
| Barrow-in-Furness | 58 |
4 Bed |
| Bolton and Bury | 86 | Shared Room
|
| East Lancs | 35 | Shared Room
|
| Fylde Coast | 55 | Shared Room
|
| Kendal | 64 | 4 Bed
|
| Lancaster | 73 | 4 Bed
|
| North Cheshire | 87 | Shared Room
|
| Oldham & Rochdale | 59 |
Shared Room |
| South Cheshire | 48 | Shared Room
|
| St Helens | 65 | 1 Bed
|
| St Helens | 63 | Shared Room
|
| St Helens | 39 | 4 Bed
|
| Tameside & Glossop | 66
| Shared Room |
| West Cumbria | 13 | Shared Room
|
| West Pennine | 26 | Shared Room
|
| West Pennine | 48 | 4 Bed
|
| Wigan | 47 | Shared Room
|
| South East | |
|
| Ashford | 79 | 4 Bed
|
| Aylesbury | 69 | Shared Room
|
| Basingstoke | 94 | Shared Room
|
| Chichester | 73 | Shared Room
|
| Dover-Shepway | 94 | Shared Room
|
| Eastbourne | 85 | 4 Bed
|
| Isle of Wight | 62 | Shared Room
|
| Isle of Wight | 86 | 4 Bed
|
| Newbury | 60 | Shared Room
|
| Newbury | 92 | 4 Bed
|
| North West Kent | 55 | Shared Room
|
| North West Kent | 75 | 4 Bed
|
| Sussex East | 63 | 4 Bed
|
| Thanet | 69 | Shared Room
|
| Thanet | 98 | 4 Bed
|
| South West | |
|
| Gloucester | 76 | Shared Room
|
| Mendip | 70 | Shared Room
|
| Mid & East Devon | 72 |
Shared Room |
| Mid Dorset | 25 | Shared Room
|
| Mid Dorset | 69 | 4 Bed
|
| North Cornwall & Devon Borders | 63
| Shared Room |
| North Cornwall & Devon Borders | 95
| 4 Bed |
| Salisbury | 63 | Shared Room
|
| Weston-S-Mare | 72 | Shared Room
|
| Winchester | 59 | Shared Room
|
| West Midlands | |
|
| Black Country | 95 | Shared Room
|
| Eastern Staffordshire | 51 |
Shared Room |
| Herefordshire | 86 | Shared Room
|
| Herefordshire | 85 | 4 Bed
|
| Rugby & East | 92 | Shared Room
|
| Solihull | 22 | Shared Room
|
| Warwickshire South | 87 |
Shared Room |
| Worcester North | 44 | Shared Room
|
| Worcester South | 49 | Shared Room
|
| Yorkshire & Humber |
| |
| Barnsley | 82 | 1 Bed
|
| Barnsley | 58 | Shared Room
|
| Barnsley | 74 | 4 Bed
|
| Doncaster | 76 | Shared Room
|
| Grimsby | 93 | 4 Bed
|
| Halifax | 21 | Shared Room
|
| Halifax | 89 | 4 Bed
|
| Harrogate | 23 | Shared Room
|
| Leeds | 40 | Shared Room
|
| Richmond & Hambleton | 95
| 1 Bed |
| Richmond & Hambleton | 6
| Shared Room |
| Richmond & Hambleton | 93
| 4 Bed |
| Rotherham | 52 | Shared Room
|
| Scarborough | 76 | Shared Room
|
| Scarborough | 86 | 4 Bed
|
| Scunthorpe | 55 | 4 Bed
|
| Wakefield | 70 | Shared Room
|
LHA: Switch to CPI Indexation From 2013-14
3.26 The effect of this particular measure is difficult to
model because actual local rent inflation is so difficult to predict.
The picture is further complicated by the fact that even if local
rent inflation can be identified for a particular area it may
well not be even across the whole market. For example, rents may
well rise at a faster rate in the top 70% of the market than at
the bottom 30% of the market.
3.27 However, it is reasonable to assume that broadly over
time rent inflation will outstrip CPI inflation. Indeed government
appears to be making this assumption if the policy is to make
the savings that have been built into the budget.
3.28 The logical consequence of this is that overtime the
30% of the market that is available to tenants will be squeezed.
In theory, working on the assumption of uniform rent inflation
and that rent inflation will outstrip CPI, there will come a point
at which the current lowest rent that is available has overtaken
the 30th percentile rent up-rated in line with CPI. At that point
there will be no properties available at the LHA rate.
3.29 CIH modelled this reform using the overall average rates
for rent inflation and CPI over the period 1991 to 2009 (from
the bottom of the previous recession to the current one). Over
this period rent inflation outstripped CPI by an average of 2.57%
per year (in fact it was higher in every single year with the
sole exception of 2009). We inflated the current lowest rents
available from the rent officer data set at CPI plus 2.57% (using
the CPI average 1991-2009) and compared them with the rent officer
figures for the 30th percentile up-rated in line CPI.
3.30 Our results illustrate the time in years it would take
for LHA to fall behind the lowest rent if these assumptions held
good. The worst affected areas (ie where the gap is closed the
quickest) in table 3.4.
Table 3.4:
TIME IN YEARS FOR LHA TO FALL BEHIND THE LOWEST RENT
| Shared Room | |
| 1 Bedroom | |
| BRMA | Time |
| BRMA | Time
|
| West Cumbria | 1.13 |
| Barnsley | 8.22 |
| Chesterfield | 1.72 |
| Oldham & Rochdale | 9.09
|
| Richmond & Hambleton | 3.26
| | St Helens | 9.10
|
| Mid Dorset | 3.39 |
| Aylesbury | 9.66 |
| Barrow-in-Furness | 6.64 |
| Chilterns | 10.50
|
| Harrogate | 7.23 |
| Swindon | 11.02 |
| Herefordshire | 7.42 |
| Solihull | 11.09 |
| Winchester | 7.43 |
| Isle of Wight | 11.20 |
| Kendal | 7.55 |
| Worcester North | 11.20 |
| Northumberland | 7.64 |
| Milton Keynes | 11.31 |
| Southampton | 7.65 |
| North Nottingham | 11.51 |
| Worcester North | 8.06 |
| East Cheshire | 11.72 |
| Sunderland | 8.38 |
| Kendal | 11.72 |
| Darlington | 8.72 |
| Darlington | 11.72 |
| Teesside | 8.86 |
| East Thames Valley | 11.72
|
| Worcester South | 8.89 |
| Walton | 12.22 |
| 2 Bedroom | |
| 3 Bedroom | |
| BRMA | Time |
| BRMA | Time
|
| Ashford | 9.99 |
| Newbury | 8.46 |
| East Thames Valley | 10.43 |
| Maidstone | 10.47
|
| East Cheshire | 10.65 |
| Outer East London | 11.72 |
| West Wiltshire | 11.59 |
| Worthing | 12.63 |
| Mid Dorset | 11.77 |
| West Wiltshire | 12.82 |
| Winchester | 12.63 |
| Chilterns | 13.06 |
| Basingstoke | 12.77 |
| Harlow & Stortford | 13.45
|
| Chichester | 13.04 |
| Lancaster | 13.49 |
| Aylesbury | 13.38 |
| Richmond & Hambleton | 13.49
|
| Maidstone | 13.38 |
| West Pennine | 13.69 |
| Stevenage & North Herts | 13.38
| | Cherwell Valley | 13.71
|
| Warwickshire South | 13.70 |
| Salisbury | 13.91
|
| Swindon | 13.70 |
| Darlington | 14.02 |
| Milton Keynes | 14.04 |
| Crawley & Reigate | 14.19
|
| Southend | 14.04 |
| West Cumbria | 14.19 |
| Darlington | 14.45 |
| Mendip | 14.21 |
| 4 Bedroom | |
| BRMA | Time |
| Eastbourne | 6.09 |
| Newbury | 8.61 |
| St Helens | 8.70 |
| Worcester South | 9.09 |
| Richmond & Hambleton | 9.53
|
| Blackwater Valley | 10.87 |
| Huntingdon | 10.93 |
| Salisbury | 11.01 |
| Oldham & Rochdale | 11.18
|
| Herefordshire | 11.43 |
| Milton Keynes | 11.64 |
| Taunton & West Somerset | 12.15
|
| Southport | 12.36 |
| Ashford | 12.39 |
| North Cornwall & Devon Borders | 12.50
|
| Stevenage & North Herts | 12.73
|
3.31 Our modelling has shown that broadly the effect of the
CPI cap will be to work in the reverse way that 30th percentile.
The areas most adversely affected are generally those where median
30th percentile rents are closest together because these are normally
the markets where the gap between the lowest rent and the 30th
percentile rent are also closest. In other words, in markets where
the 30th percentile is already close to the lowest rent the gap
will close more quickly.
3.32 It is critical to understand that this means that over
time the effect of the CPI cap will be to break the link between
what help tenants receive with their housing costs and the actual
rent they pay. At this point it can no longer be said that housing
benefit will be meeting its central policy objective: to ensure
that accommodation is available to all households regardless of
their income.
3.33 That is why, this is the budget measure that CIH is most
strongly opposed to.
3.34 The effect of this measure in shrinking the affordable
supply will be two fold. First for tenants the purchasing power
of their LHA will diminish. Second long-term landlord investment
in rental stock is likely to shrink because long-term investment
is predicated on long-term rental income yields.
3.35 We are also seriously concerned that once this measure
has been introduced into the private rented sector that this will
then be used to justify its extension to the social rented sector.
This would have serious consequences for social landlords and
their business plans. We would stress that any such measure would
need to be fully and comprehensively considered, in particular
looking at the inter-relationship between housing benefit, regulated
rents and new supply.
DEDUCTIONS FOR
NON-DEPENDANTS:
REVERSE PREVIOUS
FREEZES ON
UP-RATING
AND MAINTAINING
LINK WITH
PRICES FROM
2011-12
3.36 We have no objection to the principle of non-dependant
charges, it is reasonable to expect non-householders to contribute
towards the householders housing costs. But we have concerns about
charges which are set at a rate which are effectively higher for
lower income households than those which people in non-benefit
households would be expected to pay.
3.37 If it is right to peg benefit rates to what low income
working households can afford, then that principle should apply
to the setting of non-dependant charges also. Also if it is right
to peg benefit rates to CPI then non-dependant charges should
also be tied to CPI. We would ask that government is clear as
to the index that will be applied to the unfreezing and to subsequent
increases thereafter.
3.38 We also object to the reduction of benefit levels at
a rate that is faster than inflation. This would be carried out
under a general benefit up-rating and it is unclear whether there
will be any effective scrutiny. The impression given by the budget
statement is that the DWP is returning to a policy of up-rating
non-dependant charges in line with prices. This would appear to
be misleading. There is no established policy as to how non-dependant
charges are up-rated. The Social Security Administration Act allows
the Department to apply any level of increase they decide without
the need to refer the matter to the SSAC even if the increase
is more than the general increase in prices[15].
In fact this loophole was regularly taken advantage of during
the 1990s resulting in charges which were widely accepted as being
unfair - hence the policy of freezing.
3.39 We note that it is implicit from the Budget 2010 Policy
Costings[16] that the
increases in non-dependant charges also apply to council tax benefit.
Obviously this will mean that this particular measure will apply
to and affect all tenures. But it also means that tenants will
be hit twice with both higher rent and council tax payments. It
seems likely that this measure will hit pensioners particularly
hard.
3.40 It is difficult to model the effect of the increase in
charges on households without information about what the expected
rate[17] of increase
will be. However, we understand that the final cumulative increase
will be within the region of between 60%-90% of current values.
3.41 Table 3.5 shows our estimate of the rate of charges once
the policy has been fully phased in based on increases of 60%
and 90%. We have also attempted to estimate the numbers of people
affected based on known data from historic housing benefit caseloads.
We do not have equivalent historic data for council tax benefit
but based our estimates on the same proportions as in housing
benefit.
Table 3.5:
ESTIMATED CURRENT CASELOADS AND RATES OF NON-DEPENDANT CHARGES
FROM APRIL 2013 IF CURRENT RATES ARE INCREASED BY (A) 60% OR (B)
90%.
| Current rate | 60% increase
| 90% increase | Total Estimated caseload
| Estimated pension age caseload |
| Housing Benefit | £47.75
| £76.40 | £90.75 |
19,020 | |
| £43.50 | £69.60
| £82.65 | 7,130 |
|
| £38.20 | £61.10
| £72.60 | 11,890 |
|
| £23.35 | £37.35
| £44.35 | 14,260 |
|
| £17.00 | £27.20
| £32.30 | 9,510 |
|
| £7.40 | £11.85
| £14.05 | 98,630 |
|
| | |
| 160,440 | 52,840
|
| | |
| | |
| Council Tax Benefit | £6.95
| £11.10 | £13.20 |
23,150 | |
| £5.80 | £9.30
| £11.00 | 8,670 |
|
| £4.60 | £7.35
| £8.75 | 31,830 |
|
| £2.30 | £3.70
| £4.35 | 131,630 |
|
| | |
| 195,280 | 88,910
|
| | |
| | |
| Total affected by both HB & CTB |
| | | 142,340
| 46,880 |
| | |
| | |
| Total households affected |
| | | 213,380
| 76,940 |
SOCIAL SECTOR:
LIMIT WORKING
AGE ENTITLEMENTS
TO REFLECT
FAMILY SIZE
3.42 The Budget Policy Costings show that this measure out
of the whole package is likely to have the most significant impact
on social landlords. Out of all of the measures this is also the
one which it is most difficult to estimate the impact for the
lack of any hard data.
3.43 The Departmental estimates for the Budget Policy Costings
were based on the preliminary data from the English Housing Survey
(EHS)[18] rather than
DWP data from the Single Housing Benefit Extract. EHS data does
not however show a breakdown of under-occupation, according to
working age and pension age. We have therefore had to base our
modelling on estimates on the relative rates of under-occupation.
It may well be that rates of under occupation in Scotland and
Wales are at different levels to those in England - although England
accounts for the lion's share (83% of caseload and 86% of expenditure).
3.44 A further difficulty with making estimates about the
number of losers and the average rates of loss arises from the
fact that the detailed policy framework for the reduction in the
award for under occupation has not yet been set. For example it
is unclear whether the policy concerning under-occupation will
mirror the size criteria applied to private sector tenants. This
would raise questions about, for example, single people aged under
25.
3.45 Our estimate is that this measure will affect around
220,000 households (at current caseload levels) at an average
loss of around £9.00 per week. However, it should be noted
that this would only generate around one quarter to one third
of the savings compared to that estimated in the Budget Policy
Costings.
3.46 This suggests that either the deductions for under-occupation
are expected to be a lot more significant (we have assumed an
average reduction of around 15% of the award) or the numbers affected
are expected to be much greater (or a combination of both).
3.47 It is unclear at this stage whether the policy will take
account of the unique characteristics and accepted standards that
apply to the social sector. For example, social landlords do not
develop new bedsit accommodation and landlords do not have a responsibility
to ask tenants to consider downsizing when there is a change in
household size.
3.48 It would seem reasonable to assume that this measure
will have a disproportionate impact on those parts of the UK where
demand is the lowest: Scotland, Wales the North of England and
the Midlands. It also has the potential to undermine attempts
at regeneration (eg in the Housing Market Renewal Pathfinder areas)
if the policy is implemented inflexibly.
3.49 As with the CPI measures we are concerned that once this
measure has been applied to working age households the logic will
be to apply it to pension age households at some later date on
the grounds that their exception is an unjustified anomaly (we
would for example note that the size criteria in the private rented
sector are applied regardless of the age of the tenant).
3.50 Reduce awards to 90% after 12 months for claimants of
JSA
3.51 We think this proposal may well have the opposite effect
to that intended: to encourage unemployed tenants back into work.
We maintain that a stable home and family life is a pre-requisite
for a stable job. We are particularly concerned about the effect
of this measure on the supported housing sector (for example Foyers)
where landlords are working intensively with tenants on their
underlying problems to help them make them work ready. We note
that rents and service charges in these schemes are higher to
take account of the landlord's increased risk and therefore tenants
will take a higher loss.
3.52 This measure will be felt in particular by single people
aged under 25. The average benefit award for the LHA shared room
rate is £69.00. The average loss with the reduction to the
30th percentile is £6.00 per week making the average award
under the new regime £62.00. So the total loss in income
will be £12.30 which they will have to make good out of a
total benefit income of just £51.85 per week. This also assumes
that they do not already have a benefit shortfall.
3.53 Our modelling has shown that this measure will have the
biggest impact in the regions: Birmingham is very severely affected
(Birmingham Ladywood standing out as being by far the worst).
This highlights the fact that it takes no account of the difficulties
that people face due to local economic conditions. It is also
indiscriminate: it penalises those who are making genuine efforts
to return back to work as much as those that do not. We would
also note that the number of people affected by this measure will
increase as planned benefit reforms move more people off incapacity
benefits on to JSA.
Table 3.6:
TOP 30 PARLIAMENTARY CONSTITUENCIES AFFECTED BY PROPOSAL TO
REDUCE AWARDS FOR JSA CLAIMANTS TO 90% AFTER 52 WEEKS
| Parliamentary constituency 2010 |
Claimant count in receipt of JSA for 52 weeks or more May 2010
| Estimated number of Housing benefit cases affected*
| % of claimant count BME (by local authority)
|
| Birmingham, Ladywood | 2,560
| 1024 | 42.0 |
| Birmingham, Hodge Hill | 1,760
| 704 | 42.0 |
| Birmingham, Erdington | 1,510
| 604 | 42.0 |
| Birmingham, Perry Barr | 1,360
| 544 | 42.0 |
| Tottenham | 1,360 | 544
| 49.5 |
| West Ham | 1,285 | 514
| 65.5 |
| Birmingham, Hall Green | 1,275
| 510 | 42.0 |
| Liverpool, Walton | 1,255 |
502 | 8.3 |
| Nottingham North | 1,240 |
496 | 22.2 |
| Birmingham, Yardley | 1,240 |
496 | 42.0 |
| Bootle | 1,235 | 494
| 16.7 |
| Kingston upon Hull North | 1,235
| 494 | 3.1 |
| Birmingham, Northfield | 1,235
| 494 | 42.0 |
| Foyle | 1,225 | 490
| No data available |
| Belfast West | 1,210 | 484
| No data available |
| Poplar and Limehouse | 1,195
| 478 | 60.4 |
| Middlesbrough | 1,185 | 474
| 8.6 |
| Bethnal Green and Bow | 1,180
| 472 | 60.4 |
| Hull West and Hessle | 1,175
| 470 | 3.1 |
| Leicester West | 1,155 | 462
| 41.6 |
| Leicester South | 1,145 |
458 | 41.6 |
| Leeds Central | 1,135 | 454
| 17.7 |
| Birmingham, Edgbaston | 1,130
| 452 | 42.0 |
| Camberwell and Peckham | 1,130
| 452 | 52.5 |
| Newry & Armagh | 1,100 |
440 | No data available |
| Manchester Central | 1,095 |
438 | 28.3 |
| Liverpool, Riverside | 1,085
| 434 | 8.3 |
| Brent Central | 1,085 | 434
| 62.2 |
| Kingston upon Hull East | 1,075
| 430 | 3.1 |
| Wolverhampton South East | 1,055
| 422 | 28.4 |
*Estimated at 40% of the JSA caseload
Source: DWP Labour Market Statistics
ADDITIONAL BEDROOM
FOR CARERS
3.54 We welcome this measure but point to the very limited
circumstances in which it will apply. For example, it will not
apply to severely disabled tenants who do not have a carer, but
nevertheless require the use of an extra room.
3.55 It should also be recognised that those who benefit from
this policy will be precisely the same people who are guaranteed
to face a loss from one or more of the PRS measures that come
into force in 2011-12.
INCREASE DISCRETIONARY
HOUSING PAYMENTS
BUDGET
3.56 Whilst this is welcome the total increase in the budget
amounts to 1.7% of the total expected savings made. Taking the
30th percentile measure alone, and using the current distribution
formula, we estimated that this would be enough sustain around
60,000 cases covering the full loss between the median and the
30th percentile for a year - just 6% of the LHA caseload. However,
this assumes the whole additional budget would be spent solely
on the 30th percentile losses and would leave nothing to cover
for losses resulting from the other measures (eg the non-dependant
charges) and assumes that there nothing to cover social sector
tenants.
3.57 DWP has said that it will be revisiting the discretionary
housing payment funding distribution formula so that it better
takes account of those areas that will be worst affected by the
changes. Whilst this is of course welcome it does inevitably mean
that it will sustain fewer cases.
CONCLUSION
4.1 The long-term objective of Government, tenants and housing
providers should be to provide a system of help with housing costs
that is both politically and economically sustainable.
4.2 CIH is clear that the starting point in moving towards
success in this objective is focusing on the reasons for growth
in the housing benefit budget and what policies around housing
support in the round (both in the social and private sectors)
are aiming to achieve.
4.3 As noted, the measures in the June budget have significant
shortcomings and are inconsistent with wider, stated government
ambitions around welfare reform.
4.4 CIH is very concerned at the scale and nature of the cuts
announced to Housing Benefit in the Emergency Budget. Nearly a
million households will be affected by the first tranch of cuts
alone.
4.5 We believe that such cuts will put a severe strain on
some of the poorest and most vulnerable households across the
country, causing hardship and in the worst instances homelessness.
4.6 What's more we believe that they will not deliver the
savings to the public purse envisaged as whilst benefit payments
reduce, costs stack up in other areas including through homelessness,
temporary accommodation, hostel places, personal debt, education,
health, social services and criminal justice.
4.7 We therefore strongly oppose these cuts and are also concerned
at the short timescales involved. However, if they are to go ahead
we believe that there are measures which if adopted could help
minimise the impact and smooth the transition for those households
affected.
4.8 We have written to the Secretary of State with other concerned
organisations outlining our recommendations on the implementation
and communication measures which need to accompany these changes
if we are to avoid a surge in levels of debt, overcrowding and
homelessness.
4.9 In particular, we propose as an immediate course of action:
- Moving
the introduction of caps back to October 2011.
- Caps to
be uprated in line with rent inflation.
- Reviewing
the Broad Rental Market Areas to ensure 30% of the PRS is available
to claimants in each local authority.
- Additional
support and resources to assist claimants, especially those with
vulnerabilities.
- Discretionary
Housing Payments being proportionally allocated to those authorities
worst affected.
- Clear
and timely communication with particular attention paid to vulnerable
claimants.
- Clarification
on the guidance around intentional homelessness.
4.10 There are also significant longer term questions
which the June announcements raise, notably around housing benefit,
rent levels and housing supply. We would urge government to carry
out comprehensive analysis around the trade-offs in public expenditure
and the impact on private investment in affordable housing, before
taking any further steps in this direction.
September 2010
10 See Housing Benefit Subsidy Order 1998 No.562, Article
17A Back
11
The Homelessness (Suitability of Accommodation) Order 1996 No.3204,
Art 2. Back
12
Housing Benefit Regulations 2006 No.213, Regulation 7(6). Back
13
DWP Equality Impact Assessment, Annex C page 30 Back
14
http://www.dwp.gov.uk/docs/localhousinglargerproperties.pdf
Back
15
Social Security Administration Act 1992, s150(7) & Schedule
7 paragraph 3 Back
16
http://.parliament.uk/deposits/depositedpapers/2010/DEP2010-1600.pdf
Back
17
We say expected because of course the Department cannot know for
certain what rate of inflation will be for the three years over
which the "unfreezing" will take place. It could however
publish its figure for the cumulative up-rating 2001-2010 if the
freezing had not taken place. Back
18
Hansard 6 July 2010 column 214W [6502] http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm100706/text/100706w0002.htm#10070668000023
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