Impact of the changes to Housing Benefit announced in the June 2010 Budget

Written evidence submitted by Citizens Advice Bureau

Summary

· Citizens Advice is extremely concerned at the impact of the cuts to housing benefit (HB) on people’s ability to pay their rents and avoid rent arrears and homelessness. We consider it highly regrettable that the housing implications of these cuts do not appear to have been given any consideration in advance of decisions being made.

· Bureaux are already reporting that their local authorities are very concerned at the implications for their homelessness functions, at a time when their budgets will be facing sharp cuts. It will be crucial that local authorities’ homelessness prevention funds are expanded by redirecting savings made from the HB cuts.

· Cutting entitlement to HB to this extent is not an effective way of improving work incentives. For claimants in work, a forced move may add to their travel to work and child care costs. Unemployed claimants forced to move from high rent areas such as central London to areas where rents are lower, may find it more difficult to find work because of higher unemployment rates.

· Citizens Advice is particularly concerned at the proposal to cut entitlement to HB by 10% after a claimant has been in receipt of JSA for over a year, especially in circumstances where the claimant has fully complied with requirements to actively seek work. This cut will fall hardest on vulnerable claimants who already face disadvantage in the labour market, for example people with mental health problems or who have a disability.

· CAB evidence demonstrates the hardship which claimants already face as a result of shortfalls between their LHA and their rent. This will be exacerbated in future when basic benefit levels are reduced as a result of uprating in line with CPI rather than RPI. We anticipate that the increased shortfalls will result in higher levels of poverty, indebtedness, rent arrears and homelessness.

· Shortfalls are particularly problematic for single claimants aged under 25 who are subject to the shared room rate (SRR) restriction, and we believe there is a strong case for continuing to set the SRR at the median rather than the 30th percentile.

· Use of the CPI will depress LHA rates over time, as rent inflation is traditionally higher than the CPI. As a result, LHA rates may fall below the 30th percentile unless regulations provide for regular corrections to be made.

· We regret that no assessment has been made of the likely impact of cuts on rent levels and landlords’ willingness to let to claimants. CAB evidence does not suggest that landlords will reduce their rents when LHA rates fall.

· We are particularly concerned at the impact of the maximum cap on housing and homelessness in London, where housing pressures are already extreme. We believe there is a strong case for easing the transition to the proposed cap, such as by applying it only to new claims from April 2011.

Introduction

1. Citizens Advice welcomes the opportunity to respond to this timely enquiry into the impact of the changes to HB announced in the Budget. We are extremely concerned at the potential impact of the cuts to HB on people’s ability to pay their rents and avoid rent arrears and homelessness.

2. Housing and housing benefit related problems are some of the most common enquiries brought to Citizens Advice Bureaux. During 2009/10 bureaux dealt with over 222,000 enquiries relating to HB and it clear from this advice work that HB plays a crucial role in enabling people on low income to sustain their housing.

3. In our view, the proposed cuts demonstrate the fundamental and longstanding fault line between housing benefit and housing policy. As a result, the DWP’s case for the cuts is made in relation to the need to reduce benefit expenditure and welfare dependency and to promote work incentives, which are key DWP priorities. The proposals do not seem however to recognise the fact that CLG’s housing and homelessness policy is increasingly dependant on the private rented sector with its unregulated rents to provide for low income households in housing need. This has inevitably fuelled the housing benefit budget, as the average weekly LHA payment of £112.89 to a private tenant is £40.44 per week (£2,310 per year) higher than the £72.45 average HB payment to a social housing tenant. The failure of successive Governments to fund adequate levels of social housing has led to the current situation where housing benefit accounts for around 80% of all government spending on housing. 1Yet policy responsibility for that spending rests with DWP rather than CLG.

4. As a result, the housing implications of these cuts do not appear to have been given any consideration in advance of decisions being made. For example, no assessment has been undertaken of the possible impact on rent levels, on landlords’ willingness to let to claimants, or on the standard of property that will be available within LHA rates. We therefore very much hope that the remit of this enquiry will enable the CLG committee to be involved, in order that the housing impact of the proposals can be fully examined.

Incentives to work and access to low paid work.

5. We welcome the recognition by DWP Ministers that a key disincentive to work is the rate at which HB is withdrawn as income rises. As the White Paper 21st Century Welfare outlines, tackling levels of marginal deduction rates is central to improving work incentives.

6. In addition, we believe that the proposals under consideration by the previous Government to introduce fixed period awards for people in work, would be a very positive step in reducing the hassle factor for people in low paid work trying to manage their HB claim if their income is continually fluctuating. Bureaux regularly report clients in low paid work falling into rent arrears or facing recovery of overpayments because their HB has not kept pace with changes in their income. We therefore very much hope that these proposed changes will be progressed.

7. In contrast, we do not accept that cutting entitlement to HB is an effective way of improving work incentives. It is true that the lower the rent, the easier it is to escape the poverty trap created by high marginal deduction rates, through increasing income from work. However these changes are essentially about reducing entitlement to benefit rather than reducing rents themselves.

8. In reality, many tenants are likely to have to move to areas with lower rents as a result of the proposed cuts. For many, the actual process of such a forced move will be highly disruptive and stressful as well as putting additional stranin on very limited budgets. In the transitional period therefore, there can be little doubt that the proposed changes will act as a work disincentive.

9. The question then arises as to what impact a move will have on people’s ability to find and sustain work. Firstly it is important to recognise that many private tenants claiming HB claimants are in work. Figures from the 2007/8 Survey of English Housing show that as many as 24% of private tenants were working.1 Any move which takes them further away from their place of employment will add to their travel and child care costs. This is likely to be a significant disincentive to work and some claimants may even find they are no longer better off in work when the increased costs are taken into account.

10. In contrast to the number of private tenants who are claiming HB and in work, only 13% in the 2007/8 Survey of English Housing were categorised as unemployed (that is actively seeking work). For this group, a key question is whether employment prospects are better or worse in the areas to which they have to move. ONS Labour Market Statistics for the London area suggest that there is a relationship between rent levels and rates of unemployment. In the three local authorities which will be most affected by the cap, unemployment rates are much lower ( Westminster 2.77%, Camden 3.3%, Kensington and Chelsea (3%)) than in some of the few London boroughs which will be unaffected by the cap and to which claimants may therefore have to move (Barking and Dagenham 5.78%, Newham 6.44% Redbridge 4.15%). A move to an area with affordable rents could therefore perversely increase the risk of a claimant being hit by the 10% HB penalty for still being unemployed after 12 months in receipt of JSA.

11. Citizens Advice is particularly concerned at this proposal to cut entitlement to HB by 10% after a claimant has been in receipt of JSA for over a year. Evidence is - at best - mixed as to whether sanctions are effective in encouraging people into work, and we can see no logic to making such a cut from a household’s HB, especially in circumstances where the claimant has fully complied with requirements to actively seek work. The reasons why some claimants stay on JSA for over a year are often to do with factors beyond their control such as the state of the local labour market or their perceived attractiveness to employers. The recently published Labour Market Statistics which show rates of unemployment for over a year were highest amongst people aged 50 and over, illustrates this point.2 This cut seems destined to fall hardest on those who already face disadvantage in the labour market, for example people with mental health problems or who have a disability. We note in particular the concern of supported housing providers such as St Mungo’s who estimate that over 90% of their residents who are in receipt of JSA have been so for over a year. There must be a risk that this cut would discourage providers from housing vulnerable client groups.

12. Citizens Advice has already expressed significant concerns about the numbers of claimants in poor health who are failing the work capability assessment for ESA and therefore being found fit for work.3 As well as being in poor health, some will have been out of the labour market for many years because of their health condition. They are therefore likely to face particular difficulties in finding a job, and may well fall foul of this new one year rule. We very much hope that the government will reconsider and withdraw this proposed measure.

Levels of rent

Will rents fall?

13. Ministers have suggested that a consequence of the cuts to LHA rates could be that levels of private rents will fall. If so, this would be very welcome. However we are concerned that no research or assessment has been carried out on which to base such an assumption. If rents do not fall, the full burden of the cuts will be experienced by claimants.

14. Indeed the available evidence would suggest that LHA rates do not drive the rental market. DWP statistics show that there is very little bunching of rents at the LHA rates, which would be expected to happen if this was the case. The DWP’s Impact Assessment reveals that 47% of claimants are currently getting an excess payment because their rent is below the LHA level, whilst on the other hand 48% of LHA claimants face shortfalls between their LHA payment and their rent, averaging £23 per week. This suggests that just 5% of LHA claimants have rents which match the amount of their LHA.

15. Further evidence that rents do not follow LHA rates is available from the way landlords have responded to recent falls in LHA rates in some parts of the country, which have left their tenants with unexpected shortfalls between their rent and LHA. Bureaux have reported the problems that this has caused for clients, as their landlords have not reduced their rents in line with falling LHA rates, even though it is frequently argued that landlords are keen to keep existing tenants rather than having to re-advertise the property and risk having a void period.

A CAB in West London reported the case of a couple with four children who have experienced a drop of £86.26 a week in their LHA since they took on the tenancy of their 3 bedroom house. The landlord has not reduced the rent and the family are unable to meet this additional cost. They have had to move three times in three years trying to find affordable accommodation, which has been extremely disruptive for the whole family.

A CAB in Surrey reported a 62-year-old woman whose only income is a very small state pension and pension credit, plus HB. She has been claiming HB for two years, but this year it was reduced by £20 per month due to a decrease in the LHA. She was very worried about how she would manage to make up the shortfall as she already had to budget very carefully to meet all her living costs. Her rent of £390 per month has not decreased and is unlikely to; indeed it could increase when the lease comes up for renewal at the end of the month.

16. It is likely that for most landlords, decisions about rent levels are primarily driven by the need to cover their mortgage costs and other outgoings, and the need to reflect the going rate across the rental market. In many parts of the country, demand for rented accommodation exceeds supply at the bottom end of the market, so landlords will be able to let to other tenant groups - such as students - if housing benefit claimants are no longer able to afford their rent.

Local variation in rent levels

17. The significant variation in rent levels across the country has always been a feature of the UK housing market and indeed this has been behind the recognition of the need to separate out housing costs from other benefit support for living costs. Even under the existing rules, a common problem reported by bureaux following the reduction in the number of Broad Rental Market Areas (BRMAs) which came into effect along with the move to the LHA, has been that it has led to much rougher justice for claimants, because of the wide variation in rent levels in different communities within a BRMA.

Rother CAB has raised concerns about the way the boundaries of the Sussex East BRMA have been drawn, to include Hastings with its relatively low rents, along with Rother District where rents are significantly higher. The LHA rates which result from combining these two contrasting areas mean that claimants in Rother District face major difficulties in finding any accommodation to rent within LHA rates.

18. This highlights a longstanding concern of Citizens Advice and others - that the regulations do not allow Rent Officers to have any regard to variations in rent levels when setting the boundaries of BRMAs. As a result, communities with very different levels of rent can find themselves in the same BRMA, thus creating virtual "no go" areas for housing benefit claimants. The previous Government was considering amending the regulations to address this issue, and we believe that it is important that such reform is progressed before the reduction to the 30th percentile is implemented.

19. The wide variation in rent levels means that the impact of the various cuts will not be spread evenly. Of particular concern is the 10% cut for those on JSA over a year. Private tenants paying market rents will suffer a much larger hit than those in social housing where HB payments are on average over £40 lower. And within the private sector, the range of LHA rates (from under £100 to the £290 maximum cap 2 bedroom property) means that the amount that claimants would have to make up from their JSA (for which rates are the same across the country) will vary considerably.

20. The impact of the move to the 30th percentile will also vary across the country. The Impact Assessment shows that for a 2 bed property outside London, average losses from this measure will vary from £1 per week in Pendle and Burnley to £16 per week in Cambridge and Brighton. Losses in parts of London will be much greater, with the effect compounded by the impact of the maximum cap.

The impact of uprating LHA rates by CPI

21. We are concerned at the proposal to uprate LHA rates in line with the Consumer Price Index (CPI), rather than by using local Rent Officer data to ensure that the LHA continues to reflect the movement of local rents. Over time this will break the link between local rent levels and housing benefit, causing problems for claimants in areas which for local reasons experience an above average increase in rent levels.

22. More significantly, use of the CPI seems likely to depress LHA rates over time, as rent inflation is traditionally higher that the CPI. During the period 1991-2009 ONS data shows that CPI averaged 2.86% pa whilst ‘rent only’ inflation was 5.43%. 1 This will therefore lead to a steady shrinking in the sector of the market which is affordable within LHA rates, and moreover appears to be in contradiction to the proposal to set LHA rates at the 30th percentile. In practice it would seem that uprating by CPI will mean that LHA rates will steadily reduce below the 30th percentile. We very much hope that the Government will reconsider this proposal. At the very least it will be crucial that the regulations provide for regular corrections to be made so that LHA rates continue to reflect the reality of local rents.

Shortfalls

23. Shortfalls are not a new feature of the HB system and indeed are a very common source of problems which bring people to bureaux. As outlined above, DWP figures indicate that around half of all LHA tenants already face shortfalls between their benefit and their rent, averaging £23 per week.

24. Yet the DWP’s Impact Assessment of just three of the planned cuts indicates that:

· setting LHA rates at the 30th percentile will affect 83% of LHA claimants with an average loss of an additional £9 per week.

· the restriction to the 4 bedroom rate and the application of the maximum cap will create average shortfalls of an additional £74 per week for the 21,060 cases affected, 83% of whom live in London.

Taken together with the removal of the £15 excess, DWP estimates that every LHA claimant will lose benefit, averaging £12 per week.

25. CAB evidence repeatedly demonstrates the hardship which claimants face when they have to try and make up shortfalls between their LHA and their rent – often from other benefit income. This will become even harder in future when basic benefit levels are reduced as a result of uprating in line with CPI rather than RPI – a measure which is projected to save £5.8 billion by 2014/15. We know from CAB evidence that tenants place a high premium on paying their rent, and it is likely that the initial effect will be cuts in other parts of their budgets such as food and fuel, along with an increased level of indebtedness as other bills don’t get paid. The discretionary housing payment budget – although tripled in size – cannot possibly fill the gap, and rent arrears and homelessness will inevitably follow. Moving home - particularly to smaller accommodation in a less desirable area- is often seen as very much a last resort, because of the cost of moving and the disruption to family life, especially where children are settled in local schools. For larger families, an option may be overcrowding in smaller accommodation, with its inevitable impact on health and family relationships.

26. Bureaux report that shortfalls are particularly problematic for single claimants aged under 25 who are subject to the shared (formerly single) room rate (SRR) restriction. Shortfalls have always been particularly common for this group – DWP commissioned research published in 2005 found that 87% of all SRR claimants faced a shortfall, averaging £35.14 per week.1 Although the definition of the single room rate was slightly broadened with the introduction of the LHA, CAB evidence does not suggest that this has had much impact in easing the extent of these shortfalls. We understand that the adequacy of the SRR is an issue which DWP is examining as part of their review of LHA, but regrettably information on this is not yet available.

27. Under 25s also face greater challenges than older claimants in making up shortfalls because of the lower rate of their JSA (£51.85 cf £65.45 for those aged 25 and over). In many parts of the country, property matching the SRR definition simply does not exist, but one bedroom properties are completely unaffordable, leaving young people at high risk of homelessness.

A CAB in Rutland reported a 22 year old woman who moved to the area as she secured employment. She lodged with a friend for four months but the friend has now asked her to leave. She found a flat but was unable to afford it because her LHA would be restricted to the SRR. However there is very little shared accommodation in county.

A CAB in the North East reported a 23 year old client and father of two children who was homeless as a result of relationship breakdown. He was in receipt of JSA so only entitled to the SRR of £49.86. He had been unable to find any accommodation available at that rent and so had been 'sofa surfing' at various friends/relatives. His relationship with his children was suffering as he did not have a home for them to stay over with him.

28. We are pleased to see that the shared room rate has been exempted from the maximum cap. Given the acknowledged shortage of shared room accommodation and the higher levels of shortfall faced by under 25s who are limited to this rate, we believe there is a strong case for continuing to set the SRR at the median rather than the 30th percentile.

Evictions/homelessness

29. No assessment has yet been made by DWP of the impact of plans to raise the level of non dependant deductions, to uprate LHA by CPI, to restrict HB where social tenants are under occupying and to reduce HB by 10% where claimants have been on JSA for over a year. However just from the size of the shortfalls resulting from the implementation of a maximum cap and the 30th percentile detailed in the Impact Assessment, it is clear that many claimants will be unable to make up the difference, and will have to move. If they are unable to find alternative accommodation at rents within LHA rates, they will be at risk of homelessness.

30. Even at current LHA rates, CAB clients frequently report that it is virtually impossible to find a landlord prepared to rent to them if they are in receipt of HB. This is backed up by a CAB survey of 424 letting agents carried out in 2009 which found that only 12% would let to claimants without imposing additional requirements such as a guarantor or six months rent in advance.1

31. It seems inevitable therefore that there will be increased pressure on local authority homelessness departments as a direct result of these cuts. Over recent years, because of the failure of successive governments to fund adequate levels of affordable social housing, local authorities have been increasingly relying on the private rented sector to prevent homelessness. Indeed CLG homelessness prevention statistics for England show that in 2009/10, 50% of the cases assisted to obtain alternative accommodation were through the private rented sector. 2 However, falls in LHA rates will reduce the opportunities to do this in future, whilst at the same time these cuts will increase demand on homelessness departments. Bureaux are already reporting that their local authorities are extremely concerned at the financial implications for their homelessness functions, at a time when their budgets will be facing sharp cuts. It will be crucial that local authorities’ homelessness prevention funds are not only protected in the forthcoming comprehensive spending review, but indeed expanded by redirecting savings made from the HB cuts.

32. We are particularly concerned at the impact of the maximum cap on housing and homelessness in London, where housing pressures are already extreme. The Impact Assessment indicates that 17,410 households in London will be affected by the cap and the restriction to the 4 bed rate, with average shortfalls of £81 per week. Thousands of low income families living in London will therefore have to move home over the year from April 2011, yet no assessment has been made as to whether there is empty and affordable accommodation on the necessary scale for them to move to, nor of the logistics which will be required in order to manage such a significant shift in population over a limited time period.

33. To make matters worse, the speed with which the cap is being implemented (from April 2011) means that there will be less than six months between the regulations being laid and the first claimants being affected. It will not therefore be possible to get the message out in time to avoid some prospective tenants signing up for a new tenancy with an initial six month (or longer) fixed term, at a rent which is currently within LHA rates but which will become completely unaffordable when their LHA is reviewed after next April.

34. We believe there is a strong case for easing the transition to the proposed cap, such as applying it only to new claims from April 2011. This would ensure that existing tenants - who may have entered into fixed term agreements with their landlords in the belief that the rent was affordable within LHA rates - can be given longer notice of the introduction of the cap. This would provide them with greater scope to avoid homelessness by managing their moves to lower cost accommodation. It will also be important that regulations provide for the caps to be uprated annually in line with rental inflation to ensure that households are not further restricted in their choice and access to accommodation as rents increase.

35. Evictions and homelessness may also result from the decision to rapidly increase levels of non dependant deductions (NDDs) to bring them up to the level they would have been had they been fully uprated since 2001. CAB evidence shows that even at the current level where the maximum rate is £47.75 per week, NDDs are a common source of rent arrears, as well as causing family tension when rent arrears arise as a result of the non dependant failing to make the assumed contribution towards the rent. The result is often than the non dependant leaves or is evicted from the household. In some cases this will result in homelessness, in others the non dependant will rent their own place and make a separate claim for HB, thus adding to the overall HB budget spend.

36. The DWP has not provided figures on the levels of NDDs that will result from this measure, but there must be a concern that, particularly in areas where rents are lower, the size of the NDD will appear out of all proportion to the level of the rent. This is likely to be perceived as very unfair and will therefore exacerbate non payment by the non dependant. If NDDs are to be increased we consider that it is important that a mechanism is built into the formula to ensure that they are proportionate to the actual rent. In addition, clear information needs to be provided for non dependants, about the contribution which the HB scheme assumes they will make towards the rent.

Landlord confidence

37. As outlined above, bureaux already report widespread reluctance by landlords to let to claimants, especially in areas where there are other prospective tenants such as students or those in low paid work. The shift under LHA to make the default payment of benefit to the tenant rather than direct to the landlord has undermined landlord confidence still further. We fear that these cuts will act as a further disincentive to landlords to let to HB claimants.

38. Even if the rent is within LHA levels at the time the letting is made, the landlord will have reason to fear that in future the tenant may be unable to afford the rent, either because they are subjected to the 10% JSA related penalty, or because the consequence of linking LHA rates to CPI will mean that over time LHA rates will fail to keep pace with the local rental market.

39. One measure which could help improve landlord confidence would be if local authorities were to engage in larger scale private sector leasing arrangements to help meet the needs of low income households seeking affordable accommodation. Local authorities would be better placed than individual claimants to negotiate lower rent levels, within LHA rates, and landlords might be persuaded to accept lower rent levels in return for greater certainty over their rental income stream and void levels.

40. We are aware that a similar scheme has been developed in the Republic of Ireland with some success. As a result of concern over the rising levels of benefit expenditure, the Irish Government has introduced the Rental Accommodation Scheme. Under this scheme, local authorities assume responsibility for procuring accommodation for most housing benefit claimants of over 18 months duration. Such claimants are either rehoused in social housing or, where this is not possible, in private sector accommodation which is leased long term by local authorities, which are able to use their greater market power to attempt to secure lower rents. 1

Community cohesion

41. We are very concerned at the impact that these measures will have on local communities if large numbers of households are forced to move from more expensive areas to those where rents are lower. The effect is likely to be particularly acute in London as a result of the application of the maximum weekly caps which will be applied from April 2011. According to the Impact Assessment, the cap will affect 17,410 claimant households in London on the anniversary of their claim, with average losses of £81 per week. In central London, only 7% of accommodation will fall within the LHA rate once the cap is applied, and it is therefore clear that many households will have to move away from their existing communities to those parts of outer London which are relatively unaffected by the cap. This will result in significant disruption to family life as people lose their informal support networks of family and friends, children have to change schools and new arrangements for access to health care and social services support have to be made. We note that DWP plans to "explore other impacts on schooling, health and social services."1 It must be of concern that decisions have been made to cut HB in advance of such impact assessments being made.

42. A minority of London boroughs will be unaffected by the cap and it therefore seems likely that population shifts from central London towards these boroughs will be particularly significant. This will threaten community cohesion in these receiving areas as local services such as schools, hospitals and GPs come under increased pressure. Such a population shift would also undermine efforts to promote mixed communities, and instead run the risk of increasing the concentration of low income households in poorer areas.

Disabled people, carers and specialist housing

43. We welcome the announcement that, from April 2011, an additional bedroom will be included within the size criteria where overnight care is provided by a non resident carer. However we are disappointed that changes were not made to tackle the discrimination which arises from the fact that the regulations make no provision for circumstances where a disabled household member needs a separate bedroom. Bureaux regularly report the distress and hardship caused where older couples need separate bedrooms because one of them has severe health problems. Similarly, bureaux report cases where the financial hardship faced by a family with a disabled child is increased because they have to make up the shortfall from renting a property with an extra bedroom.

A North Wales bureau reported a client with three children who was renting accommodation with four bedrooms although LHA was only payable at the three bed rate. Her son aged nine has special needs and she has been advised by her GP and social worker that he cannot be left in the same bedroom as the daughter

as there has been an incident in the past. She is therefore having to cope with the additional expense of meeting the shortfall in benefit.

44. We are concerned that no provision has been made to protect disabled people from any of the proposed cuts, despite the fact that they will be likely to find it particularly difficult to find suitable alternative accommodation and to cope with the disruption which a move will entail, including the need to make new arrangements for health, social services and other support services. It will be essential that adequate financial provision is made for local authorities to provide a personalised support service to help disabled people cope with the stress and disruption which a move to cheaper accommodation will entail.

Older people, large families and overcrowding

45. We accept that older people will not be so widely affected by the HB cuts as other groups because a lower percentage are in receipt of LHA, and some of the measures will not affect older people. However in a recent debate, the Minister Steve Webb stated that some 80,000 older people were in receipt of LHA and therefore would be affected by the cap, the move to the 30th percentile, and the loss of the £15 excess. 1 Older people will also be affected by the increased rate of NDDs, which we understand will apply to council tax benefit as well as housing benefit.

46. For those older people affected, the benefit cuts are likely to create significant anxiety and distress. They may be reluctant to face the upheaval of moving home and may resort to making economies in their budget and spending down any savings in order to meet shortfalls in their rent. If they are forced to move, they are likely to need personalised support to help them find decent alternative accommodation near friends, relatives and support networks.

47. We are concerned at the decision to restrict LHA rates to 4 bedrooms, when the impact of the previous decision to limit LHA to the 5 bedroom rate has not yet been assessed. Moreover the DWP’s Equality Impact Assessment acknowledges that this measure is likely to have a disproportionate impact on some ethnic minority groups, although it is unable to establish the scale of the impact because of limitations of the data. This is highly unsatisfactory and we consider it is essential that DWP prioritises the collection of additional data in order to assess the impact before these measures come into effect.

48. The impact of the cap and the move to the 30th percentile may encourage some families to move into smaller, overcrowded accommodation in order to stay in the area they live in. In addition, the restriction of LHA rates to 4 bedrooms means that overcrowding is structured into the benefit rules. This will cut across policy objectives to support family life and tackle disadvantage, by putting additional strain on larger families, affecting children’s health, well being and future prospects, as well as putting pressure on parents’ relationships. Where a relationship breaks down, this may result in an additional HB claim being made, thus wiping out any benefit saving.

2 September 2010