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

Written evidence submitted by Barnardo’s

Introduction

1. A large number of families we work with are living in poverty and in recent years we have done a significant amount of research and campaigning work to highlight the problems that children growing up in poverty face. In particular in early 2009 we published "Below the Breadline", a year long study which followed 16 families, and provided a detailed insight into the day to day lives of children growing up in poverty.1 Housing problems are a major difficulty for many poor families, and many of the children in the study were living in overcrowded, unsuitable and isolated accommodation. It is critical that housing is considered as a key part of the Government strategy for tackling child poverty if the target of eliminating child poverty by 2020 is to be achieved.

2. We are concerned that significant consideration has not been given to the impact that reforms to local housing allowance payments are likely to have on child poverty rates. The impact assessment (paragraph 51), recognises this possible impact when it states:

"Any reductions in benefit incomes for families will have an adverse impact on work to reduce child poverty and […] children’s schooling could be affected. The department intend to take forward further analysis on this aspect"

Barnardo’s believes that it is imperative that this analysis is undertaken, particularly in light of the Chancellor’s assurances within the Budget speech that child poverty levels would not rise as a result of the measures announced.

Executive summary

Barnardo’s believes that the Government should:

· revisit the maximum levels of housing benefit levels proposed and analyse whether they are realistic in all areas of the UK

· give careful consideration to the impact these changes will have on housing availability, particularly in areas with high housing costs

· consider how to counteract the pressure these changes will put on the availability of affordable housing in the central and outer London areas.

A new upper limit will be introduced for each property size, with upper limits set at between £250 and £400 a week

3. The housing benefit absolute cap will affect many families currently housed in central London. Barnardo’s runs a temporary accommodation project in the capital and many of the service users who use this project find it impossible to find accommodation at less than above market rents. This includes many families who are renting ex-council flats which have been bought by private investors and let out at rents in excess of £400 a week.  We feel that this, combined with the decision to measure rates generally at the 30th percentile of rents within each broad market rental area, will have a significant effect on housing availability in the central London area, with a significant knock-on effect on the housing supply in outer London areas (see below). Barnardo’s would urge the Government to revisit the level of this cap to ensure it is workable in all areas of the UK, particularly within the capital where housing costs are notoriously high, and which itself has very high levels of child poverty.

The Local Housing Allowance will be set at the 30th percentile of rents in each broad rental market area (BRMA), rather than the median

4. We are concerned that effects of the overall caps on rents will be made worse by the proposal to restrict the calculation of payments at the 30th percentile of rents in a BRMA, rather than the median. Barnardo’s believes this will have a profound effect on areas with high property prices, most notably the capital. Currently, on the Government’s own estimate, 52% of properties in central London are available to benefits’ claimants because they are within the local housing allowance levels. This will reduce to 7% under the proposed reform. This will place a significant additional pressure on the availability of properties to rent in all the inner and outer London boroughs. However, these areas themselves are estimated to see a reduction in their housing stock with a fall properties available at local housing allowance levels of between 17% and 26%.

5. It is acknowledged (Para 57 page 17) that there will need to be liaison between boroughs in London to ensure that there is a smooth transition. Barnardo’s is concerned that if this does not happen then there is a significant risk that many already vulnerable families will be left homeless, competing for the relatively small amount of housing stock in a new area, against the areas existing population.

6. Barnardo’s is also concerned that the effect of these proposals will be more keenly felt amongst certain ethnic groups. Despite The Equalities Impact Assessment’s (Appendix C) claim that the cumulative impact of the changes will not disproportionately affect one group more than another, we are concerned that this is not the case in London where ethnic minority communities often live in highly localised areas, some of these in central London. One group we know well is households from a number of Arabic communities who live in the area around Edgware Road. It is likely that most of these households will have to move.

7. Barnardo’s urges the Government to consider what more can be done to increase the housing stock available to Local Housing Allowance claimants in the London area, to ease the burden that a possible 45% reduction of available housing stock will cause on central London areas.

6 September 2010