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

Written evidence submitted by St Mungo’s

1 Executive summary

1.1 Our submission focuses principally on the very concerning impact of the proposed measure to cut people’s housing benefit by 10% after they have been on JSA for over 12 months. However, we also remain concerned that other changes will also increase homelessness and hardship, particularly in London, and impair our ability to move people out of our accommodation and into independent living.

1.2 Housing benefit should not be subject to sanctions as a result of someone’s unemployment. It is a benefit intended to give people a roof over their heads and should only be contingent on income and rent levels.

1.3 The 10% cut will have a significant impact on homeless people who typically face a long journey to the labour market. Most of our clients have been out of work for over a year, a majority have been out of work for over 5 years. They also face many barriers to employment including mental health problems, substance use and low levels of education. It will not facilitate a quicker journey back to the labour market but instead inhibit it.

1.4 If the 10% cut is brought in individuals who live with us will face a significant reduction in income. After housing and travel costs have been deducted people will have approximately £2.98 a day to buy food and clothes and other necessities such as soap with, a 43% reduction from the JSA amount currently available.

1.5 Exemptions and other measures could be used to mitigate the impact of this measure but it will still have a range of unintended consequences and we believe it will not have the effect of motivating our clients back into work.

2. Concerns about the overall cuts to housing benefit

2.1 We support the statements made by Crisis

Shelter, Housing Benefit Warning, 2010, http://england.shelter.org.uk/news/june_2010/housing_benefit_warning

2.2 In particular, as providers for the single homeless people, we are concerned about the pressure these changes will place on existing services at a time of scare resources. The analysis of many organisations, including London Councils

London Councils, Housing benefit cap for London must be revised or nearly 15,000 families could lose their homes, 2010 http://www.londoncouncils.gov.uk/media/current/pressdetail.htm?pk=1116

2.3 The unintended consequences of the changes to the way housing benefit is calculated could be the reduction of a vital safety net of services for some of the most vulnerable adults in our society.

2.4 We are further concerned that the changes could make it more difficult for us to move our clients out of our high needs accommodation and into the private rented sector once they are ready to move on. As a result people will be stuck in inappropriate and more expensive accommodation, ‘bed blocking’ emergency and specialist services.

Proposed cut to housing benefit for those on JSA for over a year

3. Overall concerns

3.1 Housing benefit is an income related benefit intended to ensure that people can afford to live in an acceptable standard of accommodation. While it has never been viewed as an ideal system its purpose has always been clear - to give people a roof over their heads.

3.2 The proposed link to a person’s out of work status therefore represents a departure from this fundamental concept. It also supposes that people could find work and haven’t, something that may not always be true. For those people who are not able to find work this cut to their income will be devastating.

3.3 For those who are already only just living within their means this cut will mean that they are unable to afford to continue to live where they are and they will be forced to relocate or to live in overcrowded or inappropriate housing. For those living in London and in other parts of the country where the cost of housing is high the choices will be even harder as other housing benefit changes are likely to limit the available properties in some areas dramatically.

3.4 For others, particularly those who are homeless and living in temporary accommodation, there will be very limited options in terms of where they can move to. People living in temporary or supported accommodation like the accommodation provided by St Mungo’s will be left with some stark choices:

1) Get into debt

2) Work in the ‘informal’ market (e.g. cash in hand)

3) Work in the illegal market (e.g. prostitution)

4) Sleep on the streets

3.5 This measure will hurt the most vulnerable and those unable to find work for whatever reason. It is unclear to what extent it will act as an incentive to work and as a result it seems more likely that it will have the effect of increasing poverty, debt and poor health among some of the poorest people in society.

4. Inappropriate for our clients

4.1 We have overarching concerns about the nature of this measure for all recipients of JSA, however, we are particularly concerned about the impact on our clients. We work with homeless people who face multiple barriers to employment and who’s journey back to the work place is often long involving high levels of support.

4.2 We take an annual snap shot survey of our all clients resident with us. It is completed by client’s key workers and gives us a reasonably accurate picture of the type of issues our clients are facing. In our 2010 survey we found that 26% of clients were on JSA and 24% have been on JSA for over 12 months. It is unsurprising that most clients on JSA have been on this benefit for over a year as most of our clients have not worked for over a year, in fact 26% had been out of work between five and ten years and 27% for over a decade.

4.3 The survey also showed us what some of the current support needs are for our clients on JSA and issues which may be barriers to employment:

· 23% have a significant medical condition

· 51% have a mental health condition (diagnosed or suspected)

· 43% use alcohol problematically

· 57% misuse prescribed drugs or use illicit drugs

· Education level:

o 34%        None

o 39%        CSE/GSE/GCSE

o 8%          A Level

o 6%          Degree

In addition to this survey research carried out for a recent report Work Matters

St Mungo’s, Work Matters, 2010, http://www.mungos.org.uk/actionweek/be_part_action_week_2010/

4.4 While the response of Government might be that clients with this level of need should be on ESA rather than JSA we do not believe that given the nature of the Work Capability Assessment this is likely or possible. We believe that there are significant flaws in the assessment process for example the failure to properly include external medical evidence to demonstrate the extant of an individual’s mental health problem.

4.5 However, even if the assessment did operate effectively many of our clients would still be deemed ‘fit to work’. Until the WCA is a more holistic assessment of all of the factors which impact on a person’s capacity to work there will remain a group of people on JSA who need significant support to return to work and that this process will take longer than a year.

4.6 Case study: Chris is a former resident of St Mungo’s who has recently got back into work with Lakeside Construction. He spent the 9 months prior to getting employment training with "Revive" St Mungo’s painting and decorating social enterprise. Throughout his time as a hostel resident and working with St Mungo’s Skills and Employment team Chris was on JSA, although in the initial stages as a resident he was not fit for work and was suffering from mental health issues and the trauma of becoming homeless.

4.7 Chris’s journey from entry to St Mungo’s hostel to job took 26 months, if Chris had been forced to take a 10% reduction in his housing benefit from month 13 and make up the difference from his housing benefit, it would have damaged his chances of getting into work and would have knocked back his recovery.

4.8 The average weekly rent within St Mungo’s is £150-160. Chris would have been expected to make up the difference of £15-16 after month 12 of his stay.

Table 1

4.9 This equates to £2.98 per day under the new proposal which is not sufficient to pay for food to live on. This is, in effect, a 43% reduction in the amount our recovering residents have to spend on food, clothing and toiletries.

5. Impact on those trying to find work

5.1 This has been pitched as a measure that will incentivise work. However, we are highly sceptical of its ability to do so for our clients both because of its negative impact and because they are unlikely to be ready for employment after a year. If anything our concern is that this will act as a barrier for people:

- It will de-motivate people who are trying to find work, penalising them regardless of how much progress they have made over the year and how many jobs they may have applied for.

- It will create and compound structural barriers

Centre for Social and Economic Inclusion Access to mainstream public services for homeless people: a literature review (Crisis, 2005); Lownsbrough, H Include Me In: how life skills help homeless people back into work (Demos, 2005)

6.5 In recent research undertaken by St Mungo’s looking at homeless people’s barriers to work we found that people faced a range of concerns which could be compounded by a sudden loss of income in particular people’s self confidence. In the survey conducted 49% agreed with the statement "Lack of confidence stops me from getting training or work."

St Mungo’s, Work Matters, 2010, http://www.mungos.org.uk/actionweek/be_part_action_week_2010/

5.2 We are also concerned that it will decrease motivation to engage in skills or vocational training, particularly if that training is over a period of months. If people are aware that they have a year before their income will nearly halve they will have little incentive to engage in activity which might better equip for the labour market in the long term or enable them to fill skills gaps in the current labour market. Given the low levels of skills among our client group this is of particular concern.

5.3 This measure would also seem to run counter to the policy approach being adopted elsewhere on welfare to work. The development of the Work Programme seems to explicitly take into account the reality that people have different journey’s into employment and that some take longer than others. It would, therefore, be strange if housing benefit policy undermined this approach. Evidence from our employment projects show that we can support vulnerable homeless people with a poor work and education history towards and into work but that it takes time. Our innovative hostel based Pathways 2 Employment programme achieved these outcomes with people who had been in the programme over 9 months:

- 13% had gone into a full or part-time job

- 6% had gained a work placement

- 6% were doing voluntary work

- 17% were taking a further education course

- 14% were completing a vocational training course

IBID.

6. Impact on housing providers

6.1 As a social housing provider to some of the most vulnerable people in society we are very concerned about the position this legislation could place us in. If this measure is bought into effect we will face difficult choices either we force people into debt, poverty or ill health through requiring them to pay us the gap between their housing benefit level and their rent, are forced to evict people who are unable to meet this cost or somehow find the resources to cover the shortfall ourselves.

6.2 Given that this will come into effect in 2013, at a time we anticipate that we will already have had to make significant efficiency savings in response to reducing Supporting People funding, covering the cost ourselves risks putting St Mungo’s into financial difficulty.

6.3 We have made estimates of the impact based on those clients who have currently been on JSA over 12 months. On this basis we estimate that there will be a shortfall between rent and housing benefit of £287,000 per annum a cost of £820 per client per year. This additional burden would impair our ability to support people as quickly as possible to recovery and in the long run may well cost the state, if not DWP, more.

6.4 If, rather than covering the cost, we opted to evict those who couldn’t pay we may well be evicting significant numbers of people on to the streets where other services would have to pick them up, significantly undermining an individual’s ability to move on from homelessness and further using expensive services.

7. Possible ways of limiting the impact of the cut

7.1 We strongly believe that this cut will have wide ranging unintended consequences and that any modifications to it will still result in hardship and homelessness. However, the impact on homeless people could be limited by altering the blanket nature of the cut:

- Create an exemption so that it does not apply to those living in supported housing or temporary accommodation. However, this would risk making it difficult to move people on from supported accommodation into the private rented sector.

- Exempt people facing specific barriers to employment, for example those with a recent history of street or other homelessness, substance use etc. While this would have the benefit of the exemption following people into the private rented sector it would require a dramatic improvement in the way this type of information is captured about people by organisations like Jobcentre Plus in order for it to be effective.

- Link cut to whether people are engaging with the Work Programme and actively seeking work rather than their total success in getting a job. While we do not agree that this is a benefit which should be used as a back to work incentive if it is being used as such then it should be linked to people’s engagement, otherwise it will penalise people even if there are no jobs for them to go to.

- Raise earnings disregard so that people can at least make up the shortfall with part time work.

6 September 2010