Localisation issues in welfare reform

LWR 18

Written submission from New Charter Housing Trust Ltd

Welfare Benefit Reform

You may recall that we met with you some time ago to discuss the implications of the welfare reform proposals in particular, the issues surrounding Housing Benefit.

Your support of our financial inclusion work has always been very welcome and very much appreciated over a number of years. On that basis, I am asking for your continuing support for amendments to the welfare reform proposals. We, as an organisation, have grave concerns in relation to the negative impact on tenants, our neighbourhoods and service.

Direct Payment to tenants

Tenants who are out of work are to be encouraged to deal with their financial affairs as if they were in work, essentially choosing how they spend their money. To enable this, the proposal is to pay the rent element of the UC to the claimant and remove the choice of payment to the landlord.

We have analysed the anticipated impact of non-payment of rent by tenants currently having their Housing Benefit paid direct to the landlord, and it would need non-payment of only 4% for our Business Plan, and therefore our service delivery, to be compromised.

As you know, the competing pressures on a limited household budget make it very difficult to manage personal finance. We simply want the tenant to have the choice of payment direct to their landlord. The tenant should have the ability to make that choice to suit their circumstances.

Under-occupancy

The reduction in Housing Benefit for under-occupancy compounds the issues for tenants who currently struggle to manage their budget. It is anticipated that tenants who under occupy their home will have to make additional rent payments of between £11 and £25 per week.

We have analysed the impact and in summary, it is expected that our tenants will have to find in the region of £628k per annum to cover the reduction in Housing Benefit on this issue alone.

What is clear is that there are significant numbers of individual tenants, already holding rent arrears, who will be under increasing pressure to meet a higher rent liability. Some of these people are under considerable amount of stress and the introduction of this element of reform will do nothing but increase that stress for these individuals, potentially leading to increased evictions and the loss of their home.

We would like to see this proposal removed from the reforms for existing tenants who have little or no choice to move to smaller accommodation.

Support Services

We currently invest £200k per annum to provide welfare and money management advice to tenants and we have achieved some remarkable results.

We have real concerns that we may have to review the provision of these services if the impact on our service is as severe as we expect. This of course will have a detrimental impact on tenants at a time when they are going to need more support than ever.

We carried out a survey with tenants in November 2009 that showed 27% have some long term debt and 53% have money worries. Managing money is a very real concern for our tenants. The services we offer are well used and can bring life changes to many of those accessing the service.

What we know is that the provision of these support services work and rent arrears levels are reducing as a result of applying a holistic approach to our income management service.

Summary

We welcome an approach that tries to simplify the payment of welfare benefit and we completely understand the approach to making work pay. However, we do not believe that simply cutting benefits is the way to achieve this. Support and training go a long way to making the transition easier and indeed, the issue of direct payment to tenants offers no incentive to work but instead brings a degree of uncertainty to the security of a tenancy.

We would welcome your support on the issues outlined above with particular emphasis on the direct payment issue. We simply want the tenant to be able to make the choice of how they pay their rent. As long as this is a considered decision taken by the tenant then this has to be an example of demonstrating responsibility for managing their money.

June 2011