Communities and Local Government CommitteeWritten evidence from London Borough of Camden Council

1. Impact on Residents

1.1 Our latest analysis shows that 761 households in Camden will be affected by the Total Benefit Cap from April. Below is a table showing the number of households affected for each tenancy type, and the estimated weekly reduction in their benefit as a result of the Cap:

Tenancy type

No: affected

Average weekly loss

Council

167

£82.97

RSL

135

£69.75

Private—LHA

320

£89.27

Private other

30

£89.79

Temporary

109 (of which 70
placed out of borough)

£141.44

Total/overall

761

£91.34

1.2 Across the borough, 42% of households affected by the Total Benefit Cap are in the private rented sector, so it seems likely that there will be increased demand for private rented sector housing at the lower end of the market, as affected households seek cheaper accommodation. For many of them, and including some in the social rented sector where rents are already much lower than the LHA, a move out of the borough seems the most likely outcome.

1.3 In Camden, nearly 80% of the affected households have children. The total number of children affected is 1,887 (about 4% of all children in Camden), with an average loss of benefit per week of £107 per household. 58% are in households with four or more children. This means current living arrangements are unlikely to be sustainable for most. The number will be higher for all Camden residents, as some send their children out-of-borough. Primary schools will very much be at the front-line coping with change, and already some are instituting breakfast clubs for low income households seeking, on reduced weekly incomes, to stay in their local area.

1.4 We predict that the proposed cut housing support for under-25s in Camden would see over 925 young people claiming housing benefit impacted. The largest group are young people in council housing, many of whom are vulnerable or were previously in care, or have succeeded tenancies from their parents after caring for them. 320 of Camden under-25s supported in this way are single parents with young dependents. For young people who have lost parents, but remain in the area, these new changes could uproot them from their neighbourhood, and for vulnerable people getting settled after trauma this would be another unwelcome change.

2. Local Mitigations

2.1 Jobcentre Plus has written to all the affected claimants three times to offer advice and support, and are now considering visiting those who have not so far engaged with them. Linking to this, the Council has a joint visiting team of Benefit and Housing officers and are now establishing contact with everyone to explain what is going to happen.

2.2 A number of the affected households have already had a Local Housing Allowance Cap and have already been visited by council officers. We have had some success in helping people to re-negotiate rents with their landlords, sometimes for a limited period. We have also helped some families to find cheaper, suitable alternative accommodation and have helped with removal costs and deposits. 449 clients have been supported since January 2012. Of these, 204 (45%) have been resolved as follows:

For 66 families, council has negotiated with landlord to reduce rent to capped level, with judicious use of DHP & HPF payments.

26 households supported to move to more affordable accommodation, generally outside the borough.

Six families have approached another LA.

69 families have successfully bid for social housing (although often for homes that are slightly smaller than their assessed need).

13 families are making up shortfall from other income.

19 families moved of own accord (although some to overcrowded accommodation as a stepping stone to a bid for social housing).

Five families have made statutory homeless applications.

2.3 However, the position for those who will be affected by the total Benefit Cap is bleak and the opportunity to find cheaper affordable accommodation for them is very limited. The only way for them to avoid the Cap is to find work but officers are reporting that, in the majority of cases the claimants are very far from work ready. The Council is actively working with Jobcentre Plus to see what can be done to increase skills and job opportunities for these people.

2.4 We are working very closely with local advice agencies as part of the Camden Advice Partnership. This is an important network through which we can share timely information on the effects as the changes are implemented, reaching residents that we are finding difficult to engage, and ensure that people get the welfare, housing and debt advice they need. The partnership is a mix of internal and external advice providers working together to achieve a more strategic, integrated “one borough” approach to advice provision. The Council has signed up to a seven year commitment with our partners, and remains one of the largest funding authorities in the country.

3. Work with DWP and DCLG, and Guidance

3.1 In Camden, we have effective and close working arrangements with our local Jobcentre Plus, overseen by the District Operations Manager who is an active member of our welfare reform steering group.

3.2 At a national level, we have been frustrated with the limited and late information coming from DWP and DCLG relating to administration and new burdens funding, for instance: the last minute changes to additional funding for Council Tax Reduction Scheme, and late information on the Social Fund. This has delayed our ability to finalise the size and shape of the Council Tax Reduction and Social Fund schemes we want to put in place.

3.3 There has been limited information available for the Council in determining the impact of the welfare changes and how we can help manage them, during a time of significant funding cuts for local authorities. For instance, detail on the roll out of Universal Credit has not been sufficient for the Council to plan Housing Benefit staffing for the period 2013 to 2018, or to plan mitigating actions such as encouraging tenants to pay by direct debit or ensuring sufficient staff to tackle increases in rent arrears.

4. Financial Risks to Local Authorities

4.1 The statutory duties on local authorities to support vulnerable residents will place the Council under considerable financial pressure with the introduction of these welfare changes. At the moment, there are 667 households in temporary accommodation in Camden. We expect a surge in the number and cost of these households from April 2013 as the total benefit cap is implemented and the private rented sector becomes more difficult to procure. This is particularly true for larger families. Whilst we can support people in the short term, for instance through the strategic use of Discretionary Housing Payments, we do not have the means to support everyone.

4.2 The changes also present a significant risk in terms of our ability to collect rent and Council Tax, as residents risk falling into arrears despite our best efforts. With the introduction of Universal Credit and benefits going directly to a single householder rather than paid to the Council directly, there is a risk that for some households little or none will be paid. The Council currently receives £86 million in rent rebate, and £27 million through Council Tax Benefit each year.

4.3 We believe, subject to further detail, social landlords are also bound to face losses. This will have a knock-on impact on local authorities if eviction rates go up, and we find we have a duty to rehouse people in priority need.

4.4 Transition to PIP and Universal Credit following on from a range of benefit changes will significantly increase the requests for advice and assistance to the Council and our advice partners. There are no additional resources for this increased pressure on the Council and on voluntary sector partners funded by the Council. We are already seeing the effect of this with changes to Employment and Support Allowance and Disability Living Allowance. For instance, last year, the Supporting Council Tenants Team had 78 benefit appeals with 100% success rate for ESA, and 98% success rate with DLA. Our advice partners are also reporting a near 90% success rate in appeals they support.

4.5 Finally, there is as yet no information on what resources local authorities will be allocated to support the rollout of Universal Credit, as it seems likely that we will be expected to help support residents with the online interface. We are already, though our digital inclusion strategy, looking at what we can do to support residents who have not had or wanted in the past to use computers. This will take considerable resourcing.

5. The Cost of Living in Camden

From the Equality Taskforce evidence base: www.camden.gov.uk/equalitytaskforce

5.1 Camden’s Equality Taskforce has sought to explore the following question—how much do you need to earn to live in Camden?

5.2 They have calculated socially acceptable incomes for four household types based on the national Joseph Rowntree Foundation’s Minimum Income Standard (MIS) adjusted for Camden in key expenditure areas of housing, childcare and travel. It assumes that parents work full-time and has been calculated separately for private rented and council housing costs to reflect the large disparities between the two in the borough. A couple with two young children need £1,040 a week to achieve a socially acceptable income while working full-time and renting privately in Camden and a lone parent with one child aged under one would need £775. This is 50% more than the national Minimum Income Standard. See the table below for details.

MINIMUM INCOME STANDARD FOR CAMDEN FOR FOUR HOUSEHOLD TYPES AND THE INCOME NEEDED TO ACHIEVE IT

Household type

National
MIS

Camden
MIS—
private
rent

Camden
MIS—
council
rent

Gross annual
income from
employment needed
to achieve the
MIS in private
rented sector
(after universal
benefits)

Gross annual
income from
employment needed
to achieve the
MIS in council
property (after
universal benefits)

Median
household
income
in Camden
2012
1

Single working age

£262.25

£327.74

£246.66

£17,042.40

£12,785.65

£32,625

Couple pensioner

£308.91

£561.59

£306.97

£4,288.72

-£1,099.28

Couple, 2 children (1 aged 2–4; 1 primary school age)

£685.04

£1,037.96

£695.04

£69,350.28

£41,925.01

Lone parent, 1 child aged 0–1

£502.80

£775.75

£521.14

£56,057.81

£33,050.89

Table Note:

1 Source: CACI Paycheck 2012 data

5.3 We have also calculated the gross annual income from employment (or a private pension) needed to achieve the MIS in Camden, after universal benefits. In the private rented sector, a couple with two young children would need to earn £69,000 a year and a lone parent with one child aged under one £56,000. The national figures would be £34,000 and £25,000 respectively, about half the amount. The level of income needed in Camden would mean that the families wouldn’t qualify for housing benefit and it is far higher than the actual median household income in Camden (£32,625). In fact, both household types would need to be above the 80th percentile of household income in Camden to achieve the MIS.

5.4 Furthermore the incomes needed for the two household types with children to live in council accommodation are still higher than the median household income. This is because while housing costs are clearly much lower in council properties (about a quarter of the market rate for a two bed flat), full-time childcare costs are another major expense.

January 2013

Prepared 28th March 2013