Communities and Local Government CommitteeSupplementary written submission from Citizens Advice

Many thanks for inviting me to give evidence before the Communities and Local Government Select Committee. I always welcome the opportunity to share with Parliament the wide experience Citizens Advice has from helping over 2 million with 7 million problems a year.

During the hearing the Committee asked about how tenants in the private rented sector managed the move to paying housing benefit direct to tenants when the Local Housing Allowance was introduced in April 2008. (ref qu. No. 153) We have examined our statistics, and the records for the two years following the introduction of LHA shows that there was a significant increase in the number of problems that clients raised with Citizens Advice about rent arrears to private landlords and with Housing Benefit in general. This increase was significantly greater than the corresponding increase we saw in the social housing sector who had not been affected by the LHA reforms.

Increase from 07/08 to 08/09

Increase from 07/08 to 09/10

Increase from 07/08 to 10/11

Rent arrears to Local Authorities or Arms Length Management Organisations

4%

9%

9%

Rent arrears to housing associations

1%

15%

15%

Rent arrears to private landlords

17%

48%

64%

Housing Benefit

10%

31%

34%

We believe a large part of this increase in demand was caused by the move to paying private tenants their rent directly.

There are however reasons to believe that moving to direct payments under Universal Credit is likely to create significantly more issues than when direct payments became the default arrangement in the PRS. One reason for this is that the change in payment method will be introduced alongside cuts in income resulting from other welfare cuts and tax rises. This will give people less room within their budget to deal with any shocks which might lead them to miss paying their rent.

Another reason we are expecting more people to come to us from the social housing sector is that more than half of tenants in the PRS Housing Benefit did not cover their entire rent, so were used to having to pay money to their landlord. This does not currently apply in the social rented sector unless the claimant has a non-dependant or sufficient extra income to trigger a reduction in HB.

Lord Freud, giving evidence to the Committee, said that one of the most interesting lessons from the Direct Payment Demonstration Projects was just how resource intensive it is to support tenants. Our evidence confirms these findings and shows that it is vital that the Government makes available adequate resources so that this support can be provided.

If you would like any further details about our findings or any other evidence which you believe would be helpful for your enquiry please contact my office and we shall endeavour to help.

February 2013

Prepared 28th March 2013