Support for housing costs in the reformed welfare system - Work and Pensions Committee Contents


The Government began reforming Housing Benefit in 2011. Further reforms to the support provided for housing costs have been implemented since and changes will continue in the future, as Universal Credit is rolled out. The aims of the reforms are to reduce benefit expenditure, incentivise people to enter work, or increase their hours, and to make the benefit system fairer.

The Government has made efforts to reduce the impact of the reforms on vulnerable groups. However concerns remain that the reforms may be causing hardship to some vulnerable households who were not the original targets of the reforms and who are unlikely to be able to respond to the reforms by changing their circumstances. This report sets out how these impacts might be mitigated.

Local Housing Allowance

·  Reforms to Local Housing Allowance (LHA), paid to Housing Benefit claimants in the private rented sector, have led to a growing discrepancy between the average area rents and the amount of LHA that households can claim. As a result, there is evidence that private sector landlords are becoming increasingly reluctant to rent to LHA recipients and evictions and non-renewal of tenancies are increasing, leading to an increased risk of homelessness among Housing Benefit recipients. Private sector properties which remain affordable to LHA recipients are increasingly of poor quality.

·  The Government should monitor the impact of reforms to support for housing costs on homelessness, and look at further ways of supporting claimants and local authorities if the reforms are found to be exacerbating it.

Social Sector Size Criteria

·  The Social Sector Size Criteria (SSSC)—also known as the "spare room subsidy" and the "bedroom tax"—is having a particular impact on people with disabilities, especially those living in adapted accommodation, or who need an extra room as a result of their disability, and who are unlikely to be able to move house or enter work. There is evidence that many of these people are suffering financial hardship.

·  The Government should take steps to mitigate the impact of the SSSC on disabled people. Disabled people living in homes which have been significantly adapted for them should be exempt from the SSSC. The Government should also exempt from the SSSC all adults on the higher rate mobility or care component of Disability Living Allowance, or equivalent in Personal Independence Payment.

The Benefit Cap

·  The Benefit Cap is having a negative impact on some vulnerable households who were not the intended targets. These include full-time carers receiving Carers Allowance who, although living in the same house as the person to whom they provide care, are not part of the same household benefit unit; and homeless households in temporary accommodation.

·  The Government should take steps to exempt all those on Carers Allowance resident in the same house as the person cared for, and all households in temporary accommodation, from the Cap.

Transitional Protection

·  The Government's additional funding for Discretionary Housing Payments (DHPs) to help local authorities to support claimants affected by the reforms is welcome. However, the discretion allowed to local authorities in granting DHPs is resulting in tenants' access to these funds depending heavily on where they live and the eligibility criteria their local authority apply. It is a particular concern that some local authorities are taking income from disability benefits into account in the means tests they apply for determining eligibility for DHP awards. The temporary nature of DHPs may also mean that they do not provide sufficient safeguards for those who need longer-term support.

·  The Government needs to give local authorities more specific guidance on allocating DHPs, including on granting long-term DHP awards for specified categories of claimants. The Government should also review DHP provision to ensure that those who cannot adjust to the reforms are provided with sufficient long-term support which is structured in a way that ensures they do not suffer hardship. If DHPs are found not to be providing sufficient protection from hardship, the Government must look at alternative means of protecting people who are unable to adjust to the reforms.

Council Tax Reduction

·  The introduction of new local Council Tax Reduction schemes (which replaced Council Tax Benefit and which was accompanied by a 10% reduction in central funding) is leading to financial hardship for some affected claimants and incurring extra expense to local authorities through loss of revenue, and costs relating to arrears collection, court action and providing support to affected claimants.

·  The move to localise Council Tax support has also created a post-code lottery whereby in some areas residents qualify for 100% support while in other areas someone in the same circumstances has to pay as much as 20% of their Council Tax. The Government should commission research into the impact that this variation in Council Tax reduction schemes across the country is having on levels of poverty in different areas.

Universal Credit

·  Both private and social sector landlords are concerned about how tenants will manage direct payments of housing costs under Universal Credit. There was particular concern that vulnerable tenants may not receive help until they have accrued unmanageable levels of rent arrears. The development of the Local Support Services Framework is a welcome step towards providing additional support to vulnerable people to adapt to Universal Credit, including the changes in the way support for their housing costs will be paid. However more fundamental assistance is needed to help vulnerable claimants manage their rental payments.

·  The Government should give vulnerable claimants the option of having their housing costs support paid direct to their landlords if this is their preference, at least for the first few years of a Universal Credit claim, as a transitional measure.

·  Universal Credit claimants should receive a breakdown showing the elements which make up the total UC payment, and which clearly indicates the portion of the payment which is intended to be used for housing costs.

Some of the reforms discussed in this report were implemented in 2011 but the full impacts are only just beginning to become clear. Other were implemented later, in 2013, and so only an initial assessment of their effects can be made at this stage. A number of our recommendations therefore call on the Government to monitor the impacts carefully and to take urgent remedial action where necessary to assist the hardest hit claimants, particularly as a number of them may be affected by other welfare reforms, including those to disability and incapacity benefits.

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Prepared 2 April 2014