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

List of conclusions and recommendations

In this List, conclusions are set out in plain type, and recommendations, to which the Government is required to respond, are set out in italic type.

1.  A number of the reforms discussed in this report were implemented in 2013 and so only an initial assessment of their impact can be made at this stage. Even with the LHA reforms, some of which began in 2011, phased implementation and transitional protection offered to existing claimants mean that evidence of the full effect is only now becoming available. Some of our recommendations therefore focus on the need for the Government itself to monitor carefully the impact of the changes it has introduced and to take urgent remedial action where necessary to assist the hardest hit claimants, particularly given that a number of them will be affected by other welfare reforms, including reforms to disability and incapacity benefits.
(Paragraph 8)

Local Housing Allowance reforms

2.  We welcome the Government's efforts to encourage private sector landlords to keep rents affordable and thereby help to keep LHA expenditure under control. However, we are concerned that, for some recipients of Housing Benefit, rents are becoming increasingly less affordable in the private sector. We recommend that the Government monitor the private sector rental market and that, if it finds evidence of a rise in homelessness and evictions and a decline in new letting to tenants in receipt of Housing Benefit, it should consider increasing LHA rates by more than 1% annually in the more pressured areas. (Paragraph 27)

3.  We are concerned that landlords are increasingly reluctant to let to tenants in receipt of Housing Benefit and to provide temporary accommodation, and that many of the private rental sector properties that do remain affordable to Housing Benefit recipients are of poor quality. We recommend that the Government work closely with private sector landlords to address their concerns and provide greater support to landlords who rent to Housing Benefit claimants. (Paragraph 28)


4.  There is evidence that Housing Benefit reforms are contributing to increased levels of homelessness with corresponding serious implications for households and for local authorities. We note the Government's assertion that homelessness acceptances overall have decreased in England but we are concerned that rises are occurring in certain high-demand areas, such as London, and that homelessness among those not in priority need increased by 9% between 2012 and 2013. We recommend that the Government take steps to monitor the impact on homelessness of the Housing Benefit reforms it has introduced. If they are found to be exacerbating homelessness, the Government must look at further ways of supporting people and local authorities to prevent and deal with homelessness. (Paragraph 36)

Shared Accommodation Rate

5.  We are concerned that the extension of the Shared Accommodation Rate (SAR) to single claimants up to age 35 may have reduced the availability of safe, appropriate accommodation for younger people, some of whom may be vulnerable. We recommend that the Government assess the impact of changes to the SAR. If it appears that it is resulting in some vulnerable young people having to live in situations which are inappropriate or which put them at risk, the Government should investigate introducing exemptions for vulnerable people, and take steps to increase provision of appropriate accommodation. (Paragraph 43)

Targeted Affordability Fund

6.  We welcome the introduction of the Targeted Affordability Fund (TAF) as a means of increasing LHA levels in areas of higher than average rent rises. However, we are concerned that some areas may see rents rising by more than the TAF maximum of 4% yearly, particularly in London. We recommend that the Government amend the TAF so that it can be paid at higher levels in areas where rent increases are greater than 4%, and that it should use available rents rather than stock rents as a measure of the rental increase. (Paragraph 47)

The Social Sector Size Criteria (SSSC)

7.  We understand the Government's wish to use social housing stock more efficiently and to reduce overcrowding. However, the SSSC so far seems to be a blunt instrument for achieving this. In many areas there is insufficient smaller social housing stock to which affected tenants can move, meaning that they remain in housing deemed to be too large and pay the SSSC. This is likely to be causing financial hardship to a significant number of households. We recommend that the Government carries out a detailed assessment of the available social housing stock in each local authority area. If there is clear evidence that there is insufficient smaller housing stock and that those who are willing to move cannot do so, the Government should consider allowing affected households more time to find ways of adjusting to the SSSC before the reduction in benefit is applied. Where a household is under-occupying but there is no suitable, reasonable alternative available, the SSSC reduction in benefit should not be applied. (Paragraph 64)

8.  To support the policy intent of better and more innovative use of social housing stock, and as a further measure to ease the burden on affected tenants and providers, we recommend that the Government allocate funding to a national scheme in which all providers of social housing can share information about their available housing stock; the stock needed by tenants on housing waiting lists; and those households interested in mutual exchange. (Paragraph 65)

9.  We are concerned that the number of bed-spaces per bedroom is not taken into account when assessing whether people are considered to be "under-occupying" within the regulations governing the SSSC policy and that, therefore, in some cases, two children are being expected to share a room that was designed for one child. We recommend that the Government use the Department for Communities and Local Government standard of bed-spaces rather than the number of bedrooms in order to determine whether a household is under-occupying under the SSSC. (Paragraph 69)

Impact on claimants with disabilities

10.  We note that the SSSC is affecting many people with disabilities who have adapted homes or who need a spare room to hold medical equipment or to accommodate a carer. We are deeply concerned that the policy is causing severe financial hardship and distress to people with disabilities, many of whom will not easily be able to move. We do not believe that Discretionary Housing Payments are able to provide effective support to these households because of their short-term and temporary nature, the variability in award and the distress that having to re-apply can cause to affected households. We recommend that disabled people living in a home that has been significantly adapted for them should be exempt from the SSSC. We also recommend that the Government exempt from the SSSC households which contain a person who is in receipt of the higher level mobility or care component of Disability Living Allowance (DLA) and the equivalent in Personal Independence Payment (PIP). (Paragraph 77)

11.  If the Government is unwilling to use DLA and PIP entitlement to establish a right to an exemption from SSSC for disabled people, then we recommend that it extend to adults the exemption already applicable to households containing disabled children who are unable to share a room because of their severe disabilities, as assessed by local authorities. This exemption should include those whose disability means that a room is required for medical equipment, or for a carer, including a partner who is also a carer, and part-time carers. (Paragraph 78)

Cost-effectiveness analysis

12.  We recommend that the Government produce, by March 2015, a full cost-effectiveness analysis of the SSSC policy, taking into account the funding for Discretionary Housing Payments and the additional costs incurred by local authorities and social housing providers as a result of the SSSC, to assess the overall impact of the policy on the public purse. (Paragraph 88)

Impact on investment in social sector housing

13.  We note that, as a result of the SSSC and other reforms, local authorities and housing providers are having to provide extra support to affected tenants, and are also having to invest additional resources in chasing arrears, dealing with evictions and managing re-allocations. We are concerned that this diversion of resources is having a detrimental effect on local authority and housing provider budgets and the ability of providers to build social housing. We recommend that the Government consider allocating extra funding to social housing providers in areas where the additional costs arising from the SSSC are identified as significant, to mitigate the impact and ensure that their ability to build new social housing is not compromised (Paragraph 91)

The Benefit Cap

14.  We are concerned that the Benefit Cap is having an adverse impact on people with disabilities and their carers in cases where the carer is resident in the same household but is not considered part of the same household as the disabled person for benefit purposes. This would typically occur where a person is the carer for an adult son or daughter, or for a parent. Carers who live separately from the person for whom they receive Carers Allowance may also be adversely affected by the Cap. DWP now estimates that fewer than 5,000 carers are affected by the Cap. However, we disagree with the Government's view that Discretionary Housing Payments are the most appropriate way of addressing these issues. DHPs cannot act as an effective long-term mitigation because they are intended to be temporary and not all carers in this situation are considered to be eligible. We recommend that the Government exempt all recipients of Carers Allowance in such circumstances from the Benefit Cap. If the number of carers affected is as low as DWP estimates, then the cost of exemption will be commensurately low. (Paragraph 106)

15.  Local authorities often have no option but to use more expensive temporary accommodation to house homeless households. These households often then fall within the scope of the Benefit Cap. We recommend that the Government exempt households in temporary accommodation from the Benefit Cap because these claimants have no choice about where they are housed and few options for reducing their housing costs. Moreover, local authorities often then have to fund the difference between the capped benefit paid and the rent due, and so there is likely to be no overall saving in public funds from the inclusion of these claimants in temporary accommodation within the scope of the Cap. (Paragraph 110)

Supported accommodation

16.  We welcome the Government's recognition that exempting only some supported accommodation from the Benefit Cap was anomalous and the action it has taken to address this by bringing forward amending legislation to ensure that "virtually all" supported accommodation will now be exempt. We expect to see the changes implemented from April 2014. (Paragraph 124)

Localised Council Tax support

17.  We are concerned that the 10% reduction in central funding for council tax support which accompanied its localisation is leading to hardship for some households and to increased expense for 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. We recommend that the Government commission research into the impact this variation in Council Tax Reduction schemes across the country is having on levels of poverty in different areas. (Paragraph 135)

Transitional protection

18.  We welcome the Government's additional funding for Discretionary Housing Payments (DHPs) to assist the transition for claimants affected by the housing cost reforms. However, we are concerned that the discretion allowed to local authorities in granting DHPs is resulting in access to DHP funding depending heavily on where a claimant lives. We are especially concerned that some local authorities are taking income from disability benefits into account in their means tests for determining eligibility for DHP awards. Disability benefits are intended to cover the extra costs arising from a disability or long-term health condition and we therefore believe they should not be included in DHP means tests. We recommend that the Government issues revised guidance to local authorities which advises them to disregard disability benefits in means tests to assess eligibility for DHP awards. (Paragraph 141)

19.  The Government has recognised that, in some cases, longer-term DHP grants are appropriate, including for people with disabilities or other claimants for whom there is little reasonable expectation of finding work or moving house. However, we are concerned that the Government's guidance to local authorities is not strong or explicit enough to convey this message and that many LAs remain reluctant to grant long-term awards. We believe that responses other than DHPs should be used to support the majority of claimants facing long-term hardship arising from the reforms, preferably exemptions for disabled people and claimants in temporary accommodation, as recommended in this report. To provide reassurance for claimants who may continue to require long-term DHPs, we recommend that the Government issues new guidance to local authorities making explicit that it supports long-term DHP awards for specified categories of claimants and that frequent reapplication should not be necessary for these households. The Government will also need to take the impact of long-term awards into account when deciding on DHP funding allocations after 2015. Local authorities need clarity on DHP funding for at least a three-year period ahead. The Government should announce its decisions on future funding for DHPs at an early date, to enable local authorities to plan effectively. (Paragraph 145)

20.  The level of DHP spending in 2013-14 is unlikely to provide a true picture of need because local authorities and claimants have understandably taken time to adjust to the reforms to housing costs. The Government needs to ensure that those who cannot move house or enter work in response to the reforms are supported in the long term in a way that avoids hardship. We recommend that the Government review DHP provision when more representative data are available and increase the funding for it, if necessary, to a level which is effective in preventing hardship to vulnerable people. This will be particularly important if the exemptions to the Benefit Cap and SSSC are not extended in the way we have recommended in this report. (Paragraph 148)

Universal credit

21.  We recommend that DWP publish the full evidence from the Direct Payment Demonstration Projects as soon as possible. This will assist landlords and local authorities across the country in drawing up necessary policies and procedures as Universal Credit is rolled out, and will allow time to consider whether further amendments to regulations are required. (Paragraph 159)

22.  We are concerned that some Universal Credit claimants may struggle to manage direct payments of housing costs, even with the additional support that is envisaged. Local authorities may not be able to identify vulnerable people until they have incurred significant arrears, potentially leading to debt problems and evictions and financial difficulties for landlords. We acknowledge the steps the Government has taken to date to respond to this challenge through development of the Local Support Services Framework. However, we believe that a more fundamental change is needed for vulnerable claimants. We recommend that the Government allow vulnerable tenants to opt in to having their housing costs support paid direct to their landlords if this is their preference, at least for the first few years of a UC claim, as a transitional measure. We also recommend that Universal Credit claimants 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. (Paragraph 167)

23.  The revised system of work allowances (disregards) under Universal Credit appears simpler than the original proposals. However, it risks creating an anomaly which would mean that some claimants who are in work and have eligible housing costs would receive more benefit if they did not claim the support for housing costs which they are entitled to. Many claimants may not be aware of this anomaly and so may end up receiving less than their full entitlement of Universal Credit. We recommend that the Government revisit work allowances under Universal Credit and take steps to address this anomaly. (Paragraph 173)

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Prepared 2 April 2014