Welfare Reform and Work Bill

Written evidence submitted by Crisis (WRW 21)

1. Crisis shares the Government’s intention of supporting people into work. For many of the people we work with, finding a job is the best way of making a sustained exit from homelessness. Last year we helped 668 people find work. This was a quarter of clients using our employment services, many of whom overcame significant barriers to work. A further 1305 gained qualifications and 530 entered work placements- moving them closer to the labour market.

2. However, we are concerned that some of the measures contained in the Bill may increase homelessness and consequently move people further from the labour market.

3. Crisis has concerns about the lowering of the benefit cap, which will affect some single person households for the first time.

4. We note the absence in the Bill of proposals announced in the Budget to remove support for housing costs for 18 to 21 year olds and the long-term impact of freezing Local Housing Allowance rates. We expect these to be laid in secondary legislation, but we would urge ministers to use this Bill to lay out further details on both policies.

Apprenticeships reporting obligation

5. The Bill introduces a duty on the Government to report on progress made towards a target of three million apprenticeships by 2020.

6. Crisis welcomes this commitment to encourage the creation of three million apprenticeships in this parliament. For those who have experienced homelessness and can work, vocational training and employment provide a long term route out of homelessness, improving self-esteem and confidence and reconnecting them with society.

7. The Youth Obligation, announced in the Summer Budget, will place an expectation on unemployed 18 to 21 year olds to apply for an apprenticeship or traineeship, gain work-based skills, or go on a mandatory work placement after six months. For the Youth Obligation to effectively move young people further towards the labour market, it is vital that quality apprenticeships that provide a route into sustained employment are specifically targeted at this age group.

8. We are concerned, however, that the growth in take-up of apprenticeships since 2009/10 has been largely due to an increased take-up amongst over 25 year olds. In 2012/13, 37 per cent of apprenticeship starts were by people aged over 25, compared to just 27 per cent being taken up by under 19s. [1]

9. From 2017 many 18 to 21 year olds will be unable to receive support for their housing costs while they seek work. Given this context, it is vital that young people are supported as much as possible into work, including through the creation of good quality, targeted apprenticeships. Housing costs should not be a barrier to young people engaging in work related activity and should be included in the list of exemptions if a Work Coach or adviser deems this necessary.

10. Crisis supports amendment 3 that requires information about the uptake of apprenticeships by age to be included in the reporting obligation. This should include specific analysis of the take-up amongst 18 to 21 year olds, who will be subject to both the Youth Obligation and restricted entitlement to support for housing costs.

11. The quality of apprenticeships should also be analysed and reported on. Amendment 3 also requires the Secretary of State’s report to include a report by the UK Commission on Employment and Skills on the quality of apprenticeships being provided.

Lowering the benefit cap

12. The Bill will lower the benefit cap to £20,000 for families and £13,400 for single people (£23,000 and £15,410 respectively in London). The Bill also removes the requirement for the level of the cap to be set by reference to estimated average earnings.

13. At its current level, the benefit cap has mostly affected large families in areas with high rents. These lower thresholds mean that some single person households are likely to be hit by the cap for the first time. Crisis is concerned that, by affecting a far greater number of households, the cap will have a more significant impact on homelessness.

14. Analysis by Crisis, examining the cap in relation to LHA rates, shows that the new cap will affect single jobseekers in most parts of inner London. Single people currently in the Work-Related Activity Group for Employment and Support Allowance are likely to be affected in areas of inner and outer London, as well as in high rent areas such as Guildford and Oxford. This is because they will still be eligible for the work-related activity component (see below) but will be subject to the cap.

15. The Government has acknowledged that these lower thresholds are lower than average earnings, arguing the policy will encourage more claimants into work. Crisis is concerned that to date there is little evidence that the benefit cap is in fact encouraging people into work to justify this. According to the Government’s evaluation, just one in ten people affected by the cap in February 2014 had found enough work to become unaffected by the cap by the summer. The vast majority (78 per cent) were still capped, including a significant majority with barriers to employment, including poor health and/ or skills gaps. [2]

16. 16.Households have instead responded to the cap by cutting back on household essentials, including by skipping meals, while a significant proportion (45 per cent in summer 2014) are in rent arrears. [3] Many cannot move house to reduce their housing costs because they are already living in the cheapest available accommodation in their area. [4]

17. We are supportive of amendments which seek to exempt temporary accommodation from the cap. People in temporary accommodation cannot control their housing costs as they have been placed in accommodation by their local council. Temporary accommodation costs are higher than standard housing benefit rates as a subsidy is included in the housing benefit award for the additional management costs. Single people living in temporary accommodation will have had to meet a very high threshold of vulnerability in order to be eligible for the homelessness duty.

18. Local Authorities have a duty to house statutorily homeless households and it is likely that in some areas a significant proportion of Discretionary Housing Payments (DHP) is being spent to mitigate the high cost of placing households in temporary accommodation.

19. We are also supportive of amendments which would exempt people in the Work-Related Activity Group of Employment and Support Allowance (ESA WRAG) from the benefit cap. One of the stated principles of the cap is to encourage people into work, but people in ESA-WRAG are not required to look for work. Applying the cap to people in ESA-WRAG imposes additional conditionality requirements that are not appropriate for those with limited capability for work.

Freezing of certain social security benefits

20. We are concerned that the freezing of Jobseeker’s Allowance (JSA) could create hardship and poverty for claimants, especially those who are at risk of homelessness. The shortfall between Local Housing Allowance (LHA) rates and actual rents is growing in many areas (see Local Housing Allowance section). Many people already use their JSA to help with the shortfall that they face. Freezing JSA means that people will have fewer funds to help with their housing costs, putting them at risk of rent arrears and homelessness.

21. We are supportive of amendment 15 which would annually review the freeze, taking into account both the rate of inflation and the national economic situation.

22. We are also supportive of amendment 39 which would see JSA increasing in line with the consumer price index.

Removing the work-related activity component in Employment and Support Allowance (and the equivalent in Universal Credit)

23. The Bill will reduce the level of entitlement for sick and disabled people who are not currently fit for work, but likely to be fit for work in the future, to the same rate as Jobseeker’s Allowance. It will apply to new claimants only. The reform is intended to remove an assumed financial incentive to claim sickness benefits over Jobseeker’s Allowance, and to increase employment levels amongst people with disabilities and health conditions.

24. People claim Employment and Support Allowance (ESA) because their poor health or disability presents a genuine barrier to work. In order to qualify, people must undergo a rigorous assessment of their sickness or disability to determine their capability for work.

25. Reducing the level of entitlement to the same rate as Jobseeker’s Allowance equates to a reduction of almost £30 per week. Given that people who claim ESA are struggling with difficult life circumstances, it seems hard to justify why they should not receive the same level of financial support in the future. People typically claim ESA for longer than JSA, Recent analysis from Mind has shown that 60 per cent of people on JSA move off the benefit within 6 months, while almost 60 per cent of people on ESA WRAG need this support for at least two years [5] . Reducing the level of support is likely to put people at risk of significant financial hardship.

26. Crisis welcomed the announcement in the Budget that additional support will be given to those in the WRAG to help them take steps back to work. This is not included in the Bill but is a more appropriate way of motivating people to overcome barriers to employment and to prevent people from drifting too far from the labour market during a short-term illness. Crucially, this support should fully take into account other life circumstances such as homelessness that are related to, or exacerbate, people’s disabilities and health problems.

27. We are supportive of amendment 20 which removes the changes to the work-related component of Employment and Support Allowance.

Social rent reduction

28. The Bill will require providers of social housing to reduce rents for social housing by 1 per cent each year for the next four years.

29. Crisis is concerned that this will have an impact on supported housing, including hostels for homeless people and domestic violence refuges. Rents in supported housing tend to be higher than in general needs social housing and cover a much wider range of housing management activities. These higher rents reflect the additional costs of ensuring that the vulnerable tenants living in this type of housing are safe and supported.

30. Research from Homeless Link [6] shows that 90% of residential homelessness services rely on housing benefit as a key source of income. Reducing their rents by 1% each year would disrupt their business models and make it considerably harder for them to deliver the type of support that is needed to help people move on from homelessness.

31. Supported housing, categorised as ‘specified accommodation’, is already exempt from normal housing benefit rules including the benefit cap in recognition of their unavoidably high running costs. We therefore believe the Bill should be amended to exempt specified accommodation from the 1% social rent reduction.

New clauses

Local Housing Allowance Freeze

32. The freezing of Local Housing Allowance (LHA) was announced in the Budget and will be laid in secondary legislation. However we believe that a clause should be inserted which will require the Secretary of State to review the level of the LHA annually. We have significant concerns about the long-term impact of freezing the rates as rents continue to rise in many parts of the country. As it currently stands LHA rates will continue at their current level until 2019/20.

33. In the last parliament the link was broken between actual rents and the support available for housing costs, with rate increases capped at one per cent. As a result, homes in the private rented sector are already becoming increasingly unaffordable to people in receipt of housing benefit.

34. The shortfall between LHA rates and actual rents is growing even in many areas that have received additional funding to make up the shortfall – Targeted Affordability Funding (TAF) – allowing them to be uprated by 4 per cent. Remaining at their current level for the next four years will allow this shortfall to grow even wider.

35. Analysis by Crisis shows that across Great Britain, one in ten current LHA rates (98 rates) are already 5 per cent or more lower than the estimated 30th percentile of local rents. This includes 77 rates (8 per cent of rates overall) that have already benefited from an additional increase due to TAF. [7]

36. The Shared Accommodation Rate – intended to cover the cost of a room in a shared property– has been particularly affected by the decision to limit rate increases. A fifth (21 per cent) of Shared Accommodation Rates fall 5 per cent or more below the 30th percentile, even though almost all of these have received TAF. [8]

37. While the stated intention of the LHA reforms in the last parliament was to exert downward pressure on rents, Government research shows that tenants are shouldering most of the burden, with 94 per cent of the shortfall between LHA rates and local rents falling on new tenants and just 6 per cent being absorbed by landlords in rent reductions. [9]

38. Private rents rose by 1.7 per cent across Great Britain last year alone. Oxford Economics has projected private rents to rise by 39% between 2015 and 2020 in England. [10] A real terms cut to Local Housing Allowance will erode its value over time, making private renting increasingly unaffordable to people who need support with their housing costs.

39. The ending of an Assured Shorthold Tenancy is now the leading cause of homelessness. It accounted for 29% of all homelessness applications in England and 38% of applications in London [11] .

40. It is vital the Government maintains Targeted Affordability Funding for each of the next four years at a sufficient level to support those with the greatest shortfall between their rent and the amount of support they can receive for their housing costs.

41. We are supportive of NC2 which would require the Secretary of State to review the level of the Local Housing Allowance annually, in light of the rate of inflation, levels of market rent and the national economic situation.

Support for housing costs for 18 to 21 year olds

42. This is not contained in the Bill but was announced in the Budget. From April 2017, 18 to 21 year olds making a new claim for Universal Credit will not be entitled to support for their housing costs. Given that the Bill creates no new powers for this, we expect these measures to appear in regulations using powers already contained in the Welfare Reform Act 2012.

43. Crisis has serious concerns that removing young people’s access to support with their housing costs will lead to an increase in youth homelessness. Youth homelessness is already on the rise: 8% of 16-24 year olds report recently being homeless [12] and in four years the number of young people sleeping rough in London has more than doubled. [13]

44. The Government has made clear however that young people will be protected if they are vulnerable, if they can’t live with their parents or if they have been working for the previous six months. Crisis welcomes this commitment and believes it is vitally important to better understand who exactly will be protected.

45. For many young people housing benefit is all that stands between them and homelessness. This includes care leavers and those who have experienced violence or abuse from family members. Some may be unable to live with their parents because of relationship breakdown but find this difficult to prove, for example if they have been thrown out because they are LGBT or if a parent has remarried.

46. Young people who have already found themselves homeless may have been supported into accommodation funded by Housing Benefit, either by their local authority or by a homelessness organisation. Between 2010 and 2014 Crisis helped create 8,128 tenancies in the private rented sector for people who were homeless or at risk of homelessness, with support from the Department for Communities and Local Government. It is vital that young people can maintain these forms of accommodation– and that those at risk of homelessness can continue to access them.

47. In order to make sure that all young people at risk of homelessness are protected, it is essential that the list of exemptions takes into account all the reasons young people may need support with their housing costs. In terms of defining vulnerability, this should include:

i. Young people owed the homelessness duty.

ii. Young people who are homeless or at risk of homelessness being supported by local authority Housing Options teams.

iii. Young people living in homelessness accommodation projects.

iv. Homeless young people supported by voluntary or statutory agencies into alternative accommodation.

v. Those who have formerly been homeless as young adults

vi. Those without family or who have experienced relationship breakdown with their parents

vii. Care leavers and those who are known to children’s services due to child protection concerns

viii. People who cannot live with their families because the accommodation is unsuitable, for example due to overcrowding.

ix. People who cannot live with their families because the neighbourhood is unsuitable, for example risk of involvement with gangs

x. Those leaving custody

48. The ministers should take this opportunity to lay out their proposed exemptions to this policy.

About Crisis

49. Crisis is the national charity for single homeless people. We are dedicated to ending homelessness by delivering life-changing services and campaigning for change. Our innovative education, employment, housing and well-being services address individual needs and help people to transform their lives.

50. As well as delivering services, we are determined campaigners, working to prevent people from becoming homeless and advocating solutions informed by research and our direct experience. Crisis has ambitious plans for the future and we are committed to help more people in more places across the UK. We know we won’t end homelessness overnight or on our own but we take a lead, collaborate with others and, together, make change happen.

8 September 2015

Company Number: 4024938 | Charity Numbers: England and Wales 1082947,

Scotland SC040094

[1] Skills Funding Agency/ Department for Business, Innovation and Skills (2015), Apprenticeships geography age and level: starts 2005/06 to 2014/15

[2] Department for Work and Pensions (2014), Post-implementation effects of the Benefit Cap (wave 2 survey)

[3] As above

[4] Department for Work and Pensions (2014), In-depth interviews with people affected by the Benefit Cap

[5] Mind (2015), http://www.mind.org.uk/news-campaigns/news/budget-benefit-cut-insulting-and-misguided/#.Veb41_lVhBd

[6] Homeless Link, Support for single homeless people in England (2014)

[7] Analysis of Valuation Office Agency, Scottish Government and Rent Officers Wales data

[8] As above

[9] Department for Work and Pensions (2014), The impact of recent reforms to Local Housing Allowances

[10] National Housing Federation (2013), Home Truths

[11] DCLG Live tables (2015)

[12] Crisis (2013), The Homelessness Monitor

[13] CHAIN data

Prepared 11th September 2015