Welfare Reform and Work Bill Committee

Written evidence submitted by The Almshouse Association (WRW 53)

To the Public Bill Committee for the Welfare Reform and Work Bill

(House of Commons)

Executive Summary

· There are over 1,650 independent almshouse charities throughout the UK, of which 95% are members of the Almshouse Association. Over 35,000 residents live in almshouses as beneficiaries under a licence to occupy. Almshouses are the oldest form of community based, local housing, and approximately 35% are listed buildings and make an important contribution to our national heritage. Almshouses must be held in perpetuity under Schemes issued by the Charity Commission in accordance with the wishes of their benefactors. Almshouses provide homes for those in need, and the majority are governed by local trustees and are built on specie land specifically donated for that purpose.

· The Rent Reduction proposals within the Welfare Reform & Work Bill could have a serious impact on those almshouse charities which are Registered Providers, and particularly if applied to those charities which have not achieved Target/Formula Rent levels and which could become insolvent. The Bill’s assumptions about housing associations’ capacity to absorb the cuts would be inaccurate in respect of almshouses.

· There are an increasing number of examples where housing legislation and associated regulation conflict with charity law, making it impossible for trustees to achieve full compliance, and preventing the HCA from making exceptions for almshouse charities when these situations arise.

· Recommendations:

o Exemption of almshouse charity Registered Providers generally from the rent-cutting obligations in the Welfare Reform and Work Bill.

o Failing that, exemption of almshouse charity Registered Providers who have not achieved Target/Formula Rent levels or who are already in or will join the 2015-18 round of Affordable Homes funding distributed by the Homes and Communities Agency

o The Welfare Reform and Work Bill should put the legal status of almshouse residents on a statutory footing

o Inclusion in the Welfare Reform and Work Bill of an agreed definition of an almshouse charity to remedy the ambiguity, circularity and confusion in existing statutory references, and a statutory direction that charity law should prevail where it appears to conflict with other legislation.

Introduction

1. The Almshouse Association is the working name of The National Association of Almshouses, registered charity number 245668. The Association is a membership charity. Our members, to whom we provide advice and support, constitute around 1650 independent almshouse charities. The Association is an official partner of the Charity Commission, meaning there is a formal relationship whereby the Charity Commission recognises the Association as a source of expertise in almshouse matters, and the Commission’s own internal guidance advises its caseworkers to refer to the Association for an expert opinion in certain matters.

2. The Association’s membership comprises about 95% of all almshouse charities in the UK, collectively housing around 35,000 residents, usually elderly although some charities are for other particular groups such as ex-armed forces personnel. Almshouse charities are the oldest form of social housing in the country and some have been providing accommodation to those in need for centuries. They are usually run by local volunteer trustees with minimal paid staff, and represent the finest tradition of local people helping their neighbours in need. The almshouse movement is the only part of the social housing sector where wardens are still common, with the related well-documented benefits of wardens in reducing social isolation.

3. 80% of almshouse charities have no more than 20 dwellings. Nearly 35% of almshouse charities provide accommodation in Listed buildings. Over 300 almshouse charities are also Registered Providers of social housing in England, because at some point (possibly decades ago) they were required to apply for that status as a condition of receiving social housing grant.

4. Although the precise beneficiary class varies between charities, all almshouse charities are legally obliged to provide accommodation only to those who are in need. Usually this has to be financial need. Accordingly, most almshouse residents are elderly and in financial need.

5. It is settled law that residents of almshouse charities are licensees under charity law, not tenants [1] .

6. The Association’s concern is about the impact of clauses 19ff on those almshouse charities which are also Registered Providers of social housing in England. These oblige Registered Providers to cut ‘rent’ for ‘tenants’ by 1% every year for four years, and cutting from the level of ‘rent’ as at 8 July 2015. ‘Tenant’ is defined so as to include almshouse residents despite their being licensees only, and ‘rent’ is defined in a way which would include the modest contribution towards maintenance of the almshouses which residents are asked to make (‘Weekly Maintenance Contribution’ or ‘WMC’).

7. Those almshouse charities which are Registered Providers have to apply the HCA’s Rent Standard Guidance (by analogy, since it is written for a landlord/tenant scenario which is not applicable in the almshouse context). Accordingly such charities ensure that the WMC does not exceed Formula/Target Rent levels, and increases by no more than CPI + 1% each year.

8. In the July 2015 Budget the measures in clause 19ff of the Bill were misleadingly portrayed as a 1% cut. In reality it is a far bigger cut, since over those four years charities would otherwise have been entitled actually to increase their WMC by CPI + 1% every year. Evidence from our members indicates, for example, that one charity with 144 dwellings stands to lose £370,000 in broad terms over the four years, once foregone increases in WMC are taken into account.

9. We contend that these measures were formulated without realising that they would catch many almshouse charities. Hence the assumption was that they would affect only housing associations, whose large scale and relative wealth would give them room to make efficiencies.

10. This assumption does not hold true in the case of almshouse charities. Even the largest is tiny by comparison to a housing association and therefore has little scope for achieving economies of scale. Almshouse charities have minimal or sometimes no paid staff so there is little scope for economies through staff redundancies. If redundancies were to be made, it would typically be the precious resource of the warden, now a rarity in housing associations.

11. Many almshouse charities have negligible investment income. Their only significant source of income is WMC from residents, which clause 19ff now requires to be cut. They cannot raise funds by selling accommodation. However, they are obliged by charity law to make financial provision for future maintenance as well as meeting ongoing needs. Often almshouse accommodation needs more expenditure than housing association stock, because it tends to be older and therefore designed for an age when people died and expected to be widowed at a younger age. For example, many charities still have bedsit accommodation. Hence it needs greater adaptation than housing association stock to bring it up to a modern standard suitable for enabling elderly residents to live independently for longer, and possibly with a spouse or partner. This problem is even more acute for the large percentage of our members who have Listed buildings.

12. Recommendation: we recommend that almshouse charities which are Registered Providers should be expressly exempted from the ‘rent’ cutting obligations in clause 19ff of the Welfare Reform and Work Bill. Please see Annex 1 for the wording of a suggested amendment to the Bill to achieve this.

13. Recommendation: in any event, the following two subsets of almshouse charities which are Registered Providers should be expressly exempted from those obligations:

a. Any such charity whose current level of WMC is below Formula/Target Rent. It is evident that a significant number of our members have not achieved Formula/Target Rent for a variety of reasons in relation to some or all of their dwellings. For the ‘rent’ cut to be applied to this group would place those charities under severe financial strain which could make them insolvent. This is particularly true of almshouse charities using Listed buildings. In addition, it is important that where an almshouse dwelling becomes vacant and is upgraded, the charity should retain the current flexibility to move to Formula/Target Rent for the dwelling.

b. Any almshouse Registered Provider which is now in or joins the 2015-18 round of Affordable Homes funding from the HCA. To assess whether they should bid for such funding, almshouse charities in this position will have done detailed financial projections on the assumption that they would be able to charge Affordable Rent levels for the relevant properties on completion of work. The exemption should not only cover almshouse Registered Providers in this position. For the avoidance of doubt it should also extend to almshouse charities in the 2015-18 round which are not Registered Providers, in the event that there is anything in their Framework Development Agreement with the HCA which would have the effect of contractually obliging them to act as if they were bound by clauses 19ff of the Bill, or by any future amendment to the Rent Standard Guidance mirroring the effect of those clauses. Again, it is important that the almshouse charities in this group should have the flexibility to increase WMC, whether on appointment of a new resident or otherwise, which they assumed they would have when bidding for funding.

14. Any exemption would need to refer to a definition of almshouse charity. The definitions which have historically been used in legislation are ambiguous and/or circular, and their re-use will cause confusion in the minds of regulators and the public.

15. Recommendation: the Welfare Reform and Work Bill should use new statutory definitions of ‘almshouse charity’ and ‘almshouse’ as set out in Annex 1. Note the suggested definition has built in a timing mechanism to prevent other Registered Providers being able to take advantage of an exemption simply by re-branding their accommodation as ‘almshouses’. The Association has prepared a detailed analysis of the deficiencies in the existing definitions, set out in Annex 2.

16. With regard to the status of almshouse residents, in Gray v Taylor the Court of Appeal ruled that for a variety of charity law reasons almshouse residents are not tenants, and occupy purely as beneficiaries of the charity. However, until now there has not been an opportune moment for this principle to be put on a statutory footing. It would be advisable to do so if the Welfare Reform and Work Bill adopts the amendments suggested above, to avoid confusion in the context of a clause 19 creating an obligation about levels of ‘rent’. This is particularly urgent given that at least one statutory reference to almshouse residents simultaneously uses the mutually exclusive legal concepts of ‘tenant’ and ‘licensee’, creating confusion. See Annex 2 for more detail.

17. Recommendation: the Welfare Reform and Work Bill should adopt the suggested clause in Annex 1 which puts the legal status of almshouse residents on a statutory footing and would resolve the confusion which is present in at least one existing statutory reference but absent in case law.

General recommendation

Almshouse charities feel burdened by the increasing number of examples where housing legislation and associated regulation conflict with charity law, making it impossible for trustees to achieve full compliance, and preventing the HCA from making exceptions for almshouse charities when these situations arise. If the Committee would like specific examples to illustrate these points, the Association would be pleased to supply them. Generally charity trustees should not be put in a position where complying with their charity law duties requires them to contravene other legislation.

Recommendation: there should be an express statutory clarification that charity law should prevail where it appears to conflict with other legislation.

Annex 1 – proposed clauses in Welfare Reform and Work Bill

1. Clause inserting an amendment to subsection 19(2) and a new subsection 19(9A) to the effect that the 1% ‘rent’ cut will not apply to almshouse charities. Suggested new text is shown in italics [Note subsection 19(1) sets out the obligation on registered providers to cut rent]

19(2) Subsection (1) is subject to subsection (3), subsection (9A) and section 20

….

19(9A) Subsection (1) shall not apply to a registered provider of social housing which is an almshouse charity.

2. Clause confirming the legal status of almshouse residents on a statutory footing

Residents of almshouse charities occupy their dwellings under a licence arising in virtue of being beneficiaries of the charity and are not tenants.

3. Clause defining ‘almshouse charity’ and ‘almshouse accommodation’ as used in other suggested clauses

"almshouse charity" means a body corporate or body of persons (‘the body’) which is a charity for the purposes of the Charities Act 2011, provides accommodation in furtherance of its purposes, satisfies at least one of the following tests, and, if it only satisfies Test 2, has been in existence continuously for at least one year before the coming into force of this section. If the body was incorporated during the year before the coming into force of this section in order to acquire all or substantially all of the assets of a predecessor charity which the body is legally capable of receiving, the body shall be deemed, for the purposes of this section only, to have existed for the aggregate length of its own existence and the existence of the predecessor charity.

Test 1

The body is expressly or impliedly prevented by its rules or constituent instrument from granting tenancies of accommodation occupied for the purposes of the charity; or

Test 2

The rules or constituent instrument of the body refer to the provision of almshouses or bede houses or any other word which is reasonably to be understood as having the same meaning; or

Test 3

A document other than the rules or constituent instrument reasonably evidences an intention by the original donor that the body’s purposes should include the provision of accommodation for those in need, and there is no express reference in the rules or constituent instrument to the provision of such accommodation by way of tenancies; or

Test 4

As far as can reasonably be ascertained, all accommodation which the body has provided in furtherance of the body’s purposes and other than by way of investment property has at all times been almshouse accommodation occupied under licence.

"almshouse accommodation" means accommodation provided pursuant to charitable objects which either expressly or impliedly include the relief of those in need through provision of accommodation.

Annex 2 – drafting deficiencies in existing statutory references to almshouses

1. Example of existing legislation using the mutually exclusive categories of ‘tenant’ and ‘licensee’ to describe an almshouse resident (emphasis added in italics)

The Electricity and Gas (Carbon Emissions Reduction) Order 2008, Schedule 1, Article 1

In relation to England and Wales, householder means a person who is-

….

(c) a tenant, including a sub-tenant, who has-

………

(iv) a licence to occupy which meets the conditions in paragraph 12(a) and (b) Schedule 1 to the Housing Act 1985 (almshouse licences);

2. Example of existing statutory definition which is ambiguous as to what is meant by ‘prevented by its rules or constituent instrument from granting tenancies’. [Note in this definition, the word ‘almshouse’ is used to refer to the whole charity rather than the individual residence.]

SI 1988/395 The Registered Housing Associations (Accounting Requirements) Order 1988

"almshouse" means a corporation or body of persons which is a charity and which is prevented by its rules or constituent instrument from granting tenancies of dwellings occupied for the purposes of the charity;

3. Example of existing statutory definition using ‘almshouse’ to mean the individual residence, not the whole charity, but which is circular. Emphasis added in italics.

Housing Act 1985 Schedule 1, para 12 (as amended)

A licence to occupy a dwelling-house is not a secure tenancy if- E+W

(a) the dwelling-house is an almshouse, and

(b) the licence was granted by or on behalf of a charity which-

(i) is authorised under its trusts to maintain the dwelling-house as an almshouse, and

(ii) has no power under its trusts to grant a tenancy of the dwelling-house;

and in this paragraph "almshouse" means any premises maintained as an almshouse, whether they are called an almshouse or not ; ….

4. Example existing statutory definition of ‘almshouse charity’ containing the same circularity (emphasis added in italics)

Charities Act 1992, section 50

· "almshouse" means any premises maintained as an almshouse , whether they are called an almshouse or not; and

· "almshouse charity" means a charity which is authorised under its trusts to maintain almshouses.

October 2015


[1] Gray v Taylor, [1998] 1 WLR 1093

Prepared 14th October 2015