Welfare Reform and Work Bill Committee

Supplementary written evidence submitted by Councillor Gary Porter CBE, Chairman of the Local Government Association (WRW 63)

I am writing in follow up to the evidence I gave to the Committee on Tuesday 15 September 2015.

The Member for Stretford and Urmston asked for the LGA's analysis of the combined impact of the social housing rent reduction, the freeze on local housing allowance and the reduction in the benefit cap on discretionary housing payments.

The combined impact will be significant. Proposals to reduce rents paid by tenants in social housing in England by 1 per cent a year for 4 years from April 2016 will cost councils around £2.6 billion by 2019/20, equivalent to 60 per cent of local government's total housing maintenance budget each year. The measure puts investment in affordable homes at risk, which would lead more tenants to rent in the more expensive private rented sector and so increase demand for financial assistance as the Government seeks to reduce it.

Table: Estimated impact

£000s

£000s

£000s

£000s

£000s

2015/16

2016/17

2017/18

2018/19

2019/20

Current policy

7,310,442

7 ,471,272

7,672,996

7,887,840

8,116,597

New Policy

7,310,442

7,237,338

7,164,964

7,093,315

7,022,381

Revenue gap

0

233,934

508,032

794,525

1,094,206


The impact assessment for the extension of the benefit cap which accompanies the Bill acknowledges that it increases the risk of hardship. That assessment argues that these impacts will be lessened if those affected find work, but the evidence from the previous cap showed that a relatively small number of those affected were able to move into sustained employment.

The impact of the Local Housing Allowance rate freeze will fall on households claiming housing benefit in the private rented sector, many of whom are in work. The DWP recently estimated that by 2019/20 the average loss to a household of this measure will be £5.30 per week. This is likely to be significantly higher in high rental areas.

The retention of Discretionary Housing Payment and some of the Targeted Affordability Fund is welcome, but this funding is not intended to nor can it address the significant, long term and deepening unaffordability of many high rental areas for households on modest incomes.

We fully support the Government's aim to reduce the Housing Benefit bill, but this is the least sustainable way to do so. Giving local government the powers it needs to build new houses, greater freedom to shape their local economy, and devolving employment support for the most disadvantaged households will enable us to develop balanced and sustainable local economies, with a healthy mix of tenure and employment.

October 2015

Prepared 14th October 2015