Welfare Reform and Work Bill Committee

Written evidence submitted by Camden Council (WRW 79)

Welfare Reform and Work Bill 2015-16

1. Summary

1.1 There is unprecedented demand for housing in Camden which makes it a very expensive borough to live in for both working and workless households. It is already challenging for the Council to secure affordable housing for homeless households and this will be exacerbated by a number of aspects of the bill. We are concerned that households on benefits will face unprecedented hardship in Camden despite efforts to seek employment. In particular:

1.2 Clause 7 and 8: severing the link between median earnings and lowering of the benefit cap will result in large parts of London becoming unaffordable to those with two or more children.

1.3 Clause 9 and 10: the proposed freeze on working age benefits will negatively impact on the poorest households in the borough, making them even poorer.

1.4 Clause 12: Changes in tax credits limiting entitlement to two children will lead to hardship for working parents.

1.5 Clause 19: provides the mechanism for limiting increases to social housing rents announced in the budget which will set back much needed improvements to council homes and will inhibit the ability for local Registered Social Landlords to secure financing for development of new homes in the borough.

2. Context

2.1 The London Borough of Camden includes some of the wealthiest and the most deprived neighbourhoods in London. Housing costs are extremely high and it has one of London’s largest social housing stocks with a third of the population living in social rented accommodation. 32% of dwellings in Camden are private rent, significantly higher than for all of London.

2.2 The cost of housing in Camden is amongst the highest for all local authority areas in the country. In June 2014, the average (mean) house price in Camden was £659,310 – 4.4 times the average price for England & Wales and 1.7 times the average price for London.

2.3 Those in the private rented sector in Camden also face some of the highest rents in the country, ranking in the top 5, after Kensington & Chelsea, Westminster and the City. For a two bed flat in Camden renters currently pay an average (mean) £1,933 a month – 1.3 times the average rate for London and 3 times the national average [1] .

2.4 A quarter of all households in the borough claim Housing Benefit, 19, 667 are of working age ( 12,600 households claim working and/or child tax credits in Camden (DWP, 2013).

2.5 We appreciate the Government’s intention to reduce the overall benefit bill but we are concerned that in the long run the measures will put more households at risk of homelessness in Camden.

3. Clauses 7 and 8

3.1 Camden is an inner London borough where there is huge demand for accommodation and the average rent for a two bedroomed flat is £460pw whereas the Local Housing Allowance (LHA) is £302pw.

3.2 Bucking the trend of increasing homelessness in London, Camden has managed to sustain low levels of statutory homelessness applications with a strategy of preventing homelessness through placements of households in the private rented sector.

3.4 With the LHA caps and the existing benefit cap the procurement of private rented accommodation has become increasingly difficult. The lowering of the total benefit cap will further negatively impact our ability to procure accommodation for homeless households. Already 64% of homeless placements since January 2013 are outside of Camden but within London. Breaking the link with average earnings and reducing the cap will make it almost impossible to place families in London and it will become even harder to place small families in less expensive areas. Currently 49% of capped households in Camden are single parents.

3.5 We are concerned that where we have discharged our homelessness duty in the private sector we may see a return of these applicants seeking assistance from Camden. We will have no alternative but to place them in temporary accommodation at greater cost to the Council. Finding ‘suitable’ affordable accommodation for discharge of duty that is not subject to challenge will become more difficult. Larger families with three or more children will find even social housing rents for four bedroomed accommodation becoming unaffordable. We anticipate that any family on benefits with more than 2 children is going to find it difficult to afford living in Camden.

3.5 The reduction in the single person cap will make it difficult to find a shared room in the private rented sector in Camden that is affordable.

3.6 We welcome the increase in Discretionary Housing Payments (DHP) to assist with this situation, but the resources are finite and we expect an increase in demand for DHP with a lowering of the cap.

4. Clauses 9 and 10

4.1 The intention of the LHA reforms in the last parliament was to exert downward pressure on rents. However in Camden we have seen private rents increase and median monthly rents have seen greater increases than smaller properties – a 3 bedroomed property rent has increased by 16% over the period September 2012 to March 2015 (Valuation Office Agency 2011-15).

4.2 Because rents are exceptionally high in Camden, households on benefits ( 40% of working age claimants are working) already struggle to secure accommodation that falls below the LHA. Since 2011 we have seen a decline of LHA claimants in Camden, the greatest decline in the private sector where rents are above the LHA cap. The freezing of certain working age benefits, including LHA, will increase the difference between LHA rates and actual rents which will make many areas of Camden unavailable for both working and workless families.

 5. Clause 12

The impact of the freezing of working age benefits will be compounded by the limitation of tax credits to the first two children as well as the reduction in the threshold and steeper tapers brought in as a result of the 2015 Budget. The loss in household income will not be offset by the new ‘National Living Wage’ according to the recent analysis by the Institute for Fiscal Studies. Together these measures will have the greatest detrimental impact on households with the lowest incomes in the borough and we anticipate that the pressure on support and welfare services will increase.

6. Clause 19:

6.1 We appreciate the Government’s intention to reduce housing benefit expenditure but reducing social rents could have a significant impact on the standard of accommodation that we are able to offer to some of the most vulnerable and disadvantaged members of society. The self financing agreements signed with councils just three years ago held the prospect of moving away forever from the problems associated with historic neglect of estate infrastructure. Camden’s initial estimates suggest that £69 million HRA funding will potentially be lost compared with the assumption in our existing Business Plan which will mean a set back to expenditure on major works and planned maintenance, all of which intended to make much needed improvements to our housing estates. Our local registered landlords have expressed concerns that the reduction in rental income is going to affect their ability to raise financing for the development of new homes in the borough.

7. Conclusion

7.1 Camden is supportive of the principle of encouraging people back into work and works closely with the local JCP to support and assist residents to become work ready and move into employment. However we are concerned that the freezing of certain working age benefits will see the lowest income households will get poorer and together with the lowering of the total benefit cap will only see households on benefits forced to move from Camden and London and greater levels of homelessness.

October 2015

[1] Valuation Office Agency, May 2014.

Prepared 20th October 2015