Welfare Reform and Work Bill Committee

Written evidence submitted by Councillor Chris Penberthy, Cabinet Member for Co-operatives and Housing, Plymouth City Council (WRW 84)

Welfare Reform and Work Bill 2015

Councillor Chris Penberthy (Labour and Co-operative, St Peter and the Waterfront) is Plymouth City Council’s Cabinet Member for Co-operatives and Housing. His portfolio includes lead responsibility for housing; child poverty; financial inclusion and welfare; and social enterprise development and support.

Chris has spent most of his working life in charities including as Chief Executive of Volunteer Development England. He was awarded a fellowship of the Royal Society of Arts in recognition of his contribution to the voluntary and community sector.

Chris has held a variety of trusteeships and directorships in charities and social enterprises. He currently holds the Chair of Plymouth Fairtrade Network and Millfields Inspired and is on the Boards of the Millfields Community Economic Development Trust CIC, Plymouth Energy Community and Plymouth Municipal Charities.

1. Introduction

1.1. This evidence submission outlines our response to the Welfare Reform and Work Bill. Our key concern is that the proposed legislation will significantly hold back our ambitious plans to build 22,700 new homes by 2031.

1.2. Plymouth, despite a number of significant improvements and robust plans for growth, have some key challenges including low productivity, poor connectivity within the region and beyond and an over-dependency on public sector jobs. The city remains a relatively low wage economy with over 20% of the city’s households earning less than £16,000 and over half earning less than £20,000 [1] . Over 29% of adults in Plymouth have problem debt, one of the highest levels in the country and the highest in the South West [2] .

1.3. The city also faces significant challenges in terms of poor health outcomes and health inequalities. For example, the Plymouth Fairness Commission referred to Plymouth as a ‘tale of two cities’ with a gap in life expectancy of 12 years between the most deprived and most affluent neighbourhoods. Plymouth has significant pockets of deprivation with a number of neighbourhoods being amongst the most deprived in the country [3] . As of 2012, there were 10,760 Plymouth children live in poverty with higher child poverty rates than both the regional and national average. [4]

1.4. In Plymouth, we have estimated the likely loss of benefit income to the city as approx. £60 million and about 20% of our population will be affected. We expect working families, young people and lone parents will be more likely to see reductions in benefit income via tax credit and housing benefit changes.

1.5. We have identified welfare reform as a strategic risk to achieving of our citywide objectives of making our city a fairer place to live where an outstanding quality of life is achieved by all as they will potentially impact on increased levels of:

§ homelessness and rough sleeping;

§ child poverty;

§ indebtedness;

§ pressure on front line services including, housing options and social care.

2. Summary of key concerns:

§ Reducing social housing rents by 1% a year will hamper our need to deliver additional social housing in the city; Further impeded by announcements to extend the right to buy which will place pressure on already over-stretched social housing stock;

§ The reduced benefit cap will force families into more expensive accommodation and result in poor outcomes for children;

§ The largest number of households affected by welfare reforms in Plymouth, with the greatest loss of income in the city, will be due to changes in tax credits. We are concerned that this will impact most heavily on working families.

3. Clause 19 Social housing rents

3.1. The number of households on Plymouth's housing waiting list is 13,049 households, a rise since 2012/13 when there were 10,263 households on the waiting list and gives a rate of 124 per 1,000 households.  This is significantly higher than the national rate in 2013/14 of 60.8 per 1,000 households.

3.2. The number of households on Plymouth’s housing waiting list in high priority bands A-C is 3194 a rise since 2012/13 of 13%

3.3. We are concerned about the impact of a 1% reduction in social rents on our city’s ambitious growth agenda. The Office for Budget Responsibility has warned the policy could lead to at least 14,000 fewer new homes being built and the National Federation of Housing Associations says 27,000 fewer.

3.4. We have been contacted by Registered Providers (RP) who have said that this will dramatically impact on future affordable housing delivery. Local RP partners are pulling their development plans back to the drawing board as they consider impacts of this on development viability and capacity. This is at a time when partners have been stepping up to meet the challenge of increasing affordable housing in the city.

3.5. One of our partners has estimated this could remove as much as £20m from their Business Plan. This will have a significant impact on their current and future development capacity and ambitions. Their business plan had been based on the 2014 Governments 10 year rent settlement.

3.6. We have some of the lowest social rents in the country; Plymouth Community Homes is the 3rd lowest in the country. This already demonstrates a significant saving to the taxpayer in terms of housing benefit levels. This measure seems to unfairly penalise those RPs providing notably lower rents.

3.7. Despite Plymouth having some of the lowest rents in the country, RPs are becoming increasing risk adverse about potential tenants. This means some of our most financially excluded residents are unable to secure tenancies.

3.8. We are concerned about the ability and capacity of our partners to continue with further phases of regeneration in some of our most deprived wards. This risks widening our cities health inequalities and hinders community cohesion.

3.9. We feel it is important to acknowledge the wider announcements that compound these problems:

§ Extending the right to buy to RSLs depleting already overstretched social housing in the city (13,049 households in Plymouth are waiting for social housing). Our partners tell us that at the moment the level of receipt generated from a RTB sale requires on average 2.5 sales to provide the funds to build one new home.

§ Higher earners paying market rents. In Plymouth this could mean social tenants paying an additional £250pcm. We believe this is a disincentive to finding work, taking additional hours and aspiring to wage progression.

3.10. We would welcome the opportunity to have further input/consultation on these measures as more details become available.

3.11. We propose:

An exemption to the 1% reduction in social rents for:

§ RPs with rents lower than target rents

§ Small and new RPs that don’t have adequate reserves

4. Clause 7 – 8 Benefit Cap

4.1. The Government expects more than 330,000 children from low-income families to be impacted and that 59% of those impacted will be lone parents. This means 1,300 children in low income families in Plymouth to be affected.

4.2. In April 2013, the DWP indicated that 150 households in Plymouth would be affected by the existing benefit cap of £26,000. A reduction of £6,000 to the overall cap is likely to result in much greater numbers in the city being affected.

4.3. Plymouth Community Homes estimate that 600 of their tenants could be affected. We believe that this could reach 1,000 households citywide most likely to affect out of work households with 3 or more children.

4.4. Larger families are already struggling to secure tenancies with Registered Social Landlords as they prepare for the cap reduction and set strict affordability criteria to mitigate potential rent arrears. We are concerned that these families will be pushed into more expensive, sub-standard private rented accommodation where they are likely to struggle to pay rent. We fear that the most vulnerable of our society will no longer be able to acquire the more affordable and secure social housing.

4.5. This measure risks statutory homeless provision becoming the ‘norm’ with families having limited or no housing options. This means children in vulnerable households receiving poor health and education outcomes.

4.6. We propose:

§ The Secretary of State to continue to review each year rather than once in each Parliament

§ Local Authorities receive additional hardship funding to mitigate the impacts

5. Clause 11 Reducing tax credit support

5.1. The Government has identified that lone parents, women and ethnic minority households are more likely to be impacted.

5.2. In Plymouth, 17,900 families are in receipt of child tax credits and of these 66% are working families. Based on IFS analysis, these families are likely to lose an average of £1,000 annually.

5.3. There are over 22,000 children within these working families in Plymouth. They could see increased levels of child poverty but sit of the new social mobility measurement.

5.4. We are concerned that this measure will be a disincentive to working more hours or for those in receipt of child tax credits to find work and therefore could increase unemployment levels in the city.

5.5. We propose:

§ Reconsider all changes to tax credit support outlined in the Bill due to the unfair impact on working families and lone parents.

6. Additional impacts on 18 – 21 year olds announced in the Summer Budget

6.1. Young people not ‘earning or learning’ could lose between £86 - £162 a week for rent.

6.2. In May 2015, DWP estimate the number of 18-21 year olds claiming JSA in Plymouth was 469; these young people may no longer be entitled to housing benefit.

6.3. Specialist housing organisations, such as the Foyer, may no longer be able to provide support and accommodation for single, young homeless. This could result in vulnerable under-21s no longer being able to access supported accommodation and pressure might be put on the Local Authority to provide this support.

6.4. These changes have the potential to increase in levels of homelessness for young people leading to increased sofa surfing and rough sleeping with the attendant concerns about safeguarding and sexual exploitation.

6.5. If implemented there will be additional pressure on children social care budgets as Housing Benefit is recovered against some in-house and independent fostering placement costs.

6.6. Vulnerable young people are often NEETS and are least likely to secure employment to access housing benefit.

6.7. We propose:

§ The full implications of the Summer Budget on this Bill are considered as part of the debate

§ The Equalities Impact Assessment for this Bill is updated to explicitly include the implications of the Summer Budget

§ Young people identified as vulnerable or who are resident in accommodation provided by specialist housing organisations are exempt from any changes to Housing Benefit

October 2015


[1] ‘Creating the Conditions for Fairness’, Plymouth Fairness Commission, March 2013

[2] Ibid

[3] Plymouth City Council Child Poverty Needs Assessment 2012

[4] DWP, Households below average income, 2012

[4]

Prepared 20th October 2015