02/04/12. For a more update round up of news and implciations for housing, please see this summary article recently published
The Bill has continued its progress through the House of Lords Grand Committee Stage, with debates held of late covering disability payments, employment-related benefits, mental health issues and the ability to work, alongside criteria for exemption of other benefits such as carers allowances from benefit caps. There have been no direct debates surrounding underoccupation or Universal Credit direct payments, and the bill is expected to gain Royal Assent by the end of the year, with Lord Freud, minister for welfare reform outlining in the latest published debate that “Our policy aim is to achieve a range of positive effects through changing attitudes and expectations. Clearly, we intend in particular to improve work incentives and reinforce the expectation that people of working age should work”
The governments housing strategy published on 21st November confirmed their intention to see through reforms, outlining a range of measures which will work “in tandem with ... tenancy reforms to help make sure that social housing is used more effectively and better targeted at those who need it most”, but with a commitment to designing Universal Credit so that it “contains safeguards to help protect social landlords income streams, and ensures that sufficient support mechanisms are in place for those who need help managing their finances”
The Government has confirmed that under its direct payments proposal, which they remain committed to, certain groups will continue to see their benefit paid direct to the landlord such as pensioners and “vulnerable people” - estimated to stand at circa 10% of social housing tenants.
The definition of vulnerability is still awaited, but Felicity Ridgway, part of the DWP's Universal Credit Programme, stated recently that "We're trying to figure out whether we want a really defined definition that would be black and white to the point that we can automate it, or we give it to human discretion so it's more of a subjective decision-making process about what is vulnerable and what isn't. If we go down that route, who would be to choose, would it be central government, local authorities or housing associations themselves? The likelihood is it may be some sort of balance between the two”.
She also said the Government is looking to support claimants in the first month of their Universal Credit claim - as it is likely to be paid monthly in arrears – most likely to be via "transitional payments".
The DWP aims to run pilot projects to gauge the impact on landlords of direct payments in six local authority areas from June 2012 to June 2013, with a five-month lead in starting in January 2012. Confirmation of which 6 councils and their housing association partners will be taking part should be announced soon as the deadline for expressions of interest was 8th November. Further detail on the projects can be found here.
Timescales for implementation
The latest news we received today (16th November – unconfirmed by the DWP though) indicates that inclusion of housing benefit into universal credit is being delayed from October 2013 until April 2014 for new claims and ''around'' the end of 2015 for existing claims. So Housing Benefit may well survive longer than expected, but limiting payments based on underoccupation is still scheduled to go ahead from April 2013. The governments published timetable is as follows:
- From October 2013 to April 2014 about half a million new claimants will receive Universal Credit instead of Jobseeker's Allowance, Employment Support Allowance, Housing Benefit, Working Tax Credit and Child Tax Credit.
- At the same time, another half a million existing claimants and their families will be transferred to the new credit when their family circumstances change significantly, for instance if they get a job or have another child.
- From April 2014 a further 3.5 million claimants and their families will move to Universal Credit.
- And from the end of 2015 to the end of 2017 a further 3 million people will be moved over, focusing on Housing Benefit claimants
Changes to non dependent deductions were introduced in April this year. There are six levels of non-dependent deductions depending on the income of the non-dependent, and the rates had been frozen since 2001. The Government is increasing the rates over stages so they can catch up with what they would have been without the freeze by April 2014. They will be rolled into Universal Credit by that stage for new claims.
Tenants living with other adults have already therefore begun to see their Housing Benefit reduced as non-dependent deductions are increased over a three-year period from April 2011, and landlords are already apparently noticing increase in arrears due to these deductions – outlined in this 24dash.com article.
Working families – conditional benefits
Universal Credit will also replace existing in work benefits and tax credits with a single payment, but Lord Freud, minister for welfare reform, fears the new system will pay "benefit to claimants who are clearly capable of working or earning more". The government now want to apply conditionality to in-work claimants from April 2013.
Under current proposed amendments to the bill, part time workers reliant on benefits to top up their income or pay for housing will have to demonstrate they are seeking to earn more or face a sliding scale of cuts to their income. This will be defined by an earnings threshold, the equivalent of a 35-hour week on the national minimum wage (currently £212.80). Workers who fall below this threshold will have to demonstrate they are actively looking for additional hours, an additional, or new, job. The threshold for single parents with a child under 13 will be about 20 hours with gross pay of £120. With children over 12 they will be expected to work full time within 90 minutes of their home.
Mothers and fathers will also be treated as separate individuals. With a child under 13, one parent will be designated as the carer who will be under the same conditionality as a single parent. The other will be treated as a single worker. A couple with children over 12 will both be expected to work 35 hours.
Given the high proportion of existing tenants who are already partially reliant on housing benefit, and constant changes in eligibility for some, this will be yet another complication and potential for arrears to accrue across the sector in addition to underoccupation deductions proposed.
A report published earlier this month by Sheffield Hallam University highlights how up to one million of the 2.6 million people in Britain currently in receipt of incapacity benefit may lose their benefit over the next three years as major changes are introduced - including a tougher medical test for claimants, the re-testing of existing recipients of payments, and a limit on the length of time individuals are entitled to non-means tested benefits.
All long-term sickness benefit claimants on the old incapacity benefit are to be moved to Employment and Support Allowance (ESA), which has regular tests to assess a person's capability for work.
The report, which analysed pilot schemes and the Department for Work and Pensions’ own calculations, found that the impact of the reforms has so far “barely been felt”. Northern areas are likely to be much more affected, with Merthyr Tydfil in Wales, Easington in County Durham, Liverpool and Glasgow expected to be hit 10 times harder than for example Kingston upon Thames in London or Wokingham in Berkshire.
These changes will potentially compound hardship for tenants in the North, who, as an NHF study pointed out recently, will already be affected much more by the proposals on underoccupation.
The Legal Aid, Sentencing and Punishment of Offenders Bill has been entered into the Lords and will go into the committee stage in the coming weeks. It proposes that legal aid will not be available to anybody contesting a welfare payment decision – leaving vulnerable customers and those potentially affected by incapacity benefit changes outlined above without recourse to state funded legal assistance. A recent report by Scope assesses that 78,000 disabled people will be affected and will therefore rely more heavily on support from other agencies such as housing organisations and support workers in fighting their cases.
Affordability in London
An estimated 133, 000 households in London will be unable to afford their rent if proposed caps on total benefits receivable goes ahead – including a cap of £350 a week for single person households and £500 for all others. London council’s looked at 480,000 current recipients of benefits in their report “Does the cap fit? An analysis of the impact of welfare reform in London,”
The report estimates that some 20% of the total number of workless households would be unable to afford their rent to some degree if UC is introduced as planned between 2013 and 2016, with Brent and Redbridge the boroughs where the most families – some 30 per cent - would not be able to afford their current rent, because they have a greater proportion of larger households, and because these workless families face relatively higher rents. In addition, many inner London boroughs would also become unaffordable to low income families by 2016.
Westminster Council expects up to 5,000 private sector tenants will be affected. In an interview with 24housing, Jonathan Glanz, Cabinet Member for Housing and Property at Westminster Council, said he expected people to move to areas of affordability as a result of the measures.
In our top tips article last month we indicated that checking out the local affordability of affordable rents should be one of the key steps involved in reviewing development strategies.
The Guardian has recently published a useful affordability map and database which can be found here , breaking down by area across England what salaries or income will be required to cover 60% or 80% of the local market rent, and what the impact looks like for different housing types across the country.
While we’re not certain and are awaiting clarification of the basis of the calculations (and are assuming the basis is VOA data on private rents as the basis for 80%, and 35% of net income on rent as the basis for affordability as used by Shelter) it provides a useful base point from which reviews of proposed developments and of allocations policies could start. Some areas are missing, but the coverage is pretty comprehensive.
The government’s consultation on changes to the way supported housing benefits are paid ( proposing splitting payments, which would be capped into two broad categories - one for conventional supported housing and one for people with more specific housing needs) closed at the end of October .
There are fears across the sector that the true cost of running individually tailored services will not be met because the government has not made it clear how much money will be available or precisely how payments will be capped.
Under measures introduced in 1995, for accommodation provided via exempt-accommodation regulations, including supported housing, people with high support needs receive a higher level of housing benefit. This is used to promote independent living via funding of support workers or , for example, adaptations.
Estimates suggest that 170,000 people currently depend on supported housing. The consultation includes a proposal to replace the exempt-accommodation rules with a locally managed housing fund. Claimants with additional housing needs will no longer receive extra housing benefit or universal credit, but will have to request extra funding from a funding pot held by their local authority.
Single Fraud Investigation Service
The Government is proposing the creation of a single integrated fraud investigation service from April 2013 to investigate Universal Credit fraud and Tax Credit offences, with statutory powers to investigate and sanction all benefit and tax credit offences and combine existing resources across Local Authorities, HMRC, and DWP.
This builds on proposals outlined in the 2010 Paper on tackling fraud and error, and sets out ambitious plans to amalgamate and extend existing services to coincide with the introduction of Universal Credit in 2013. Further details can be found in this DWP published impact assessment
Given the close working relationships many landlords have developed with their local authority fraud investigation teams in areas such as tenancy fraud; this deserves close monitoring as it progresses in 2012.
Welfare reform presents significant challenges for all landlords – and the scale and implications of change continues to unfold as the Welfare Reform Bill passes towards royal assent.
Frank Field, Labour’s former welfare minister and the current government’s welfare tsar, has recently stated that;
- the sector should focus during the Bill’s remaining passage through the Lords and Parliament on challenging proposals to penalise families with one spare bedroom rather than the plan to slash housing benefit for under occupiers ‘in general’,
- he does not foresee a government rethink on the cap of £26,000 per year for all benefits, and
- landlords should work with local credit unions to help tenants manage their benefits and set up bank accounts to allow automatic payment of rent.
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