Welfare Reform Update. Welfare cuts – who hurts most? New tenants Lone parents Young single people...

Welfare Reform Update

Welfare cuts – who hurts most?

• New tenants

• Lone parents

• Young single people

• Women

• Disabled people

• Large families

• Social tenants with spare rooms

• Ethnic minority groups

• Private rented sector landlords?

Who is less affected?

Older people...

• Universal credit is for working age only

• Protected from under occupation measure

Total benefit cap

• From 2013 household benefit payment capped at around £500 per week for families and £350 for single adult households

• Excludes Disability Living Allowance recipients and working families equivalent of Working Tax Credit.

• Housing element that gives

Benefit cap – money left for rent?

Number of children (couple, Council Tax Benefit£20 per week):

Rent (pw) at which householdwould be affected by welfare cap:

1 £302

2 £245

3 £187

4 £130

5 £72

6 £15

Private rented and social sectors

• Deductions for non-dependants increased

Tenants living with other adults will begin to see their LHA or HB reduced as non-dependant deductions are increased over a three-year period from April 2011.

Weekly gross income Deduction

2010/11 2011/12

Less than £122 £7.40 £9.40

£122 to £179.99 £17.00 £21.55

£180 to £233.99 £23.35 £29.60

£234 to £309.99 £38.20 £48.45

£310 to £386.99 £43.50 £55.20

£387 and above £47.75 £60.60

No deductions are made for people under 25 on JSA or older people on Pension Credit and some other groups.

Social housing only

Empty Nest Penalty

• HB for working-age families to reflect household size

• Hits existing tenants – under pension credit age; disabled; lone parents

• Hits 680,000 households (372,000 in HA and 308,000 in LA)

• Provision in Welfare Reform Bill – would come into force in 2013

• Expected to be based on LHA standard – percentage cut rather than flat rate cut – eg. One spare bedroom = 10 - 15% HB two bedroom 20 – 25%

• New duty on tenants to report house size? Or Landlords?

Social housing only

Empty Nest Penalty: regional breakdown

Region Estimated households affected

North West 154,400

London 103,800

Yorkshire & Humberside 91,300

West Midlands 86,200

East Midlands 52,800

South East 51,500

North East 50,100

South West 48,000

East 39,700

England 677,800

Mitigating Measures

• HB claimants with disability in private rented sector entitled to funding for an extra bedroom for a non-resident carer – Government estimates will benefit about 10,000 disabled people (April 2011)

• Councils given cash to tackle older under-occupancy (Jan 2011)

• Money for homelessness prevention work protected to spending review

More good news?

Discretionary Housing Payments up

2010/11: £10m

2011/12: £20m

2012/13: £60m

2013/14: £60m

2014/15: £60m

Extra DHP over spending review period = £130m

A further £50m over Spending Review period "to help meet the housing needs of claimants who are affected by the changes”.

Total additional funding: £180m

Where are the discretionary housing payments going? HB cuts HB help

£2.2bn

£180m

HB cuts vs. HB help

Impact on HA sector

• Risk of arrears – HB cuts and wider welfare reform

• Higher management costs

• Can local authorities insist on nominating HB recipients on waiting list to occupy 80% rent homes?

• Will HB cover near-market rents? HAs to “have regard” to LHA bedroom caps.

• Once £26k benefit cap is reached HB will be cut back.

Universal Credit

Universal Credit will simplify the benefits system by bringing together a range of working-age benefits into a single streamlined payment.

It aims to:

• Simplify the system• Make it cheaper to administer• Improve work incentives• Smooth the transitions into and out of work• Reduce in-work poverty• Cut back on fraud and error

UC: Federation concerns

• Long term threat to HA rents. DWP considering new LHA for social housing. Federation calling for HB to match actual rents

• DWP presumption of payments to tenants not landlords.

• Child support usually goes to mother, HB to tenant, workless benefit to individual. Where will the UC go? What about sanctions and conditionality?

Contact

Sue Ramsden

Policy Leader

National Housing Federation

020 7067 1080

Sue.ramsden@housing.org.uk