Thursday 18 October 2018

Welfare Reform

Housing Benefit Administration Subsidy 2015/16

 Letter from Lord Freud to Local Authority Chief Executives 23 July 2014

Lord Freud letter re. Housing Benefit Admin Subsidy 2015/16

Welfare Reform in the East Midlands: The Story So Far

At their meeting on 7 February 2014, Members of East Midlands Councils considered the consequences of the Government’s package of welfare reform measures for communities and councils across the region. Although still in the early stages of implementation, EMC has worked with local authorities in the East Midlands to publish the initial findings of work looking at the impact of welfare reform up to the end of 2013.  The report also contains some examples of innovative practice from councils across the East Midlands. Key messages include:

  • There is a need for greater local freedom and flexibility for councils to address under-supply of affordable housing,
  • There are specific concerns about the availability of smaller properties and one bedroom accommodation,
  • There is a need for greater freedom for councils to support people into employment & deliver strong local economies,
  • There is a need for a greater acknowledgement of the impact on councils and help in absorbing the cost of administration,
  • There is a need for local knowledge and discretion in supporting people with particular needs or vulnerabilities,
  • There is a need for local authorities to consider how to make provision for welfare assistance beyond 2014/15; and,
  • All measures must be adequately and appropriately funded.

The report also highlights those issues that EMC will focus on as it continues to work with councils and the LGA in sharing intelligence and good practice.  In particular, it identifies where EMC may lobby and influence in order to improve current arrangements to support the effective roll out of Welfare Reform.

Welfare Reform in the East Midlands: The Story So Far (February 2014)

The Benefit Cap

What is it?

The benefit cap is designed to ensure that those in workless households do not receive more in benefits than the average working household earns. Some benefits are excluded. Thus couples with or without children will not be entitled to more than £500 in benefits per week. Similarly single parents whose children live with them will not be entitled to more than £500 a week. A single person would receive no more than £350 per week in benefits.

Each council is provided with a list by central government of all households that will be affected by the cap. To ensure that affected households are under the cap councils will withhold housing benefit.

The Impact

Impact on Citizens

Impact on Councils

  • Figures from DWP[1] indicate that the cumulative count (April 2013 – November 2013) of households affected by the cap in the east Midlands was 1,278 (3.9% of the total for England).

 

  • The highest levels are in Leicester (the most populous local authority area), followed by Nottingham and Derby.

 

 

  • Councils will have to work closely with households identified as likely to be capped, aiming at getting as many as possible back to work in partnership with Jobcentre Plus.

 

  • As yet there is no clear evidence of councils in London sourcing affordable accommodation in the East Midlands to meet the needs of tenants affected by the cap – although the situation will continue to be monitored closely.


[1] Published 9th January 2014

Local Housing Allowance (LHA)

What is it?

LHA is the way in which Housing Benefit is calculated for private sector tenants.

As of April 2011 a number of changes have been made to the way in which LHA is calculated. These changes are as follows:

  •  The maximum payable rate has been lowered from the 50th percentile to the 30th percentile.
  •  Maximum weekly payable rate:
    • - For a one bedroom property it is £250 per week
      - For a two bedroom property it is £290 per week
      - For a three bedroom property it is £340 per week
      - For a four bedroom property it is £400 per week
  • Four bedroom rate is now the maximum payable.
  • Those under the age of 35 who do not have children are now only eligible for the Shared Accommodation Rate (SAR). As of January 2012 the age restriction for SAR increased from the age of 25 to 35.
  • Previously claimants of LHA if they had a rent lower than that of the LHA rent could keep the excess (excess limited to £15). From April 2011 this arrangement was removed.
  • Further change has been made to the size criteria so as to allow an extra bedroom for either a customer or partner who is disabled or has a health condition which requires over night care provided by a non resident carer.

The Impact 

Impact on Citizens

Impact on Councils

  • Research by Sheffield Hallam University[2] suggests that there may be up to 89,000 households affected by changes to LHA in the East Midlands (7.4% of the total for England).

 

  • The impact is likely to be highest in some coastal towns and urban areas where there is a strong reliance on private sector accommodation and where rent levels are generally higher.

 

  • Some councils have reported an increase in Local Housing Allowance Case Loads (Further detail in Figure 10.6).

 

  • Some councils have reported a sharp increase in applications for Discretionary Housing Payments since April 2013 (see below).

 

  • There will be an increased need for councils to address the under-supply of affordable housing.

 

  • Councils will need to develop localised initiatives to address the needs of the working poor.


[2] The Local and Regional Impact of Welfare Reform, Sheffield Hallam University, CRESR, April 2013

The Social Sector Size criteria

What is it?

As of April 2013 housing benefit recipients in the social sector will receive housing benefit payments based on their household size. Although it is down to the landlord to accurately describe a property and the rent charged. Those who are deemed to be under occupying will see a reduction in their housing benefit. If a recipient is found to be under occupying their home by one bedroom then they will see a 14% reduction in their housing benefit. If a recipient is found to be under occupying by two or more rooms then their housing benefit will be reduced by 25%.  Each person or couple will be entitled to a room with some exemptions.

Exemptions:

  • Children under the age of 16 of the same gender are expected to share.
  • Regardless of gender children under ten are expected to share.
  • An extra room will be provided for a disabled person who requires a non-residential carer.

Children with a severe disability can claim for an extra room.  It is down to the discretion of the local authority to decide as to whether it is inappropriate for a child with a disability to share a room.

The Impact

Impact on Citizens

Impact on Councils

  • Figures suggest there are 17,872 cases affected by the under-occupancy criteria in the East Midlands in council owned stock (over half from the major urban areas): 14,599 with one spare bedroom and 3,273 with two or more spare rooms.  Further detail in Figure 10.3.

 

  • At present there is little evidence to suggest that people are moving as a result of under-occupancy.   

 

  • Council figures from across the East Midlands (Figures 10.4 & 10.5) suggest a rise in the level of rent arrears during 2013.  However this data is incomplete and there no evidence of a direct link with under-occupancy.

 

  • Some councils have reported a sharp increase in applications for Discretionary Housing Payments (DHPs) since April 2013 (see below).

 

  • Some councils have considered re-classifying smaller bedrooms as other accommodation to reduce the impact on tenants.     

 

  • There is increased pressure on a limited amount of smaller sized social housing stock. 

 

  • There will be an increased need for councils to address the under-supply of affordable housing.

 

Council Tax Support

As of April 2013 the administration of council tax benefit changed. Instead of being administered on a national level local authorities have now set up their own local localised benefit support schemes. This has been accompanied by a 10% reduction in funding for Council Tax support. 

The Impact

Impact on Citizens

Impact on Councils

  • Local schemes have reduced support to certain groups to meet budget constraints, including low income working families, those in part time work or zero hours contracts.

 

  • Some groups may now be paying Council Tax for the first time.

 

  • The council tax benefit claimant counts in the East Midlands have remained static or increased despite falling unemployment, contrary to the DWP expectations (further detail in Figure 10.1). This may be due to increased number of claimants in part time work or on zero hours contracts.

 

  • 23 out of 28 councils that responded reported a fall in council tax collection rates and there is evidence that the cost of collection is increasing.

 

  • Initial rates of council tax collection are declining through the year as more people are finding it harder to pay.

 

  • The cost of council tax recovery is increasing with councils having work harder to collect receipts.

Universal Credit

What is it?

Universal credit is the combination of Jobseekers Allowance, Housing Benefit, Employment and Support Allowance, Child Tax Credit, Income Support, and Working Tax Credit into a single benefit payment. This is intended to simplify the benefits system and provide clear incentives to work. Universal Credit is to be introduced between October 2013 and 2017.