Transcript Slide 1

Housing Benefit &
Welfare Reform
11 October 2011
Sam Lister
Policy and Practice Officer
Setting the scene
The Context
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Work and Pensions is largest budget
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more than entire NHS spending
More than twice education spending
HB spending £18 billion
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second largest social security item after
retirement pensions
third largest item if you include tax credits
Expenditure on benefits
Expenditure on key benefits 1991/92 - 2010/11
30
Mobility Allowance / Disability Living Allowance
/ Attendance Allowance / Carers Allowance
25
£ billion, real (2009/10 prices)
Sickness / Invalidity / Incapacity Benefits
20
15
Income Support (lone parents, sick, disabled,
other)
10
Unemployment Benefit / Income Support
(unemployed) / Jobseekers Allowance
5
0
Housing Benefit / Council Tax Benefit /
Discretionary Housing Payments
Cause of rapid rise?
• DWP Minister: Due to LHA rate
inflation and feedback
• Increases in caseload
• Caseload composition
• Rent increases – but not LHA rate
inflation (i.e. LHA rates broadly
follow the wider PRS market)
Caseload composition
Date
Total caseload
1000s
PRS caseload
1000s
% PRS
Nov 2004
3,940
780
19.8
Nov 2008
4,170
1,055
25.3
May 2011
4,880
1,552
31.8
Projected savings
Budget Red Book & Spending Review Policy Costings
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LHA abolish £15 excess
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Social sector size limits
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LHA 30th percentile
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LHA CPI cap
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Non dependent deductions
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Household benefits cap
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Increase age limit for shared room rate to 35
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Time limit HB to 90% for JSA awards
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LHA award caps and 4 Bed limit
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Discretionary housing payments
Additional room for carers
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Total annual saving (steady state)
Other welfare benefits
2014/15*
£550M
£490M
£425M
£390M
£340M
£270M
£215M
£110M
£ 65M
-£ 40M
-£ 15M
£2800M
£7500M
Looking to the future
Help with housing costs
• Short-term
• Medium-term
• Long-term
2013 and beyond
HB is a dead benefit
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Terminal decline starts October 2013
Working age claims go to Universal Credit
Pension age claims to Pension Credit
HB reforms will be baseline for UC
Legacy caseload to Universal Credit
completed October 2017
Help with housing costs paid together with
out of work benefit
Working age benefits: old & new
HB
IS
Universal
ESA
Tax Credits
JSA
Credit
This cant happen can it?
What will happen
• HB PRS changes (have done already)
• Universal credit
• Universal credit timetable
What might change
• Some adjustments to the household cap
• LHA CPI indexation (two years only)
• Some concessions to under occupation
• Payment and splitting universal credit
Overview of reforms
2013 and beyond
HB is a dead benefit
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Terminal decline starts October 2013
Working age claims go to Universal Credit
Pension age claims to Pension Credit October
2014
HB reforms will be baseline for UC
HB legacy caseload transferred by October
2017
Further ahead – move to a much more ‘rough
and ready’ assessment
Happening now
Private rented sector
• £15 excess abolished (April 2011)
• Set local housing allowance at 30th
percentile of rents (April 2011/ January
2012 or next review date)
• LHA Caps (April 2011/ January 2012 or
next review date)
• Extension of shared room rate to under
35s (January 2012 or review date)
Happening 2013
All claims
• Overall benefit cap (2013-14)
Social rented sector
• Limit working age entitlement to
reflect family size (2013-14)
Private rented sector
• Local housing allowance: switch to CPI
indexation (April 2013)
Homeless – temporary accommodation
• Temporary accommodation subsidy
(April 2013)
Housing support welfare cuts
Budget Red Book & Spending Review Policy Costings
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Social sector size limits
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LHA 30th percentile
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LHA CPI cap
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Household benefits cap
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Shared room extension
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Other private rented sector
Other social rented sector
Other housing cost support (e.g SMI)
Other welfare benefits
2014/15*
£490M
£425M
£390M
£270M
£215M
£ 650M
£ 240M
£ 130M
£7500M
Other welfare benefits
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Benefits up-rated by CPI
Abolition of income support (migration
of lone parents etc to JSA
Transfer of IB/SDA caseload to ESA
Contributory ESA limited to 12 months
disability living allowance replaced with
personal independence payment (ESA
style medical test)
Social fund
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Community care grants disappear
Private rented sector
LHA £15 Excess
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Affects 47% of LHA claimants (Great Britain)
Average loss £12.00. 68% of losers in the
£10-15 range of losses
Proportion of claimants losing increases with
property size (range 30%-82%)
From April 2011
DWP Estimate: 438,000 claimants in Great
Britain lose £11.00 p.w.
LHA Caps
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Regulations already laid
Absolute weekly limits:
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1
2
3
4
Bed
Bed
Bed
Bed
£250.00
£290.00
£340.00
£400.00
4 Bed cap outside London 3,620 losers
4 Bed cap 1,940 losers in London
All other sizes 15,470 in London)
No mechanism for up-rating caps
(Government can choose index and
timing)
LHA 50th percentile (median)
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30
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percentile impact
Transitional protection
Problems where evidence base is poor
makes 30th percentile more
problematic.
47% of losses in £5-10 per week range
(Great Britain)
DWP Estimate: 775,000 claimants (83%)
losing average £9.00 per week
Transitional protection
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Applies to existing or new clams made
before 31December 2011
LHA caps
30th percentile
Shared accommodation rate
For existing claims for nine months
from anniversary date (starting from
April 2011 to March 2012)
For new claims made 1 April 2011-31
December 2011 for 12 months from
anniversary date
Shared room rate
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Upper age limit for single claimants being
increased from January 2012
Transitional protection
Two new exceptions:
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Has at anytime lived in homeless hostel for 3
months (whether or not continuously) and has
accepted support services to resettle/rehabilitate
Offenders who are the subject of multi-agency
management arrangements
DWP Estimate: 62,500 claimants in Great
Britain lose £22 p.w. circa 20% of 1 bed
caseload
LHA CPI Cap
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LHA rates set by CPI rather than real rents
Effect will be overtime to squeeze the 30% of
the market that is theoretically available
Rent inflation almost always outstrips CPI
Only 5% of CPI is housing costs
In theory there will come a point at which the
lowest real rent is higher than the 30th PC uprated by CPI
Breaks the link between help with housing
costs and actual housing costs
CPI indexation
The impact of Welfare Reform Bill
measures on affordability for low
income private renting families
Sam Lister (CIH), Liam Reynolds and
Kate Webb, Shelter
Date at which very unaffordable
• Red – 2023
• Orange – 2025
• Yellow - 2030
Social rented sector
Social sector size limits
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Requires primary legislation – will be in
Welfare Reform Bill – then subsequently detail
made by regulations
Does not apply to pension age claims (age
61½ -62 by 2013 and rising)
Deductions for under-occupation
1 bedroom (15%)
2 or more bedrooms (23%)
In Great Britain almost one-third of social
sector tenants on HB
Average loss £13 per week
All tenants
Non-dependant deductions
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Previously frozen since April 2001
Unfreezing in three staged increases
starting in April 2011
By April 2014 back to where they
would have been(??)
Indexed to eligible rents (2001-10)
then RPI thereafter (80% to 90%?)
CTB (24%) as well as HB (27%)
Rent charges 2010-12
2010 7.40 17.00 23.35
/11
38.20 43.50 47.75
2011 9.40 21.55 29.90
/12
48.85 55.20 60.60
Loss/ 2.00 4.55
week
10.25 11.70 12.85
6.55
Household benefit cap
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Based on national average earnings
Applies to all tenures
Only applies to out of work households
Doesn’t apply to households on
disability living allowance, working tax
credits, war widows pension or retired
Impact on large families in high rent
areas
HM Treasury estimate average loss
£93.00 per week
Household benefit cap
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Part of Spending Review
Overall cap of £350 /£500 per week
Add together all out of work benefits:
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JSA/ESA/IS, child tax credits, child benefit,
council tax benefit, (& others)
Any room left over can be used for HB (rent)
Any excess is shaved off HB (rent)
Mainly affects couples with large families
Circa £228 per week left over for couple with
two children decreasing by £62.50 for each
extra child
Household benefit cap
600
500
£ per week
103.10
165.50
400
227.70
24.00
290.30
24.00
370.05
300
206.45
24.00
200
157.45
278.55
24.00
108.45
59.45
100
18.00
24.00
20.30
33.70
47.10
60.50
105.95
105.95
105.95
105.95
105.95
Couple
Couple + 1
Couple + 2
Couple + 3
Couple + 4
53.45
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Single
JSA
Child Benefit
Child Credits
CTB
Maximum Housing Credit
Household benefit cap: PRS
Household benefit cap: impact on 3 child families in London and the south east.
2013 & Beyond –
Universal Credit
Universal Credit
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Potentially much wider reaching implications
than the Budget 2010 reforms
Combine all means-tested benefits for
working age claimants into single working
age benefit (already under way)
Single income assessment (most effective way
of dealing with deepest part of poverty trap)
Incentives to start work and increase hours
build up over time
HB changes will form the baseline
The policy vision
• DWP view universal credit
as a surrogate wage
The poverty trap
500
300
200
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£5
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£4
70
£4
40
£4
10
£3
80
£3
50
£3
20
£2
90
£2
60
£2
30
£2
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£1
70
£1
40
£1
10
£8
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£5
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£ per week
400
Net Earnings
Child Benefit
Working Tax Credit
Child Tax Credit
Housing Benefit
Council Tax Benefit
Couple with two children. £80 pw rent. 2010/11 Rates
Universal Credit: structure
600
400
300
200
100
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£5
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£8
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£1
10
£1
40
£1
70
£2
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£2
30
£2
60
£2
90
£3
20
£3
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£3
80
£4
10
£4
40
£4
70
£5
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£5
30
£5
60
£5
90
£6
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£6
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£ per week
500
Net Earnings
Child Benefit
Housing Benefit
Council Tax Benefit
Universl Credit
Couple with two children. £80 pw rent.
Administration and changeover
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Reduce structural complexity ….but one
very complicated benefit
Administered by DWP centrally
‘Real time’ weekly adjustments
‘Challenging IT and administration reforms’
Starts in October 2013 transfer of legacy
caseload completed by October 2017
Centralised system
• Contact points will be DWP local office
• Initial claim either on-line or by
telephone with some local office back
up
Support systems 2013
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Local authorities already cut grants to
voluntary sector
Landlord run down of advice services?
Local authority run down of HB
departments
England Community Legal Service funding
for welfare benefit advice withdrawn
Scale of change
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DWP taking on 4.8 million housing costs
cases and 2 million working cases
Taking over administration of in-work
benefits (employed /self employed)
8.0-8.5 million universal credit cases
(ignores tax credit caseload)
2.1 million pension credit cases
20% increase on existing combined
caseload (ignoring tax credit cases)
Payment issues
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But currently DWP have no way of splitting off the
housing costs element
Starting point will be LHA payment rules with some
modifications (probably broader)
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Eight weeks
Rent arrears direct (including hostels)
Vulnerable
Unlikely to pay rent
Payment slowed down to the slowest part of the
process (JSA, tax credits, housing costs)
Direct payments as rent roll
Non HB rent roll
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Working age
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Pension age
22%
8%
Pension age HB rent roll
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Pensioner direct payment
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Pensioner tenant payment
11%
5%
Working age HB rent roll
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Working age tenant payment
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Working age direct payment
16%
38%
Demonstration projects
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Demonstration projects not pilots
Circa 6 projects at least one each in Scotland,
Wales, and London
DWP will be inviting bids by local authorities (by
benefit authority not by landlord)
Start June 2012 for one year
Researchers involved in the design
Aim to identify risk indicators to take out cases for
landlord payment early on and find what works in
terms of support
Procedure for review
Conclusions & Action
Conclusion
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Landlord need to start planning for this
now
It is not good enough to rely on
lobbying for changes
This is not just about training frontline staff it goes right through the
organisation
Board and senior management to
develop strategy and make resources
available
Ideally to pilot some initiatives before
the change takes place
For managers without a plan…
Send staff for benefits training…
Where do we start?
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Needs to be driven from the top
Board and senior management
Create a team or appoint person responsible but
Make it a corporate priority
Build a vision of how you will look in 10 years
Assessment of risk to you
Analysis
HB Impact calculator
What resources will you need to deal with the
problem
Need to know responses but the potential losses
give starting point as to what might want to invest
How do we target resources most efficiently
Some areas to look at
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Payment systems
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Time to invest in smart technology?
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Welfare advice services
Money management
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E.g. lettings procedures (under occupation
rules)
Systems for tenant support
Review policies and procedures
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Develop a financial inclusion strategy
Staff training
Not just welfare benefits
Landlords – the choice
• It boils down to this…
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Do landlords retreat to core business
in order to make savings to offset
losses; or
Expand and/or reconfigure services
to try to manage and mitigate losses