Transcript Slide 1

West Midlands Homelessness Forum
CSR and housing investment update
Liz Larkin
Policy Officer
0121 634 1533
[email protected]
13 December 2010
CSR: The headlines
• We’re all in it together: 19% cut across departmental and
capital budgets
• CLG: largest cut – departmental budget by 51%, capital
spending by 74%
• Housing: NAHP 60% cash cut:
– £4.5bn (including existing
commitments, mortgage rescue,
empty homes, places of change &
G&TSs)
– Rental flexibility - ‘Affordable
Rent’ tenure at 80% of market
rent
Housing: the broader funding
picture
• Positives
– Increased capacity
from rents
– £200m Mortgage
Rescue - 2,500
households
– New empty homes
initiative
– £725m DFG – rises
with inflation
• Negatives
– Very limited headroom in
capital programme
– Regeneration funding
– £6.5bn SP - spared huge
cuts, but local picture varies
and subject to further erosion
Housing: the broader funding
picture
• ...and what remains uncertain...
– New initiatives – new homes bonus
– Level of flexibility – rent levels, existing
tenures and asset management
– How to generate capacity everywhere
– Local Authority role – HCA negotiations,
LIPs and allocation and planning policies
– Interaction with welfare reform – will
benefit restrictions limit sector capacity
– How to deliver other products
– Provider appetite
– Lender appetite
West Midlands supply
and demand
• Average house price still
requires an income of £43,000
to purchase, twice the average
regional income
• 2009/10 HAs built 3,371 new
homes, 9% increase but
private builders built 32% less
• Highest proportion of
overcrowded homes in the
country, outside of London
• More than 350,000 people on
social housing waiting lists.
The new funding model: supply
• ‘Affordable Rent’ - a rapid move towards revenue subsidy – more
efficient in short-term
• Claimed that (with limited capital pot) can provide 150,000 new
affordable homes
BUT future supply is extremely sensitive to:
• market rent levels – LHA and Universal credit caps will be key
• proportion of re-lets at new tenure
• the new-build programme
• other assets generated – conversions through asset management,
S106 contributions, contributions from reserves, efficiency savings
New model will not generate capacity everywhere...
The new funding model: supply
Where it works well:
Central London
Where it could work:
Warwickshire south
Social rent
Affordable rent
3 bed
4 bed
3 bed
4 bed
£106.94
£118.99
£340
£400
Social rent
Affordable rent
3 bed
4 bed
3 bed
4 bed
£77.00
£87.63
£138.08
£183.19
Where it doesn’t work: Social rent
3 bed
Staffordshire north
£77.00
Affordable rent
4 bed
3 bed
4 bed
£87.63
£92.06
£127.96
The new funding model: supply
but, what about the benefits cap for larger families....
Family size
Housing need Benefits left
within £500
cap
Affordable
rent
(Warwickshir
e south)
Couple with 4
children
3b6p
£129.95
£138.08
Couple with 5
children
4b7p
£65.97
£183.19
The new funding model:
affordability
• Affordability problems if new tenure aimed wider than
the ‘missing middle’
• For tenants in receipt of benefits rents at these levels
would deepen the poverty trap and create significant
work disincentives - £50,000 earnings for ‘typical’
family to escape HB dependency
• Rental income limited by £26,000 benefit limit for
couples/families. If full ‘affordable’ rent can be charged
shortfall paid by....
• Board/senior executive soul searching – fundamental
questions about strategy, purpose and ambitions
Housing Benefit Budget
short to medium term (1)
From April 2011:
• Local Housing Allowance levels will be restricted
to 4 bedroom rate.
• A new upper limit will be introduced for each for
each property size
• LHA will be set at the 30th percentile of rents in
each Broad Rental Market area, rather than the
median (9 months later for existing claimants)
10
Housing Benefit Budget
measures from April 2013
• Local Housing Allowance rates will be uprated on the
basis of the Consumer Prices Index rather than local
rents.
• Housing Benefit for working age social-rented sector
customers will be restricted for those who are occupying a
larger property than their household size and structure
would warrant.
• Recipients of Jobseeker’s Allowance will receive their full
Housing Benefit award only for a period of 12 months.
After that period, their benefit will be reduced by 10%.
11
Employment and Support
Allowance
Example – 26 year old who currently gets
income support due to ill-health –
totalling £93.45 per week plus full HB of
£90.
If switched to ESA (work-related activity
group) = £91.40 (but protected) plus full
HB
If placed on JSA = £65.45, and £81 HB
after a year.
Tenant of Aragon Housing Association
Care and Support-what’s
happening?
• £6.5 billion investment nationally between
2011/15, 12% cuts in real terms for Supporting
People
• Funding for housing related support through
Formula Grant, devolution to local authorities,
giving them a lot more flexibility -> risk?
• £2 billion additional funding for social care to
local authorities, including £1 billion NHS
funding.
Care and Support-what’s
happening to benefits?
• Further change to Housing Benefit. Age
threshold for the single room rate is to be raised
from 25 to 35 years from 2012/2013. This will
mean that people under 35 in the private rented
sector will only receive LHA at rate for people in
shared accommodation
• Mobility component of DLA will not be paid to
people living in care homes
• £50 million for local authorities to support people
through transition
Framework Housing Association
Other sources of funding
• Disabled Facilities Grant is maintained and
increased with inflation but no private renewal
housing funding
• Homelessness Grant will be maintained in cash
terms to over £400 million, but paid as AreaBased grant and no ring fence
• Community budgets piloted in 16 local areas
from April 2011
Important connected themes
• Public health budgets ringfenced and delivered
through LA health and wellbeing boards. 4% of
the NHS budget.
• White Paper on increasing competition and
public services, improved commissioning and
new rights for communities to run services and
own assets in Localism Bill
• Awaiting Green Paper on reducing re-offending
Resident of Herefordshire Housing scheme for people with
long term mental health problems
Impact?
Local authorities:
• Budgets not ringfenced
• Local decision making
• Impacts on planning for new supply and
commissioning of services
Housing associations:
• To build or not to build?
• Affordable rents
• Who is the key client group?
Impact on housing associations
and providers
• Decisions for Boards to make about core
business
• Impact of rent reform and flexible tenure
proposals
• To build or not to build?
• Are business plans robust to deal with cuts?
On your behalf
We are asking the Government to:
• Maintains investment in support for vulnerable
and older people and ensure councils report on
and are accountable for how their spending
benefits vulnerable people
• Set up a commission to examine the impact of
proposed housing benefits cuts and put in place
robust safeguards to protect the poorest people
• Facilitate the building of more social housing.