2010 10 Welfare Benefits

Monday 1 November 2010

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Housing Benefit cuts – the proposed changes to local housing allowance in 2011

Changes to Housing Benefit paid in the private sector in the form of local housing allowance were first announced in the Emergency Budget in June 2010. From April 2010 the changes include: -

  • local housing allowance levels will be restricted to the 4 bedroom rate;
  • a new upper limit will be introduced for each property size, with upper limits set at:

◦£250 a week for a 1 bedroom property;

◦£290 a week for a 2 bedroom property;

◦£340 a week for a 3 bedroom property; and

◦£400 a week for a 4 bedroom property or larger.

  • from October 2011 the local housing allowance will be set at the 30th percentile of rents in each broad rental market area, rather than the median;
  • the government contribution to discretionary housing payments will be increased by £10 million in 2011/2012 and £40 million in each year from 2012/2013;
  • from April 2013, housing benefit awards will be reduced to 90 per cent of the initial award after 12 months for claimants receiving Jobseeker's Allowance. TUC research estimates that at least 24,000 disabled people (who will be moved on to JSA from incapacity benefit) will be affected by this change.

On the positive side, the size criteria will be adjusted to provide for an additional bedroom for a non-resident carer where a disabled claimant has an established need for overnight care.

An equality impact assessment on the changes was published by the DWP in July 2006: 'Housing Benefit Changes to the Local Housing Allowance arrangements and Housing Benefit size criteria for people with non-resident overnight carers'. Its overall conclusion was that an estimated 99 per cent of local housing allowance cases would be affected by the forthcoming changes to the local housing allowance, with an average decrease in benefit of £12 per week. It also highlights that

  • some households, particularly in very high cost areas, may have to move as a consequence of the measures;
  • some households may need to move from central London to outer London Boroughs or neighbouring local authorities which are not impacted by the overall caps;
  • housing authorities may experience difficulty finding suitable private rented sector accommodation locally for households that are accepted as homeless or at risk of homelessness – these impacts are more likely in London but could occur elsewhere.

The Social Security Advisory Committee is currently considering the changes to be introduced by the Housing Benefit (Amendment) Regulations 2010 and associated amendments to the Rent Officers (Housing Benefit Functions Order) 2010. The SSAC is expected to publish its recommendations to government in the late autumn.

The Citizens Advice response to the SSAC consultation (September 2010) states that the proposed cuts to housing benefit will result in higher levels of poverty, debt, rent arrears and homelessness. Its evidence to the SSAC states:

‘The charity is particularly concerned about the impact on housing and homelessness in London, where housing pressures are already extreme. When the new caps are imposed, 93% of rents in Central London will be unaffordable for private tenants reliant on housing benefit. Over 18,000 households will be affected, with average shortfalls between their housing benefit and rent of £81 a week.’

Citizens Advice Chief Executive, Gillian Guy, said -

'We are extremely concerned at the potential impact of the cuts to housing benefit on people’s ability to pay their rents and avoid rent arrears and homelessness. Tens of thousands of private tenants will find their rent is unaffordable and will therefore need to move at short notice to areas with lower rents as a result of the proposed cuts. For many, such a forced move will be highly disruptive and stressful as well as putting additional strain on very limited budgets. It will be particularly hard for families, whose options could be limited to moving somewhere smaller with the risk of overcrowding, or moving to a cheaper area further away, breaking vital links with jobs, schools, healthcare and family support. Those unable to find affordable alternative accommodation at rents within the new housing benefit limits will be at real risk of homelessness.'

See also CPAG’s response to the proposed housing benefit reforms: ‘Supporting people into work: the next stage of Housing Benefit reform’ (February 2010).

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