Homelessness Prevention: Preparing for Changes to Housing Benefit August 2010

Background “...spending on housing benefit has risen from £14 billion ten years ago to £21 billion today. That is close to a 50% increase over and above inflation. Costs are completely out of control. We now spend more on housing benefit than we do on the police and on universities combined it is clear that the system of housing benefit is in dire need for reform. We will do that by: Resetting and restricting Local Housing Allowances; Up-rating deductions; Reducing certain awards Re-adjusting Support for Mortgage Interest payments Limiting social tenants’ entitlement to appropriately sized homes; And, lastly, we will for the first time introduce maximum limits on housing benefit – from £280 a week for a one bedroom property to £400 a week for a four bedroom or larger” George Osborne, 22 June 2010

Proposed Housing Benefit Reform Capping LHA rates at £250 p/w for a 1-bed property, £290 p/w for a 2-bed property, £340 p/w for a 3-bed property, and £400 p/w for all properties with 4-beds or more, from April 2011 Up-rating non-dependent deductions to reflect increases in rent since 2001/02, in April 2011, and annually on the same basis Amending the size criteria to provide an extra bedroom for disabled claimants who have a non-resident carer, from April 2011 Changing the basis for setting Local Housing Allowance (LHA) rates from the median to the 30 th percentile of local market rents, from October 2011 Up-rating LHA rates by the Consumer Price Index, from April 2013 Restricting housing benefit for working age social tenants who occupy a larger property than their family size warrants to a standard regional rate for a property of the appropriate size, from April 2013 Restricting housing benefit to 90% of the full award after 12 months for claimants who are in receipt of Jobseekers Allowance, from April 2013

Mitigating Impacts of Housing Benefit Reform on Our Communities The government has announced increases in the national Discretionary Housing Payments budget by; £10 million in 2011/12 £40 million in 2012/13 £40 million in 2013/14 Local Authorities are encouraged to begin planning for the potential impacts of Housing Benefit reform - what can they do and what could the impacts look like at a local level?

West Midlands Impacts From early indications the potential effects of the change from assessing LHA rates from the median to the 30 th percentile could be: 32% of claimants in the West Midlands region will lose between £10 and £15 per week. (excluding the £15 excess) Including the £15 access this figure rises to 52% of claimants Only 16% of current housing benefit claimants LHA rates will not be reduced by assessing rates at the 30 th percentile in the West Midlands DO YOU KNOW ; How many households could be facing a reduction in LHA payments in your authority. How much each household could possibly lose. IF NOT WHAT DO YOU PLAN TO DO NOW?

Regional Tables Impact of measures coming into effect Estimate of number of losers Average loss per loser, £/week % of national losers figure National936, London159, North West130, South East123, Yorkshire and the Humber87, South West83, West Midlands80, East of England70, East Midlands58, Scotland49, Wales48, North East45,160-95

Removal of £15 excess – Distribution of losses Percentage (%) of LHA recipients Not losing Losses of £0-£5 Losses of £5-£10 Losses of £10-£15 Losses of £15-£20 Losses of £20-£30 Losses of £30-£40 Losses of over £40 East Midlands East of England London North East North West Scotland South East South West Wales West Midlands Yorkshire and Humber

30 th Percentile - Impacts Estimate of number of losers Average loss per loser, £/week % of national estimated losers North West 114, London 113, South East 96, Yorkshire and the Humber 78, South West 70, West Midlands 67, East of England 59, East Midlands 51, Wales 43, Scotland 40, North East 39, National 774,970-9

30 th Percentile - losses Percentage (%) of LHA recipients Not losing Losses of £0-£5 Losses of £5-£10 Losses of £10-£15 Losses of £15-£20 Losses of £20-£30 Losses of £30-£40 Losses of over £40 East Midlands East of England London North East North West Scotland South East South West Wales West Midlands Yorkshire and the Humber

Removal of £15 excess Estimate of number of losers Average loss per loser, £/week % of national losers estimate London82, North West64, South East58, West Midlands38, South West36, Yorkshire and the Humber35, East of England30, Scotland26, East Midlands25, North East20, Wales19, National438,130-11

Planning for Reform It is important that homelessness and housing options services take the initiative in positioning themselves to respond at the earliest opportunity. Where it may be necessary to source alternative accommodation for households, maximise the potential to prevent homelessness by identifying and strategically targeting those affected before their accommodation becomes unsustainable. Identifying key partners and building or maintaining relationships now, is a further crucial aspect of delivering an effective response to significant changes to the Housing Benefits scheme in England.

Practical Ways Forward 1.Provide training for members and front line staff (including partner agencies) regarding the package of measures and the local response 2.Talk to your Housing Benefit Department 3.Talk to your local PRS landlords 4.Talk to Housing Management and Partner RSLs 5.Talk to Money Advice/Debt Counselling Services 6.Talk to Job Centre Plus 7.Talk to Tenants 8.Work with Partners 9.Share best practice!

Further Information A full summary of the changes announced in the Budget on 22 June 2010 is given in the July issue of Housing Benefit Direct (Issue 103, July 2010): The Valuation Office Agency has published a table providing indicative figures showing how the planned changes announced on 22 June could affect Local Housing Allowance rates: Further information is available from DWP, including excel tables outlining anticipated impacts of the proposed changes: housing-allowance/impact-of-changes.shtml Directgov summary of the government’s emergency budget in June:

Questions?