HB Subsidy Provisions for Temporary Accommodation from April 2013? Peter Meehan LA Benefits Adviser 17 th February 2012

Pre-April 2010 subsidy controls for Temporary Accommodation Each LA was given a specific threshold and cap by DWP based on rental charges in that particular LA area Full subsidy (100%) for HB up to an initial threshold A lower subsidy (10%) for any HB above that threshold but below a cap No subsidy whatsoever for any HB above the cap

Subsidy Controls DWP’s case for change The current controls, using nets and caps, do not reflect the cost of leasing properties of different sizes from the private rented sector in different localities. Evidence of some LAs charging above cost overheads, thereby creating a surplus at the expense of HB. Significant and continuous increases in HB Expenditure for those living in temporary accommodation, particularly in London, are becoming unsustainable. Such high rents provide a very real barrier to work for claimants living in temporary accommodation

New Temporary Accommodation Subsidy Model Inner London 90% of LHA + £40 per week for management costs Outer London and elsewhere in UK 90% of LHA +£60 per week for management costs

New Upper Limit ( or Cap) Inner London £500 per week per claim Outer London and elsewhere in UK £350 per week per claim

From April 2010 For accommodation procured from the Private Rented Sector Board and Lodging (including Bed and Breakfast) accommodation Accommodation procured under a license agreement (licensed accommodation) Accommodation held on a lease by a local authority for a period not exceeding 10 years ( short-term leased accommodation)

From April 2011 extended to also cover accommodation procured from a Housing Association Applies also where the HB, in the form of a rent allowance, is payable to a registered Housing Association to whom the claimant is liable to pay rent AND the accommodation has been made available to that person by arrangement with the local authority to enable the latter to either discharge a homelessness function or to prevent the person being or becoming homeless

What currently remains outside the new model? Temporary accommodation where the property is owned by the local authority. Exempt Supported Accommodation

Proposals for a new TA scheme Phase in a new scheme from October 2013, in line with Universal Credit Under Universal Credit the accommodation element would be the same as mainstream LHA and paid to the claimant as part of UC A separate funding arrangement for management costs sitting outside the state benefit system. Review of HB service charge regulations to make them more prescriptive Review the current level of management costs (£40/£60) for payment in 2013 onwards

Risks Direct payment of accommodation element to claimant in UC would mean increased collection costs and arrears. Ongoing reductions in LHA, extension of shared room rent and freeze/CPI up-rating may pull that rent element down. Lower £40/£60 management element Restriction of eligible service charges A clumsy payment split will introduce administrative difficulties and necessitate additional overheads to track.