How will changes in Housing Benefit affect out of work

Londoners?

Ros Dunn Sue Causton

Chief Executive, Thames Assistant Director, Operations

Gateway London Partnership Peabody

The Thames Gateway is a cross party, cross river partnership made up of the 10 local authorities and eight universities in the London Thames Gateway area, as well as Dartford Borough Council and Thurrock Council. We campaign on behalf of our members to ensure the area is able to live up to its enormous potential and remains a key national and regional priority.

Where is the London Thames Gateway?

Creating opportunities for people in London since 1862

• Peabody is London’s oldest and largest social landlord. Founded in 1862 by the American banker and philanthropist, George Peabody.

• We own and manage approximately 20,000 homes in the capital and provide affordable housing for 50,000 + Londoners.

• Peabody operates in 27 boroughs and in some of the most deprived communities in London. Just over 50% of our tenants are in receipt of housing benefits.

• Our mission is “to make London a city of opportunity for all by ensuring that as many people as possible have a good home, a real sense of purpose and a strong feeling of belonging

A Real Sense of Purpose

•Opportunities to improve life chances and raising aspirations through:

Employment / Skills training, Community HubsIT, advice / support, basic skills‘Taster’ activities for hard-to-reach groupsDedicated team – engagement with employersAround 300 people into jobs; 1,500 access training each year.

Health and well-beingActivate London Programme – over 35,000 participated so far.

Volunteering235 active volunteers currently registered.

Overview

• What do we know? Housing benefit changes will create shortfall in meeting housing costs in London for existing claimants

• Unemployment in London remains persistently above UK average, and likely to rise as public sector jobs go before private sector jobs are created

• What might happen? On housing, migration to outer London and out of London to meet housing need

• On employment, increasing lack of availability of jobs and increased cost of employment act as deterrents to get back to work

• The hurdles all just got higher………..

Housing Benefit: What are the changes?

Key Measures Effective From

Claimants affected

Introducing absolute caps on the maximum rates that can be paid for each property

April 2011(April 2012 for existing claimants)

New claimants in very high-cost area such as central and inner

Introducing deductions for non-dependants living with HB claimants

April 2011 Households with other related adults in them, such as grown up children or elderly parents

Setting maximum LHA at 30th percentile of the range of local rents, instead of the median

October 2011(Existing claimants up to December 2012)

Claimants whose rent is above the 30th percentile of rents in their area.

Increasing LHA rates by the CPI changes

April 2012 All claimants

Introducing new household size criteria for claimants in social rented sector

April 2013 Claimants in houses with more rooms than are presently occupied.

Source: Shelter

Impact on housing?

• Central and inner London will become more unaffordable, as HB claimants will face a significant shortfall in their ability to pay rents.

• Particularly acute for those needing larger homes (3+ beds)

• Even taking account of new build coming on stream, reduction in the number of homes genuinely available to those on low incomes.

• Many will seek cheaper rents in more affordable areas in outer London and out of London.

Some case studies (1)Deductions for non-dependants will be uprated in April 2011 on

the basis of prices. This will reverse the freeze in these rates since 2001-02.

• A tenant claiming Income Support has an adult child of 23, who has returned to the family home after a relationship breakdown. Her gross income is £236 per week and she is expected to make a non dependant deduction of £38.20.

• However, her net income is £168 per week. She has Credit Card debts and a bank loan leaves her with £108 per week. Her travel card costs £41, leaving £67. After paying her non dependant deduction to her mother, she has only £28.80 disposable income to cover clothing, lunches, and any other expenses.

• The tenant’s daughter’s non priority debts cannot be negotiated down without adversely affecting her credit rating, which would affect her ability to privately rent in the future.

Some case studies (2)From April 2013, housing entitlements for working age people in the

social sector will reflect family size

• A tenant currently lives in a two bedroom flat. He had custody of his son, but lost this due to an industrial accident and a subsequent descent into alcoholism. He has now been sober for two years and is currently working with Social Services to gain full custody again, and the Job Centre Plus to find suitable employment.

• If changes are made so that he can only receive benefit as a single person household, he would not be considered to need a two bedroom property and therefore only be paid housing benefit on the basis of a one bedroom. He would face the choice of having less contact with his son, or not paying the shortfall of rent from his benefit. If he were to downsize to a one bedroom property, it would not be considered suitable for his son to be returned to his father. Both options would adversely affect the tenant’s ability to provide for his son.

Some case studies (3)The Government contribution to Discretionary Housing

Payments will be increased by £10 million in 2011-12 and £40 million in each year from 2012-13.

• A tenant in Islington had started her first job, and there was a £23 per week shortfall in her Housing Benefit award. Peabody applied for a Discretionary Housing Payment to cover six months so that she could clear other priority debts incurred whilst on Job Seekers Allowance (gas, electricity and water rates). We demonstrated how the DHP would enable tenant to manage fully after this period. She was turned down, and a review was also turned down.

• Another tenant in Islington had seen a cut in hours from full to part time. The Housing Benefit shortfall fell to £19. We applied for a Discretionary Housing Payment to enable the tenant to manage the transition. This was awarded.

What is happening to unemployment in London?

Source: Nomis

Impact on employment?

• A lag between public sector job losses and private sector job creation increases competition for jobs, potentially to the detriment of those out of work

• Migration from expensive to cheaper boroughs increases pressure in “receiving” boroughs

• Travelling to vacated jobs in central London is too costly to pursue.

• Limited job availability in affordable areas• Discourages young peoples’ career development

Long term impact?• Labour market mobility reduced.

• Shortage of workers for necessary service/support jobs in central and inner London, decreasing London’s attractiveness as a place to locate.

• Potential Changes to the nature of outer London.

Discussion

• Is this analysis right; have the hurdles really just got higher?

• What are the messages to take back to central government/the Mayor of London?

• Does anyone else have information to contribute to the story?