APPG for Housing in the North: Impact of welfare reform
Summary of Evidence received to date.
Background
The APPG for Housing in the North launched an Inquiry into the impact of
welfare reform. The Northern Housing Consortium (NHC) hosted the inquiry
and put out a call for evidence in April 2012.
The original frame for the inquiry was focused on the following 5 questions
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Can we demonstrate any economic impact on localities?
What, if any, are the particular housing market impacts?
Has welfare reform produced behavioural change as Government
hoped for?
What new services or products, if any, are being developed to support
welfare reform?
What impact, if any, has welfare reform had on partnerships – existing
or revealing the need for new partnerships.
Process
Organisations (housing providers, Local Authorities, private rented landlords,
charities and the third sector) had been invited to provide evidence of their
experience/views under the headings set out above. However, it was evident
from April 2012 that organisations were at different stages of preparing
for/responding to the changes initiated through the Welfare reform Act and
therefore not all respondents were able to answer all questions – or as has
been the case, evidence has been supplied in an iterative format rather than
one complete document.
As welfare reform is still unfolding and organisations are reacting to
developments as they occur (for example learning from the direct payment
demonstration sites), we recommend that the Inquiry is kept “open” and key
experiences and learning are shared amongst the housing sector and shared
with Parliamentarians as appropriate.
It is clear from the engagement and evidence received to date that housing
organisations and LA’s across the North respect and agree with the
underlying principles of welfare reform –namely to simplify an overly
complicated system and that supporting people into work should be a key
priority for both the welfare system and housing organisation. However,
concern, where voiced, has been on perhaps unintended consequences
arising out of the delivery of these aspirations.
Engagement and Evidence
Throughout the Inquiry, the NHC has received evidence from and has
engaged with over 50 organisations. Not all organisations are in a position to
provide information against the 5 initial headings but we have not sought to
exclude their input as we recognise the importance of collecting as much
information as possible whether that is an initial assessment of projected
impact or a more detailed assessment of a particular aspect of welfare reform.
Focus
Whilst the Inquiry framework did not specify any particular aspect of welfare
reform, the nature of organisations responding meant that evidence is
primarily focused on “housing related” changes – namely, changes in social
housing size criteria and the introduction of Universal Credit and direct
payments. However, it is clear that wider reforms will also impact on
households and neighbourhoods and this may mean we need to return to
wider assessment of cumulative impact of welfare reform.
Similarly, in preparing for welfare reform, organisations have been able to
work with groups known to be affected by changes – those now classed as
under occupying for example. The evidence to date gives an indication of the
resource requirements, support needed to secure “behaviour change” etc. We
do not yet have significant evidence around those individuals and families
who due to a change in circumstances are affected “overnight” – we may
need to revisit evidence at a later date to assess how well these
individuals/families are supported.
Local Support
As part of the changes to welfare reform, there are some support aspects
that have been devolved to Local Authorities –namely, Discretionary Housing
Payments (DHPs) delivering a local support service in lieu of the “Social
Fund” and of course localisation of council tax support. Not all LA’s have yet
published their proposed approaches to DHPs and Social Fund, therefore it is
difficult at this stage to assess how these support services will respond to
demand. It may be useful to revisit evidence on these matters post April 2013.
Recommendations:
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That the Inquiry is kept open, that learning is shared across the
housing sector and that parliamentarians are kept informed
That we undertake a cumulative impact assessment of all aspects of
welfare reform and we ask Government to agree to similar impact
assessment process.
That we revisit evidence around local support services once these are
fully developed and can be subject to assessment re demand/need and
delivery.
Evidence to date
Economic Impact on Localities
Local Authorities have sought to undertake economic impact assessments in
respect of welfare reform. These assessments have sought to use national
impact assessments applied to local circumstances – the degree to which
these have been scenario checked will differ from location to location –
therefore we counsel against comparing apples with pears. However,
evidence to the Inquiry includes:
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Durham County Council estimating potential impact of £151million
removed from the economy by 2013/14. With welfare reform so heavily
intertwined with economic vibrancy they remain concerned that
unemployment levels in Durham remain significantly above the national
average.
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Sunderland City Council predict potential impact of £54million removed
from local economy
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Manchester City Council commissioned Centre for Local Economic
Strategies (CLES) to determine likely economic impact – their findings
suggest potential reduction of £45million per annum to the local
economy.
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Barnsley Council estimate a reduction of £32million per annum from
economy – the equivalent of 3100 jobs.
Responses
Local Authorities are recognising the need to do all they can to support
economic growth, working closely with LEPs and Chambers of Commerce as
well as utilising other methods such as City Deals. In recent months we have
noticed an increased level of engagement with Chambers of Commerce
seeking to understand the potential impact on local businesses of these
reforms – for example both Sunderland and Sheffield Chambers of
Commerce recently held events including seeking a housing perspective.
Local Authorities and housing providers are also looking at different spatial or
population cohorts likely to be affected by changes - for example can you
identify communities with high levels of incapacity benefit (IB) or DLA
claimants which may require significant support.
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One neighbourhood in Rochdale reports IB levels of over 20% national average is closer to 3%
Easington in Durham has identified 10% of population is claiming IB
Estimating the total economic impact of welfare reform remains difficult at this
stage due to the range of scenarios needing to be applied. However,
organisations have been more able to supply evidence on the economic
impact of specific elements of welfare reform.
Housing Market/Housing Welfare Changes and their Impact
Unsurprisingly the most complete evidence received to date relates to the
impact of proposed changes to social housing size criteria. However, other
evidence received includes – learning from demonstration sites on direct
payments, changes to Local Housing Allowance (LHA) and changes to shared
accommodation requirements. We will share highlighted evidence of each of
these.
Social Housing Size Criteria/Bedroom Tax
The DWP impact assessment acknowledges the spatial impact of these
changes with over 40% of working age households in the North affected.
Parliamentarians will be increasingly familiar with the local impact and the
difficulties faced by individuals and landlords; however it is worth rehearsing
some of the key evidence lines again.
Scale of Impact
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4 housing providers in the Liverpool City Region (representing 30% of
social stock) have identified £7million of Housing Benefit (HB) likely to
be removed
Gateshead Council estimate likely need to collect extra c£2million per
annum as a result of under-occupation charges alone
Riverside Housing estimate need to collect £4.8million in rent arising
out of these changes (c3% of total rent roll)
Gentoo calculate £1.8million of extra rent to be collected as a result of
under occupation
Your Housing Group (NW) advise £3.9million HB to be withdrawn
The particular challenge faced by organisations is the mismatch between
properties available and demographic need – a fact illustrated by the 4
Liverpool City Region housing providers.
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North Tyneside Homes report a similar profile mismatch and have
estimated that to move everyone into the new “right” sized property,
based on current turnover rates, would take over 10 years.
The Cambridge Centre for Housing and Planning Research undertook research in
Feb 2012 to seek to identify likely responses to HB changes arising out of underoccupation, it predicted that 32% of those affected will wish to transfer to smaller
accommodation, 26% will find the money from another source and 42% will simply
not pay.
NHC members have been applying this model to their own stock profile with results
that suggest in places, the potential saving DWP have identified is offset against
other draws on the public purse in the form of, higher rents in the private rented
sector, bad debt and arrears, potential evictions, potential call on LA services for
homelessness applications etc. Some examples are given below:
Wigan and Leigh Housing – Moving to the private rented sector
Under occupying
by
1 bed
I
2 bed
3 bed
Current household
size
4 bed
3 bed
2 bed
6 bed
5 bed
4 bed
3 bed
4 bed
Predicted %
downsize to LA
30%
4%
6%
0%
0%
30%
4%
30%
Predicted %
downsize to PRS
2%
28%
26%
100%1
100%2
2%
28%
2%
Cost to DWP
Impact on DWP
budget
-£3189.47
+£393,960.62
+£171,921.21
+£ 2,408.45
+£773.45
-£4,556.39
+£22,396.76
-£4205.18
+£579,509.45
Wigan and Leigh – Eviction and Homelessness Costs
From the Cambridge study it is estimated that 42% of households will simply not pay
the charge and may ultimately get evicted. The estimated saving to DWP from this
group is £1,343,429 per annum. However based on the average figure for eviction
1
2
As there is only 1 case this is assumed to move to PRS therefore figure is 100%.
As above
costs of £6,852 this would cost the organisation £13.1m. Costs that would be met
locally from the revenue account (HRA) and therefore reducing income available to
repay debt, maintain stock, provide services and build new homes. This is in
addition to the increased pressure on the General Fund of meeting homeless costs
at a time of reducing budgets and rising homeless presentations based on CLG
figures of £5,300 for each homeless acceptance then this would be over £10m in
Wigan alone.”
Further case studies illustrating the financial comparison between under-occupying
and moving adaptations or under-occupying and dealing with ASB have been
provided to the Inquiry.
Under Occupation Responses
Housing providers have been preparing themselves and their customers for these
changes as soon as the Welfare Reform Bill was published. Evidence to the Inquiry
suggests that considerable effort and resources have been put in place to
understand the scale of impact, ensure data sharing was effective and then mobilise
communication campaigns.
Whilst concerns around data sharing always arise, respondents to the Inquiry have
indicated generally good relationships with partners.
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Symphony Housing Group works with over 40 HB departments and
reported LAs as forthcoming with information – the only caveat being
“The effectiveness and willingness to engage with us has been affected
by their software”
Organisations have sought to ensure their customers were informed about the
forthcoming changes in a variety of ways including:
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Northwards Housing Group going to Parents evenings at local schools
to raise awareness
Halton Housing Group , First Ark, Yorkshire Coast Housing, City West
Housing amongst other have produced videos explaining the changes
Plus Dane Housing Group have adopted a “beer, prayer and hair”
approach – drawing upon the findings of RSA Connected Communities
project which suggests people get information from “familiar strangers”
in their community, not always “officials”.
Leaflets, posters and other campaigns have been of use, but
organisations consistently report that face to face advice and support is
most effective – this may have implications for the introduction of
Universal Credit.
Some landlords have looked at reclassification of stock size – effectively changing
from a 3 bed to a 2 bed. Their ability to manage this reclassification will be
dependent on business plan capacity, numbers affected and ultimately acceptance
by any rent referral. Knowsley Housing Trust has recently announced they will be
doing this for some of their stock.
The use of Discretionary Housing Payments (DHP) to alleviate impact of under
occupation charges has been recommended by the government. NHC analysis
suggests not all LA’s have a confirmed policy on how they will prioritise under
occupation requests against other requests and furthermore how they will distinguish
between cases falling into the under occupation category. However, DHP are only
payable for a time limited period.
Evidence submitted to the Inquiry suggests that demand for DHPs will significantly
outweigh level of funds available:
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Liverpool City Region landlords suggest that for those tenants with a
significant adaptation, the estimated HB loss will be £3.57m per annum
– or 12% of UK DHP pot available. Liverpool City Region population
represents 2.2% of UK total
Learning from the Direct Payment Demonstration sites
Whilst the focus has been on under occupation, housing organisations have also
been preparing for the advent of direct payments under Universal Credit. Currently,
the government position is that most tenants will have their UC paid direct to them
(including element for rent), those exempt from this position include those in
specified supported housing schemes and those in temporary accommodation.
The government’s view is that by moving to a position whereby the majority of
tenants receive their Universal Credit direct and on a monthly basis it creates a
situation which is more akin to that of being in work and receiving a monthly salary.
The 6 demonstration sites across the country are testing different elements of the
process – particularly the trigger points for switchback (the level of arrears that a
tenant hits at which point payment switches back to the landlord). Wakefield and
District Housing are one of the demonstration sites and have reported
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Over 1,000 tenants have received direct payments through the project.
Arrears have increased to over £180,000 on the project. This equates to 11%
of the debit compared to 2.7% for the whole stock.
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Payments reverted back to WDH – 174 tenants payments have reverted back
to WDH. Over 90% of these have been due to a 15% underpayment trigger.
Very few instances have been due to eight weeks arrears accruing.
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Most tenants pay most of the rent most of the time but are susceptible when
they have a crisis in their lives.
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Housing providers will have substantially higher costs in terms of arrears and
administration costs.
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Housing providers will have less information on which to plan to help and
assist
We are aware of at least one organisation which is doing its own version of the
demonstration site –encouraging their tenants to switch to HB direct now in advance
of changes arising out of Universal Credit.
A key concern for housing providers in preparing for both Universal Credit and Under
Occupation is how the level of bad debt, increased administration costs will affect
their capacity to build new homes in the future.
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WDH analysis suggests lost capacity of £100,000 per week or the inability to
build 2,200 homes over a 30 year business plan
Homelessness and the Private Rented Sector
The Inquiry is keen to receive evidence from all parts of the housing sector and is
pleased that the private rented sector have engaged through written evidence and by
hosting roundtables and that homelessness organisations have supplied evidence.
We are aware that the NE homelessness taskforce is undertaking further specific
research on potential impact on homelessness services and clients and we will
provide the APPG with an update on this research as it progresses.
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One NE social landlord reported concerns voiced by private sector landlords
that they would not take under 35s, even if in employment, in case their status
changed
Evidence from the National Landlords Association, representing private sector
landlords, also registered concerns regarding direct payments and also felt it
was wrong that the demonstration pilots had not included anything focusing
on the private rented sector.
Behavioural Change
The Welfare Reform Act intends to demonstrate to general public and benefit
claimants that it pays to be in work – this is both through the design of Universal
Credit which seeks to remove cliff edges apparent in current welfare system –
and through “nudging” claimants to make “better” decisions about work and
welfare. The Inquiry was keen to receive evidence as to whether behaviour
change was being achieved.
To date, evidence on this topic is hard to determine, particularly as the vast
majority of changes have not yet come into being. Respondents identified the
primary focus of behaviour change related to under occupation;
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Your Housing Group reported “Since delivery of our Financial Wellbeing
leaflet and questionnaire to residents and since enhancing our Homeswapper
mutual exchange subscription to include Rightsize, the Group has seen a
growth in the numbers of residents accessing the Homeswapper Service.
We are already, in advance of actual implementation of the welfare reform
changes ,seeing increased demand for our money advice and tenancy
support services “
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The NHC supports ContactNet – a network for housing based contact centres
and they have agreed to monitor telephone traffic once the changes have
taken place to provide evidence on the type of inquiry customers are
contacting them about and the ease by which such queries are solved.
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Riverside Group research suggests that 29% of customers affected by under
occupation would seek to work longer hours/take up employment. However,
no organisations reported (at the time) increased levels of queries regarding
employment opportunities etc.
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Evidence from the Cyrenians cited a case study which highlighted the
potential negative behaviour choices that could arise out of welfare reform
Case Study
This individual was in receipt of JSA from January to February 18th
2011. When he was due to begin work, health problems (heartrelated) prevented him from starting. He received a sick note from
his GP, informed the Department of Work and Pensions, made a
claim for ESA and handed in his sick note to his employers.
Two weeks later he had heard no response and so contacted ESA.
They asked him to attend a medical at Arden house and sent ESA
forms which he completed with help of support staff. However, two
weeks later he still had not heard from DWP and when he rang
them they stated that they had not received the forms. They sent
more forms, which again he completed and returned. After eight
weeks from first declaring health problems he was still not receiving
any money at all, so becoming desperate, he decided to apply for
JSA. At this point, he was informed that he would have to wait until
he had attended his medical.
During this time he has resorted to shop lifting for food. This
individual had already experienced very poor physical health, and
during this period suffered weight loss, fatigue and an asthma
attack. In addition his mental health has been affected. He has
experienced anxiety, has become easily irritated and has displayed
sudden bouts of anger. He also reports loss of confidence in
professionals and the state system; feeling that it is now pointless
doing any training courses and can’t see an end to his predicament.
New Products and Services
All respondents to the Inquiry indicated that as a result of welfare reform they were
undertaking fundamental reviews of how they engaged and supported their
customers. Many landlords have significantly extended their financial inclusion teams
– quite often doubling or trebling in size. Organisations have taken a holistic
approach to supporting their customers – not just focusing on welfare reform but on
outgoings.
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The NHC and Derwentside Homes have come together under the banner of
“The Smarterbuys Store” to provide access to household goods at affordable
rates of finance and promoting Credit Union savings. “The Smarterbuys Store”
is aimed at providing an alternative to high street weekly payment stores and
hopefully removes the need for customers to access pay day lenders. This
initiative is being rolled out to 25 landlords.
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Landlords in the NW including Bolton at Home, Northwards Housing, Halton
Housing Trust, New Charter Housing Trust, Irwell Valley, Kirklees
Neighbourhood Housing, Knowsley Housing Trust, Calico, Wulvern and
Liverpool Housing Trust have been working with ABCUL (Association for
British Credit Unions) to develop a “jam jar” account. One of the barriers to
operation of such schemes is the transaction costs associated with card
payments. The sector as a whole is working hard to lobby card providers to
reduce transaction costs.
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Gentoo/Sunderland City Council are developing a single on line financial
assessment tool by the Local Authority which will enable much easier
assessment and initial budgeting for likely welfare reform impacts
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Organisations are looking at how they can act as “matchmakers” for new
shared housing projects
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As welfare reform is linked to digital access, many organisations are reviewing
how they use digital services and how they can streamline their operations –
for example providing staff with tablets to enable online activity on home visits
and real-time data updating
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Gentoo also report tenant-led activity on social media platforms including the
creation of a Facebook page for mutual exchanges
Partnerships
One of the aims of the Inquiry was to determine whether partnerships were fit for
purpose in responding to the changes brought in by welfare reform and if not, what
needs to be done to improve them. The Inquiry also sought information on
respondents’ views as to what new partnerships may be needed.
Local Authorities, Job Centre Plus and Credit Unions were the most cited
partnerships that were fundamental to welfare reform being implemented smoothly
from the evidence to date. Data sharing issues and concerns were raised by
respondents – although this was generally before the change in regulations
regarding data sharing.
It appears that although at first many organisations focused, rightly, on their own
business requirements, we are increasingly seeing desire to share information and
collaborate.
Collaboration
 The NHC operates an online Yammer Group on welfare reform, allowing
members to ask questions, share information or documentation, peer support
etc. It now has over 170 members.
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7 organisations including Liverpool Housing Trust, Leeds Federated, Leeds
and Yorkshire, Halton Housing Trust, Kirklees NH, Stockport Housing, North
Star Housing have come together to undertake standardised interviews with
customers exploring financial circumstances, decision making and spending
behaviour. It is hoped that this wider sharing will provide a solid evidence
base and will assist in potential service development activity across the group.
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Many respondents reported concerns about the capacity of the advice sector
to cope with anticipated increases in demand – coming at a time when grant
funding for such services was under increasing strain, if not withdrawal.
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A clear area requiring further research was the partnership between housing
and health. Many respondents commented on the link between debt and
mental health or drug/alcohol misuse. The need for health and wellbeing
boards to fully understand the potential impact of welfare reform was made by
several respondents.
Conclusions
The evidence to date shows housing organisations are working hard to prepare their
customers for the changes coming with welfare reform. At the same time,
organisations themselves will need to adapt their risk management framework,
business plans and organisational delivery approaches.
Some of the fundamental questions for the sector (as expressed by one respondent)
include:
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Will the sector have to live with fewer resources as social housing providers, and
thus need to drive significant savings if we are to continue to build more homes
and deliver added value services?
Will we become firmer in the management of our tenancies, with a greater
emphasis on enforcement than support? Will our relationship with customers
change?
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Will we be forced to retrench, providing core services only, to the detriment of
neighbourhoods and communities?
Over time, will we need to develop new products and services – whether in terms
of the types of homes we build (smaller), their design (more flexible and suitable
for sharing), or the services we offer (brokering shared tenancies). Will people
just accept that they will have to live differently?
What will this do to our neighbourhoods? Will they be better, with contemporary
products and services aligned to demand and delivered more commercially, or
will social housing become more transient and residualised?
Next Steps
Given the evolutionary application of welfare reform, we would recommend that the
Inquiry remains open and we continue to seek evidence along the lines already
outlined. If the APPG would like a particular focus we will be happy to accommodate
this.
In terms of interim recommendations we would suggest that as a minimum the
following be applied:
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That the Inquiry is kept open, that learning is shared across the
housing sector and that parliamentarians are kept informed
That we undertake a cumulative impact assessment of all aspects of
welfare reform and we ask Government to agree to similar impact
assessment process.
That we revisit evidence around local support services once these are
fully developed and can be subject to assessment re demand/need and
delivery.
Northern Housing Consortium
February 2013