Housing and Welfare Reform pdfs/Presentations... · Housing and Welfare Reform CIH South East...

Housing and Welfare Reform

CIH South East Conference, Brighton

6th March 2013

Andrew Parfitt Deputy Director of Housing Policy

[email protected]

mailto:[email protected]

2 Department for Work & Pensions

Summary of reforms in relation to Housing (1)

• LHA rates to be uprated annually by reference to the Consumer Price

Index from April 2013 – this will end the monthly uprating of LHA rates

and bring the system in line with other pensions and benefits

• Autumn statement confirmed that most DWP benefits will be limited to

a 1% increase for three years from April 2013

• Housing Benefit for working age Social Rented Sector claimants will

be restricted for those who are occupying a larger property than their

household size and structure would warrant from April 2013:

• Affects 31% of working age Social Rented Sector Housing Benefit

claimants, with an average loss of £14

• Support for Mortgage Interest - Autumn statement confirmed that 13

week waiting period and £200,000 capital limit will continue until 31

March 2015


Summary of reforms in relation to Housing (2)

• Introduction of localised support for Council Tax to replace Council

Tax Benefit from April 2013

• The Benefit Cap will be rolled out on a phased basis in four London

Boroughs from April 2013

• …and of course introducing Universal Credit


Local Housing Allowance

• From April 2013, LHA rates will be set at the lower of the previous

LHA rate up-rated by the previous September Consumer Price Index

(CPI) figure or the 30th percentile of local rents

• As part of the preparations for introducing annual uprating, we froze

LHA rates from April 2012 to provide a baseline

• Following the announcement in the Autumn Statement, in line with

proposals for working age discretionary benefits more generally,

increases to LHA will be capped at 1% for the next 2 years, (April

2014 and April 2015)

• We have set aside £140m of the savings generated to increase the

LHA rates in areas where there is a shortage of affordable

accommodation

• The new annual LHA rates which will apply from April 2013 were

published by Rent Officers on 13 November 2012


Monitoring and Evaluation

• Research commissioned in 2011, early findings June 2012,

interim report in spring 2013 with a final report in early 2014.

• Funded by DWP, DCLG, Scottish Government and Welsh

Assembly Government

• Undertaken by a consortium of CRESR, IFS, Ipsos MORI and

Oxford ISP

• To provide robust quantitative and qualitative evidence on

claimants’ and landlords’ experiences

• To track national and local impacts

• To build a cumulative understanding of impact

• To model future impact from initial evidence of change

• Annual publication of LHA rates and the 30th percentile of market

rents to monitor LHA uprating by CPI and 1%


Social Rented Sector

• June 2010 Budget announced size criteria rules to be introduced into

social rented sector

• Housing Benefit entitlement for working-age tenants in the social

rented sector will be restricted to reflect the needs of their household

• This will take effect from April 2013 for all current and new claimants

• Claimants will see a reduction in their eligible rent of 14% for under

occupation by one bedroom and 25% for under occupation by two or

more bedrooms

• The number of bedrooms Housing Benefit will cover will be based on

the LHA size criteria rules (but with no Shared Accommodation Rate)

• one bedroom for each of the following:

• a couple

• a person who is not a child (age 16 and over)

• two children of the same sex

• two children who are under 10

• any other child


Preparing for the Under Occupancy Charge (1)

• The Chartered Institute of Housing has produced a toolkit, which

includes examples of best practise, designed to aid landlords in the

implementation of this measure

• We have been working closely with local authorities and housing

associations in developing implementation plans and writing

guidance

• We have engaged with welfare rights organisations while developing

this policy to ensure the needs of different customers are taken into

account

• Along with the guidance we have developed products to aid with

implementation including draft letters, leaflets and posters designed

to draw claimants’ attention to the changes


Preparing for the Under Occupancy Charge (2)

• Local authorities need to collect information from social sector

landlords about how many bedrooms there are in their properties

• Local authorities will inform those claimants who are potentially

under-occupying their property and ask them to confirm the

information they hold

• Local authorities may also write to landlords to notify them of tenants

likely to be treated as under-occupying their properties

• Local authorities may work with these tenants to discuss their options

and provide advice and support


Localising Council Tax Support in 2013

• The Local Government Finance Act (received Royal Assent on 31 October 2012) paves the way for the implementation of localised Council Tax support schemes in England from April 2013

• DWP & DCLG are working together on:

• the provision of appropriate data to facilitate the planning of local schemes

• the continuation of the flow of information that local authorities currently receive from DWP, such as the LAID and LACI

• the development of new data flows that will be needed once Universal Credit is in place

• An assessment of the ongoing and new costs of implementing local schemes is being undertaken to determine the level of funding local authorities need to implement and support the administration of their schemes. However, for 2013-14, local authorities will receive HB Administration Subsidy funding on the same basis as in previous years


Benefit Cap

• The benefit cap will be introduced on a phased basis in four

London Boroughs - Bromley, Croydon, Enfield and Haringey

from April 2013 and will apply to the combined income from the

main out-of-work benefits, plus Housing Benefit, Child Benefit

and Child Tax Credits

• The benefit cap levels will be:

• £500 per week for couples and lone parents

• £350 per week for single adults

• 56,000 households will be affected by the cap in 2013/14

• the average benefit reduction is £93 a week per household


Benefit Cap - Exemptions

The following households will be exempt from the cap:

• those entitled to: Working Tax Credit

• those in receipt of

• Disability Living Allowance

• Industrial Injuries Benefits

• Personal Independence Payment

• Attendance Allowance

• Employment and Support Allowance, if paid with the support

component

• Armed Forces Compensation Scheme

• Before 6 April 2005, the War Widow’s/Widower’s pension and war disablement pension

• claimants who have been in employment for 50 weeks out of 52 weeks or more when they claim benefit will be exempt from the cap for up to 39 weeks


Benefit Cap – Disregard for supported exempt

accommodation

• Housing Benefit paid to those living in supported “exempt”

accommodation is excluded from the benefit cap calculation

• This is the case from the introduction of the benefit cap in April

2013 and under Universal Credit (where housing costs will

continue to be met under Housing Benefit rules)

• These households are not exempt from the benefit cap, but, by

not including Housing Benefit in the calculation, these cases are

unlikely to be affected by it


Payments are paid to different

adults in a household and for

various periods

Universal Credit is paid on a calendar

monthly basis in a single payment to each

household (we will retain the ability to pay

more frequently or to split payment in

exceptional circumstances)

Conditionality: some benefit

claimants are capable of working

but have no obligations to look

for work

Universal Credit will personalise conditions

according to people’s capability and

circumstances

Work incentives can be

very low, benefits are reduced

to take account of earnings but

different benefits have different

rules

Universal Credit will make work pay.

Financial support will be reduced at a

consistent and predictable rate and people will

generally keep a higher proportion of their

earnings

The welfare system has more

than 30 benefits each with their

own rules and criteria

Universal Credit provides a new single system

means-tested support for working-age people

who are in or out of work

How is Universal Credit different?

Current System Universal Credit


Direct Payments Demonstration Projects

Six local authorities & housing associations

are now trialling direct payments of Housing

Benefit to selected tenants

Project timeline

Jun 2012 Projects started

Jul 2012 First direct payments to selected

tenants in local authorities in England

and Wales

Jul 2012 First bi-monthly Learning Report

produced – summary shared on

Learning Network

Aug 2012 First direct payments to selected

tenants in Edinburgh

Jan 2013 ‘Learning the Lessons’ report published

Jun 2013 Project completes

Aug/Sep

2013

Final Project evaluation report

published


Payment of Universal Credit

• Universal Credit will be paid to claimants who are in work and out of

work

• As most businesses pay monthly, Universal Credit will also be paid

monthly

• Claimants will be responsible for managing all household costs,

including rent payments

• To help claimants prepare for Universal Credit, we will test key

elements of incorporating housing support into Universal Credit

whilst protecting the financial position of social landlords

• Housing costs for owner-occupiers in Universal Credit will continue

to be paid to qualifying lenders direct under the Mortgage Interest

Direct scheme

• Direct Payment Demonstration Projects will run for a year in six local

authority areas


Universal Credit and housing

For social sector renters

• rent plus eligible service charges

• less any under-occupation deduction

• less housing cost contributions from non-dependants

For private sector renters

• the lower of actual rent and service charges or the appropriate LHA

• less housing cost contributions from non dependants

For owner-occupiers

• flat rate of interest on outstanding loan up to a set capital limit of

£200,000

• plus eligible service charges

• help subject to waiting period

• help ceases if claimant or partner receives any earned income


Universal Credit and Supported Housing

• Having listened to concerns of stakeholders we have decided that these housing costs will be met outside Universal Credit

• In the interim this will be administered broadly as now through existing DWP legislation by local authorities

• For the longer term we are still looking at options, particularly the feasibility of a localised system

• We are continuing with the existing DWP definition of supported ‘exempt’ accommodation and not any other broader interpretation of supported housing

• Housing costs for people in Supported Exempt Accommodation will not be included in the calculation for the benefit cap


Temporary Accommodation

• From April 2013 Housing Benefit subsidy for all temporary accommodation

cases will continue to be based on the current arrangements

• In most cases this means, 90% of the appropriate January 2011 LHA rate for

the property that the local authority places the claimant into; plus £40 (for

London authorities) or £60 (for non-London authorities) management

element

• Temporary accommodation cases in Universal Credit will have housing

support based on the appropriate LHA rate for the household (not the

property, as happens now)

• The management element for temporary accommodation cases in Universal

Credit will be separated out and paid directly to local authorities in order to

protect this funding stream

• We are considering how the separate management element will be paid for

Universal Credit claimants, our preferred option is to provide additional

funding through the Discretionary Housing Payment pots with a mechanism

to reflect changes in local caseloads. This will be an interim arrangement

while we work on a longer term solution


Universal Credit - Support for Mortgage Interest

Principle:

To protect home owners from repossession as far as possible

• Support for Mortgage Interest will be on Universal Credit platform

• owners will receive help with mortgages and other eligible loans

based upon a standard rate of interest and a set capital limit

• will continue to be a waiting period before they are entitled to help

Main changes:

• all loans secured against the property are eligible for help

• help ceases if claimant or partner receives any earned income

• no deductions for non-dependants and no linking rules

• Autumn statement confirmed that 13 week waiting period and

£200,000 capital limit will continue until 31 March 2015


Housing Credit for Pensioners (1)

• Universal Credit will replace means tested benefits including Housing

Benefit, Child Tax Credit and Working Tax Credit resulting in changes

for customers who have reached Pension Credit qualifying age

(linked to women’s State Pension Age)

• As pensioners are outside the direct scope of Universal Credit an

alternative mechanism is needed to deliver support for rent and for

dependent children. This support will be incorporated into Pension

Credit

• For pension age customers, support for eligible rent will be delivered

as an additional Pension Credit component – Housing Credit, which

will run alongside both the current Guarantee Credit and Savings

Credit components

• New pension age customers wishing to claim support for eligible rent

after October 2014 will need to make a claim to Pension Credit

• DWP will continue to pay landlords directly for pension age

customers if that is the current arrangement.



Support for children

• Currently people responsible for children, including those over Pension Credit age, may receive support from HMRC for each child through Child Tax Credit

What will change…

• To protect the continuity of support for pensioners, there will be an additional amount for children incorporated into the Guarantee Credit element of Pension Credit. This will be known as Child Addition. There will be 4 rates: for first child, subsequent children, and higher rates for disabled children

In Work Support

• Following the abolition of Working Tax Credit, working age customers will be able to access similar support through Universal Credit. There will be no Working Tax Credit replacement within Pension Credit; however, pension age customers who do not qualify for Pension Credit but are still entitled to Working Tax Credit will be entitled to Transitional Protection at the point of change, provided their circumstances remain the same



When the changes take place – key dates

No earlier than

October 2014

The current go live date for modified Pension Credit

(new claims only)

This is 12 months after the introduction of Universal

Credit

By the end of October

2017

All existing claims to Housing Benefit will have been

migrated to DWP from local authorities

All existing claims to Child Tax Credit/Working Tax Credit

will have been migrated to DWP from HMRC



Migration • Almost 1.6 million Housing Benefit and 100,000 Tax Credit cases will need to

be migrated • The underlying principle of the migration approach will be to ensure

continuity of financial support for pension age customers and to minimise the potential for avoidable contact, confusion and anxiety. There a comprehensive communications strategy and close collaboration with local authorities and HMRC throughout the planning process and beyond

• The pension age migration strategy will be compatible with the Universal Credit Programme’s approach for working age customers

• The existing case migration approach will be based largely upon a “managed”, i.e. planned and controlled, movement of cases. Work is ongoing to fully define the criteria supporting managed migration

Channels • There will be no change to the way that pension age customers claim

Pension Credit. Telephony will continue to be the primary channel for new applications and enquiries

• Pension age customers will not use the Universal Credit online claims channel, there is an intention to provide an online channel for Pension Credit at some point in the future


Conclusion

• A major programme of reform to limit increase in HB expenditure.

• Independent monitoring and evaluation and additional DHPs.

• Basic structure of housing element of Universal Credit the same as

now – in PRS housing the lower of LHA and actual rent – in SRS

actual rent less any under-occupancy charge.

• Universal Credit part of a broader transformation of welfare,

strengthening work incentives and promoting social justice.

• Further reforms will follow for those of Pensions Age.

Questions?

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