Monday, 17 November 2014

Universal Credit claimants face 20 per cent rent arrears deductions

On 13 November the Department for Work and Pensions (DWP) published a Universal Credit 'support pack' to advise social landlords on how to help their tenants get ready for the new benefit. Included in the Department's press release was a short, but very important, statement:

'The amount that can be deducted from a claimant’s Universal Credit if they fail to pay their rent, has been increased from 5% to an amount of up to 20% of the Universal Credit standard allowance, which will ensure claimants are back on track with payments quicker. The minimum amount that will be deducted is 10%.'

DWP calls these 'third party deductions' - see, for example, page 9 of this document.

If a claimant accrues a months worth of rent arrears it will trigger 'early intervention' by the DWP, who will review a tenants financial status. DWP may then consider making rent payments direct to landlords.

If a tenant builds up two months of rent arrears, DWP will intervene immediately, and divert the housing element of Universal Credit to a claimant's landlord.

Earlier this year, DWP consulted on a proposal to 'increase the rate of rent arrears deductions in Universal Credit,' and a wide range of charities and experts responded to this.

Looking at the original consultation, mailed directly to respondents (here is Shelter's response), it's clear that DWP initially wanted to deduct as much as 40 per cent from claimants' Universal Credit allowances, should they fall into arrears.

DWP writes, 'Work coaches are being trained to assess a claimant’s financial capability and will refer them to personal budgeting support where appropriate.'

The national roll-out of Universal Credit is expected to be complete by 2018, but the scheme has been beset by delays. According to a Guardian article dated October 2014:

'... from 2016 to well into 2018, it is likely Britain will have a two-tier welfare system with some people on universal credit and millions not. The DWP estimates there are 7.7m eligible claimants at present.'

Thursday, 30 October 2014

Welfare trends report considers housing costs

The Office for Budget Responsibility (OBR) published its first welfare trends report on 16 October, looking backwards at the last three decades of welfare spending, and forwards to future prospects.

The OBR will be producing welfare trend reports each year, in response to a request from the Chancellor of the Exchequer to assess the Government’s performance against its new 'welfare cap' and, in order to facilitate open and constructive debate about welfare spending, to “prepare and publish information on the trends in and drivers of welfare spending within the cap.”

The report includes a section about housing costs, and it discusses overall trends in welfare spending. This is a very detailed document which may reward closer reading. For example, OBR writes:

'Over the past 30 years, welfare spending has risen steadily in cash and real terms, but on average that increase has been broadly in line with growth in the economy. So the proportion of national income devoted to welfare spending has not shown a significant upward or downward trend over time.'

In terms of housing, the report tends to focus on housing benefit which, 'accounts for a significant share of welfare spending'. Social housing has not been left out of OBR's findings, and we learn that:

'The number of households living in the social-rented sector has been declining steadily for decades.'

Linked to this, the report says, 'Reduced spending on social housing may have had a significant impact on the housing benefit bill, by increasing the proportion of the caseload paying higher rents in the private-rented sector.'

Trends in housing benefit spending are also identified. For example, 'Spending on housing benefit has fluctuated with the economic cycle, but on a generally upward trend over time.'

It is also claimed that, 'recent reforms to both private- and social-sector rents are expected to reduce growth in housing benefit average awards and spending ...'

Monday, 20 October 2014

A permanently divided nation

The Social Mobility and Child Poverty Commission has laid before Parliament its second annual State of the Nation Report in which it says 'Britain is on the brink of becoming a permanently divided nation.'

The report predicts that 2020 is set to mark the end of the first decade since records began without a fall in absolute poverty. Even with a strong economic recovery and a record number of people in work the Commission has found that the social recovery needed to get Britain back on track to abolish child poverty has not happened.

The link between effort and reward, on which social mobility relies, the Commission says, 'has been broken by changes in the housing market - with home ownership rates halving among young people in 20 years - and the labour market - with 5 million workers trapped in low pay.'

Chair of the Commission Alan Milburn, said:
"The circumstances are so different, the challenges are so great that the old ways of thinking and acting that have dominated public-policy making for decades will simply not pass muster. What worked in the past will not serve as an adequate guide for the future. A new agenda is needed."
The next UK Government in 2015 will have to adopt radical new approaches if poverty is to be beaten, mobility improved and if Britain is to avoid becoming a permanently divided society. 'We have reached a crossroads', the Commission says, with three roads open to the next Government:
  1. Continue with the current confusion where noble ambitions – lower poverty, higher mobility – are not complemented by consistent or clear enough policies.
  2. Accept that progress will not be made, that poverty will rise and that mobility will fall.
  3. Reset our ambitions as a nation in the light of the circumstances in which we find ourselves. To define clear objectives and timescales for reducing – and then ending - child poverty and improving social mobility.
The Social Mobility and Child Poverty Commission monitors the progress of government and others in improving social mobility and reducing child poverty in the United Kingdom.

Thursday, 16 October 2014

Labour's commitment to build the homes that first-time buyers need

Leader of the Labour Party, Ed Miliband MP, today launched Labour's housing plan - Lyons Report - in which he made a commitment to build 200,000 homes a year by 2020 and for doubling the number of first-time buyers over the next decade, if elected next May.

The plan argues that tackling the 'housing crisis' will require strong leadership from central government alongside the delegation of powers, funding and responsibility so that every community can build the homes they need. It also expects a more active role for local government to deliver on the 200,000 homes a year by 2020. Councils will be:
  • empowered to enforce land release from developers, including strengthened compulsory purchase powers.
  • able to share their borrowing caps so that spare capacity in one area can support house building elsewhere.
  • given new powers tackle empty homes, of which there are almost 1 million in the UK.
Other proposals include developing a more competitive construction industry with an expansion of the number of smaller building companies, and giving local people first refusal on homes built in their area for up to two months.

Author of the report, Sir Michael Lyons, said:
"My report sets out a comprehensive plan to tackle the key problems that underpin our failure to build enough homes. This will require strong leadership from central government alongside the delegation of powers and responsibility so that every community provides the homes they need."

"The recommendations will make more land available for new homes; unlock investment in infrastructure; and ensure that new homes are built when and where they are needed in attractive, thriving places. That will involve a more active role for local government in assembling land and in risk sharing partnerships with developers, landowners."
In launching the Lyons Report on a visit to Milton Keynes, Ed Miliband said,
"Only Labour has a plan to build the homes that our country, our local communities and our families need. We will get Britain building again by insisting local authorities have a plan to meet the need for housing in their area - and that the big developers play their part rather than hold land back."
Chief Executive of the Chartered Institute of Housing Grainia Long and a member of the Lyons commission, said:
"This report is a detailed blueprint for action on most of the main barriers to building 200,000 homes a year. It's the most comprehensive approach since the Barker Review of housing supply 10 years ago – and if implemented would bring a renewed urgency to addressing the housing crisis."
The Lyons Report forms part of Labour's Policy Review, in which Sir Michael Lyons led an independent housing commission to set out a plan to tackle the deep and underlying causes of the 'housing crisis'.

Tuesday, 14 October 2014

Report calls for more support for young private tenants

A report produced by the All Parliamentary Group for the Private Rented Sector (PRS) asks central government to offer more support for younger people who want to rent homes in the PRS.

The inquiry, into access to private rented housing for those under the age of 35, was chaired by Conservative MP Oliver Colvile, and also involved Labour’s Karen Buck and David Ward from the Lib Dems. It was funded by the Residential Landlords Association.

The PRS has a much younger profile than other tenures, with over half of its tenants under the age of 35, and young tenants in the PRS are more than twice as likely to be claiming housing benefit than those living in social rented homes (42.5 per cent compared to 20.5 per cent).

The report’s recommendations include:
  • Government should work with local authorities, through the Local Government Association, to determine what impact Article 4 Directions (planning rules that allow local authorities to require a landlord to seek planning permission before converting a property to a House of Multiple Occupation) are having on those needing shared housing.

  • The Government should launch a full review of the operation of the Shared Accommodation Rate (SAR) which, since the beginning of 2012, restricts single people under the age of 35 to claiming housing benefit only for a room in a shared house. This should include whether there is sufficient shared housing to cope with the increased demand arising from SAR changes, and the issues affecting those with mental health problems and non-custodial parents wishing to accommodate their children for visits.

  • The rent-a-room allowance that allows someone to earn up to a threshold of £4,250 per year tax-free from letting out furnished accommodation in their own home should be increased, 'with a level in London higher than that outside'.

  • The charging of council tax for bedsit rooms should be banned, or a lower band for bedsits introduced, to ensure rented rooms aren’t made unaffordable by more councils charging separate council tax on them.

  • VAT rules should be reviewed to encourage more properties to be converted for housing use.
Responding to the report, Gavin Smart, deputy chief executive at the Chartered Institute of Housing, said:
"We welcome this report – particularly the call for a full review of the Shared Accommodation Rate rules, which mean single people under 35 can now only claim housing benefit equivalent to a room in a shared house."
However, Alex Hilton, director of Generation Rent, told Inside Housing:
"The recommendations in this report simply don’t go far enough and in most cases do no more than call for a review. This incremental approach fails to reflect an understanding of the pressure cooker in which renters of all ages are living today."