Will welfare reform address problems rather than creating greater ones?

This post is not about the pros and cons of welfare reform.  I think many of the ambitions behind welfare reform are to be welcomed. Rather, this post looks at the practical implementation of these measures and some unintended consequences.

Regarding the Bedroom Tax (I feel I can call it that given that on Monday a government minister at a conference organised by Crisis accepted that that is the phrase he uses) is resulting in a large proportion of tenants failing to pay the resulting shortfall in their rent.  Riverside Group has revealed that around half of its 6,000 households receiving housing benefit had not paid anything at all to cover the shortfall.  A quarter had contributed something but were not paying their rent in full.  Just one in four tenants impacted by the bedroom tax paid the full amount.

Guinness Partnership said that around 1,000 of their 3,000 tenants affected by the under occupation regulations have not met the shortfall.  Their experience is similar to a number of other housing associations around the country.  Inside Housing is covering this issue on its front page in today’s edition.

Because we tend to work almost exclusively with single homeless people, and our housing stock is largely one-bedroom flats, this is not an issue amongst our tenants. However, I would anticipate that, in due course, we will begin seeing tenants of other social landlords presenting at our advice centres in Brighton, Eastbourne and Hastings requiring assistance because they are facing eviction.

There have been warnings about this which have gone largely unheeded.  A more widespread risk relates to the payment of rent direct to tenants rather than to landlords.  This will undermine the confidence of private landlords to take people who are receiving housing benefit, see an increase in arrears and bad debts faced by landlords in both the private rented and social sectors, and cause a loss of confidence amongst financial institutions who lend money for the building of homes for rent.

Julian Ashby, the chair of the regulation committee at the Homes and Communities Agency has warned that housing providers face being hit by a ‘double whammy’ of increased rent collection costs and reduced income due to welfare reform.

In a report published today by Housemark, it has been estimated that social landlords face losing £1.4 billion of rental income a year as a result of welfare reform.

There is also concern amongst social housing providers regarding the move to making claims online.  In a survey taken in November 2012, Ipsos Mori showed that just 60% of local authority tenants and 64% of housing association tenants had access to the Internet.  I’m not aware of any similar research regarding tenants in the private rented sector but, given the efforts taken by social landlords to increase digital inclusion, and in the absence of a similar programme in the private rented sector, I would imagine digital inclusion is much, much lower.

BHT did its own survey around that time and we found that79% of our clients, tenants of both private and social landlords as well as some owner occupiers, and meaningful access to the Internet.  However, when you remove the provision made available to our clients by BHT itself, that number falls to 19%.

There is still time for the government to pause and think about whether it is going about these matters in a way that will address problems rather than creating greater ones.

Welfare Reform: Lewes District Council is leading the way in helping residents

Lewes District Council has partnered with FutureGov to identify how welfare reform will impact on residents, and what options are available to support people.

The project looks at more radical approaches to help all members of the community, not just those on benefits. It looks beyond what the benefits system provides to the wider resources that are in the community, and how they can be used to help people meet their aspirations. An example is FutureGov’s Casserole project, which brings local communities together around home cooked food, with people who are happy to cook an extra portion of dinner for older neighbours who struggle to cook for themselves.

The council and FutureGov have spoken to many residents and front line staff, as well as partners such as the Citizens Advice Bureau, the Credit Union, and Eastbourne Borough Council, to really get a picture of how life is on the front line.  I have been delighted to be part of the working group , representing BHT.

We understand that life is hard for many people with added financial pressures. It’s been great to be involved with such inspiring colleagues from Lewes District Council and Future Gov, to lead the way in finding innovative solutions for people to deal with the financial pressures of day to day life.

FutureGov has already secured funding of £50K to develop a secure mobile app with the council to enable people to access low interest loans from Credit Unions, to rival current high interest “pay day lenders”.  The council will work with financially vulnerable people to create the secure app.  It will help reduce fraud and financial exploitation and empower people with limited means to take control of their lives through better borrowing and saving habits.

Over the next six months, the council and FutureGov will work with residents and partners to develop more ideas and work out which schemes will work best in the district.

To find out more about the Lewes project or to get involved please email rachel.allan@lewes.gov.uk or tweet @lewesdc.

Biggest change in welfare provision since creation of the welfare state

April sees the biggest change in welfare provision since the creation of the welfare state. The aim is to simplify the benefit system, to replicate work conditions (monthly payments), and ensure that work always pays. I can support these aims but, as with much of what government (of any party) tries to do, there is likely to be problems with implementation and unexpected consequences.

The changes include:

• Universal Credit replacing Jobseekers’ Allowance, Employment and Support Allowance, Income Support, Housing Benefit, Working Tax Credit, Child Tax Credit
• Personal Independence Payments will replace Disability Living Allowance
• Council Tax Benefit going and those under Pension Credit age will probably have to pay around £2 per week
• Benefits Cap of £500 per week
• Changes to Social Fund
• Child Benefit reduced if one parent earns more than £50,000 and stopped over £60,000

Any new system has the potential to cause confusion. There is an expectation that 80% of claims will be made online (although research suggests that the majority of claimants don’t have the means to do so)..

Payments will be in one monthly lump sum, raising challenges with budgeting for some claimants.

Landlords are expecting a huge increase in arrears and bad debts. This will result in increased evictions and homelessness. At BHT we have modelled the prospect of losing £95,000 as a direct consequence of these changes.

And finally, there is the Under-occupation regulation, called by some as the Bedroom Tax. It is not, in fact, a tax, but a claw back of benefit for those who have a ‘spare’ bedroom. This has recently attracted much controversy and changes have been made, although there remains serious concerns about the practicality of households downsizing, not least because of the shortage of suitable alternative accommodation and the disruption to lives, including those with disabilities.

In the next few days I will posts more details of the changes.

Seeking advice at the earliest possible time can save a huge amount of time, added complications and worry

We can’t pick up the newspapers these days without hearing about the struggle ordinary people have in making ends meet. Inflation is up again, fuel bills are causing huge anxiety, and many households going ow having to cope with the additional cost of Christmas.

Where households are getting into financial difficulties it is important that they get advice at the earliest possible time.

I’ve recently been told that our Eastbourne Advice Centre is seeing an increase in the number of people who are delaying seeking advice until their situation is at a critical point.

My colleague, Sue Hennell,  BHT’s Advice Services Manager  in East Sussex  told me  that it is very common for people to feel unable to face up to the growing difficulties if at all possible.  She said that it is never too late to get advice but that her advice is not to delay if at all possible.  Early advice can save a huge amount of time, added complications and worry.

Sue told me: “In over 80% of housing cases, we either prevent homelessness or achieve other positive outcomes such as sorting out disrepair and helping with finding accommodation.”

Here is an example of a client, John (not his real name) who we have helped. John was a client of our Eastbourne Advice Centre and knows first-hand how important it is to get advice as soon as possible. He said: “I came to the advice centre because I was unemployed and six months behind on my mortgage payments. I had left it and left it and eventually it got so bad that the mortgage company applied to the County Court for a Warrant of Possession.

“I thought that I would lose my home and couldn’t see a way out of it.

“I went to see an adviser at BHT Sussex and they realised I had not been receiving a state pension or pension credits. They were able to adjourn the hearing for 6 weeks and make an application for the state pension and pension credits.

“I received a backdated payment which allowed me to pay off my mortgage arrears and I was then able to pay my mortgage each month with the on-going payments.

“I had spent the last six months worrying about losing my home and wondering what I was going to do. Early advice would have prevented all of this worry and stress. I should have sought advice as soon as the problem started.”

BHT Sussex Eastbourne Advice has recently moved to share an office with Citizens Advice Bureau, Eastbourne. The co-location of the two advice agencies has resulted in a ‘one stop shop’ for advice in Eastbourne.

Click here for contact details of our advice centres in Brighton, Eastbourne and Hastings.

The public debate on welfare reform has been based on ignorance and prejudice

Last week there was a contentious vote in the House of Commons regarding welfare benefits. Much has been written elsewhere regarding the impact of the reform of welfare benefits.

What has saddened me is the widespread ignorance relating to the level of benefits and the prejudice being shown towards claimants.  The Daily Express headline the following day, “Party is over for benefit skivers”, summed much of what I find distasteful about the way the debate has been conducted.

Here is a small test to help you assess your own understanding of welfare benefits. It is based on a YouGov poll that was carried out just before Christmas. If you don’t know the answers (I knew very few myself) make your best guess on the basis of what you have heard or read.

1. What percentage of the entire welfare budget goes on benefits to unemployed people?
2. On average what percentage of the welfare budget is claimed fraudulently according to the government’s own figures?
3. What percentage of people who claim Jobseeker’s Allowance go on to claim it for more than a year?
4. How much does an unemployed couple with two school-age children get in Jobseeker’s Allowance per week?
5. How much better off, or worse off, per week would this family with two school-age children be if one of the unemployed parents got a 30 hour a week minimum wage job?

Jot down your answers before you read further.  I was surprised by my own personal ignorance, and concerned how I had bought into some of the mis-information that has done the rounds.

I asked 30 colleagues at BHT to do this test, and again I was taken aback by how much they, collectively, had had their perceptions skewed by the tone of the debate.

So how accurate is your perception?

1. On average people think that 41 percent of the entire welfare budget goes on benefits to unemployed people, while the true figure is 3 percent.
2. On average people think that 27 percent of the welfare budget is claimed fraudulently, while the government’s own figure is 0.7 percent.
3. On average people think that almost half the people (48 percent) who claim Jobseeker’s Allowance go on to claim it for more than a year, while the true figure is just under 30 per cent (27.8 percent).
4. On average people think that an unemployed couple with two school-age children would get £147 in Jobseeker’s Allowance – more than 30 percent higher than the £111.45 they would actually receive – a £35 over-calculation.
5. Only 21 percent of people think that this family with two school-age children would be better off if one of the unemployed parents got a 30 hour a week minimum wage job, even though they would actually end up £138 a week better off. Even those who thought they would be better off only thought on average they would gain by £59.

It is the last question that really hit home to me.  I was miles out.  I thought the family would be just marginally better off with a job that pays the national minimum wage.  It shows that benefit levels are well below even the national minimum wage.

So much for life on benefits being a party!  No doubt an intelligent sub-editor wrote that headline, and other intelligent people will have framed the debate in such a misleading way.  I feel we, as a society, lost some integrity last week.

Will 2013 and the introduction of Universal Credit see an improvement or worsening in arrears, bad debts and evictions?

 

One of the biggest challenges for all providers of rented accommodation, either in the social or private sectors, will be the impact of further welfare reform, in particular the introduction of Universal Credit and payments direct to tenants.  For tenants, there will be an increase in their responsibilities and consequences for not getting it right.

A new YouGov survey published today by Shelter has estimated that 1.4 million Britons are falling behind with the rent or mortgage payments.  The number of people struggling to pay their rent or mortgage each month has increased by 44% over the past year, to 7.8 million people.  The research also reveals that over the past year:

• almost a million people used a payday loan to help pay their rent or mortgage
• 2.8 million people used an unauthorised overdraft to help pay their rent or mortgage, and of those 10% did so every month.

There is a wide political consensus on the need for welfare reform.  Many of the objectives of Universal Credit are laudable, not least the implementation of the system and the ambition that work should always pay.  I have a particular concern: that the implementation on the ground will result in problems for claimants and landlords alike.  There have been warnings that the systems necessary will not be in place nor robust enough.  The pilots on payments to tenants have not been encouraging and there have been worrying increases in arrears.

The government, MP’s and the DWP have had sufficient warnings about the state of readiness.  Reassurances have been given at each turn.  I hope they are right.  However, I know from BHT’s own research, the expectation that claims be made online are a long way from reality in spite of work being done with social housing tenants.  Only a few of us are doing much for tenants in the private rented sector who are particularly vulnerable.

The consequences of significant problems in the implementation of Universal Credit, to claimants and landlords alike, are grim.  Tenants will get into arrears and face eviction. An increase in arrears and bad debts, will see some associations failing.  Housing associations have been reviewing their risk maps, with welfare reform now at the top of their risk registers.  Private landlords will become even more reluctant than they are at present to offer tenancies to claimants.

The Shelter / YouGov survey shows the situation before the impact of welfare reform.  I hope that in a years time the simplified system will see an improvement in arrears and evictions.  Sadly I think the situation will have only worsened.  I sincerely hope to be proved wrong.

The case for advice, and the case for investment in advice services

One of the unfortunate aspects of politics over the last 20 years has been ‘Government by Anecdote’ where a handful of extreme cases are used to justify fundamental changes to the welfare state. For example, we have heard a great deal in recent months regarding people on housing benefit claim over £100,000 per annum. In reality, this has happened on just three occasions. I would agree that this is three cases too many. Unfortunately, such anecdotes are used to justify the wholesale changes to housing benefit provision currently being introduced.

Similar stories have been told regarding ‘fat cat’ lawyers getting rich on legal aid. The reality is that most legal aid practitioners work for far less than they could earn if they were in private practice. So why do they do it?

People sometimes have complex problems and sometimes they need technical and practical assistance to give them breathing space to get on with their lives. Such technical and practical assistance often comes from legal aid practitioners. They do it because it is the right thing to do, not because of the money.

If this specialist advice was to be lost, more individuals would flounder, with consequences for their health, their mental well-being, their homes, and their families. For society, the financial costs can be enormous. The cost of legal aid is small by comparison.

I believe Parliament has been short-sighted in deciding to restrict the availability of legal aid. But we are where we are. Legal aid is being restricted, saving the Treasury just £450 million a year. This saving may well be exceeded by the fall out of not ensuring that people are properly advised and represented.

One consequence of changes to legal aid provision is to put in jeopardy independent advice centres up and down the country. Shelter, for example, has recently announced that it will be closing eight of its legal aid centres.

BHT’s own legal aid centres in Brighton, Eastbourne and Hastings have an uncertain future. Our legal aid funding is likely to be reduced by about 40%, thereby undermining the financial viability of these services. Already they run at a loss of over £200,000 each year.

One of the tough decisions for local councils is to decide whether to fund such services. Everyone knows that local government is having to make huge savings from their own budgets. To expect them not merely to maintain their investment in advice services but to increase it might appear, on the surface, to be unreasonable.

Yet there is a strong case for increased investment. Take BHT’s Brighton Advice Centre. It advises and represents 4,500 residents of Brighton and Hove each year and prevents 2,500 households from becoming homeless.

BHT does its part.  We bring into the City over a £1 million from the Legal Services Commission, Big Lottery funding and funding for work in the private rented sector.

So what does Brighton and Hove get from this investment? First and foremost it ensures that its residents have a first rate legal aid centre so that those who might otherwise flounder, who need breathing space, can have their complex problems dealt with through specialist advice and representation.

Using the concept of the ‘Local Multiplier’, the £1.5 million cost of our Brighton legal services is worth over £4 million to the local economy. The Local Multiplier has it that investment in jobs within the local economy sees that investment recycled within that economy to the factor of up to 3 times.

All of this leads me to say how delighted I am that the draft budget for the City Council is seeking to invest in advice services provided by BHT and others.  This is a matter above party politics and I hope that there will be all-party support for this part of the council’s budget.

The Mayor of Brighton and Hove visits BHT’s Advice Centre

The Mayor of Brighton and Hove, Councillor Bill Randall, today visited BHT’s Advice Centre in Queens Road, Brighton.

The Mayor of Brighton and Hove, Cllr Bill Randall, visits BHT’s Brighton Advice Centre

Cllr Randall met staff who provide housing, welfare benefit, debt and immigration advice and representation.  Last year the Advice Centre worked with 3,912 men and women.

In 2011/12, because of the work of the Advice Centre, homelessness was prevented or accommodation found in 1,531 cases.

After the visit, Bill acknowledged that the Advice Centre makes a huge contribution to meeting many of the City Council’s strategic priorities including the prevention of homelessness and rough sleeping, reducing inequality through helping clients out of poverty, and achieving community cohesion through immigration advice helping families achieve stability and live together.

I a statement, he said: “Most distressing is to hear about the trafficked children brought here for domestic service or prostitution. Some are as young as 13. Often these children are referred to as ‘young people’. In reality they are children and need our protection.”

The Advice Centre prevented homelessness in 70% of cases. This represents a huge financial saving for the local authority but more importantly there are fewer people sleeping on the streets and fewer people in temporary accommodation.

The Big Interview (Argus 10th November 2012)

On Saturday, November 10th, the Brighton Argus carried an interview with me.  The focus was housing in Brighton. Unfortunately, the Big Interview (as the weekly item is called) is not posted online.  So here is the text of the interview:

What are the main housing challenges faced by Brighton and Hove?

Simply, there’s a shortage of supply to meet the ever-increasing demand for housing.  The rising cost of the housing that is available is making it increasingly difficult for people to meet their housing costs. The increasing demand for homes in the City is partly due to the increasing number of single person households, and partly due to more people are moving here.

Brighton has a low wage economy.  Those jobs that are available, often in the service and retail sectors, are subject to enormous competition.  It is not uncommon that graduates from our two universities end up in non-graduate jobs in order to remain in the City.

While people joke that this has led to us having the most qualified baristas in the country, the harsh reality is that this trend excludes less qualified, local staff out of the jobs market. Low wages, coupled with high housing costs, is not a healthy mix if we want to live in a City at ease with itself.

Do we face any pressures that other areas don’t?

Brighton and Hove is sea- and land-locked.  There are relatively few sites on which to build new homes.  It has a thriving economy and is an attractive place to live and work.  The challenge for the City is its ability to accommodate the businesses that will provide jobs, and the homes for people to live in.

I really hope that we get the balance right between jobs and homes.  I would hate to see Brighton become a dormitory town, with most residents commuting to jobs elsewhere.  If I wanted to live in a town like that I would move to Worthing!

I would support the building of housing between Falmer and Woodingdean, but that is unlikely to be agreed.  So if we can’t go south and cannot encroach on the National Park, the only way, as Yazz sang in the 1980’s, is up!  We need a debate on the number of high rise developments that the City needs.

Unfortunately, the debate on tall buildings has been skewed by the controversies surrounding the ‘Roaring Forties’ tower in the Marina and the King Alfred proposals.

Where we have a real advantage over other areas is the range and effectiveness of support services.  Where elsewhere in the country such services are being decimated, in Brighton and Hove, with all party support, most have been protected, and homelessness has been prevented.

What part do you and Brighton Housing Trust play in addressing these issues?

One of the most important things we do is to prevent homelessness.  Last year, because of our work, mainly through our Advice Centre in Queen’s Road, we helped 4,116 households from becoming homeless.

Unfortunately, because of changes to the Legal Aid system, from next April, we will be able to help fewer people unless we can attract funding from new sources.  The visible consequence will be more people living on the streets.

In addition to preventing homelessness, we do a lot of work addressing those issues that may have led people to homelessness. We help people to prepare for housing – what it takes to be a good tenant, how to work with, not against, landlords, and how to increase the housing opportunities available to people.

We provide relatively few homes but the work we do in preventing homelessness and finding practical solutions for people in housing need means that BHT’s contribution to resolving issues relating to housing demand is far greater than our modest size.

What would you most want to see happen to tackle these challenges? Can local or national Government help?

In Brighton and Hove, local government could help by agreeing to build 750 homes at Toads Hole Valley.  Perhaps more homes should be considered on this site, a thousand or fifteen hundred, but I doubt there would be support for that.

The government should invest in truly affordable social housing.  The campaign group, Homes for Britain, says that every £1 spent on housing puts £3 into the economy.  And for every £1 spent on construction, government gets 56p back in reduced welfare payments.

Over the lifetime of this government, £35 billion will be spent of housing benefit, yet just £4.5 billion is being spent on building.  It is economic madness.

The right to buy doesn’t help.  Over the last 25 years housing has moved from being affordable and available to meet local demand, to being available only at unaffordable rents.  I heard the other day about a former council house, once with a rent of £120 per week, now being let out privately for £750 per week.

Are more people coming to you in crisis now than in the past and is that down to the recession or other factors? i.e. are economic circumstances driving people onto the streets?

Over the last two years we have seen a sharp increase in the number of people sleeping on the streets in Brighton.  That appears to have steadied over the last year partly due to excellent work being undertaken by Brighton and Hove City Council, CRI, Sussex Central YMCA, BHT and others.

I am amazed at the resourcefulness and sacrifices people make in order to keep themselves and their families in one piece.  We regularly come across single people, holding down jobs, but living in cars because they can’t afford housing.  Parents, usually women, are going without food, to ensure that their children have what they need or to heat their homes.

The latest increases in fuel charges might well push some households over the edge, and there is plenty more bad news yet to come.

So do you foresee the situation getting worse in the immediate future? What is your worst fear? What is your best hope?

The introduction of Universal Credit from next year, changes to the Social Fund and further restrictions on housing benefit, will likely result in more people getting into difficulty.

The plan with Universal Credit is to merge into one payment most of the benefits received by a household.  Universal Credit will be paid monthly, leading to new challenges for households to stretch the cash throughout a longer period.  It will also incorporate housing benefit payments.  This could lead to an increase in rent arrears resulting in losses for landlords and an increase in evictions.

The Department of Works and Pensions expects 80% of claims to be made online.  At BHT we have carried out our own research and have found that 71% of our clients appear to have the means and support to make claims online.  But when you take away the facilities and support BHT provides, that number falls to just 19%, similar to the assessment the DWP itself has made.

My biggest fear is that more people will fall foul of the new welfare regime and will lose their benefit entitlement, sometimes for prolonged periods.  This will result in three H’s: hardship, hypothermia and hunger.

The challenge for charities like BHT is how we can find a twenty first century solution to poverty.  Food banks are already doing a roaring trade. I fear we will soon see the opening of food kitchens.  A depressing note on which to finish.

Housing Benefit and Under 25’s

In a speech later today, the Prime Minister will say that he is considering removing housing benefit from those under-25s.  This appears to be one of the most ill-thought through, headline grabbing policy announcements that I can recall.

There are some questions that demand answers:

• How can parents be obliged to take their adult children back into the home, and what happens to those young people where they can’t ‘go home’?
• What protection will there be for children and young people who have left their family home to avoid abuse and domestic violence?
• What happens in those cases where the parents have “done the right thing” by moving to smaller houses once their children have move out and there is now no spare room?
• What happens if there is no room in the parent’s home for other reasons, such as second families with children?

I have to ask why David Cameron is bringing this proposal forward now?  We are already witnessing the most profound changes to the benefit system in my lifetime.  If this is such a pressing issue, why was it not identified and enacted when all the other changes were introduced?

The BBC’s political correspondent, Vicki Young, has suggested that Mr Cameron’s speech will be seen as an attempt to reconnect with disgruntled Tory backbenchers.  I don’t know if that is true, but if there is even a hint of reality in her analysis, it ill becomes a Prime Minister to risk a huge rise in youth homelessness for internal party expediency.

This isn’t the pressing problem it is being made out to be. Those under 35 living in the private rented sector are entitled to just £77 housing benefit per week. Just 6% of those under 25 living in the private rented sector currently receive housing benefit.

92% of new claims for housing benefit are from those in work.  They are already “doing the right thing” but this measure will hit young people already in jobs.

The consequence of this proposal will be an increase in overcrowding, homelessness, begging, crime, and prostitution.