Private rented housing is “out of reach” for under 35s, says the Chartered Institute of Housing

The Chartered Institute of Housing (CIH) recently carried out research into the gap between rents in the private rented sector and what Local Housing Allowance (LHA) will pay.

LHA is based on the 30th centile of the range rents charged in the private rented sector. Except it isn’t. That was how it was supposed to be (having previously been reduced from there 50th centile). In fact, the level of payment has been frozen for three years and will be frozen until 2019/20. LHA no longer reflects in any way the reality of rents in a locality.

In Brighton and Hove the rates are £82.66 for a room in a shared house, £153.02 for a one bed flat, £192.48 for a two bed property. The average one bed flat in Brighton and Hove is now £971 per month compared to LHA of £612.08 for the same period.

In Eastbourne the rates are £67.00, £116.53 and £151.50, and in Hastings £69.77, £92.06 and £120.29. (There are higher rates for 3 and 4 properties).

It is worse for you if you are under 35 where you are restricted to claiming LHA for just a room in a shared house.

And if you think it is bad for under 35s, it is EVEN worse for those under 21 for whom the rate is zero (unless you are ‘lucky’ enough to qualify for one of several exemptions – merely being a rough sleeper is not enough).

So what has the CIH found? It has found that the gap between LHA and rents has widened to the point where private rented housing is “out of reach” for under 35s.

A couple of weeks ago I wrote how the senior civil servant responsible for housing policy at the Department for Work and Pensions, Darrell Smith, said that the government is now going to use LHA rates to set new, lower rents for specialist supported housing. Why? Because it is such a good barometer for the market? No. He said: “The one advantage of (LHA rates) is that they are already there, so it doesn’t cost the government anything to set it up. I know”, he continued, “that isn’t a great answer but that’s all I have got”.

Is this the most depressing, mind-boggling, ridiculous justification ever from government?

The government announced in late 2015 that the rents that specialist supported housing services could charge and be paid for through housing benefit / Universal Credit would, from April 2019, be capped at Local Housing Allowance (LHA) rates. This move has been widely opposed because it is likely that many services would become financially unviable.

The government is currently consulting on how services can be protected and is considering a ring fenced pot to make up any shortfall. Yesterday I was at the consultation event in London looking at this very issue. I can’t say that the mood was particularly upbeat!

The problem with using LHA is that it has not kept up with the reality of local housing markets and, what is more, George Osborne froze the rate that LHA will be paid for the foreseeable future.

A small illustration: in Brighton and Hove the average one bedroom flat is currently £971 per month. LHA in the city is £612 per month.

There is an absurdity to link the payments for supported and sheltered housing tenants to LHA rates. LHA is meant to cover housing costs.  But it costs roughly the same to provide these services where ever you are in the country. As it happens, Brighton and Hove has a higher than average LHA rate, far higher than an area in the north of England yet it costs the same, for example, to maintain a lift in the north of England as it does in the south.

The LHA is a lousy guide to actual costs.

LHA was originally introduced to set the amount of housing benefit that would be paid to claimants who rented in the private rented sector. The figure was supposed to equate to the 30th centile of rents for properties in a locality.

But why is the government determined to base rents for specialist supported housing scheme on the LHA? This week we got an insight into its thinking, and I have to say it is most mind-boggling, ridiculous justifications I think I have ever heard. That view appears to be shared by the person who gave the justification.

At the National Housing Federation’s finance conference which took place in Liverpool last week, the manager for housing policy at the Department for Work and Pensions, Darrell Smith, said in response to a question as to why LHA rates are being used for setting benefit levels for supported housing, he said: “The one advantage of (LHA rates) is that they are already there, so it doesn’t cost government anything to set it up. I know that isn’t a great answer, but that’s all I have got.”

If that is the way that government is developing its strategy for those very services that support the most vulnerable members of our society, what hope is there?

Denying 18-21 year olds the right to claim housing benefit is bad, bad news, and bad, bad policy

At the very time when rough sleeping numbers are rising nationally, the government has announced plans to end the automatic right of 18-21 year olds to claim housing benefit.

In a week with so much else happening (Brexit vote in the House of Lords, Theresa May in Scotland, Northern Ireland elections, Trump) someone must have thought it was the ideal time to bury bad news. This is bad, bad news and bad, bad policy.

If there is one measure that will lead to an increase in rough sleeping amongst young people, it is denying them the automatic right to claim support for their housing costs.

img_4847Of course there will be exceptions made for certain categories of young people allowing them to claim (such as if parents are abroad and the young person can not ‘go home’).

A spokesperson from the Department for Work and Pensions said: “We want to make sure that 18- to 21-year-olds do not slip straight into a life on benefits, which is why we are helping young people get the training, skills and experience they need to move into a job and build a career.”

Desperate times for young people will see them return to unsafe family situations, turn to crime and prostitution, and end up sleeping rough.

What about the finances – we always hear we have to tackle the deficit. 2015 research from Heriot Watt University calculated that once exceptions and costs incurred on other public services were taken into account, the policy could save just £3.3 million a year.

If just 140 young people end up on the streets, the additional cost to other services (ambulance service, NHS, housing departments, police, etc.) then this measure will actually be a drain on public finances!

It makes no sense in economic terms. It makes no sense in human terms. It is the wrong policy and goes totally against recent positive moves by government, now least through the Homelessness Bill, to tackle homelessness.

Please call on your MP to support fair funerals

Molly, my lovely mother-in-law, passed away earlier in the summer. Her funeral was beautiful and we made sure that everything was just as she would have wanted it to have been.

We are fortunate in that we could afford the funeral, shocking though the price was. But not everyone is as fortunate as us.

Funeral poverty is a terrible thing. When faced with the loss of a loved one, the high cost of dying can prove to be an intolerable burden.

Next Wednesday morning (14th September) Parliament will debate funeral poverty.

ff-logo_0The Fair Funerals campaign (run by anti-poverty charity Quaker Social Action) is a great campaign and one worth supporting. You can find out more about their work by following this link.

The campaign needs you to contact your MP to let them know you’re worried about funeral poverty.

A Select Committee report recently called for urgent reform of the state system that lets bereaved people down. The Department of Work and Pensions has failed to take action.

Please contact your MP. You can do so by following this link. Ask them to attend the debate and to call for the DWP to act on the Select Committee’s recommendations.

 

 

 

Public policy can be designed to attack poor people rather than to attack poverty itself

The other day I was sent a copy of a poster which read: “Homeless people are not the problem. They are the result of the problem”.

Apart from an unfortunate photograph on the poster which offers a stereotype view of a homeless person the message was spot on.

I read somewhere over the weekend (for the life of me I can’t remember where) that public policy can be designed to attack poor people rather than to attack poverty itself.

There are many aspects of welfare reform but I agree with, not least simplifying the system. However, there seems to be some in-built features that seem unnecessarily cruel. A similar view has been expressed by Frank Field, the chair of the Commons Work and Pensions Select Committee who said that the minimum six week payment period face by people claiming Universal Credit for the first time have become a “recruiting sergeant for food banks”.

Such delays are unnecessary and, in my mind, cruel. Frank Field has said that this measure alone leads to reliance on emergency food parcels, triggered debt and rent arrears, and caused health problems.

The welfare system is there to be a safety net. Sadly it has become punitive.

I agree with Field when he says: “This is an unbelievably long time for people at the bottom to survive with no money, and I have received evidence to suggest people have been exposed to hunger and homelessness during this 42 day period”.

The all-party Work and Pensions Select Committee concluded in a report published last December that it was “concerned that the DWP has not properly considered households who have no savings or a final paycheque to fall back on”.

dwp_logoI don’t agree absolutely with the Committee. I think there is ample evidence which the DWP has chosen to ignore. Food banks, housing associations and welfare advisers have reported that they are seeing growing evidence of claimants hit detrimentally by payment delays.

That is why I think that public policy, in this case delays in payment, can sometimes be designed to attack poor people rather than to attack poverty itself.

Uncertainty about the future of supported housing continues

For several months I have been writing about my concerns for the future of specialist supported housing as a result of a proposed cap in line with Local Housing Allowance that was announced by the former Chancellor, George Osborn, in his budget following the general election in 2015.

With a change in personnel at the top of government, there is an opportunity to drop ill thought through policies such as this.

The new work and pensions secretary, Damian Green, had been expected to make an announcement about the future of this proposal last week. However, he has put off the announcement until the autumn.

I’m not too overly concerned about this postponement because any rushed announcement hight have resulted in the proposal remaining in place. However, taking the summer to review the situation, Mr Green will be able to do a proper review and realise that many specialist supported housing schemes would close.

The downside of a delay is that many specialist supported housing schemes that were planned have not going ahead because of uncertainty about future revenue funding. That uncertainty will continue for a few months more.

Mr Green has said in parliament that he will be making an announcement early in the autumn that will set up the government’s view on what the future funding solutions for specialist supported housing will look like.

Organisations like BHT rely a great deal on this funding, but more importantly several hundred people living in our residential projects rely on the accommodation and support to sustain their recovery from addiction, manage their mental health problems, and return to work.

A simple request to government: please think and consult before making announcements

Last week the Department for Work and Pensions (DWP) indicated that it was postponing the cap on charges in supported housing schemes that was announced in the Autumn Statement.

While this is to be welcomed, it is frustrating that the DWP did not think through these changes before they were announced. As a result, the confidence of housing associations has been dented, and a number of schemes have not been developed because of uncertainty regarding revenue funding.

As for back as December last year, and subsequently on Channel 4 News in January, I warned of the dire consequences of capping charges in supported housing schemes at local housing allowance levels from 2018. BHT’s forecasts showed that many of our schemes would become unaffordable, not least for anyone under the age of 35, and we would have to close some schemes.

On the assumption that any shortfall in rent of £10 per week or more would be unaffordable to tenants on benefits to make up:

  • 435 (69.8%) of BHT’s 623 homes / lettings would be unaffordable for those under 35 and
  • 273 (43.8%) would be unaffordable for those over 35.

The proposed cap still applies to our general needs and private sector leased accommodation.  See here for more details.

The long-term solution that the DWP now needs to come up with must be sustainable in the long term, so that essential services for vulnerable people can remain financially viable.

The cost to local authorities, the NHS and other government departments would be astronomical if under 35s and others were priced out of supported housing schemes, or these schemes were to close.

Is it too much to ask of government that they think and consult before announcing such measures? This fiasco has damaged the sector, and has undermined confidence in the DWP and government in its ability to make reasonable judgements and decisions.