In a report on welfare reforms from 17 charities and non-profit organisations, the effect of cuts to housing benefit on low paid, unemployed, disabled, carers and older people and their communities has been raised by almost every organisation submitting evidence to the council.
Eviction Notice – a sight set to become more common
Midland Heart, one of the regions largest social landlords, say their customers
Generally feel dismayed and negative. They are unhappy and unenthusiastic about the changes to the benefits system and afraid that they will be unable to live on reduced benefits
From April 2011 the rate for Local Housing Allowance (LHA), which replaces Housing Benefit, restricts claimants to the cheapest 30% of the private rented market. This does not take into account the substantial number of landlords who will not take welfare claimants, with “No DSS” a common feature in house letting adverts. Giving Hope, Changing Lives – a social inclusion process led by the Bishop of Birmingham – say that only 10% of landlords in the private rented sector would take people on benefits.
LHA cuts affect 17,500 residents in Birmingham. The amount cut ranges from an average £5 per week for under-35s claiming the single room rate to £46.15 per week for families in 4 or more bedroom houses. Many large families have found they have to move to smaller, overcrowded accommodation due to the cuts.
Young people are also heavily affected. Freshwinds show how a 26 year old has lost £181/month in the housing benefit reforms, as the single room rate has been extended to include 25-35 year olds, meaning he is no longer eligible for a 1 bed flat, but only for the cost of renting a room in a shared house. Freshwinds raise concerns that the single room rate won’t even be enough to cover the cost of living in anything except the worst accommodation, and say that the cuts leave the “Potential for crisis if any unexpected expenditure occurs”
Changes to “non-dependent” allowances mean that people under 25 who are unemployed are also set to be hit with a £65 per month charge if they live with family, a move which Midland Heart say “could put them at a risk of becoming homeless and thereby potentially place pressure on local authority waiting lists.”
The number of people who are finding their benefit does not cover their rent has risen from 50% to 66%, with the average shortfall increasing from £15 per week to £16, leaving two-thirds of claimants to find a significant amount of extra money from their wages or benefits to keep a roof over their heads.
The introduction of Universal Credit next year will compound the problems created by the LHA, as an overall benefit cap is introduced – £500 per week for couples and single parents and £350 per week for single adults.
Midland Heart say that for “those households who are capped, the impact will be considerable.” and Freshwinds warn
Individuals may be forced into renting poor standard accommodation which is more affordable but impacts on health and well-being (physical and psycho-social)
St Basils say that the introduction of Universal Credit will increase homelessness, with short term private rentals – most likely expensive B&Bs – becoming increasingly used.
They inform us that in 2011/12
4,574 young people between the ages of 16-25 sought assistance as homeless; 83.5% of those were aged 16-21 – a 32.6% increase on previous year
In the report nine different groups say they expect to see an increase in homelessness as benefits get cut. Birmingham Voluntary Services Council say “that 75 per cent of the 110,000 individuals at risk of homelessness are children”
Sifa Fireside say that long delays in processing housing benefit and in particular providing evidence for exemption from caps, combined with increasing numbers of people losing housing benefit following a Jobseeker’s Allowance sanction, is meaning
More service users at SIFA Fireside are facing rent arrears, debt and eviction because of the [welfare reforms] and slow processes.
It is imperative that Birmingham City Council act to ensure that homelessness does not increase in Birmingham, by supporting existing tenants, meeting their plan to build 70,000 new homes by 2026 and bringing the 600 empty council owned residential properties identified by Birmingham Tenants and Homeless Action Group back into use.
Nationally, rising homelessness adds to the long list of reasons for a huge investment project into new zero-carbon council houses, which would produce a profit for the taxpayer, reduce housing benefit costs and help prevent homelessness.
The caps are not the only cut to be implemented in Universal Credit reform. The under occupancy charge – applied where there are empty bedrooms – is expected to affect 40,000-60,000 tenants around the West Midlands and will see people forced to move from homes they have lived in for years, or find money from wages or benefits to make up the difference.
Concerns have been raised specifically about foster carers who will not be eligible for full benefit as “a household that has an extra room for a current or potential foster child will be treated as under-occupying” (PDF section 3.7, p11/12) potentially making it even harder for Birmingham City Council to increase the number of foster carers following the closure of children’s homes. There are similar concerns for parents with visiting children who will have to find extra money to keep a bedroom available for when their child stays.
Birmingham and Solihull Women’s Aid warn the effect of 95% cuts to payments for service charges, the reduction in LHA rates and benefit cap, and the uncertainty and potential loss of income from the removal of direct payments to landlords “will impact disproportionately on those facing domestic violence and on refuges, limiting women’s ability to escape violence”. In fact the cuts are so bad that every refuge in the country might close.
Midland Heart say that the inability to levy service charges would impact on the upkeep of properties and “possibly create ghettoised estates that would attract crime and anti-social behaviour”. Castle Vale Community Regeneration Services, St. Basils and Birmingham Voluntary Service Council all raised concerns about the effect that the cuts would have on communities, which will see increased transience as people are forced to move.
UPDATE: The DWP have now said that exempted supported housing will be taken out of Universal Credit, which is great news and a relief no doubt for many organisations around the UK and the people they support. Read more
Another change with Universal Credit will be the removal of direct payments to Landlords, a change that Midland Heart’s customers say
Direct payments to vulnerable customers could lead to them misusing the money and building up debts with their landlords. One customer said they were “rubbish managing their money” and that this will cause increasing pressure as they might ‘blow it’.”
On the other hand, some customers were happy with direct payments as they would feel trusted and in control. Others expressed a worry that they would be tempted to spend the money and that some might misuse it. Some spoke of the risk of being financially abused as they currently have trouble handling money.
Again, the majority of submitters to this report raised concerns about the loss of direct payments could have on vulnerable people and on the cash flow for social landlords. Castle Vale Tenants and Residence Alliance say that
In theory this responsibility is potentially a good thing for the less vulnerable … however in reality, [it] is untenable and irresponsible
With advice services expected to be overwhelmed by increases in people seeking help coupled with cuts in funding and legal aid, these reforms spell disaster for residents of Birmingham. The biggest reform – Universal Credit – has come under criticism from 70 charities and with spending on the IT side of the project having reached £638m, this project should be abandonded before it reaches a spending level on the epic proportions of the failed NHS IT project, and most importantly before it harms everyone in Birmingham.