Tag Archives: housing benefit
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.In
So first up is our meeting – 6:30pm on Monday, at Unison offices, 19th floor, McClaren Tower, Priory Queensway, B4 7LR.
Tom will be talking about the case for a new generation of social housing, how it can form part of the alternatives to cuts, prevent the need for cuts to housing benefits directly and what plans there are in Birmingham. This will be followed by a discussion about housing issues, and what we can do in Birmingham. That’ll be for around an hour, and then there will be about 30 minutes of organisational matters relating to anti-cuts activities in Birmingham.
Everyone is welcome to attend the meeting, and the room is wheelchair accessible with accessible toilets. Children are welcome at our meetings but we cannot provide a creche service. If you have any accessibility needs, please contact us: BirminghamAgainstTheCuts@Gmail.com
Then on Tuesday is a one-day conference on welfare issues, organised by Boycott Workfare, but covering more welfare issues than just workfare. Running from 9:30am – 5:30pm at Unite the Union, 211 Broad Street, Birmingham, B15 2AY, the conference is free and you do not need to book – just turn up for the day or whichever sessions you can make. The full timetable is available here.
This conference is particularly important given recent events where a man set himself on fire outside Selly Oak job centre, after desperation set in following problems with benefit payments, and the news that a Birmingham man who suffered from a heart condition died of a heart attack just weeks after being found fit for work by ATOS.
This morning, Holland and Barrett announced that they were pulling out of the Work Experience Scheme, after sustained demonstrations at their premises, led by Solidarity Federation branches around the UK. In their statement, Holland and Barrett said that the protests were the main reason they would be leaving the scheme. They are instead going to be taking people as apprentices – paying just £2.60/hour, far below the living wage in Birmingham of £7.20/hour. A step in the right direction, and to be celebrated as a victory – Holland and Barrett were singled out by Chris Grayling as a shining example of firms taking workfare labour from the taxpayer, so them leaving the scheme is a big blow for this Government. We must watch to make sure they are not still taking part in other workfare schemes like mandatory work activity, and we must be clear that £2.60/hour is not an acceptable wage.
This shows that demonstrations and protests do work, and that we can bring pressure to bear on companies and through them the government.
Thursday is the lobby of the Police authority against the privatisation of policing services, including investigative roles. We do not want to see the likes of G4S and KBR patrolling our streets. For a briefing about the privatisaion, explaining why it should not take place, click here.
The lobby is at 10am, at West Midlands Police HQ, Lloyd House, Colmore Circus, B4 6NQ in Birmingham City Centre
Then on Friday, a night out in solidarity with Spanish miners who are facing the destruction of their communities in a similar way to how our miners did in the 1980s. As part of the Spanish government’s austerity measures, subsidies for coal production are being removed, and mines are being closed. Production of coal will no doubt shift to cheaper and less safe coal mines in China and Africa, and the miners are being left with no support to build replacement industries.
Music and comedy, with a suggested donation of £3. Birmingham Social Centre, Pershore Rd near Pebble Mill Road. For directions and more detail see this blog.
We hope that you can make it along to one or more of these events next week – we’ll be reporting from all of them if you can’t so make sure to look back here next week to find out what happened.
At the moment, the construction industry is in trouble, with a fall in output of 4.8% in Q2 2012 as the UK goes back into recession. The Housing report for 2012, compiled by National Housing Federation, Shelter and Chartered for Institute of Housing identifies rising overcrowdedness and homelessness, and cuts to housing benefit see many hundreds of thousands at risk of being unable to afford their homes, including over 11,000 families in Birmingham. On top of this, there is identified a growing demand for housing which will not be met at current rates and locally the Labour Party has said 70,000 new homes will need to be built by 2026 – we are currently building around 1,000 a year (Labour Party Local Election Manifesto, PDF, page 13).
Has there ever been a clearer example of market failure? Here we have a situation where there is spare capacity in the industry and excess demand in the marketplace, but supply is not increasing to meet demand – so all that happens is prices go up and quality goes down.
Although there are specific issues around availability of land that will restrict the supply of housing, the biggest issue is that private investors are nervous, and they are concerned that there will be a further crash in the housing market, perhaps looking at Ireland where years of austerity have devastated the construction industry and left many half built houses and estates.
On it’s own, this market failure would be a good argument for the public sector to intervene and build to provide new homes directly, but in fact it is only a starting point for the case for this investment.
Right now the government can borrow at astonishingly low rates – 0.5% for long term gilts. This is far lower than the private sector can borrow, and makes good sense to do. As the linked article states, we could raise £30bn, paid for by the pasty tax.
Now there are many things that £30bn could be used for, but an investment in housing would not only fulfill a growing need, it would be a profitable investment for two reasons.
The first is that council housing makes a profit. Although it is widely believed that council houses are subsidised because they are so much cheaper than private rentals, in fact, council housing made the taxpayer £194m profit in 2008/9, and that figure is expected to rise to nearly £1bn/year in the next ten years. In fact, as this article explains, more subsidies are paid to the private sector than the public sector. The investment made in housing will pay itself back over time.
There are many reasons why council housing is cheaper than private rentals – longer pay back times for the investment, a large amount of housing stock which has already paid for its investment cost, a lack of profit motive, and the rise of buy-to-let mortgage rentals as investments which contributed to and came alongside sharp rises in house prices which meant that rents needed to be higher to cover larger mortgages.
All of this happened without the downward pressure on rents of large scale social housing because demand has exceeded supply – especially in the south east.
However, one thing is for certain, council housing is not cheaper because it is subsidised by the tax payer – it is cheaper because it is council housing.
The second reason is to reverse the rise in cost of housing benefit. Time to dispel another myth. Housing Benefit is not just paid to people who are unemployed. In fact, in 2007/8 only 12.5% of people who claim housing benefit were unemployed. This had risen to 22% by 2010, but 26% of claimants were employed in low paid jobs often at minimum wage, and many in London where £6.08 an hour (or less for younger people) is a real struggle to get by. Other claimants include pensioners (over a quarter of claimants in 2012), disabled people and carers. In fact it is in-work housing benefits payments that have increased recently, accounting for 93% of new claims – another sign that wages are being pushed lower as rental costs increase.
Housing Benefit costs £21bn/year, much of which goes to private landlords – the same private landlords who charge more than council housing. If we build council housing, and rent it at affordable levels to people on housing benefit, then that cost will be reduced, directly through the provision of cheaper housing and indirectly by putting a downward pressure on private rental cost as supply of housing comes up to meet demand. In this way it will benefit those who remain in the private rental sector.
This is another policy area in which this investment would produce positive results. Right now house prices are at a record high, out of reach to buy for most people and expensive to rent. It is no coincidence that these price rises have come alongside the sell off of council housing and deliberate decision not to build new stock. We can bring down rental prices for everyone, and this would particularly help those most affected by austerity – those on low incomes, as Shelter tells us that 55% of local authorities have rents which are (on average) considered to be unaffordable, costing over a third of the median wage for the area. Birmingham is considered to be slightly unaffordable, with rent costing an average of 34%-39% of wages (PDF, Page 35)
The money that is saved on rent would no doubt be spent quickly in other areas of the economy, providing a further stimulus effect, as the cash flows through the productive economy rather than to landlords and banks.
Alongside achieving all of these positive outcomes, the investment would also help government finances indirectly. By stimulating the economy – both directly in the construction industry, and indirectly through savings made on rent payments, it will create growth, which increases tax revenue and decreases benefit claimants. Doing so in the construction industry primarily would be an ideal place, as it is shrinking fast, and has spare capacity right now. This is where the investment becomes part of a strategic alternative to austerity – one which is focused on creating jobs in a direct manner, all working towards a sustainable, zero-carbon economy, and at the same time reducing the deficit in the medium term – something which austerity is set to fail to do.
Moving towards a zero-carbon economy is absolutely vital, and housing produces 26% of the UK’s carbon emmissions. The government could lead the way in building a new generation of zero-carbon and carbon-positive housing, designed around our needs in a post-oil future.
So by investing in social housing we can stimulate the economy, create a long term revenue stream to pay back that investment, reduce rental costs for everyone and housing benefit costs for the taxpayer, make serious moves towards transitioning to a zero-carbon, post-oil economy and all at the same time as meeting a rising demand that the private sector cannot meet for the homes people need to live in, where they need to live, and all at the same time as tackling our economic woes.