London Tenant Federation Briefing

HOUSING BENEFIT REFORM - January '03

The government set out proposals for housing benefit reform in October 2002 in the Department for Work and Pension's (DWP) 'Building Choice and Responsibility: a radical agenda for Housing Benefit'. Pilot schemes have been set up across the country in which a flat rate, standard local housing allowance is paid to private tenants of similar sized properties, regardless of the actual rent of the property. For the tenant whose rent is less than the standard allowance - they will simply keep the difference. For tenants whose rent is above the standard allowance, they must either find the extra money themselves to cover the rent, or as the government intends, they will have to look for cheaper, alternative accommodation.

The government says that the scheme provides a 'financial incentive' to tenants to 'shop around' for accommodation.

The idea of the 'shopping incentive' seems to have come from a report carried out by Professors at the University of York for the Joseph Rowntree Trust. They suggested that it would be simpler than the existing rules, which restrict the amount of rent taken into account when calculating entitlement. They carried out analysis, which found that 7 out of 10 private tenants applying for HB since restrictions were introduced 6 years ago, had part of their rent ignored when calculating benefit. The average reduction was £19 a week below the rent charged by their landlords. Reductions in London were especially large, as were those of young single people in shared accommodation.

The government's pilot schemes are being carried out in - Lewisham, Brighton and Hove, Tendring, Teignbridge, Leeds, Coventry, Middlesborough, North East Lincolnshire, Conway and Edinburgh.

The government says that the reforms, which will cost £4 million, will be a 'fairer and more efficient' system. Their rationale is that tenants will know their eligible rent figure in advance, enabling them to 'choose' accommodation. Rent officers will no longer make decisions on the amounts that should be paid for individual dwellings. Not having rent officer referrals on individual HB claims should speed up the claim process. Other changes are to be made in the administration of HB - such as the ending of pensioners having to make reclaims. Rents are to be paid directly to tenants rather than landlords - in an attempt to reduce fraud.

Although the DWP paper does not directly refer to earlier suggestions make by Frank Field that benefit may be taken away from anti-social tenants, it is an issue that has been raised in a number of articles in the press in relation to HB reform. Welfare rights and homeless organisations have noted their opposition to the inclusion of such a proposal in the reform of HB.

1 in 6 households in England and Wales claim housing benefit, which costs the government £12 billion a year. The vast majority of these are not private tenants, but are tenants of the social housing sector. Only 815,000 in the private sector claim HB. The government intends to introduce the scheme to the social housing sector once rent restructuring has been completed.

Welfare rights campaigners have already made criticisms of the proposals and are very keen to see the results of the pilot schemes before the government goes any further with the reforms. The Child Poverty Action Group in October '02 commented on the government's intentions in simplifying the process involved in applying for Housing Benefit, saying 'greater simplicity doesn't guarantee fairness'. They and other welfare rights campaigners fear that some tenants will lose benefit if they do not trade down into smaller accommodation than they (and their families) require and that it will result in benefit cuts for tenants. 'Tenants on low incomes should not have to make deeper inroads into already low incomes to fill shortfalls in HB'.

WHAT ARE THE ISSUES FOR COUNCIL TENANTS IN LONDON?

• It seems that, to extend the scheme to social housing tenants, rent restructuring needs to be complete. Rent restructuring reflects the market value of properties and results in higher rents in more 'desirable' or trendy areas.
• In London - where there is extremely high demand on properties, even in the private sector, there is little 'choice' and much more - 'take it or leave it'. In central London, 60 - 70 % of council tenants claim HB. Where exactly would residents of more desirable and expensive areas 'shop' for cheaper housing? Would they have to look to move outside London?
• Is this another proposal that will simply facilitate the moving of poorer residents out of more desirable areas?
• There are large numbers of families and pensioners living in social housing that are dependent on HB. Is it reasonable to expect families or pensioners who happen to live in parts of London that have become desirable, to 'shop around' for cheaper accommodation?
• Will the reforms force residents who are dependent on HB to take smaller sized accommodation than they actually require?
• The proposals would seem to encourage 'ghettoisation' and to be contrary to government policies relating to social exclusion. .

Although government statements to date have been that rent restructuring would need to be complete before introducing this reform into the social housing sector, it is rumoured that they are looking to do a pilot scheme soon - that is before they have even seen the results of the pilots in the private sector!

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