Written evidence submitted by Renfrewshire Council
1.1. Renfrewshire Council continues to express concerns that the reforms to support for housing costs being considered by this inquiry will exacerbate poverty for the most vulnerable individuals and families.
1.2. The Renfrewshire area includes the Ferguslie area of Paisley, the single most deprived datazone in Scotland (see the Renfrewshire context - Appendix 1, A). This area and other more vulnerable communities in Renfrewshire already face significant challenges and the measures being introduced by the UK Government will lead to increased financial stress for households and create additional service pressures arising from demand for welfare, debt and money advice, additional family distress and increased homelessness presentations.
1.3. From the Council’s perspective there are clear financial risks relating to the management and sustainability of the Housing Revenue Account (HRA). These are linked to increases in rent collection costs and bad debts associated with an increasing requirement to collect rent as a result of reducing benefit levels available to tenants and proposals for housing benefit payments to be made directly to the claimant under the proposed Universal Credit system.
1.4. Additionally, the Council is concerned that the make up and availability of housing stock at local authority level does not appear to have been taken into account when introducing the under occupancy reduction. (Appendix 1, B) refers. This places significant challenges for social landlords, including Renfrewshire Council where there is a mismatch between the housing requirements of tenants affected by the under occupancy reduction and the benefit cap and the availability of suitably sized stock.
1.5. Renfrewshire Council anticipates a number of potential impacts on its statutory duty in relation to homelessness as a result of the Housing Benefit changes. In particular, the application of the under occupancy reduction to local authority owned stock used to temporarily accommodate people presenting as homeless, while exempting other tenures of property used, does not recognise the effective use that is made of LA owned accommodation to meet such emergency accommodation needs. The loss of housing benefit and the resulting increase in rent arrears may ultimately lead to increased housing benefit costs as the council may be forced to consider greater use of the private sector provision, where rent levels may prove to be higher, in order to meet its statutory duties in relation to homelessness and protect against financial loss to the Council.
1.6. The proposed introduction of direct payment of housing costs within Universal Credit is expected to lead to greater financial stress for households and individuals and will place extreme financial pressures on the long term sustainability of social housing where households are unable to budget appropriately and manage the ongoing responsibility of sustaining their rent payments.
2.1. Renfrewshire Council has deployed significant additional resources of £1.3 million in 2013/14 and beyond to provide the Council with the best opportunity to prepare for and manage the anticipated increase in demand for services. Much of this investment is directed towards advice and support to ensure the Council is well placed to both support the tenants and their families manage the impact of welfare change, but also to seek to pro-actively protect the financial position of the Council’s housing function, in particular the sustainability of its rental stream during this transition.
2.2. Renfrewshire Council has formally recognised that where tenants subject to the under occupancy reduction are actively engaged with the Council and are taking reasonable steps to maintain a rent repayment arrangement the council will continue to pursue rent due without resorting to eviction. However, it needs to be recognised that increasing rental arrears ultimately places significant financial pressures on the Council’s Housing Revenue Account which will in turn increase the associated future rental costs for social housing within Renfrewshire.
2.3. In recognition of this, the Council has in addition, agreed to set aside £850,000 from the Housing Revenue Account (HRA) for 2013/14 to help mitigate the impacts of welfare reform on Council tenants, part of which will be targeted at providing a scheme of financial support for tenants experiencing hardship. Given the close links with the Department for Work and Pensions (DWP) Discretionary Housing Payment (DHP) scheme, options for criteria for the HRA financial hardship support scheme are being developed taking account of the circumstances and outcomes of applications made by tenants for DHP. However, it is recognised that both schemes will provide only temporary support and relief for affected tenants.
2.4. In addition, Renfrewshire Council has increased its top up funding to DHP resources by 150% by allocating an additional £150,000 to the DHP fund for 2013/14 in recognition that the DWP resources are insufficient to provide the necessary short term support to affected citizens across Renfrewshire. The Council administration is proposing to further enhance the fund up to the maximum allowable at the Council meeting scheduled for 3 October 2013. The enhanced fund will help defray the loss of Housing Benefit and provide tenants with short term support that will allow them to meet their rent obligations while considering other options.
2.5. The integration of housing officers to neighbourhood area housing teams has also been taken forward by the Council in order to support ongoing tenancy management activities. Officers continue to take proactive measures to support tenants affected and we have increased the number of officers available to offer advice and assistance, including specialist money advice to make sure that tenants have access to good advice and support. This includes maximising any opportunity to access benefit entitlement, support access to any possible financial support funds in place, and also covers repayment planning and referral to training and employment services.
2.6. Interest in Mutual Exchanges has increased and good progress is being made in partnership with Registered Social Landlords (RSLs) to develop a Housing Options shop which is scheduled to be operational during October 2013. The focus will be on supporting and facilitating exchanges where tenants have expressed and interest in this.
2.7. Invest in Renfrewshire is the Council’s flagship programme to tackle unemployment and improve employability with in Renfrewshire. This programme supported a Welfare Reform training programme within Housing Services for young people between the ages of 16 and 25. The programme funded the recruitment and supported the training of a team of unemployed to support the initial phases of the contact with tenants affected by the under occupancy reduction, a second programme is currently underway with the team focusing on a wider group of council tenants and their households. The first programme resulted in all but one of the young participants progressing to employment or further education.
2.8. Housing options advice has been extended to include employment sign posting and relevant housing staff have been trained and plans are being progressed to deploy an employment adviser dedicated to support unemployed tenants.
3.1. Both local authority and RSL housing stock is in significant demand as evidenced by the waiting lists, owner occupation is very difficult to access at present due to high purchase prices, the requirement for large deposits and the lack of availability of mortgage finance. The Council is already aware that tenants impacted are Housing Benefit claimants and this is unlikely to be an option available to them.
3.2. In Renfrewshire a Housing Options approach is in place; as part of housing advice services, tenants and applicants are given an overview of all housing options available to them, including discussions around alternative tenures including the private rented sector.
3.3. The private rented sector is relatively smaller compared to other tenures and wider welfare reforms will also make this sector more difficult to access. Tenants leaving their current homes may end up staying with family or friends or present as homeless putting greater pressure on existing services.
3.4. Shelter Scotland, have indicated that people judged to be under-occupying in the social sector and who can't afford the shortfall, will be forced with the choice to downsize or run up arrears. Due to the widely recognised chronic shortage of one-bedroom social houses, the charity says many will have to turn to the private rented sector. In Renfrewshire the existence of the required number of one bed room private rented properties is questionable.
3.5. As highlighted in tables 1 and 2 in Appendix 1, rent for a one-bedroom property in the private sector is on average higher than rent for a two-bedroom social property. Tenants electing to transition to a private tenancy as means to alleviate the impact of under occupancy rules on a social tenancy, would qualify for full Local Housing Allowance (LHA) as they would no longer be assessed as under-occupying – perversely this would be costing the public purse more in terms of providing housing costs support than it would to provide full benefit support for a social rented property without any associated under occupancy reduction.
Under occupancy reduction
4.1. The removal of the spare room subsidy, or the bedroom tax, as it is more commonly known, has introduced deductions from housing benefit on tenants who are deemed to have more bedrooms than they need. As referred to earlier, options for tenants in this situation are limited as the housing stock in the area does not match the associated demand for smaller one bedroom properties and with many affected tenants advising the Council that they have no way of making up the shortfall.
4.2. At the point of implementation of the under occupancy reduction, a total of 1,960 Council tenants lost £1.2 million a year in housing benefit (as detailed in table 3, Appendix 1) and 1,100 Housing Association tenants lost £0.6 million a year in housing benefit. It is anticipated that a major component of this loss in benefit will lead to a reduction in rental income for both the Council and Registered Social Landlords (RSLs).
4.3. Based on data from the end of July 2013, July the number of tenants affected by Under Occupancy and in arrears has risen to 1,464, with only 27% of households affected maintaining a clear rent account. The increase in rent arrears since the start of the financial year and introduction of the under occupancy reduction is £229,000. This is despite the proactive attempts of the Council to inform and support tenants through the changes and places significant financial risks on the potential to recover unpaid rent going forward.
4.4. The 2013/14 HRA Business Plan includes an anticipated increase in the level of budgeted bad debt provision from 2.5% to 3.5% (c£400k increase) and 5% (c£600k increase) thereafter. In addition, previously anticipated staffing savings of £300k in 2015/16 and £200k in 2016/17 have been removed from the HRA Business Plan to reflect the anticipation of increasing service pressures to support tenants and address growing rental arrears. In addition to this, further budgeted resources of £331,000 per annum have also been built in for 2013/14 and moving forward to provide the necessary staffing resources that are anticipated, as best can be at this point, to be required to provide these additional services and manage the additional service pressures. Any increased costs or reduction in income for 2014/15 to 2017/18 will be built into future Business Plans once increasing certainty is established over the emerging impact of the under occupancy reduction and the wider reform agenda.
4.5. Housing Benefit paid to tenants in the private rented sector is based on Local Housing Allowance (LHA) rates. The LHA rates in Renfrewshire are higher for all property sizes than in the social rented sector. As referred to above, it is anticipated that a counter- productive consequence of the under occupancy rules will see some tenants under occupying in the social sector, electing to move to the private sector and receive an increased amount of housing benefit for a smaller sized property.
4.6. Renfrewshire Council also expects a number of possible impacts on homelessness generally which are anticipated to emerge as a direct result of the HB changes. These include pressure on the proportion of lets to homeless applicants due to an increase in transfer requests from existing tenants in receipt of housing benefit who are under- occupying their homes - this may in turn lead to an increase in the length of time taken to complete the local authorities duty to house those who are unintentionally homeless, and an increase in the need to provide (and fund) temporary accommodation – it should be noted that even those who are deemed to be intentionally homeless can require to be provided with temporary accommodation.
4.7. Renfrewshire Council has always recognised the housing circumstances of Council tenants and tenants seeking to transfer are given a proportion of available lets within the current allocation policy. The Council is continuing to take a flexible approach in consideration of mutual exchange applications to accommodate those tenants impacted by the under- occupancy rules.
Benefit cap
4.8. While numbers affected by the benefit cap within Renfrewshire are low (29), for the affected larger families this poses significant concern. The annual reduction in housing benefit paid to these households is currently estimated as £106,384. Input from DWP and other agencies, including the Council will be required to provide support to the families in relation to employability and housing options.
Support and Exempt accommodation
4.9. Discussions have commenced with the Council’s commissioned housing support providers to look at current service specifications; current housing support provision; current housing management provision to determine what changes need to be considered when developing new tenders for these commissioned services. In the future housing support and housing management must be much more clearly aligned within service contracts to ensure supported accommodation projects are sustainable. While the DWP has indicated that they wish to better understand the supported housing sector and the impact of housing benefit in the sector in order to protect existing provision from the unintended consequences of welfare reform, until this work is concluded risks remain in relation to supported housing provision.
Temporary Accommodation
4.10. Under occupancy restrictions are being placed on HB recipients placed in Council owned temporary accommodation. This is not the case where tenants are placed in privately sourced/leased accommodation used for this purpose. In Renfrewshire 88% or 147 out of 167 properties used to house people presenting as homeless are council owned therefore this potentially places an additional burden. The majority of households living in temporary accommodation receive housing benefit and are placed in accommodation arising from an urgent need rather than a strict adherence to size criteria. By the end of July 2013 arrears of approximately £27,000 of under occupancy arrears had accumulated.
4.11. Renfrewshire Council recognises its duty to minimise homelessness and protect the vulnerable. In the short term, the impact of the HB reduction will in effect create a benefit gap which is not being passed on to homeless people temporarily lodged in accommodation. This is a new burden and a form of cost shunting from the DWP to local authorities which has the direct impact of diverting already stretched Council resources away from other priority areas in order for the Council to protect the most vulnerable of clients from what is seen as an unintended consequence of welfare changes. However, it is recognised that this action taken by the Council will not be sustainable in the long term and addressing this unintended and unfair consequence of the reforms on the most vulnerable of individuals is something which the Council continues to lobby the DWP for through a range of routes.
4.12. In addition, it is intended that housing costs for short stay tenants will be included in Universal Credit at LHA rates and paid direct to tenants. There will also be a management element, or overhead, however the method to be applied has yet to be determined. The Council has significant concerns over the underlying logic of this approach which is expected to place significant pressure on already extremely vulnerable clients and it is fully anticipated that a very high level of non payment of associated rent will occur as a consequence. An estimated non-recovery of £482,000 in annual rental income relating to the direct payment of the Housing Benefit element to short stay tenants through Universal Credit is expected to have an impact on the Council’s ability to provide Short Stay, temporary accommodation.
4.13. Work is ongoing to look at the current modelling of temporary and supported accommodation to determine the future viability of the current model of service delivery, which at present proves to be highly effective at meeting the immediate needs of vulnerable individuals and families. The Council is also looking at developing other options within the private sector to ensure single households have sustainable and affordable temporary housing options in accommodation that is the correct size and meets their needs. The Council is currently carrying out scoping exercises of empty buildings and cost analysis on buildings that could potentially meet the Council’s requirements moving forward. However, it is recognised that such potential re- modelling of service delivery comes with the risk that what is subsequently put in place fails to deliver an equivalent level of service, impacting once again on some of the most vulnerable in our society.
LHA changes
4.14. During 2012/13 the Council supplemented the DHP fund by giving a total of £168,000 and over the last year Renfrewshire Council actively supported private sector tenants impacted by the LHA changes. Tenants were contacted and invited to apply for a Discretionary Housing Payment as a means of providing short term support to allow them time to consider their options or seek alternative accommodation. Overall £104,000 was awarded to tenants in private rented accommodation with £26,000 of this arising from the direct contact made by council staff to tenants affected by the LHA changes. The Council continues to support these customers however with the scale of the changes for social sector tenants the DHP fund is expected to be under significant pressure as the year progresses therefore it is anticipated that there will be less scope to provide a similar level of assistance to affected tenants.
Changes to non dependant deductions
4.15. The Council recognises that non dependent adults living in a property are expected to make a contribution to housing costs, based on income. The increase in non dependant deductions over the last two years places additional pressures on landlords in collecting the balance due from non dependants and with the introduction of the under occupancy means that the presence of a non dependant can lead to the need for detailed benefit advice. Households with non dependants have been beneficiaries of DHP payments over the last year.
5.1. Discretionary Housing Payments (DHP) provide claimants with additional financial assistance with housing costs, in addition to any welfare benefits, where a local authority considers that further help is required. The DWP allocate the fund to councils and councils can, under the legislation, consider adding to this fund up to a maximum of 2.5 times the DWP allocation. In short to medium term a DHP award is likely to be one of a limited number of options open to support tenants.
5.2. The UK Government increased the overall DHP fund to help mitigate some of the short to medium term impact of the Housing Benefit changes. The Renfrewshire allocation has increased from £74,464 in 2012/13 to £267,351 in 2013/14. The DWP has advised that this increased level of discretionary funding is to be targeted at mitigating the impact of the under occupancy reduction, the benefit cap and the impact on temporary accommodation after the introduction of Universal Credit.
5.3. In the last two financial years the Council has approved additional top up DHP funding of £60,000 in each year. The UK Government allocations were £52,314 in 2011/12 and £74,464 for 2012/13.
5.4. In addition to the DWP allocation for 2013/14 of £267,351 the Council has approved additional top up support for the DHP fund by £150,000 (150% of previous year) from its own resources bringing the total support available to £417,351 to provide tenants with short term support that will allow them to meet their rent obligations while considering other options. While the Council took this necessary step it is recognised that this will not address the loss of benefit of £1.8 million across all housing providers in relation to the under occupancy alone. There is a proposal going to the Council meeting on 3 October 2013 to bring the Council’s contribution up to the maximum allowable.
5.5. Data on DHP awards since April 2013 highlight that 85% of the awards are being made to tenants affected by the under occupancy reduction, with households unable to move for health reasons and families where an extra room is required for access to children benefiting most.
6.1. Renfrewshire Council would like to take the opportunity to draw the Work and Pensions Committee’s attention to another significantly concerning aspect of the UK Government welfare changes linked to the introduction of Universal Credit – direct payments. The Council view this proposal as the biggest single financial risk to the long term sustainability of housing services within Renfrewshire. It breaks the existing arrangement of housing benefit support being paid direct to the landlord and places responsibility on individual tenants to manage their overall finances and sustain on an ongoing basis payment of their rent. It is the Council’s view that although many tenants will, with appropriate support from the Council, transition to this new arrangement, a large number will struggle which will inevitably lead to a significant increase in rent arrears, placing increased financial pressures on social landlords and longer term rental levels.
6.2. Emerging findings from the DWP Demonstration projects highlights the increase in the level of non payment of rent and where rental income is being recovered, this is at a significant cost to the social landlords involved – a cost that DWP do not at this stage appear willing to support. Given the limitations of the demonstration projects concerns remain over the long term impact of direct payment and the cost of supporting tenants to make payment and the impact on household incomes and social landlord revenue streams where conflicts arise. Using Council data, if 10% of tenants do not pay rent the loss of rent income per year will amount to £2.6 million a year and this loss rises to £5.2 million if non payment rises to 20%.
6.3. Projected losses in rental income of this order will cause significant challenges in relation to the funding of maintenance programmes and long term investment in housing provision. The Council and social landlords in general will be required to review the affordability of existing funding streams and consider the impact on rent levels for all tenants as a consequence of the significant financial pressures that are anticipated.
7.1. Responsibility and funding for CT support transferred to the Scottish Government and the Council tax Reduction scheme developed in Scotland broadly mirrors the previous Council Tax Benefit scheme. As the scheme transferred to the Scottish Government less 10% of the funding, the Scottish Government and COSLA agreed to fund the difference for 2013/14. This transitional arrangement means that recipients of the new Council Tax Reduction have not seen any change in the level of support they receive. Discussions are being progressed between Scottish Ministers and COSLA in relation the longer term funding and the impact of funding decisions on the shape and operation of the scheme.
8.1. Renfrewshire Council has developed and implemented a wide ranging corporate wide programme of work to ensure the Council is effectively mobilised and plans to manage as far as possible the impact of the welfare reform changes.
8.2. Programme activities through 2012/13 have focused on raising awareness of the changes and engaging directly with those affected, in particular with tenants. A corporate training programme has been developed and delivered to staff and communications tools such as video and a range of print materials have been developed and shared with partner organisations across Renfrewshire. The Council and partner RSLs have engaged directly with tenants with 85% (1662) of council tenants receiving direct contact prior to 1 April 2013.
8.3. To further recognise the needs of tenants, Renfrewshire Council has approved proposals to reclassify a property where it can be evidenced that a bedroom is stated as being required to meet disability or medical needs, and no other suitable alternative is available and amendments to the allocations policy to enhance exchange options.
8.4. In addition to supplementing the DHP funding outlined at paragraph 5.4 the Council has approved £1.3 million in additional resources for 2013/14 to support tenants and citizens affected by the welfare changes, including the Housing Benefit changes. This has resulted in the deployment of a 45 strong team across a range of services, including Housing Services, Advice Services and the Benefits Service to provide help and support.
8.5. Welfare reform represents a major financial risk to the Council Housing Revenue account (HRA) over the medium term as a range of welfare changes take effect over this period. The Council has planned for and responded to predicted increases in customer demands, needs and also to pro-actively protect the financial position of the HRA. Resources involved in rent collection have increased as part of proactive measures outlined earlier. Twelve temporary posts were funded by the Housing Revenue Account at a cost of £0.080 million in 2012/13 with a full year recurring cost of £0.331 million moving into 2013/14 to supplement existing resources in Housing Services. The underlying objective of this investment is to both, support the tenants and their families manage the change but also to seek to pro-actively protect the HRA rental stream during this transition.
8.6. The Council’s Benefit Service is proactively managing requests for review and disputes in relation to application of the under occupancy reduction in accordance with the Housing Benefit legislation and guidance. When additional information is provided by the customer that supports removal of the reduction, the housing benefit decision is revised. Where the decision upheld, a submission is prepared and submitted to HM Courts and Tribunal Service for consideration.
8.7. A welfare reform summit was held in Renfrewshire in December targeting support and awareness at Third sector organisations operating in Renfrewshire and the Council has recently supported a Third Sector Welfare Reform event led by the Third sector interface organisation in Renfrewshire. Further events are planned.
8.8. An Employability Conference was held in June 2013 targeting employability and business development practitioners from across Renfrewshire. Information on Welfare Reform was shared and the discussions will shape future direction and partnership working.
9.1. Renfrewshire Council is willing to present oral evidence to the Work and Pensions Committee in relation to this inquiry into the provision of support to meet housing cost in the reformed welfare system.
The Scottish Index of Multiple Deprivation (SIMD), the Scottish Government’s official tool for identifying those places in Scotland suffering from deprivation, published in 2012 notes that Renfrewshire’s overall share of the number of datazones showing the worst deprivation in Scotland has increased and the single overall most deprived datazone in Scotland is located in Ferguslie, Paisley.
In SIMD 2012, 14.7% of Renfrewshire’s population (25,030 people) is income deprived, compared to a Scotland average of 13.4%. In terms of employment deprivation, 15% of working age Renfrewshire residents (16,070) are employment deprived, compared to 12.8% in Scotland as a whole. Between SIMD 2009 and SIMD 2012, Renfrewshire had the largest increase in the percentage of working age people who are employment deprived (2.4%). Renfrewshire has the 7th largest share in terms of the 15% most deprived areas in Scotland.
There are approximately 75,000 households in Renfrewshire. 34% of Renfrewshire households rent their home in the social rented sector. Renfrewshire Council is a social landlord and retains 12,540 council houses with 68% of the households receiving Housing Benefit to assist them with meeting their housing costs. There are also approximately 7200 social rented properties managed by Registered Social landlords in the Renfrewshire area, with 69% receiving Housing Benefit.
The number of households renting in the private rented sector in Renfrewshire is estimated at 8,200. Of these around 3,400 receive Housing Benefit (LHA).
17,311 households in Renfrewshire were in receipt of Housing Benefit, totalling £63.8 Million as at 31 March 2013. Of this, £28.5 million was paid to Council tenants and £35.3 million was paid to tenants of Registered Social Landlords and private landlords.
1,960 council tenants are affected by the under occupancy reduction. A total of 1,657 tenants under occupy by one bedroom, while 284 under occupy by two bedrooms and 19 under occupy by 3 bedrooms. The total income at risk of non payment at this time is £13,500 per week, or £700,000 per annum.
Renfrewshire – data
• 12540 properties (excluding void properties)
• 68% of tenants receive Housing Benefit
• 33% of the stock, 4111, are one bed room properties
• 49% of the stock, 6098, are two bedroom properties
• 17% of the stock, 2110, are 3 bed room properties
• 2% of the stock, 220, are 4 or more bed room properties
• 1286 properties became void during 2012/13
Table 1, Renfrewshire Council rent levels 2012/13
Size/property | House | Own Door Flat | Maisonnette | Flat | Multi storey |
0 bed | £ 61.54 | £ 60.11 | £ 58.68 | £ 56.53 | £ 55.82 |
1 bed | £ 68.70 | £ 67.27 | £ 65.84 | £ 63.69 | £ 62.97 |
2 bed | £ 76.57 | £ 75.14 | £ 73.71 | £ 71.56 | £ 70.85 |
3 bed | £ 83.73 | £ 82.20 | £ 80.86 | £ 78.72 | £ 78.00 |
4+ bed | £ 89.45 | £ 88.02 | £ 86.59 | £ 84.44 | £ 83.73 |
Table 2, Local Housing Allowance rates March 2013
category | Mar-13 |
A 1 shared room | £ 65.00 |
B 1 bed room | £ 80.77 |
C 2 bed rooms | £ 102.69 |
D 3 bed rooms | £ 123.46 |
E 4 bed rooms | £ 184.38 |
Table 3, Impact on Council tenants at differing levels of under occupancy
Level of Under Occupancy | No. of affected tenants | Loss of Housing Benefit (weekly) | Loss of Housing Benefit (annual) |
1 bed | 1,657 | £17,400 | £903,000 |
2 bed | 284 | £5,700 | £294,000 |
3 bed | 19 | £400 | £21,000 |
Total | 1,960 | £23,500 | £1,218,000 |
25 September 2013
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