Written evidence submitted by Aragon Housing Association
About the organisation
GUHG comprises of 3 subsidiaries: Aragon Housing Association (Aragon), South Northants Homes (SNH) and Macintyre Housing Association (Macintyre).
The attached document (Appendix 2) sets out further details about GUHG.
Reason for submitting evidence
We wish to give oral evidence to expand on this submission as the impact of Welfare Reform is complex and the nuances are difficult to convey in 3,000 words. We are also working on producing a report detailing the impact of the reforms six months after the introduction of the under-occupancy charge. We would hope to present those findings to Select Committee.
Recommendations
Executive summary of GUHG response
GUHG is working hard to support and encourage customers into employment and we welcome initiatives to further these aims. GUHG also welcomes any schemes for reducing under-occupancy. However, Welfare Reform does not achieve either of these for customers in our area. Having examined our extensive data we are making this submission to report on the impact of Welfare Reform.
The impact of Welfare Reform is far reaching for all housing associations. We have reassessed our risks and revised our business plan. The early indications are that rent arrears have gone up. Our customers are struggling to meet rising costs and are having to cut back on fuel and food to make ends meet. As a consequence our referrals for food parcels have doubled.
Our opportunities to help customers downsize are limited by the lack of smaller social housing units. There is also a shortage of appropriate housing in the private sector.
Overcrowding is not an issue in our area and the demand is for smaller housing units. Some vacated three bedroomed properties are being allocated to tenants with low needs because households with higher needs no longer qualify for them.
We are finding that the grant of Discretionary Housing Payment (DHP) by Local Authorities is masking the impact of Welfare Reform. At the moment DHP is a temporary provision and there is a danger that any assessment by the Select Committee will not accurately reflect the likely future impact.
We would be happy to assist the Select Committee and provide a full data report if this is required.
Our new and innovative responses to the changes
We have considered a number of innovative ways of assisting our customers to cope with the Welfare Reform changes.
Our subsidiary South Northants Homes (SNH) has strengthened support provision, doubling the complement of welfare benefits and generic tenancy support officers. Aragon has also appointed welfare benefits advisers and increased its debt and money advice service.
SNH has been involved with the establishment of a foodbank in Towcester. Aragon also supports and donates to a foodbank project. The referrals to foodbanks have doubled for both organisations. We do not consider foodbanks to be a good alternative as donations are limited to non-perishable food. We would like to see a proper study of the effect on health for people who have a prolonged reliance on food banks.
We are offering a number of support projects, such as help in getting back into employment, cooking on a budget, confidence courses, computer courses and budgeting courses, all offered on both an individual and group basis.
SNH won a Community Impact Award for its Move-In4ward skills project delivered to approximately 40 of its most vulnerable tenants, spread over eight modules. These looked at essential issues such as self esteem, job seeking skills, housing matters, DIY skills, health issues and cooking on a budget.
Both organisations have funded and developed credit unions. We are encouraging our customers to sign up to jam jar accounts, to help them manage their money better, particularly once Universal Credit (UC) is introduced.
We have become a UK Online training centre to help our tenants to become digitally aware and prepare them to make UC applications digitally and apply for job electronically.
We are working with local partners to set up training for young people leaving care and those who are not in employment, education or training (NEETs). This training in the installation of kitchens and bathrooms is designed to lead to apprenticeships and work placements.
We are considering setting up food growing projects to provide fresh fruit and vegetables. However the scope of this project is very limited and will not plug the gap were people are unable to afford fresh fruit and vegetables.
Our stock is well insulated with efficient heating systems and we have innovated in the provision of solar PV and air and ground source heat pumps where practical.
We report these innovative approaches with the proviso that we would not want to see these actions being used to justify the under-occupancy charge because these solutions are not sufficient to help all our customers deal with the consequences of Welfare Reform. The work we are doing can only make a small impact.
What is the impact of the changes on the business?
SNH has 243 customers affected by the under-occupancy charge. Aragon had 408 customers affected. Currently, this has been reduced to 373 as some have had change of circumstances or have moved. Those under-occupying are mainly living in three bedroom properties. These properties have now become much harder to let because the demand in both areas is now largely for two bedroom properties; we do not have large families in overcrowded conditions waiting for three bedroom properties. Aragon is working with one family in overcrowded conditions but they require a five or six bedroom property and we are working with the local authority to adapt a suitable property for them.
A recent analysis of the lettings in July 2013 of three bedroom properties in the Aragon stock showed that all the properties were let to those with low needs and in some cases it took more than one bidding cycle to allocate any household to these properties at all.
SNH does not have families in their stock who are affected by the benefit cap. Aragon has five families affected. Of these three families are in the process of claiming DLA/Tax Credits which will exempt them from the cap if they receive an award.
Our overall rent arrears have decreased due to increased resource provided prior to the implementation of Under-Occupancy Charge but the arrears owed by those affected by the bedroom tax have increased by approximately £13,000 for SNH. For Aragon the rise in arrears among under-occupying tenants from 31/03/13 to 22/07/13 was £74,852.80. We have issued Notices of Seeking Possession in 35 under-occupying cases.
SNH has approximately 60 tenants in arrears who have never been in arrears before. Aragon has seen 72 tenants affected by the under-occupancy charge falling into arrears where they had clear accounts before.
The caseload and referrals to our Welfare Benefits Team has increased by 50% for SNH, all additional cases are due to the direct impact of Welfare Reform. Aragon has appointed a Welfare Reform Benefits Advisor to cope with increased demand. The issue of the lack of other benefits advice is also relevant as cuts to Legal Aid funding have resulted in difficulty in accessing advice. Both organisations have examples of customers who have under claimed benefits considerably.
SNH is carrying out at least 50% more mutual exchanges directly because of Welfare Reform, which for the tenant is the best way to reduce the impact of the under-occupancy charge. However, mutual exchanges are very costly for the organisation, costing on average of £550 per move.
Both subsidiaries offer a moving allowance to people who are willing and able to downsize. Without this allowance most of our customers would have been prevented from moving as they had rent arrears.
What is the impact of the changes on our customers?
SNH has been supporting five people who have been subject to the new Job Seeker’s Allowance sanctions, all of whom had to be referred to the foodbank. Referrals to the foodbank used to be limited to three per year per person. This has now been revised to three per six months, and will need to be reviewed again due to repeat presentations. In August 2013 there were 14 referrals from Aragon to the foodbank.
The sanctions, which have always been in place, are clearly being implemented with far more vigour and with a different interpretation, and it is our understanding that those sanctioned in our area have increased ten-fold.
The impact on those who have disabilities is extreme. SNH has approximately 60 households who are disabled and affected by the bedroom tax, many of whom live in specifically adapted properties. It is practically impossible to transfer these households to smaller properties because of the nature of their disabilities and specific housing need. As such we are trying to find alternatives to keep them in their own homes, such as finding different uses for their ‘spare’ bedrooms, and maximising their incomes, but the reality is that for most of these tenants, they will have to find the additional money to cover the housing benefit shortfall.
Our Money Advice Team has seen an upsurge in both referrals and debt levels, many of which are directly attributable to Welfare Reform. The financial gains for clients are twice as high as they were at this point four years ago. The amount of referrals has increased by 50% compared to this time last year.
Our work on welfare benefits has highlighted that our tenants are under claiming benefits including Housing Benefit. For example Aragon has helped customers claim nearly £79,000 in Housing Benefit alone over the last year. The total amount of benefit claimed by Aragon’s customers with our assistance is nearly £250,000.
Another consequence for tenants who move into the private sector is that they lose services we provide to tenants as a social landlord. Those tenants will not have access to our training and employment initiatives which help towards getting people into work and off benefits.
What impact do we anticipate over the coming months on us as a housing provider?
The amount owed in under-occupancy charge arrears and those who find themselves in arrears for the first time because of the under-occupancy charge is likely to increase dramatically once the DHP pot is exhausted which is likely to be in the next two months. SNH currently has 43 tenants on DHP. These are our most vulnerable families and once DHP ends they will be at serious risk of losing their tenancies as there is no ‘additional’ income to cover the shortfall in HB. Aragon has 93 tenants who have received DHP at some point since April; 52 are currently still in receipt of DHP but most of these awards end in the next two months.
SNH has approximately 650 people of working age who will need to migrate from DLA to PIP. This is a task for which most of our tenants will need support. On average, a PIP claim takes approximately five hours to complete. It can take up to an hour to complete the telephone registration alone, so to support as many of our tenants as possible through this migration process will put a huge strain on resources, and there is a real chance that other tenants, who need support with other benefit issues, will need to wait longer for our help and potentially lose out on money they desperately need.
Most of Macintyre’s customers who all have learning disabilities (approximately 500 people) will need to migrate to PIP and will need support to do this. These customers are the least able to deal with the impact of Welfare Reform changes as all MHA’s clients have a learning disability.
Universal Credit (UC)
Aragon received £32,869 602 last year of total rent of which £8,583,162 was in Housing Benefit payments for working-age claimants, direct from Central Bedfordshire Council via a bulk transfer. SNH received £13,188,350 in rent last year of which £6, 198,298 was in housing benefit. We estimate that the majority of our customers who are not deemed as vulnerable will be paid their benefits directly under the new Universal Credit arrangements, which will include the housing element which is for their rent.
The concerns around housing costs being included in Universal Credit payments are well documented. Tenants who are subject to sanction will lose all their benefits and risk losing their home whereas those being sanctioned currently do not lose Housing Benefit.
What impact do we anticipate over the coming months for our customers?
In our area the private rented sector is limited and insecure, so the opportunities for people to downsize into this sector are both severely limited and undesirable. Research in this area shows for the area that Aragon operates in (Central Bedfordshire), the average private rent for a two bedroom property is £156.13 per week, which is £29.18 per week above the Local Housing Allowance for the majority of the region. This means that should our tenants move to such properties, they face an average 18.6% shortfall, despite occupying properties of the correct size. This means both a larger shortfall for tenants and higher Housing Benefit awards; the result is that costs are both higher for tenants and Local Authorities. Therefore, moving to the private rented sector is simply not a viable option in our region. The same is true for those living in South Northants Homes’ area.
Furthermore, as a Group we do not have enough smaller units to rehouse all of those affected by the under-occupancy charge, so over time, we anticipate that our most vulnerable tenants will no longer have the capacity to maintain their tenancies, leading to evictions, increased levels of personal debt and the resulting pressures on public/private services, such as food banks, clothing banks, GUHG’s and the Councils’ support teams and statutory services such as social services.
The councils’ DHP budgets will soon be spent, and our tenants currently maintaining their tenancies in this way will need to find another option. There are limited options to move and as such, we anticipate that these families will quickly get into serious debt, both housing and otherwise resulting in a catastrophic impact on some households. The DHP scheme merely offers temporary respite from benefit cuts and is potentially pejorative, conditional, subjective and can become intrusive. In one instance our local authority refused a DHP claim because the applicant paid for dental insurance. The tenant in question has very bad teeth as a result of a medical condition. Another DHP was refused for a wheelchair user, seeking work, they were relying on broadband in order to do this but it was deemed that broadband was an unnecessary ‘luxury’. The overall effect on our tenants could be that they become demonised and treated less favourably for attempting to improve their quality of life.
We anticipate that it is the most vulnerable groups, such as homeless households and households with a disability who will suffer the most. Disabled households are the most difficult to transfer as the options open to them that are open to other tenants, such as returning to work or the occasional opportunity to downsize are more limited. They will often have no option but to find the shortfall or face eviction. The total cost to the public purse, should they be evicted, is believed to be in the region of £7,000.
Those who have never had to manage their own housing costs will need a significant amount of support to build up the skills required to cope with UC, and if they fail to do so, which we unfortunately believe that some will, they too face the prospect of losing their tenancies
Conclusion
17 September 2013
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