CIH North East Seminar 5 th July 2012 WELFARE REFORM IS YOUR - - PowerPoint PPT Presentation

Strategic Solutions to Improve Performance & Vfm

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5th July 2012 WELFARE REFORM

IS YOUR ORGANISATION RISING TO THE CHALLENGE?

Peter Hall Director - PHHS

CIH North East Seminar

Strategic Solutions to Improve Performance & Vfm

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What the Dickens is going on?

Strategic Solutions to Improve Performance & Vfm

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Black Hole?

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Or New Dawn?

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Private Rental Sector Local Housing Allowance (PRSLHA)

• Limited to the lowest 30% of rents
• £250 per week for one-bed, £290 for two-bed, £340 for three-bed , £400 for

a four bed, nothing extra for 5+

• Increases linked to the consumer prices index (CPI) rather than (RPI)
• Frozen in 2012-13

Benefit for single people aged up to 35

• Limited to the rent on a room in shared accommodation in the PRS (at the

lowest 30% of rents also) from January 2012 Non Dependent Deductions – HB

• Increased by nearly 60% to date – further 30% increase from April 2013.
• Impact of between £2 and £13 per week for tenants.

Overview of the Changes to Date

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Tax Credits

• Earnings Limit reduced from £41.3k to £26k for 1 child & £32k for 2+
• New Working Hours rules for couples – increased from 16 to 24 hrs
• 50+ Element removed
• Income Reduction changes
• If annual income goes down by £2,500 or less, no change in award
• If annual income goes down by more than £2,500, award adjusted but the

first £2,500 is ignored

• Backdating Reduced – from 3 months to 31 days existing/calendar month new
• Average Drop in Income of £1k per family

Contributory Employment and Support Allowance

• Limited to 1 year – youth provision for disabled people abolished
• Income drop of up to £94 per week

Overview of the Changes to Date

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Income Support

• Lone parents with youngest child aged 5+ move from Income Support to

Jobseeker's Allowance – requirement to find work.

• Health condition or disability which limits their capability for work may be able to

claim Employment and Support Allowance (ESA) instead. Incapacity Benefit

• Being phased out by December 2013 - no new claims from January 2011,
• New claims being assessed under Employment Support Allowance (with regular

tests to assess a person's capability for work), existing claims subject to reassessment.

• Where reviews result in awards of ESA, Job Seekers Allowance or Income Support

( 37% to date) claimants stand to lose up to £44 a week in benefits, with a £30 per week differential between the Higher Disability Rate for Incapacity Benefit (£88.55) and Severe Disability under ESA, JSA or IS (£58.20)

Overview of the Changes to Date

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www.phhsl.co.uk

Working families – conditional benefits

• Part time workers will have to demonstrate they are seeking to earn more or

face a sliding scale of cuts to their income.

• If fall below national minimum wage (currently £212.80) threshold will have to

demonstrate they are actively looking for additional hours, an additional, or new, job.

• Threshold for single parents with a child under 13 will be about 20 hours with

gross pay of £120

• With children over 12 they will be expected to work full time within 90 minutes
• f their home
• Mothers and fathers treated as separate individuals
• With a child under 13, one parent will be designated as the carer who will be

under the same conditionality as a single parent. The other will be treated as a single worker.

• A couple with children over 12 will both be expected to work 35 hours.

Overview of the Changes to come

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Underoccupation

• DWP eligibility criteria definitions used across social housing sector from

April 2013 – i.e.

• one bedroom being allowed for each person or couple living as part of

the household,

• a child aged 15 or under being expected to share with one other child
• f the same gender; and
• a child age 9 or under being expected to share with one other child

aged 9 or under, regardless of gender.

• Households under occupying accommodation will have their HB or

Universal Credit reduced by a given percentage of the rent – which could be as low as £4 per week, or as much as £37, but on average £14.

Overview of the Changes to come

Strategic Solutions to Improve Performance & Vfm

www.phhsl.co.uk

Disability Living Allowance (DLA)

• Intention to replace DLA from April 2013 with a new form of benefit –

Personal Independence Payment (PIP)

• Firm details not available as the government’s consultation and responses

to it have only recently closed/been published.

• Intention is that PIP will focus support to those individuals who experience

the greatest challenges to remaining independent and leading full, active and independent lives

• Expected 20% overall reduction in current expenditure on DLA
• Equates to £15 per week reduction per working age claimant
• Or could lose average of £73 per week if reassessed and not eligible

Overview of the Changes to come

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Social Fund

• Abolished from April 2013.
• Budgeting Loans and alignment replaced by payment of universal credits ‘on

account’.

• Community Care Grants and Crisis Loans devolved from April 2013 to local

authorities. Council Tax

• Abolished from April 2013
• Responsibility for eligibility, assessment and payment of council tax support to

Local authorities

• Must publish policies by December 2012.
• No plans to prescribe how schemes should operate – except that central

funding for it will be reduced by 10%, and support for pensioners will be set centrally.

Overview of the Changes to come

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Housing benefit to become part of Universal Credit

• For working age households (61+) and Pension Credit for pensioners
• Online claims and electronic payments direct to claimants
• October 2013 to April 2014
• 1/2m new claimants will receive Universal Credit instead of

Jobseeker's Allowance, Employment Support Allowance, Housing Benefit, Working Tax Credit and Child Tax Credit.

• 1/2m existing claimants and their families will be transferred when

their family circumstances change significantly, for instance if they get a job or have another child.

• April 2014: 3.5m move to Universal Credit.
• 2015 to 2017: 3m moved over, focusing on Housing Benefit claimants
• No Housing Benefit for Under 25’s from 2015> ??

Overview of the Changes to come

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National

• Institute of Fiscal Studies
• £12.8bn (£480 per household) through VAT etc in 2011-12
• £3.9bn (£150) through other tax and benefit reforms in 11-12
• £4.1bn (£160) less in 2012-13
• £9.8bn (£370) less in 2013-14
• £30.6bn less (£1,160 per household) over two years
• Largest losses as % of income in bottom half of income distribution
• Human City Institute Research

Overview of Impact on Incomes

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Local

• Worklessness rate of 26% across the North East: ↑ Unemployment and ↓

Job Creation

• High levels of disability claims
• County Durham Estimated Impact 2012/13
• Tax Credits £47m , DLA £31m ,Incapacity £25m, ESA £21m, Council Tax

£5m

• Overall loss to local economy in 13-14 of £150m, rising thereafter
• Underoccupation
• £30m plus across North East
• average of £676 ‘extra’ per household

Overview of Impact on Incomes

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Nationally

• 670,000 working age underoccupiers
• 530,000 (78%) under-occupying by just one bedroom
• 400,000 (60%) are single people or couples with no children only eligible for 1

beds

• 1 bed stock = only 21% of all RP stock, with only 60,000 1 bed relets per year
• £488m per year shortfall in rent payments
• Potential Extra 52m rent transactions per year
• Increases in arrears , bad debts , tenancy turnover and void periods

Locally

• 50,000 working age underoccupiers: £30+m shortfall in rent payments
• £0.5m DHP funding from DWP available : £1.25m potential total (may increase)
• Few 1 bed properties – Coast and Country: 16 for the 2,500 affected?

Impact on Housing

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Make use of ‘Making it Fit’… & Search for ‘How to Survive Welfare Reform’ Top Tips

• 1. Get to Know your customers… and Keep them Informed
• 2. Develop a Strategic & Risk Based Approach
• 3. Develop a Strategic Approach to Underoccupation
• 4. Review & Change your Allocations Policies
• 5. Develop your Income/Financial Advice Services
• 6. Review your Asset Management Strategy
• 7. Review your Development Strategy
• 8. Develop your Approach to Tenancy Fraud
• 9. Focus on Digital & Economic Exclusion and, last but by far from least

10.Focus on Value for Money

What should you be Doing?

Strategic Solutions to Improve Performance & Vfm

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Reduce Rents for existing tenants?

• Opportunity not taken by government but open to landlords
• Lord Freud on reclassifying properties: “‘The designation of property size is

another area where there may be flexibility”

• Rent standard a consumer standard – target rents are the maximum
• Vfm standard: “ensure providers boards maintain, and are transparent

about, a view in the round of the optimum sustainable performance of all their assets – including for example financial, social and environmental returns - in the context of meeting their organisation’s purpose and

• bjectives”
• Existing differentials in tenancy rents and rights : Secure, Assured,

Affordable

• How could you be transparent and fair with a discretionary approach?

What could you be Doing?

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• Transparent & practical approach for existing tenants
• Incentivise?
• Affordable? Sector Operating surplus in 2010-11 of £1.1bn –

underoccupation £488m

• Do the maths: Average of £676 per tenancy - v – all other costs
• Save 10% of operating costs - v – economic, social, practical &

reputational costs of implementing?

• 10 to 15% turnover per year: neutral position by year 5 or 6?
• Can your organisation afford it?
• Does it fit within your organisation’s purpose and objectives?
• Will your ‘stakeholder’s’ approve?

Blanket reclassification?

Strategic Solutions to Improve Performance & Vfm

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Choices....

Learn from Others & Pilots Be Creative Act Now Impact Assess

Strategic Solutions to Improve Performance & Vfm

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Peter Hall peter.hall@phhsl.co.uk 01202 233 214 www.phhsl.co.uk

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