Agenda item

(Director of Housing) To consider the attached report.

The Panel received a report from the Director of Housing regarding the Welfare Reform Mitigation Action Plan Quarterly Progress Report.

In March 2012, the Welfare Reform Act 2012 received Royal Assent, the act had many implications for the Council and residents in the district. The main changes effecting the Council were:

(a)        Reducing the amount of housing benefit given to Council and housing association tenants of working age, who under-occupied their property by one or more bedrooms. From April 2013, Council tenants under-occupying their home by one bedroom would have their housing benefit reduced by 14% of the rent, and tenants under-occupying by two or more bedrooms would have their housing benefit reduced by 25% of the rent.

(b)        From October 2013, on a phased basis, paying housing benefit to Council and housing association tenants direct, for them to pay their rent themselves.

(c)        Reducing the maximum amount of rent for which private tenants could receive housing benefit. Only tenants of those private rented properties that had the lowest 30% rents in the district would receive full housing benefit. Any rents above the 30% threshold have had to be paid by tenants themselves.

(d)        Increasing the age threshold for the shared room rate from 25 to 35 years. Single private tenants below this age only received an amount of housing benefit equivalent to the rent they would pay if they lived in a private rented property, shared with another person.

(e)        Reducing the amount of housing benefit for tenants who had non-dependants living with them.

(f)         From April 2013, on a phased basis by local authority area until September 2013, application of a Benefit Cap of £500.00 per week (£350.00 for single claimants).

(g)        From April 2013, introduction of a new Local Council Tax Support Scheme replacing the current national Council Tax Benefit Scheme, with overall funding reduced by 10% from current levels, resulting in reduced Council Tax Support of at least 20% for working age claimants.

(h)        From October 2013, on a phased basis, introducing one universal credit payment to replace a range of different welfare benefits, including housing benefit.

Effects and implications on the Council and tenants – CIH Study

To help the Council prepare for the charges, the Council commissioned the Chartered Institute of Housing (CIH) to undertake a major study into the impact and implications of the welfare reforms on the Council, tenants in the district and homelessness in Epping Forest, as well as make recommendations on how the Council should respond to the changes, for the benefit of both the Council and residents.

A presentation to members and officers from the CIH in September 2012 on the key findings from the study took place. In summary, they identified the following implications for the Council:

(i)         Increased rent transaction charges of around £52,000 per year, due to the Council’s tenants in receipt of housing benefit having to pay their rent themselves, on a phased basis, from October 2012, through Allpay, direct debit etc.

(ii)        An increase in rent arrears of between £185,000 (40% increase) and £413,000 (95% increase), due to all Council tenants in receipt of housing benefit no longer having their rent accounts automatically credited with their housing benefit every fortnight, but having it paid to them direct and then tenants paying their rent onto the Council. The minimum anticipated increase in rent arrears of 40% was based on applying the Council’s current rent collection rate of 98.8% to the significantly increased total amount of rent collected direct from tenants currently in receipt of housing benefit. It was anticipated that, due to the cumulative effect of the welfare reforms, many of these tenants would experience greater difficulty paying their rent than those tenants currently not in receipt of housing benefit, already paying their rent direct themselves.

(iii)       Although not quantified by the CIH in their study, it was also anticipated that rent arrears would increase further as a result of under-occupying tenants having to pay the “bedroom tax” and experiencing financial difficulties as a result.

The main implications for Council tenants were:

(iv)       A loss of around £475,000 in housing benefit per annum for all working age tenants who were currently under-occupying their Council home by one or more bedrooms.

(v)        A loss of around £175,000 housing benefit in 2012/13, increasing to £250,000 per annum from 2013/14, for all tenants who had non-dependants living with them.

The CIH assessment of the main implications for private Council tenants were:

(vi)              A loss of around £360,000 in housing benefit per annum due to the reduction in the maximum Local Housing Allowance to the 30^th percentile of private rents.

(vii)      A loss of around £270,000 in housing benefit for single private tenants between 25 and 35 years of age who rented their own property and did not take the decision to share their property with someone else.

The CIH estimated that the total loss in housing benefit and other welfare benefits to both Council and private tenants in Epping Forest, as a result of the welfare reforms, would be around £1.1 million per annum. In addition, the direct financial impact on the Council itself was estimated at between around £240,000 and £460,000 per annum. These losses in residents’ income were in addition to the anticipated £1.2 million loss arising from the introduction of the new Local Council Tax Support Scheme from April 2013. In addition, the CIH identified that as a result of these reduced welfare payments, there was likely to be a significantly increased amount of homelessness for the Council to cope with.

Welfare Reform Mitigation Project Team and Mitigation Action Plan

In view of the significant effect that the welfare reforms would have on the Council and residents, a Welfare Reform Mitigation Project Team was formed in September 2012, chaired by the Director of Housing and comprising Housing officers and Benefit officers, to consider and implement ways that the effects of the welfare reforms could be minimised. Good progress had been made to date in delivering 58 actions of the Action Plan.

RECOMMENDED:

That the Quarterly Progress Report on the Welfare Reform Mitigation Action Plan as at 1 January 2013 be noted.