Agenda item

3.1     Ralph Wilkinson (Head of Public Services), Mick Lear (Head of Benefits) and Genevieve Macklin (Head of Strategic Housing) introduced the report to the Committee. The following key points were noted:

·      Changes to legislation were announced after the papers for this meeting were published.

·      The number of cases of tenants across Lewisham affected by the bedroom tax went down in the previous financial year. This happened for a variety of reasons: some residents have come off benefits, some have moved to smaller accommodation and some have become exempt. The Council uses discretionary housing benefit payments to assist residents impacted by the bedroom tax while they look for smaller accommodation. A requirement of the discretionary payment is that residents look for smaller accommodation and at least bid for smaller properties but often recipients will have made no efforts to move.

·      Approximately 26,000 families or single parents and 18,500 single people are in receipt of benefits across Lewisham. It is estimated that about 400 cases will be affected by the new benefit cap. Of those, 56% will have 3 or more children and 19% will 5 or more children. The Council uses discretionary housing payments to support these residents.

·      Last year, the funding from central government for the discretionary housing payments was £1.7m, but the Council spent £1.9m. Some of the shortfall was covered by payment from the housing revenue account. The payment is conditional on the residents actively looking for a smaller property to move into.

·      The government has committed to spend £800m nationally to fund discretionary housing payments. If the distribution of this was the same as the current grant, this would mean a small increase in funding for Lewisham.

·      The administration of Universal Credit is done by the Department for Work and Pensions (DWP) and JobCentre+. The payment is done in similar way to a salary, where there is one payment a month. In addition, the payment will be made to one member of the household. Recipients of Universal Credit will have an online account to manage their claim. Full migration to Universal Credit is scheduled for completion in 2020. The delivery model for supporting the transition to Universal Credit for the Council will be done in collaboration with Lambeth and Southwark.

·      A maximum of two children are to be included in the calculation of child tax credit calculations. This change is due to come in in 2017.

·      ‘Pay to Stay’ is a policy announced by the government where households in social housing earning over £40,000 will be required to pay market rates or near market rates. It’s estimated that between 1,800 and 2,200 households would be affected in Lewisham across the entire social housing sector.

·      A 2 bedroom property in Lewisham costs £1,300 on average. According to research by Shelter, households need an income of about £56,000 to cover these costs. A couple earning £40,000 a year would be able to afford a rent of about £950. This cap applies to households and not individual earnings. This means the threshold would be reached by a couple both earning slightly more than the London living wage. The legislation currently states that councils should charge rents up to market rates so the government may introduce a scale.

·      Rent rates have a considerable impact on the disposable income available to renters. Most partners building developments in Lewisham do not set rent rates above 65% of market rates. Affordability is an issue across all tenures: home ownership, private renting and social renting.

·      Housing supply was last in line with demand for housing in the late 1960s. Since then, the shortage of housing has been getting worse. House prices in Lewisham have increased significantly and as a result more people have become homeless. New supply of homes has gone down while demand has increased. This has also decreased the numbers of social housing units becoming available as people move out. This in turn has resulted in the number of people in temporary accommodation increasing. The number of available social housing units is miniscule compared to the numbers needed.

·      More people are being evicted from the Private Rented Sector as landlords have a choice of tenants due to the shortage of properties. There are more children living in poverty in the private rented sector than before.

·      Right to Buy is being extended to include properties owned by housing associations. This will mean less stock is available for social rents. The ‘Pay to Stay’ policy would make it more likely than people will exercise their Right to Buy. Housing Associations will be required to decrease social housing rents by 1% per year for the next four years starting April 2016. This will have an impact on their ability to make the development of new homes financially viable.

3.2     Ralph Wilkinson, Mick Lear and Genevieve Macklin responded to questions from the Committee. The following key points were noted:

·      The model being developed with Lambeth and Southwark is to support people in the transition to Universal Credit. This will include support in developing budgeting skills as well as employment support. Negotiations are on-going with DWP about the model. Estimates from DWP are that about 5% of people will need support in the transition, while the Council estimates that this will be more like 40% of people.

·      The payment of Universal Credit to one member of the household could be very problematic in cases of domestic violence.

·      Universal Credit won’t have a weighting for London applied. The benefit cap however is higher in London than elsewhere in the country due to the increased cost of living in the capital. London Boroughs have argued that, although the benefit cap would be 14% higher in London than the rest of the country, the cost of living in London is even greater than that. This hasn’t increased the benefit cap in London however.

·      54% of the households impacted by the benefit cap live in the private rented sector. The benefit cap may lead to people being unable to pay rent and therefore may increase the number of evictions and homeless households.

·      The difference between the percentage of population receiving working tax credit nationally and in Lewisham may be explained by a different in the level of wages and more people working part time.

·      It has not been confirmed yet how the households that would be required to ‘Pay to Stay’ would be identified. Indications are that the government will likely estimate for each local authority how many tenants are earning over this threshold and Councils would then be required to pay government the difference between the social rents and the market rents. It seems likely that Her Majesty’s Revenue and Customs would share information with local authorities about the earnings of residents. Tenants would also be required to notify the Council if their earnings rise above £40,000. The onus would be on local authorities and tenants to ensure the required rents are paid. As the legislation develops, a key question is how the Council would cover the costs of implementing these changes.

·      It would be better if the threshold for ‘Pay to Stay’ was set with reference to the Local Housing Allowance, as this is an established mechanism linked to local market rents. The amount of rent charged under this policy should be no higher than the Local Housing Allowance for that property type.

·      The model of paying discretionary housing benefit is being looked at to ensure people are still supported when needed but are also still incentivised to move to smaller accommodation. If this grant isn’t spent, the money has to go back to central government. There is a difficult balance to strike between applying conditionality, incentivising people to move and supporting them temporarily. It is not clear yet how much funding the Council will receive next year to cover the cost of discretionary housing payments.

·      Officers are working with Lewisham Homes and PFI providers to ensure all tenants receive communications about the changes to welfare and housing. This communication likely won’t go out until more details about the regulations are known.

·      Landlords are kept aware of changes in housing benefits payments as much as possible, but the Council doesn’t have full list of private landlords operating in the borough. There is a lot of work on-going to ensure tenants are informed and supported in adjusting to these changes.

3.3     Standing orders were suspended at 21.25

3.4     RESOLVED: that the Committee note the report.