HC 576 Progress towards the implementation of Universal Credit
Written evidence submitted by Cllr Rabina Khan, Lead Member for Housing, London Borough of Tower Hamlets
This submission is from Cllr Rabina Khan, Lead Member for Housing at the London Borough of Tower Hamlets.
Tower Hamlets is an inner London borough; unparalleled in its history of diversity and growth, as well as a high level of deprivation. The impact of Universal Credit, especially the benefit cap element, is likely to have the biggest impact in boroughs such as ours. DWP estimates are that 1700-2800 households will be affected by the benefits cap from April 2013. Our own analysis suggests that this could be much nearer 4,000 households with the maximum potential loss of benefit to residents in the borough is around £38m.
This will result in a large financial risk to the council, caused by uncertainty around homelessness applications and the knock on impact to other council services.
We are also concerned that this will lead to a range of negative outcomes for residents, including, increasing overcrowding and poverty; displacing families away from their communities and support networks; reducing community cohesion; an increasing requirement for Council services; and, increasing levels of health problems, including mental health issues.
The Council has put in place a range of actions to support our residents through the changes, including briefing sessions and resources for front line staff to informing them of the changes and how it may affect their clients; a range of communications, including a personal letter to all residents to be affected by the cap, encouraging residents who have concerns to get in touch with relevant agencies to discuss their situation; and, home visits to families affected.
However the Council is still extremely concerned that these reforms will have a deep impact on the borough’s residents and community; as well as on the Council’s ability to act upon its commitment to One Tower Hamlets in reducing poverty and inequality.
The Council would welcome greater information sharing from the DWP to help us to inform residents; greater clarity from central governments on the relationships between Councils regarding homeless vulnerable households; greater recognition of the impact the reforms will have on existing Council services which will see increasing demand; and most importantly a recognition that the greatest impact of these reforms will be on large families living in inner London. As a borough which takes equality and equality impact assessments extremely seriously, it is disappointing that this policy does not appear to have considered the impact the welfare reforms will have on multicultural, income diverse, boroughs such as ours.
1.1. Tower Hamlets is an inner London borough; unparalleled in its history of diversity and growth, as well as a high level of deprivation. In recent times Tower Hamlets has experienced the largest growth in the country and has been the focal point of regeneration in London, with the borough undergoing the country’s highest housing growth over the last few years. Deprivation is widespread in Tower Hamlets and the majority (72%) of areas in Tower Hamlets are amongst the 20% most deprived areas in the country. Unemployment remains an issue with 13% of the working age population unemployed, compared to 9% across London. Diversity has always been a key strength of the borough. It now has the fastest growing population in London. This growing population is ethnically diverse, with nearly half of the borough’s population comprising of Black and minority ethnic groups.
1.2. The London Borough of Tower Hamlets has been leading on work locally to assess the impact of Welfare reform changes and to co-ordinate action to support residents through the changes.
1.3. Our calculations show that the groups most affected by welfare reforms and the welfare cap in particular, will be; households in three or more bedroom dwellings, those renting in the private sector and those with combined working hours of less than 24 hours a week.
1.4. This is due to the relatively high cost of rents in the capital, especially for larger properties, and many will exceed the Local Housing Allowance (LHA) cap introduced from April 2012 and the benefits cap expected in April 2013.
1.5. DWP estimates are that 1700-2800 households will be affected by the welfare cap from April 2013. Our own analysis suggests that up to 4,000 households could be affected. Timely and accurate information is key to enabling us to support residents through the changes and we would welcome clearer and quicker information from the DWP to help support residents through the changes.
2. Impact on the Budget
2.1. The introduction of Universal Credit will impact on Local Authorities in terms of financial support for residents who cannot afford their rent. Housing Benefit will no longer be administered locally and will become part of Universal Credit and will also be subject to the welfare cap
2.2. Local authorities have a duty to house homeless families. For those housed in temporary accommodation any shortfall between housing benefit entitlement and the rent charged will have to be covered by the Council.
2.3. Over the longer term, our impact assessment highlights greater risks for households in private rented accommodation, and some large families in social housing. This is because the welfare cap does not take into consideration family size or local market rents and as such, it is likely that these families will no longer be able to afford their rent. These households may be evicted and present to the Council as homeless. Any cost higher than the benefit cap associated with housing these families will fall to the Council.
2.4. Tower Hamlets currently has a thriving private rented sector with high demand for available properties. The 2011 Census data revealed that Tower Hamlets has seen the largest population growth in the Country, with growth of 26%. A reduction in income for households in receipt of housing benefit is unlikely to result in a proportionate reduction in rents. This has been confirmed by negotiations with local landlords and there is evidence of an increasing reluctance to house families in receipt of housing benefit.
2.5. Current estimates suggest that just under 4,000 households will see a reduction in benefits. Taking account of current family circumstances and benefit claims, the maximum potential loss of benefit to residents in the borough is around £38m.
2.6. In addition to this loss of benefits, the uprating of benefits by CPI, and not RPI or local rents, will ensure that in the longer term more and more tenants will be priced out of the borough as rent costs outstrip benefit allowances. Rents in Tower Hamlets are due to rise by 20% over the next five years (Savills and Rightmove Rental Britain Spring 2012), with CPI forecast to be around half that over the same period (Office for Budget Responsibility Economic and fiscal outlook, March 2012).
2.7. Due to the cuts already imposed on local authorities it is not possible for the Council to cover this loss in benefits and will instead have to find alternative cheaper accommodation in which to house homeless families. It is likely to be difficult to do so because properties are expensive in the borough and neighbouring local authorities will also be seeking local accommodation priced within the cap, for the purpose of housing their own homeless clients.
2.8. The Council, as a landlord, will also face financial pressures due to welfare reform. Universal Credit will be paid directly to households, who will have to pay their landlords themselves, whilst facing increasing pressures on a decreasing income. Rent arrears, evictions and length of voids are all likely to increase, placing an increasing financial risk on Tower Hamlets Homes. This financial risk will also affect local Registered Providers.
2.9. The Council is also concerned about the impact of these changes on disabled people, carers, and people with mental health problems, who may currently be managing to live independently, perhaps with the support of preventative and universal services such as lunch clubs, peer support groups, and extended families and friends. In particular, beyond Universal Credit, with the changes to Disability Living Allowance, there is a concern that a significant number of these people may be found to be ineligible for the Personal Independence Payment, (which is due to replace Disability Living Allowance from April 2013), and that the loss of this income may trigger a decline in an individuals’ ability to cope, with resulting risk of an increase in the demand on the Council’s adult social care services.
2.10. It is currently not clear from DWP what support mechanisms and assessment processes will be in place to support the implementation of Universal Credit. We are currently undertaking our own pilot programme to enable us to understand the issues and needs involved. However, the lack of any concise information regarding the DWP plans may mean that some, particularly vulnerable, individuals will have a long and stressful wait during the transition to Universal Credit.
3. Impact on the Council’s Duty of Care
3.1. Comments from Central Government Ministers regarding welfare reform changes suggest that the Government recognises that the impact of their policy will be displacement of families to areas with cheaper rents.
3.2. However the Council’s assessment is that for many London boroughs this displacement may well be outside of the borough and may indeed be in different parts of the country.
3.3. The implications for Council responsibilities under its duty of care are complex, and there is as yet no guidance from Central Government on the problems which will emerge. For example it is unclear how a Council with a homelessness duty towards a resident, and the Council where a family is housed temporarily should interact and how issues such as social care or other council services should be managed.
3.4. There are significant numbers of vulnerable adults and children in the Borough, with whom Council services have developed effective support and working relationships over a long period of time. We have also just undertaken a large scheme of work under the Government’s Troubled Families programme which will involve assigning families a key worker.
3.5. We are trying to gauge the impact on these groups and think it is likely that a number of these families will be affected by the benefit cap and potentially face displacement in terms of their homes and the support services they currently need.
3.6. There are a range of other key worker and other worker relationships with families which we are concerned will also be disrupted. These include families being supported within parenting programmes and those who have established positive relationships with family support workers in children's centres. There may also be a potential risk to children with Child Protection Plans if many of those families are moved out of borough; and we also have concerns about increasing strains on section 17 funding.
3.7. For adults this includes disabled adults, those with mental health problems, and informal carers, who are being supported by adult social services and by our third sector partners. Ensuring that residents receive the care they required and are not left in a gap between two responsible authorities is a key priority for the Council.
4. Impact on the Community
4.1. A Borough-wide Partnership event was held in February 2012. This Welfare reform congress identified the potential of these changes to have wide reaching effects on a range of issues including the health and wellbeing of those affected; educational attainment due to potential disruption to schooling; additional pressure on social care and safeguarding services; overcrowding and housing security; levels of debt and financial insecurity; and potentially on crime and community safety as income levels fall and those affected become more desperate.
4.2. In the Borough’s Community Plan, most recently refreshed in 2011 and widely consulted on with residents and partner organisations, one of the key themes was to develop our vision of One Tower Hamlets - this is our aspiration to reduce poverty and inequality, bring local communities closer together, and provide strong leadership by involving and empowering people and giving them the tools and support to improve their lives. Through this vision we aim to harness the opportunities of a borough rich in ethnic, religious and socio-economic diversity and it is our key policy for tackling inequality across health, education, jobs and quality of life. From this commitment we have seen for example a year on year increase in residents responding positively to the question "People of different backgrounds get on well together".
4.3. Planning policy has also ensured that neighbourhoods remain mixed and that community infrastructure is used by a diversity of residents. The potential impact of these changes is that people will be forcibly moved from their homes and communities, in the short term affecting communities which will lose families and in the longer term making neighbourhoods unaffordable to residents in receipt of housing benefit. The borough may become increasingly segregated and it will become more difficult to deliver the aspiration of One Tower Hamlets and its focus on reducing inequality. It is a serious risk that this will result in decreasing unity and possibly increasing community tensions.
4.4. A key strength of the communities in Tower Hamlets is the informal care structures in place. Currently 3.7% of the population provide more than 20 hours of unpaid care per week. Furthermore, we have a higher proportion of the population providing 50 or more hours of unpaid care per week than any other local authority area in England. This is the result of families often choosing to continue to live near each other, within the borough, and provide care at home.
4.5. Faith plays an important role in the lives in many of our residents, with 80% of residents stating they hold a religious belief. This means that local places of worship play a key role in both providing help and care and creating resilient and supportive communities. Tower Hamlets also has a thriving faith and secular voluntary and community sector which has developed out of these caring networks and from which innovative solutions to social problems have emerged.
4.6. The Council’s concern is that decreasing affordability will result in families moving away from the borough, disintegrating these informal care structures, currently provided by families, places of worship and community organisations. This will place more responsibility back onto individual family units and onto Council services with the net impact of reducing independence and resilience within communities. The structuring of the benefit cap is also likely to result in large families, often most reliant on informal care structures, seeing the largest reduction in income.
4.7. The benefit changes and the benefit cap impact particularly hard on our borough because of the high cost of housing and demographic profile of the borough. They have the real potential to massively increase homelessness as housing becomes less affordable to those on benefits. As the impact of new funding arrangements for new housing delivered by Registered Providers (RPs) impacts, new rents in the social sector will become less affordable to those on benefits. The Council has developed guidance about appropriate local rent levels and is developing policy around the implementation of new affordable rents within our Core Strategy Managing Development DPD, which will be used to influence Registered Providers to introduce affordable rent levels which meet local guidance, subject to further negotiation with the GLA and the outcome of the Examination in Public.
4.8. There are two key strands to the impact on health and wellbeing. A high proportion of those households who will be affected by the benefit cap have a household member who is on Incapacity Benefit or Employment Support Allowance due to ill health. There is a challenge to health professionals, and in particular GPs, about how they ensure that their practices encourage people to consider whether and how they might be able to move into work – which the evidence shows in many cases can also be a better way back to fitness. At the same time, there is a real possibility that people impacted by welfare reform will face real anxiety which could create or worsen existing health problems, particularly mental health.
5. Supporting people through the changes
5.1. The Executive Mayor of Tower Hamlets has set up a Welfare Reform Task Group including representatives from key Council services, housing providers, the NHS and the community and voluntary sector. The role of the group has been to develop a co-ordinated response to these significant changes in an effort to minimise the negative impact on local people.
5.2. This includes:
· a programme of briefing sessions and resources for front line staff across the partnership to informing them of the changes and how it may affect their teams and their clients;
· a range of communications, including a personal letter to all residents to be affected by the cap, encouraging residents who have concerns to get in touch with relevant agencies to discuss their situation;
· hosting an awareness month in Autumn 2012 around money management, employment and benefit issues;
· seeking to co-ordinate advice and support services to ensure the optimum utilisation of advice capacity in the Borough. This includes monitoring demand, targeting residents, and trying to manage pressure on advice services through developing accessible briefing material and referral routes;
· further modelling the impact of the changes and the numbers affected so that we can respond effectively;
· developing a set of indicators to monitor the effect of the changes in a range of areas;
· working closely with London Councils to share best practice and find common solutions; and
· Co-ordinating a joint Universal Credit pilot programme. This will include combining Council, Jobcentre Plus and other partners support services to work directly with those affected by the cap to support them to move into, or closer to, employment, which is a particularly complex and difficult challenge in the current economic climate.
5.3. Welfare reform changes have the potential to worsen poverty in the borough, and certainly increases the need for a focus on working in a co-ordinated way to tackle poverty. There are already a number of initiatives relating to tackling poverty, including our child poverty work, an emerging Financial Inclusion Strategy and a proposed Fairness Commission later this year. The Council is also drawing together an anti-poverty strategy to ensure this work is co-ordinated and as comprehensive as possible.
6.1. The Council and its Executive are deeply concerned about the impact these reforms will have on the borough’s residents and community; as well as on the Council’s ability to act upon its commitment to One Tower Hamlets in reducing poverty and inequality. The Council would welcome greater information sharing from the DWP to help us to inform residents; greater clarity from central governments on the relationships between Councils regarding homeless vulnerable households; greater recognition of the impact the reforms will have on existing Council services which will see increasing demand; and most importantly a recognition that the greatest impact of these reforms will be on large families living in inner London. As a borough which takes equality and equality impact assessments extremely seriously, it is disappointing that this policy does not appear to have considered the impact the welfare reforms will have on multicultural, income diverse, boroughs such as ours.
17 August 2012