The threat behind the incentive WELFARE REFORM The threat behind the incentive Scottish Churches Housing Action seminar, 28 Sept 2012 Introduction Alastair Cameron, Chief Executive

The incentive… From the Directgov website The Coalition Government has identified two key problems with the current system: work incentives are poor, and the system is too complex. We are reforming the system to help people to move into and progress in work, while supporting the most vulnerable. Reforming the benefit system aims to make it fairer, more affordable and better able to tackle poverty, worklessness and welfare dependency. We are committed to overhaul the benefit system to promote work and personal responsibility.

The threat… The incentive mechanism is to make benefits less attractive. Housing benefit changes are designed ‘to bring working age tenants in the social sector in line with the private rented sector’.

Key changes affecting homelessness Housing benefit Raising age of shared room rate Non-dependant deductions Under-occupation General Benefits cap Direct payments under Universal Credit

Shared room rate Limits the amount paid to a claimant who is single to the cost of a room in a shared house – not an independent tenancy Previously applied to under-25s; this lower age limit now applies to under-35s

Non-dependant deductions A dependant is someone who is part of the claimant’s household – usually children under 16 A non-dependant is someone who lives in the house who isn’t dependent on the claimant – usually children of the family who are 16 or over Deductions are applied where there is a non-dependant in the house - 6 levels ranging from £9.40 pw to £60.60 pw The non-dependant him or herself is not entitled to Housing Benefit

Under-occupation (aka ‘the bedroom tax’) Payment will be limited to one bedroom per couple or individual in the household Same-sex children under 16 count as sharing Children under 10 regardless of sex count as sharing. 14% of HB deducted for one ‘extra’ bedroom; 25% for two Applies to people of working age only, from April 2013

Benefits cap ‘People should not get more in benefit payments than the average wage paid to people in work’ From April 2013, no claimant will receive more than: Single person: £350 a week Couple, with or without children, and single parent: £500 a week ‘The benefit cap will encourage people to look for work and help to promote fairness between those in work and those getting benefits’

Universal Credit ‘The main differences between Universal Credit and the current welfare system are: available to people who are in work and on a low income, as well as to those who are out of work operated online responsive, as people on low incomes move in and out of work, they’ll get ongoing support still paid on first starting a new job one monthly payment, paid into a bank account support with housing costs will go direct to the claimant as part of their monthly payment.’

Direct payment From Oct 2013 for new claimants, existing claimants ‘migrate’ to new system by 2017 Landlords’ concerns (from SFHA) Loss of a tenant’s right to choose Increased level of arrears and debt for tenants Increased costs for landlords including: Arrears recovery, legal costs &c Need for additional housing management staff Need to support tenants through advice and signposting Development of new payment collection methods Transaction costs Impact on the attitude of lenders to the sector.

Context Major changes, done on cost-neutral basis – if some gain, others must lose Ignore realities of housing – eg smallest properties in highest demand Ignore realities of family life – eg separated parents needing a room for visiting kids; adult children leaving family home and then returning Background emphasis on benefit fraud, setting ‘claimants’ against ‘hard-working families’ Objectives of simplicity and fairness overwhelmed by complexity of real lives