VC4 Welfare Reform

Welfare? – No!
Reform? – No!

Don’t miss the elephant in
the room

joe@hsmonline.co.uk Joe Halewood #speyejoe
07749 121 332

Elephants?
• SRS has focused on bedroom tax, bedroom
tax, bedroom tax
• That is inept as it only levels the playing field
with PRS and LHA
• Other ‘changes’ are far more damaging to the
social housing model and the SRS is only just
waking up to (some) of them - the OBC and
tenant perceptions it is missing

joe@hsmonline.co.uk Joe Halewood 07749 121 332

Welfare?
• It is not WELFARE (benefit) changes that will happen
but HOUSING BENEFIT changes and cuts
• HOUSING BENEFIT accounts for 62% or so of SRS
income
• The OBC simply deducts WELFARE BENEFITS from the
overall benefit cap leaving a residual amount that
can be paid TOWARDS rent
• “You cant cut my dole but you can cut my rent” –
tenant perceptions are being ignored


Welfare ?
• JSA / IS or dole is the same level across the country
as is DLA or any other WELFARE benefit
• It is already capped & the Welfare Reform Bill didn’t
cut or cap the level of any WELFARE benefit
• WELFARE reform (?) is a bigger misnomer than
‘affordable rent’ or ‘supporting people’ (SP)
• 10 years ago supported housing went through its
biggest change now it is the turn of general needs
social housing


Welfare? Reform?
• The raft of ‘reforms’ are not WELFARE reforms (?)
they are HOUSING BENEFIT reforms
• Reform means to improve? The welfare (sic) reforms
(sic) benefit who exactly?
• The ‘changes’ are just HB cuts and a (political and
dogmatic) attack on the social housing model
• The move from ‘bricks and mortar’ to ‘people’ and
this means tenant perceptions of ‘reform’


Impact, Impact, Impact!
• Overall Benefit Cap – 74% public approval
• No family should get more in benefit than the
average wage – strong yet superficial argument
(but unchallenged!)
• SRS / RP approach – “it wont affect us our rents
are only £90 per week!” is naive short-termism
writ large
• OBC will fundamentally change the tenant
demographic and profile in the SRS


Bricks and Mortar to People?
• Supported housing deals with people – general
needs social housing deals with bricks and mortar
• 10 years ago all in supported housing were
anticipating SP coming in April 2003
• SP attempted to ‘professionalise’ supported housing
delivery – WRB does the same to general needs
housing
• Huge parallels and similarities and the way to view
and prepare for WRB changes


People – and how they react 1
• Oxford Pilot on direct payments:

• “....September was an “interesting month” as
children went back to school. “Some just paid three
weeks instead of four as their children were going
back to school and needed things for the new term.”
– http://www.24dash.com/news/housing/2012-11-07-Direct-payment-tenants-taken-to-court

– Not just direct payment issue but a tenant
perception issue

People (tenants) and reactions 2
• Wirral Homes (RP) on bedroom tax
• “There has been some confusion with some
people thinking their rent is going up but that
is not the case – their benefits could be cut
depending on their circumstances.”
– http://www.wirralglobe.co.uk/news/10013319.Social_landlords_respond_to__bedroom
_tax__concerns/

• SRS landlords getting wrongly blamed for
bedroom tax by tenants (risk to reputation!)


Tenant perceptions of ‘reform’
• Because HB is the ONLY benefit to be cut or capped
then it sends out the message that benefit for rent is
less important and therefore paying rent is a less
important priority
• As rents increase by RPI+ and welfare benefits
increase by less (CPI) and the OBC by wage inflation
(even less) then the systemic flaw in the OBC
appears
• Rent inflation is RPI+0.5% is 3.1% ; welfare benefits
at CPI (2.1%) and OBC by 1.4% = more tenant anger
at SRS rent increases

Tenant perceptions

• YET – because direct payment of HB puts tenant in
control they will make what payments they like – e.g. 3
weeks not 4 when school uniforms are needed
• Further reduced rent payments at Christmas? Summer
Holidays? Other times?
• Doubling of bad debt (arrears) provision is not enough
• More use of arrears evictions? Ground 8? Pinnock?
• Increasing rents by maximum to recover escalates this
vicious circle


OBC – the real elephant in the room!
• The OBC WILL significantly change the tenant
demographic in the SRS
• At April 2013 will only affect 5 child+ families in SRS
so seen as minor issue by RPs
• Yet by end of next parliament will affect 3 child+
families in the SRS and the days of full HB are over
• At April 2013 it will affect 2 child + families in PRS
who will become homeless and looking for SRS
accommodation – start of changing tenant profile in
SRS


OBC – Changing tenant profile

• DWP September 2012 released revised figures for the
numbers of households the OBC will affect
• Up from 56,000 at July 2012 estimate for 2013/14 to
171,000 – a tripling of the numbers (44% are in the SRS
and 56% in the PRS)
• Rising by 8,500 per month or 102,000 per year!
• 3 times as many SRS tenants wont get full HB than first
thought
• 3 times as many PRS tenants will go down the eviction –
TA – wanting SRS property to end LA full homeless duty


OBC – impact on SRS landlords 1
• How can SRS landlords plan their policies for
development, arrears, allocations etc in next 5 years
if they ignore the OBC?
• Development? – Is the affordable (sic) rent model
viable as the 65% average rent increase means more
SRS tenants likely to be caught by OBC?
• When the OBC systemic flaw means in 2020 that the
risk of arrears and eviction becomes all 4 child
families and all 3 child families in 2025 how can SRS
development take place at all?


OBC – impact on SRS landlords 2
• Allocations? – RPS are ‘duty-bound’ to help LAs with
allocations but they must be reasonable. So can RPs
refuse nominations? Will RPs become more
selective and more risk-averse in who they allocate
to?
• Is it worth RPs developing anything bigger than 3 bed
properties?
• Or put another way are larger properties a risk too
far for developing RPs?
• Relationship between RPs and LAs? (More STOs
taken back in-house?)


OBC – the systemic flaw 1

• In simple terms – the overall benefit cap (£500 /
£350pw) increases at a smaller rate than either
welfare benefits or rent levels
• This means less of a residual in real terms each year
goes towards housing payment (now paid by HB)
• More and more smaller families caught by OBC and
so get less benefit to pay towards rent
• Risk to arrears for tenant and landlord is huge and
increases each year


OBC – the systemic flaw 2
• April 2013 - 5 child family gets £463 in welfare benefit leaving
£37 as maximum rent contribution – 3 bed London SRS rent
£126pw = £89pw shortfall – 3 bed provincial rent £87 =
£50pw shortfall = RISK TOO FAR FOR SRS
• April 2020 – 4 child family will get £456; cap will be £555
leaving £99 as max HB payment – 3 bed London SRS rent £168
= £69pw shortfall = RISK TOO FAR FOR SRS LANDLORD; 3 bed
provincial rent 2020 will be £118 – SO 4 CHILD FAMILIES
DONT GET FULL HB
• April 2025 – 3 child family gets £421 in welfare benefits
leaving £176pw for rent from £597pw cap YET London 3 bed
SRS rent will be £210pw – so a £34pw shortfall


OBC SF Context?
• The SF figures all assume tenant will pay the rent
(Christmas / School Uniform / Other)
• The SF figures ignore higher ‘affordable rent’ units
• LAs will be pressuring RPs to take larger families out
of temporary accommodation – i.e. RPs take on
higher risk of arrears households at a time when RPs
will be (correctly) more risk averse
• How can RPs develop / allocate new properties
based on 30 - 60 year projections?


OBC SF in 30 years?
• In 2043 the OBC will be £769pw on current figures
• In 2043 the 3 child family will get £609pw in WB leaving
£160pw to pay for rent
• In 2043 the 3 bed London SRS property will be £397pw – a
shortfall or OBC cut of £237pw!
• In 2043 the 3 bed provincial SRS property will be £284pw – a
shortfall or OBC cut of £124pw
• A 2 child family will get £482pw in welfare benefits leaving
£187 as max HB – 2 bed SRS rent provincial will be £265pw –
a £78pw shortfall and a risk too far


Summary
• OBC will mean 2 child families wont get full rent and
become a risk too far
• OBC transfers massive financial risk from central
government to SRS landlords and threatens the
viability of the social housing model
• Don’t shoot the messenger – go and talk WITH
tenants and then talk WITH them again
• Revise ALL you business models in light of the OBC
impact over next 30 years


Questions?

• END OF RANT (?)

• MADE YOU THINK AGAIN?

• QUESTIONS?

joe@hsmonline.co.uk Joe Halewood (#speyejoe)
07749 121 332

2 parent 2 child 3 bed London SRS
2013 2015 2020 2025 2030 2035 2040 2045

A CAP 500 515 554 597 643 683 736 792

B WB 256 267 298 332 371 404 451 489

C RENT 126 138 171 210 255 297 356 392

D TOT (B+C) 382 405 469 542 626 701 807 881

E RESIDUAL £118 £110 £85 £45 £17 -£18 -£71 -£89


2 parent 3 child London 3bed SRS
2013 2015 2020 2025 2030 2035 2040 2045

A CAP 500 515 554 597 643 683 736 792

B WB 324 338 377 421 469 512 570 619

C RENT 126 138 171 210 255 297 356 392

D TOT (B+C) 450 476 555 631 724 809 926 1011

E RESIDUAL £50 £39 -£1 -£34 -£81 -£126 -£190 -£219


2P/3C Provinces 3 bed SRS
2013 2015 2020 2025 2030 2035 2040 2045

A CAP 500 515 554 597 643 683 736 792

B WB 324 338 377 421 469 512 570 619

C RENT 86 95 121 152 188 220 267 295

D TOT (B+C) 410 433 498 563 657 732 837 914

E RESIDUAL £90 £82 £56 £34 -£14 -£49 -£101 -£122

2P/4C London 3 bed SRS
2013 2015 2020 2025 2030 2035 2040 2045

A CAP 500 515 554 597 643 683 736 792

B WB 392 409 456 509 567 619 690 749

C RENT 126 138 171 210 255 297 356 392

D TOT (B+C) 518 547 627 719 822 916 1046 1141

E RESIDUAL -£18 -£32 -£73 -£122 -£179 -£233 -£310 -£349


2P/4C Provinces 3 Bed SRS
2013 2015 2020 2025 2030 2035 2040 2045

A CAP 500 515 554 597 643 683 736 792

B WB 392 409 456 509 567 619 690 749

C RENT 86 95 121 152 188 220 267 295

D TOT (B+C) 478 504 577 661 755 839 957 1044

E RESIDUAL £12 £11 -£23 -£64 -£112 -£156 -£221 -£252


Latest DWP figures on SRS tenants affected by OBC

• July 2012 est. Was 44% of 56,000, Oct 2012 est. is
44% of 171,000 in Year 1 = 75240
• This rises to 165,000 SRS tenants by 2015
• To 389,000 SRS tenants by 2020; To 614,000 SRS
tenants by 2025
• To 838,000 SRS tenants by 2030; To 1.06m SRS
tenants by 2035
• To 1.29m SRS tenants by 2040; To 1.51m SRS tenants
by 2045
• Source: http://speye.wordpress.com/2012/10/18/3-times-more-
tenants-hit-by-obc-next-year-dwp-figures-reveal/

joe@hsmonline.co.uk Joe Halewood
07749 121 332

VC4 Welfare Reform

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