Reform of Temporary Accommodation Subsidy. July 2013

Transcription

1 Reform of Temporary Accommodation Subsidy July 2013

2 Summary Reforms to Temporary Accommodation subsidy will be on a cost neutral basis. Households living in Temporary Accommodation cases will not be exempt from the Benefit Cap. Households living in Temporary Accommodation will not be exempt from receiving Universal Credit. Households living in local authority owned Temporary Accommodation will not be exempt from the social sector size criteria, however households living in most other types of Temporary Accommodation will retain the spare bedroom subsidy. The housing element for Temporary Accommodation cases in Universal Credit will be based on the Local Housing Allowance rate for the household (not the property). Temporary Accommodation dwellings portfolios will need to be remodelled. Drivers for Reform of Temporary Accommodation Reforms to Temporary Accommodation subsidy will be on a cost neutral basis. The reform of Temporary Accommodation Subsidy is being driven by the complexity of the current arrangements. With the introduction of Universal Credit new arrangements will be required as Housing Benefit subsidy will come to an end. Ministers are considering the rate of the fee for the contribution to costs payable to local authorities for arranging Temporary Accommodation for those claimants receiving Universal Credit. The rate of the free will be linked to the retention or removal of the shared accommodation rate for Temporary Accommodation and must be cost neutral. The 2011 Local Housing Allowance rates remain for Temporary Accommodation, but this will be reviewed at some undetermined time in the future. Everyone claiming Universal Credit will receive the same Local Housing Allowance rate, regardless of TA tenure. From 2017/18, Universal Credit laws and regulations will replace all laws and regulations pertaining to Housing Benefit laws and regulations. These new rules will encompass a housing element (including future Reform of Temporary Accommodation Subsidy 2

3 arrangements for temporary accommodation) that will replace previous regulations under Housing Benefit laws. Benefit Cap Households living in Temporary Accommodation cases will not be exempt from the Benefit Cap. The Benefit Cap commenced introduction from April The Benefit Cap applies to the combined income from the main out-of-work benefits plus Housing Benefit, Child Tax Credits, Carer s Allowance, and Bereavement Allowance. The Benefit Cap Will not apply to those of pension age, with disabilities or working 16 hours or more or those claiming Working Tax Credits. The Benefit Cap levels per week are 500 for families and 350 single persons. There is a 39-week grace period for those who have been in work in the preceding 12 months. Universal Credit Households living in Temporary Accommodation will not be exempt from receiving Universal Credit, which doesn't allow for any management costs unlike current regime. Universal Credit is an inter-grated income-related benefit replacing Income Support, Jobseekers Allowance, Employment Support Allowance, Housing Benefit, Child Tax Credit and Working Tax Credit. Universal Credit will remove complexity, duplication and overlap. Claimants are expected to manage their own affairs, including budgeting for their rent. Universal Credit pathfinders commenced April 2013, with a national rollout from October Anyone with special accommodation requirements will not go into Universal Credit, this client group will go into Universal Credit at phase three of the roll-out, for which no date has yet been set but this could be several years away. It is clear that this rule applies for supported housing schemes, but is less certain that Temporary Accommodation falls into this category. The Department of Work and Pensions in the first instance will provide an addition to Discretionary Housing Payment budget to cover management element so that these costs will be covered and therefore won't be a bar to using temporary accommodation for Universal Credit claimants. Social Sector Size Criteria Households living in local authority owned Temporary Accommodation will not be exempt from the Social Sector Size Criteria, however households living in most other types of Temporary Accommodation will retain the spare bedroom subsidy. The Reform of Temporary Accommodation Subsidy 3

4 social sector size criterion applies where a social sector claimant is deemed to be under-occupying their accommodation. This took effect from April 2013 in Housing Benefit. Case Study: Temporary Accommodation in Housing Benefit Subsidy Housing Benefit subsidy for Temporary Accommodation cases will continue to be based on the current arrangements. In leased and/or licensed arrangements this means 90% of the January 2011 Local Housing Allowance rate for the property, plus 60 ( 40 inside London) management element. The management element is being looked again with the most likely outcome equalization across the country; any change to the management element will have to be cost neutral. A decision is due September Social sector accommodation will continue to receive 100% subsidy. The Benefit Cap will apply. Most forms Temporary Accommodation will retain the spare room subsidy (although local authority owned Temporary Accommodation will not). Local Authorities can use Discretionary Housing Payment budget to mitigate impacts. Case Study: Temporary Accommodation in Universal Credit The housing element for Temporary Accommodation cases in Universal Credit will be based on the Local Housing Allowance rate for the household (not the property). This will apply in all cases (i.e. local authority owned stock as well as leased/licensed). A new flat rate management element (likely to be 40 across the whole country) will be separated out and paid directly to Local Authorities to mitigate the impact of the Benefit Cap on claimants. Management element will be paid, initially thorough Discretionary Housing Payment budget, until legislation is in place to support a mechanism for distribution to Local Authorities, this probably going to be an annual payment separate from all monies awarded from DWP or UK Government. Managed Payment of Rent to Landlords The Department of Work and Pensions is seeking views as to whether people receiving Universal Credit and living in Temporary Accommodation have their rent paid straight to the landlords. Government Ministers are considering the arguments for making Temporary Accommodation a good reason to make managed payments of rent to landlord. Reform of Temporary Accommodation Subsidy 4

5 Exempt Supported Accommodation Rules for supported accommodation are yet to be finalised, however they will sit within the overall framework for Temporary Accommodation. Actions for Temporary Accommodation Manager & Housing Benefit Manager 1. Check your Temporary Accommodation is eligible to receive temporary accommodation subsidy or if should fall into the exempt supported accommodation arrangements. 2. Provide support to households living in Temporary Accommodation that are subject to the Benefit Cap to agree a weekly/monthly budget, ensuring they understand how much of their income needs to be spent on paying for housing costs. 3. Provide support to households living Temporary Accommodation that are receiving Universal Credit to set-up a direct debt (or similar such as jam jar accounts with a credit union) to ensure that their housing costs are paid each week/month. 4. Provide support to households living Temporary Accommodation that fall outside the spare room subsidy (i.e. where it is agreed that the households will be responsible for meeting the shortfall) to agree a weekly/monthly budget, ensuring they understand how much of their income needs to be spent on paying for the spare room. 5. Identify which dwellings of Temporary Accommodation might be ineligible for the spare room subsidy. Identify how much the removal of the spare room subsidy will cost the Local Authority. Decide if these dwelling will be removed from the Temporary Accommodation portfolio, or instead to transfer ownership away from the local authority. If the dwellings remain in the portfolio, make a decision if households will be charged for the costs of the spare room or if these costs will be recovered from the Discretionary Housing Payment budget. Reform of Temporary Accommodation Subsidy 5

6 6. Assemble an evidence-based argument as to what adverse affects will occur as result of the intended reforms to Temporary Accommodation subsidy regime, submit these facts along with effect solutions to Department for Work and Pensions. 7. Undertake a financial modelling exercise of Temporary Accommodation dwellings portfolio to ascertain what consequences will be once changes have been made to the fee pay for management element and also under the new Local Housing Allowance regime in Universal Credit. Based on the conclusions from this exercise adopt an action plans to remodel Temporary Accommodation dwellings portfolio. Reform of Temporary Accommodation Subsidy 6

7 Neil Morland Housing Consultant Ltd Specialist advice on homelessness, housing needs and lettings. We provide: Support to improve outcomes Help to achieve more effective and efficient results Assistance with strategic and operational activities Advice on maximising the use of resources We offer: Knowledge across a variety of housing issues Skills covering a mixture of business management principles Experience of a range of legal topics Contact Phone neil@neilmorland.co.uk Website Registered office 78 Borough Road, Altrincham, Greater Manchester, WA15 9EJ Company number VAT number Reform of Temporary Accommodation Subsidy 7