Elsayed Ward already struggles to support his family in a cramped and damp flat. From April next year this task will be even harder. Isabel Hardman investigates how reforms to housing benefit will leave Mr Ward and thousands like him fighting to keep a roof over their heads
Elsayed Ward faces an uncertain future. Like most people, the 50-year-old father of three must buy food for his family and pay for rent and electricity. But, from April next year, he will no longer be able to afford all three.
When controversial changes to local housing allowance come into effect, Mr Ward, who is due to take up a private sector tenancy, will find himself faced with a shortfall of at least £35 a month between his rent and the amount of local housing allowance his council will pay.
His situation is not unique. Thousands of tenants across the country will face a similar situation next year following changes announced by chancellor George Osborne in the emergency Budget last month. As part of his intentions to curb the ‘out of control’ £21 billion housing benefit bill, Mr Osborne announced caps to local housing allowance, and changes to the way it is calculated.
It is because these reforms risk pushing thousands into ghettos of poverty that Inside Housing last week launched its What’s the Benefit? campaign. The campaign aims to propose alternative solutions to reduce the housing benefit bill and give a voice to the concerns housing professionals and tenants have about the proposed changes to the system.
We want to ensure that the government takes the sector’s concerns seriously by launching a parliamentary inquiry into the impact of the changes.
We will assess the impact by tracking a number of indicators: the number of households making homelessness applications, the number of households officially recognised as homeless and the number of households in temporary accommodation. In 2009/10 the number of households that made homelessness applications was 89,120, while 51,310 households were in temporary accommodation in the 12 months to March 2010. If the warnings from the sector are correct, we expect to see these indicators rise over the next year.
So what is the impact on someone like Mr Ward likely to be and how many people are likely to suffer hardship as a result?
There are no available social homes big enough to house Mr Ward and his family so the London Borough of Hammersmith & Fulham is trying to find him a home in the private sector which will see him claim local housing allowance in addition to disability allowance.
Mr Ward is desperate to move out of his one-bedroom flat, which he has rented from Octavia Housing Association since 2002. He lived alone initially but his children moved in three years ago. The outside is cheery and well-tended but inside the flat is crammed with the belongings of three growing children, who sleep in both the bedroom and the living room, and cram around the table in the tiny kitchen.
When he shuts the front door, Mr Ward reveals the other reason his family needs to leave the flat in Shepherd’s Bush: a damp problem yawns across the woodwork. The black mould is present in the bathroom, his bedroom and the living room.
Mr Ward has a thick sheaf of letters from the doctors at Charing Cross, and Chelsea and Westminster hospitals and his GP, who say the damp and cold conditions in the ground floor flat are aggravating two health conditions: chronic back pain, and circulatory problem Raynaud’s Syndrome. He and his three children, aged 11, 14 and 19, need to move.
Octavia Housing Association has offered to treat the mould problem but this would mean moving Mr Ward’s family to temporary accommodation. The association says it is doing everything it can to help him but that he wants to move to a property big enough to accommodate his family.
The first flats the council offered Mr Ward through direct lettings were not even in the borough. ‘One was in Roehampton, one was in Hanwell, and one was in Ealing,’ he says. ‘And they did not explain to me that once they had found my flat and sorted out my housing benefit, I would be on my own: the landlord could chuck me out after a year anyway.
If Mr Ward does accept one of the flats offered by the council - which could mean moving out of the borough, removing his son Mohammed and daughter Nadin from school and leaving behind the friends and relatives who cook for him and support him - he will only be able to pay the rent until April, when the coalition government’s changes to housing benefit come into effect.
The changes include caps on the amount of local housing allowance payable per property. In Hammersmith & Fulham, the council currently pays £575 on a four-bedroom property in Mr Ward’s area: next year, that rate will drop to £478.
Stephen Greenhalgh, leader of Hammersmith & Fulham Council, said: ‘Taxpayers do not expect to be paying £2,000 a week to house people on benefits. This shows why reform is needed which will help bring down the artificially high market rents that were inflated by the previous system.’
‘What am I supposed to do?’ asks Mr Ward. ‘This shopping list is £70 for the four of us, and it’s not packed with luxury items. They’re the cheapest you can find. And in the winter my electricity bill was £90. This time round it was £63. When those changes come in, how will I afford the extra on the rent and be able to pay these bills?’
Next April, Mr Ward worries he will not be able to afford the rent on any of the homes into which the council plans to move him. He could only be there for a matter of months before he needs to leave again. ‘I don’t know what I’ll do if I can’t afford it. We could end up in temporary accommodation, or back at the council, registering as homeless.’
It is precisely these concerns that led to housing groups issuing dire warnings about the effects of housing benefit reforms in the days following the emergency Budget on 22 June.
The National Housing Federation estimates that 200,000 people could be at risk of homelessness once the changes come into effect, with their income dropping by as much as 50 per cent as they are forced to make up the shortfalls in their rent with the money they receive from other benefits.
The federation says those hardest hit will be in London where 34,000 single, unemployed people could become homeless once their rents, which are the most expensive in the country, stretch out of their reach. In some areas [can we have an example?], the shortfall between the rents currently covered by LHA and the rates which will be paid under the new caps is as much as £600.
A similar blow will be felt across the rest of the country. There are 20,000 Scottish and 10,000 Welsh housing benefit claimants at risk of homelessness. There are already 140,000 people registered as homeless in the UK.
The Chartered Institute of Housing is concerned that the shortfall between LHA and rents charged will become so great that within a decade, tenants will not be able to afford to live in the private rented sector at all in 20 areas of the UK. For many of these tenants, LHA is paid as a substitute for a secure social tenancy, but with waiting lists for social housing currently standing at 1.8 million, there is little hope that they will be decanted into council and housing association properties.
A spokesperson for London Councils says: ‘Unless you are prepared to say that that this is not a place where somebody on benefits should be living, there has to be some sort of mitigation around this capping policy.’
Social landlords are also worried: housing benefit represents around 65 per cent of their income, and any drop in this could put them in a precarious financial position. Mr Osborne’s announcement that from 2013, anyone who has been claiming jobseeker’s allowance for more than a year will see their housing benefit cut by 10 per cent has frightened many who have already been conducting sensitivity testing to their business plans.
Geraldine Howley, chief executive of Bradford housing association Incommunities, says: ‘This will affect our business plans, with less income coming in, but more than that, it will impact on our customers as we won’t be able to do as much for them.’
There are also concerns that the support for claimants who are due to lose out will not be there for much longer. A number of advice centres around the country are now struggling after their local authorities cut their funding as part of the government’s initial £6 billion public spending cuts.
In the face of these stark warnings, Inside Housing’s What’s the Benefit campaign hopes to propose some alternative solutions.
We are not campaigning against the overall principle of reducing the benefits bill: there is sector-wide consensus that it needs to be trimmed. The Department for Work and Pensions estimates that the bill for housing benefit will reach £21 billion next year, and it has been rising steeply and without check since 2004. Few would argue that this can continue. However, we believe that the housing sector can come up with a better solution to cutting the bill which will not render so many people homeless, or placed in costly temporary accommodation.
Sam Lister, policy and practice officer at the Chartered Institute of Housing, believes paying only a portion of rents rather than the whole would deter landlords from raising their rents, as councils would not be obliged to cover that rise.
Some favour a package of back-to-work incentives, mooted by the previous government in its green paper on reforming housing benefit in December 2009. Those included tapering off housing benefit gradually as a claimant returned to work, which would ease the shock of entering employment. ‘This would be more expensive to begin with,’ says Mr Lister. ‘But it would have the overall effect of reducing the social security bill.’
It is ideas like this that the What’s the Benefit? campaign will present to government before the comprehensive spending review in October. We want suggestions from all our readers, which we will collate with the help of the Chartered Institute of Housing and the National Housing Federation.
It is your support that people like Mr Ward desperately need as they brace themselves for the next few months of uncertainty. ‘I worked for years, paying all my taxes, and now I’m worried I might become homeless,’ he says. ‘I feel like the government doesn’t care about poor people any more.’
The government’s plans for housing benefit
- Limits of £250 for a one-bed property and £400 for four or more bedrooms
- Local housing allowance rates set using the bottom 30 per cent of rents rather than the median from October 2011. It will be linked to the consumer price index, rather than the retail price index. There are 1 million LHA claimants in the UK
- Cutting housing benefit by 10 per cent for claimants on jobseekers allowance for more than a year
A parliamentary inquiry into the potential impact of the changes
To get 500 people to sign a petition voicing concern about the changes and supporting alternative action to bring housing benefit under control
To work with our readers to devise an alternative solution to curbing the housing benefit bill that will be presented to the government ahead of the October comprehensive spending review