Housing and Welfare Reforms: Issues for ALMOs

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Housing and Welfare ReformsIssues for ALMOs

• Steve Wilcox University of York

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Housing and welfare reforms Issues for ALMOs

• Housing Benefit Reforms
• The Maximum Benefit Cap
• Universal Credits

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The Housing benefit reforms

• Private sector reforms
• Caps lower LHA rates
• CPI Indexation ( definition)
• Increased non dependent deductions
• Social sector size limits
• Additional bedroom for carers
• Discretionary Housing Payments increase

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Caps and Lower LHA Rates

• Maximum National Caps
• Maximum 4 Bed Rate
• 30th Percentile Rates (5/8 below median)
• Removing 15 excess provisions
• Increased pressure on social sector

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The Maximum Benefit Cap

• Based on national average earnings
• Applies to all tenures
• Only applies to out of work households
• Doesnt apply to disabled or retired
• Impact on large families in high rent areas
• Likely to be some modifications?

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Impact of Maximum Benefit Cap

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Universal Credits I

• Major Structural Simplification
• Based on Dynamic Benefits
• Single Integrated Taper
• Aims to promote work incentives
• Higher initial costs
• Long term savings from work impacts ?

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Universal Credits II

• Transitional protection
• Future gainers and losers
• Integrated real time weekly adjustments
• Challenging IT and Admin Reforms
• Limited lone parent allowances
• Help with housing costs reconfigured

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Universal CreditsHelp with housing costs

• High earnings disregard
• But reduced if help with housing costs
• Mortgage costs included (?)
• Council tax benefit excluded (?)
• Many in work claimants better off
• But complexity will dilute message

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Marginal deductions from gross earningsCurrent
system and universal credit
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The Earnings Disregard Formula

• Earnings disregard for tenants
• Higher earnings disregard
• Rent times 1.5
• Subject to lower earnings disregard floor
• But no disregard for a single person

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Higher and lower earnings disregards
Household Higher Lower Housing Cost Trigger
Couple 57.70 10 31.80
Couple 1 109.60 20 59.80
Couple 2 109.60 25 56.40
Lone parent 1 148.10 40 72.10
Lone parent 2 148.10 45 68.70
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The current benefit poverty trap
Couple with two children. 80 pw rent. 2010/11
Rates Under 180 pw less
than 30 hours
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The structure of universal credits
Couple with two children. 80 pw rent.
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Net impact of systems compared
Couple 2 children. Rent 80. Council Tax 15.
5.93 per hour earnings.
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Universal Credit Issues

• Risks intermediate rents
• The national cap work
• Complexity of earnings disregards
• The direct payment issue(s)
• The monthly payment norm
• Provisions for mortgage costs?
• Council tax benefit?