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West Midlands Homelessness Forum CSR and housing investment update

West Midlands Homelessness Forum CSR and housing investment update . Liz Larkin Policy Officer 0121 634 1533 liz.larkin@housing.org.uk 13 December 2010. CSR: The headlines . We’re all in it together: 19% cut across departmental and capital budgets

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West Midlands Homelessness Forum CSR and housing investment update

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  1. West Midlands Homelessness ForumCSR and housing investment update Liz Larkin Policy Officer 0121 634 1533 liz.larkin@housing.org.uk 13 December 2010

  2. CSR: The headlines We’re all in it together: 19% cut across departmental and capital budgets CLG: largest cut – departmental budget by 51%, capital spending by 74% Housing: NAHP 60% cash cut: £4.5bn (including existing commitments, mortgage rescue, empty homes, places of change & G&TSs) Rental flexibility - ‘Affordable Rent’ tenure at 80% of market rent

  3. Housing: the broader funding picture Positives Increased capacity from rents £200m Mortgage Rescue - 2,500 households New empty homes initiative £725m DFG – rises with inflation • Negatives • Very limited headroom in capital programme • Regeneration funding • £6.5bn SP - spared huge cuts, but local picture varies and subject to further erosion

  4. Housing: the broader funding picture • ...and what remains uncertain... • New initiatives – new homes bonus • Level of flexibility – rent levels, existing tenures and asset management • How to generate capacity everywhere • Local Authority role – HCA negotiations, LIPs and allocation and planning policies • Interaction with welfare reform – will benefit restrictions limit sector capacity • How to deliver other products • Provider appetite • Lender appetite

  5. West Midlands supplyand demand • Average house price still requires an income of £43,000 to purchase, twice the average regional income • 2009/10 HAs built 3,371 new homes, 9% increase but private builders built 32% less • Highest proportion of overcrowded homes in the country, outside of London • More than 350,000 people on social housing waiting lists.

  6. The new funding model: supply • ‘Affordable Rent’ - a rapid move towards revenue subsidy – more efficient in short-term • Claimed that (with limited capital pot) can provide 150,000 new affordable homes • BUT future supply is extremely sensitive to: • market rent levels – LHA and Universal credit caps will be key • proportion of re-lets at new tenure • the new-build programme • other assets generated – conversions through asset management, S106 contributions, contributions from reserves, efficiency savings • New model will not generate capacity everywhere...

  7. The new funding model: supply • Where it works well: • Central London • Where it could work: • Warwickshire south • Where it doesn’t work: • Staffordshire north

  8. The new funding model: supply • but, what about the benefits cap for larger families....

  9. The new funding model:affordability • Affordability problems if new tenure aimed wider than the ‘missing middle’ • For tenants in receipt of benefits rents at these levels would deepen the poverty trap and create significant work disincentives - £50,000 earnings for ‘typical’ family to escape HB dependency • Rental income limited by £26,000 benefit limit for couples/families. If full ‘affordable’ rent can be charged shortfall paid by.... • Board/senior executive soul searching – fundamental questions about strategy, purpose and ambitions

  10. Housing Benefit Budget short to medium term (1) From April 2011: • Local Housing Allowance levels will be restricted to 4 bedroom rate. • A new upper limit will be introduced for each for each property size • LHA will be set at the 30th percentile of rents in each Broad Rental Market area, rather than the median (9 months later for existing claimants)

  11. Housing Benefit Budget measures from April 2013 • Local Housing Allowance rates will be uprated on the basis of the Consumer Prices Index rather than local rents. • Housing Benefit for working age social-rented sector customers will be restricted for those who are occupying a larger property than their household size and structure would warrant. • Recipients of Jobseeker’s Allowance will receive their full Housing Benefit award only for a period of 12 months. After that period, their benefit will be reduced by 10%.

  12. Employment and Support Allowance Example – 26 year old who currently gets income support due to ill-health – totalling £93.45 per week plus full HB of £90. If switched to ESA (work-related activity group) = £91.40 (but protected) plus full HB If placed on JSA = £65.45, and £81 HB after a year.

  13. Tenant of Aragon Housing Association

  14. Care and Support-what’s happening? • £6.5 billion investment nationally between 2011/15, 12% cuts in real terms for Supporting People • Funding for housing related support through Formula Grant, devolution to local authorities, giving them a lot more flexibility -> risk? • £2 billion additional funding for social care to local authorities, including £1 billion NHS funding.

  15. Care and Support-what’s happening to benefits? • Further change to Housing Benefit. Age threshold for the single room rate is to be raised from 25 to 35 years from 2012/2013. This will mean that people under 35 in the private rented sector will only receive LHA at rate for people in shared accommodation • Mobility component of DLA will not be paid to people living in care homes • £50 million for local authorities to support people through transition

  16. Framework Housing Association

  17. Other sources of funding • Disabled Facilities Grant is maintained and increased with inflation but no private renewal housing funding • Homelessness Grant will be maintained in cash terms to over £400 million, but paid as Area-Based grant and no ring fence • Community budgets piloted in 16 local areas from April 2011

  18. Important connected themes • Public health budgets ringfenced and delivered through LA health and wellbeing boards. 4% of the NHS budget. • White Paper on increasing competition and public services, improved commissioning and new rights for communities to run services and own assets in Localism Bill • Awaiting Green Paper on reducing re-offending

  19. Resident of Herefordshire Housing scheme for people with long term mental health problems

  20. Impact? Local authorities: • Budgets not ringfenced • Local decision making • Impacts on planning for new supply and commissioning of services Housing associations: • To build or not to build? • Affordable rents • Who is the key client group?

  21. Impact on housing associationsand providers • Decisions for Boards to make about core business • Impact of rent reform and flexible tenure proposals • To build or not to build? • Are business plans robust to deal with cuts?

  22. On your behalf We are asking the Government to: • Maintains investment in support for vulnerable and older people and ensure councils report on and are accountable for how their spending benefits vulnerable people • Set up a commission to examine the impact of proposed housing benefits cuts and put in place robust safeguards to protect the poorest people • Facilitate the building of more social housing.

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