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Keeping Whitehall at bay

February 2013

Welfare reform will dominate the housing agenda in all parts of the UK in 2013. However, while most of the attention focuses on what’s happening in England, landlords and tenants in Scotland, Wales and Northern Ireland face many of the same problems – and some big ones of their own too. Jules Birch reports.

Jules Birch
Freelance writer

National differences at a glance

Bedroom tax

Impact assessments estimate the under-occupation penalty will affect 40,000 households in Wales, 80,000 in Scotland and 25,000 in Northern Ireland. A higher proportion of social tenants on housing benefit (46 percent) will be affected in Wales than any other region of Britain. Scotland faces a big issue with temporary accommodation. Delays in the legislation in Northern Ireland mean considerable uncertainty about whether the regulations will be implemented by April.

Benefit cap

According to the impact assessment for Great Britain, 49 percent of households affected live in London and another 44 percent in the English regions. However, 2,500 families in Scotland and 1,500 in Wales will see their benefits capped. Some larger families in Northern Ireland could also be affected and the cap is also affected by the legislative delay.

Council tax benefit

The Westminster government cut funding by 10 percent and transferred responsibility to English local authorities and devolved administrations. In Wales and Scotland the governments have found extra money to protect people from the cut. Northern Ireland does not have the council tax. That leaves England as the only country cutting the benefit. Some local authorities are absorbing the costs but most are not.

Universal Credit

In England, Scotland and Wales, the default option will be for the housing element to be paid to tenants rather than landlords when introduction of the Universal Credit starts in October. In Northern Ireland, thanks to different devolution arrangements, the Government has negotiated a series of concessions:

  • a six-month delay to April 2014
  • tenants can have the housing element paid direct to their landlord
  • payment can be fortnightly rather than monthly
  • payment can be to more than one person in the household.

Scotland

The bedroom tax and direct payment are the two big concerns for landlords in Scotland. However, welfare reform has also brought an unexpected headache for local authority homelessness departments.

Scotland abolished priority need at the end of 2012, making it the first country in Europe to give all homeless people the right to a permanent home. Although the number of households in temporary accommodation has been falling, housing minister Margaret Burgess says there could be a short-term increase as a result of the change.

In contrast to England, where most councils lease private sector homes and tenants will be hit by the benefit cap, most Scottish local authorities own their temporary accommodation. Until October they believed that it would be exempt from the bedroom tax but then a DWP circular confirmed that it would be affected. That leaves them with a huge financial headache. “Local authorities can’t pass on the cost because the reason the household is in temporary accommodation is that they’ve been placed there,” explains Lyn Kilpatrick, policy and practice officer at the Chartered Institute of Housing (CIH) in Scotland.

That leaves them a choice between cutting their homelessness and temporary accommodation services, changing what they do (one council is considering a flat-rate charge for all accommodation, with any surplus rooms mortice locked) or outsourcing to the private sector.

On the bedroom tax in general, landlords face the same problems as in other parts of the UK. “There isn’t smaller housing around for people to move to so it’s a big issue for the individuals affected but also in terms of rent arrears and the cost of collection for councils,” says Michael McClements, policy manager at the Convention of Scottish Local Authorities (COSLA).

However, there could also be a particular problem for landlords in Scotland, where there is a long tradition of active tenant resistance to evictions. Both Shelter and the Scottish TUC are supporting a ‘No eviction for bedroom tax’ campaign organised by Govan Law Centre. “Shelter is backing the call for any rent arrears resulting from under-occupation not to result in eviction,” explained Rosemary Brotchie, senior policy officer at Shelter Scotland. “We think that is only fair.”

Wales

The bedroom tax is seen as the biggest immediate problem for landlords because Wales will be hit proportionately harder than anywhere else.

In rural areas there are particular concerns about digital inclusion and tenants faced with having to move miles away from their communities to downsize. “It’s also a particular issue for hard-to-let areas where larger properties were let to people who technically are under-occupiers,” says Julie Nicholas of CIH Cymru. “That especially applies in Valley areas.”

Community Housing Cymru (CHC) is running an online campaign at Yourbenefitsarechanging.co.uk to alert tenants to the changes. On the bedroom tax that means communicating the complexities of a change that means a brother and sister will only be entitled to separate bedrooms once they are over the age of 10 and same-sex siblings once they are over 16. “We can’t simply put out a message saying that this is going to change this year because there are lots of caveats and ambiguities and it depends on individual circumstances,” explains Amanda Oliver, head of policy and research. “Some tenants are burying their heads in the sand and thinking it won’t affect them when it will.”

In the longer term, the big concern is direct payment. CHC has called for the Welsh government to get devolved power over welfare reform in anticipation of the second stage of an independent commission on devolution. However, Julie Nicholas argues that this would be a difficult process and Wales would be better off preparing for the change. “We would like to be seeing better coordination of what landlords are doing so that everyone is doing what they can to ameliorate the impact on tenants.”

However, tenants received some good news in January when a u-turn by the Welsh Government found an extra £22 million to protect them from cuts in council tax benefit.

Northern Ireland

The Northern Ireland Executive has used its devolved powers to negotiate flexibilities in the Universal Credit. The new benefit will not start until April 2014, six months later than in Britain.

Payment can be fortnightly rather than monthly and to more than one person in the household, going some way to address concerns about claimants unused to managing their money running into problems. And housing organisations have given a warm welcome to a crucial third change: tenants will retain the option of having the housing element paid direct to their landlord.

“That’s a huge positive for us and we’re delighted that the minister was able to secure it,” says Jennifer Donald, policy advisor at CIH Northern Ireland.

Maire Kerr, housing policy and research manager at the Northern Ireland Federation of Housing Associations, sums up the thinking behind it: “If a tenant says their consumer choice is that they want to have their housing costs paid direct to their landlord, what’s the big deal? Why shouldn’t it be applied to tenants in the rest of the UK? I understand the philosophy behind it but at the end of the day people do have vulnerabilities and they are only human.”

However, the picture looks much less rosy when it comes to the April 2013 benefit changes – and the bedroom tax in particular. A series of delays have affected the Northern Irish equivalent of the Welfare Reform Act. In December it was sent to an ad hoc committee on the equality and human rights aspects and this was not due to report back until January 22. “We may not have the primary legislation in place by April and we almost certainly will not have the regulations,” says Donald.

The NIFHA is calling for a six-month delay in the bedroom tax as a result. However, the Northern Ireland Government would have to pay for any delays through a cut in its block grant. Westminster welfare reform minister Lord Freud told a public meeting last year that a six-week delay would cost £15 million. The delay also means public awareness campaigns have been slower to get off the ground than elsewhere.

Tenants and landlords face two more complications. First, the Northern Ireland Housing Executive, the dominant social landlord, is about to be split up. Second, the history of the province means that moving home is not as simple as it sounds.

“We are emerging from 40 years of conflict and we have still got segregated communities so there isn’t the mobility within social housing that there is in other parts of the UK,” says Kerr.

And Donald explains: “You could tell someone it’s still within north Belfast, but a difference of two or three streets would mean moving from a largely Protestant area to a largely Catholic one and for many people that wouldn’t be possible.”