Newham fears benefit cap blow for temporary households

London borough fears benefit cap blow  for temporary households

The London borough of Newham wants the Government to drop planned restrictions on councils housing families outside of their area and fears a £1.6m-a-year hit on arrears as a result of council tenants and those in temporary accommodation falling foul of next April’s household benefit cap.

Following the high profile coverage of Newham’s and other London boroughs’ decision to place homeless households outside of the borough, the Government is seeking to restrict local authorities’ ability to place families in stable accommodation outside of their area.

Newham says that whilst it recognises that location of the property must be taken into account, it argues there are simply not enough properties in its borough that fall within the new Local Housing Allowance (LHA) rates, much less the £500-a-week benefit cap or even private rented sector landlords who will consider benefit claimants as tenants.

In its written evidence submitted to the House of Commons Work and Pensions Committee – which is examining the progress being made towards the implementation of the Universal Credit- it said there is a huge risk that the suite of changes to welfare and benefits will put unsustainable pressure on local authority budgets.

It said: “The main risk comes from the cost of temporary accommodation. Newham has one of the best records in London for reducing temporary accommodation, having reduced it by 63% since 2007. However the borough currently has around 250 households living in council temporary accommodation that will be subject to the total benefit cap losing a total of around £1.16m annually. Temporary accommodation in Newham costs a minimum of £75 per night or £525 per week. A cut in benefits under the cap to £500 a week clearly makes this cost unaffordable. It is highly likely that tenants will be unable to pay and will fall into arrears.

“There are also around 150 households (subject to the cap) that are permanent council tenants that will lose a total of £676K per year of which around £500K will be housing benefit. These two groups alone represent a total budget pressure to the council of £1.6m/year.”

Last week, Labour councillor Phil Waker, cabinet member for housing at the London borough of Barking and Dagenham, said the council currently has 124 families languishing in bed and breakfasts (B&Bs) over the statutory six-week period. He said pressure on temporary accommodation in the borough is so bad that it may look at moving people to cheaper areas or start allocating flats in tower blocks to families.

Newham also fears that there will be large migrations across London, in particular to relatively cheap areas like Newham. “There is no additional funding in place to help local authorities such as Newham to deal with the service pressures as a result of these migrations,” it said.

Possible solutions it has suggested to Government to mitigate the impacts include an exemption from the cap for those already in temporary accommodation, a higher cap for London to recognise increased living and housing costs and withdrawing further regulatory plans to limit council’s ability to discharge the homeless outside of their area.

The Department for Work and Pensions (DWP) said the benefit cap will apply to those in temporary accommodation and that councils should use their Discretionary Housing Payment allocations to make up the shortfall.