Will the LHA maxima cap apply to all existing general needs tenants?
If it does then there will be extremely serious impacts and massive cuts of housing benefit and the guaranteed death of category 1 sheltered housing outside of London and the South East.
The only answer is, unfortunately, that we cannot be sure either way and that simple question of Will the LHA maxima cap apply to all existing general needs tenants needs urgent and absolute clarification from government.
We were informed two weeks ago that the LHA maxima cap will apply to existing supported housing tenants at the NHF 2016 conference and a revision of the DWP statement made here by Damian Green two weeks earlier.
Last week the Independent said the position for general needs tenants was (as we were told in November 2015) of applying from April 2018 and only to new tenants from April 2016. Now in that article the Independent quoted Frank Field and with reference to a parliamentary written answer I attach below.
Unfortunately, the written answer and question that the Independent article relies upon of 7 September 2016 has been superseded by the DWPs Housing Policy Manager Darrell Smith two weeks after this on 20 September. So while we can, ordinarily, rely upon a parliamentary written answer as the basis of policy, in this case we cannot.
This then begs the question Will the LHA maxima cap apply to existing general needs tenants who live in Category 1 sheltered housing – which to explain is the form of sheltered housing that is NOT supported housing but general needs housing. It is also the main type of sheltered housing too, which gives urgency to that question.
I have highlighted one part of the written answer which we now know to be false and wrong as the statement of Damian Green the Secretary of State at the DWP on 15 September and after the above written answer said for supported housing it will (a) apply from April 2019, and (b) it will apply to all existing supported housing tenants not just new ones from April 2017.
As such the parliamentary written answer of 9 September 2016 above has been changed firstly by the Damian Green statement and secondly by the announcement of a DWP manager Darrell Smith at the NHF conference on 20 September 2016 and after both the parliamentary written answer and the Ministerial statement.
Leave aside policy by DWP ‘managers’ changing Ministerial announcements (!!!!!) and see what was said:
Darrell Smith, housing policy manager the DWP, told an audience at the National Housing Federation’s annual conference in Birmingham today: “For all supported housing residents from April 2019, [the cap] will apply to everybody…
“That’s not what the chancellor announced in the Autumn Statement, that was around tenancy start dates. But the plan for supported housing is that it applies to everybody in there and the reasoning around that is that it would be too complicated to run two systems at the same time.”
Last Thursday, the government announced that housing benefit in supported housing would be limited to LHA rates, with additional ringfenced cash distributed to councils.
In the Autumn Statement last year, the government announced that from 2018, LHA rates would be applied to housing benefit and Universal Credit for all social rented tenancies that began from April 2016.
Supported housing tenants were given an exemption until April 2017.
However, the latest proposals outlined today would mean that all supported housing tenants will be affected, whether they are an existing or future tenant. The move therefore extends the scope of the cap, and could have wide ramifications for the viability of existing supported housing schemes.
The cap for general needs tenants would still only affect new tenants from 2016, according to current proposals.
The DWP manager announcement usurps the DWP ministerial statement by changing it and this then casts doubt on the reliance of Frank Field’s received written answer and the Independent article which is premised upon it.
It is why I have highlighted the perhaps significant or perhaps not (or even Freudian?) caveat of according to current proposals in the above.
What the Independent article did was expose for the first time in the national media a complex argument I have stated many times before that the LHA maxima cap will work similar to a back door bedroom tax for pensioners, albeit only we thought for new pensioners (and others in category 1 sheltered housing aged 55+) from 2016, yet which will still be significant given the churn in sheltered housing.
If it applies to all existing general need tenants such as category 1 sheltered then the proverbial hits the fan and big time with many large housing associations having huge increased financial risk – for example Riverside could have over £1 million per year added risk in Liverpool alone as their tenants have such a HB cut and despite their heavily downplayed and wholly disingenuous figures they gave to the Independent for that article.
The Independent article saw Riverside say the average cut would be £300 per year which is less than £6 per week and also saw Riverside say an outlier figure in Carlisle (where they now manage the former council housing) was £1700 per year. All such figures are a chronic and dare I say known underestimate by Riverside and can easily be proven to be known underestimates.
Here is a simple table I compiled from existing void sheltered housing properties in early September which proves the point for Liverpool with an average weekly shortfall of £47 per week and £2,464 per year:
…and below is a further part of that research which shows that the Liverpool examples are not a freak example but they apply across much of the North West and in some cases with cuts to HB of double the Riverside claimed £1700 per year outlier figures
There are many more examples and the range in the above broadly reflects the weekly cuts of between £12.84 to £64.89 in housing benefit and way way above the less than £6 per week or £300 per year Riverside fed the Independent.
Some of these examples will of course be the type of sheltered housing that is supported housing and not general needs and note all are for 1 bedroom sheltered properties.
The figures also only relate to available properties as at early September 2016 and so exclude existing tenanted ones, some of which are under the affordable (sic) rent model – yes AR for sheltered!! – so the actual amounts of weekly HB cuts to pensioners will vary widely from place to place and with some HAs will have small impact and in others huge impact depending upon the proportion of sheltered housing stock they have.
What is perhaps a given is that LSVTs – the HAs who now manage the former council housing – will be much harder hit as they inherited what councils built which was a high proportion of sheltered housing and noting here that Riverside took over the management of the former council housing in Carlisle.
So even if the LHA maxima only does apply to new tenants after 2016 in general needs this is still a significant cut to social tenants with the high turnover in sheltered housing that can be 16% per year. That means by April 2018 it will apply to 32% (16% in 2016/17 and a further 16% in 2017/18) Yet if it applies to all existing it will be 100% and really will be shit hitting the fan for some social landlords.
Whichever way this LHA maxima cap policy is going to apply in general needs housing it will give pensioners a cut in housing benefit and in political terms that is crucial.
Therefore, the question of whether in general needs housing the LHA maxima cap applies to existing or just new tenants needs urgent clarification.
London, London, Bloody London?
One final point on this Independent article is that we see it admitting the LHA maxima policy to sheltered housing will NOT impact in London and in some parts of the south east. It is a prime example of the London, London, Bloody London syndrome – housing and housing benefit policies are assessed by government ONLY as to how they will impact in London in short.
Here we have the first mainstream news article that mentions this and this also comes as a surprise to Frank Field too, which given he is the chair of the APWG for welfare and pensions also shows that politicians also tend to only look at the impact of housing and housing benefit policies in the narrow view of just London, London, Bloody London
Finally note well that pensioners under occupy more social housing than the 460,000 working-age social tenants who are hit by the bedroom tax for this. Yet the pensioners are not hit with the bedroom tax as they are pensioners.
IF the LHA maxima cap does apply to all existing general needs tenants from 2018 then these pensioner households who live in say a 3 bed SRS property that has a rent level that is higher than the local 1 bed LHA or private rate will be affected.
To explain if a pensioner or pensioner couple live in a general needs 3 bed housing association property in Barnsley (perhaps the family home in which they brought up their children who has now flown the coop) and their rent is £95 per week then currently they get all £95 per week paid in housing benefit.
Yet if the LHA maxima cap applies they will only receive a maximum of £72 per week in HB as that is the 1 bed LHA rate in Barnsley.
Hopefully that example of a near 25% cut to the housing benefit of pensioners in general needs housing in Barnsley reveals why this central question of does the LHA maxima cap apply to existing general needs tenants is an urgent one.
Any MP reading and understanding this then feel free to ask this very specific question.