HB Subsidy Provisions for Temporary Accommodation from April 2013?

1. HB Subsidy Provisions for Temporary Accommodation from April 2013? Peter Meehan LA Benefits Adviser 17th February 2012

2. Pre-April 2010 subsidy controls for Temporary Accommodation • Each LA was given a specific threshold and cap by DWP based on rental charges in that particular LA area • Full subsidy (100%) for HB up to an initial threshold • A lower subsidy (10%) for any HB above that threshold but below a cap • No subsidy whatsoever for any HB above the cap

3. Subsidy ControlsDWP’s case for change • The current controls, using nets and caps, do not reflect the cost of leasing properties of different sizes from the private rented sector in different localities. • Evidence of some LAs charging above cost overheads, thereby creating a surplus at the expense of HB. • Significant and continuous increases in HB Expenditure for those living in temporary accommodation, particularly in London, are becoming unsustainable. • Such high rents provide a very real barrier to work for claimants living in temporary accommodation

4. New Temporary Accommodation Subsidy Model • Inner London 90% of LHA + £40 per week for management costs • Outer London and elsewhere in UK 90% of LHA +£60 per week for management costs

5. New Upper Limit ( or Cap) • Inner London £500 per week per claim • Outer London and elsewhere in UK £350 per week per claim

6. From April 2010For accommodation procured from the Private Rented Sector • Board and Lodging (including Bed and Breakfast) accommodation • Accommodation procured under a license agreement (licensed accommodation) • Accommodation held on a lease by a local authority for a period not exceeding 10 years ( short-term leased accommodation)

7. From April 2011 extended to also cover accommodation procured from a Housing Association • Applies also where the HB, in the form of a rent allowance, is payable to a registered Housing Association to whom the claimant is liable to pay rent AND • the accommodation has been made available to that person by arrangement with the local authority to enable the latter to either discharge a homelessness function or to prevent the person being or becoming homeless

8. What currently remains outside the new model? • Temporary accommodation where the property is owned by the local authority. • Exempt Supported Accommodation

9. Proposals for a new TA scheme • Phase in a new scheme from October 2013, in line with Universal Credit • Under Universal Credit the accommodation element would be the same as mainstream LHA and paid to the claimant as part of UC • A separate funding arrangement for management costs sitting outside the state benefit system. • Review of HB service charge regulations to make them more prescriptive • Review the current level of management costs (£40/£60) for payment in 2013 onwards

10. Risks • Direct payment of accommodation element to claimant in UC would mean increased collection costs and arrears. • Ongoing reductions in LHA, extension of shared room rent and freeze/CPI up-rating may pull that rent element down. • Lower £40/£60 management element • Restriction of eligible service charges • A clumsy payment split will introduce administrative difficulties and necessitate additional overheads to track.