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Partnership and Resources Pdsp Changes to Housing PARTNERSHIP AND RESOURCES PDSP CHANGES TO HOUSING BENEFIT - UPDATE REPORT BY HEAD OF FINANCE AND ESTATES A. PURPOSE OF REPORT To provide the Scrutiny Panel with up to date information of the changes to the Housing Benefit (HB) / Council Tax Benefit (CTB) system and to outline details of how best the information / changes could be communicated to West Lothian residents as agreed by the Council Executive meeting of 21 December 2010. B. RECOMMENDATION It is recommended that the Scrutiny Panel notes the content of the report and agrees that further updates on the changes and their impact on West Lothian are provided to the Scrutiny Panel, as required in the period ahead. C. SUMMARY OF IMPLICATIONS I Council Values • Focusing on our customers’ needs • Being honest, open and accountable • Providing equality of opportunities • Making best use of resources • Working in partnership II Policy and Legal (including Universal Credit White Paper Strategic Environmental Assessment, Equality Social Security Contributions and Benefits Act Issues, Health or Risk 1992 Assessment) Social Security Administration Act 1992 Housing Benefit Regulations 2006 Council Tax Benefit Regulations 2006 1 Z:\TO DO BEFORE EDRMS STARTS\Former M Drive Folders\Committees\PDSPs\Partnership and Resources Policy Development and Scrutiny Panel\20110121\Changes to Housing Benefit Update Report.doc III Resources - (Financial, There is an impact on all staff involved with Staffing and Property) benefit administration, processing, appeals, advocacy, scrutiny and audit. There will be implications for benefit subsidy received by West Lothian Council. Additional costs of up to £3,000 will be incurred in giving early warning to those affected by the changes to benefits. IV Consultations Department for Work and Pensions (DWP) Convention of Scottish Local Authorities (Cosla) Housing, Construction and Building Services Corporate Communications Advice Shop Local Housing Associations Local Landlords' Forums Voluntary Sector D. TERMS OF REPORT 1.0 Background In response to comments at the Council Executive meeting further explanation of the benefit changes that will come into force in the forthcoming financial year is included. This is supported by evidence in appendices that will enable Members to better understand the complex issues that surround the changes. A clear strategy has also been developed in publicising the changes. 1.1 HB and CTB are national welfare benefits administered by local authorities on behalf of the UK Government. The declared purpose of the HB / CTB Schemes is to help people on low incomes pay their rent and / or council tax (excluding water charges). The Social Security Acts set out the basic conditions of entitlement. The circumstances in which a claimant satisfies these conditions are set out in detailed regulations, which cover the following areas: • the amount of rent and / or council tax which is 'eligible' for benefit, • the size of the claimant's family; and • the personal circumstances of the family members, principally their age; whether they have a disability or any caring responsibilities, • the claimant's income / capital, including the income / capital of their family members when compared to their family size and personal circumstances of its members; and • whether any other adults who are not part of the claimant's family live within the claimant's household and, if they do, any assumed contribution they make towards the rent / and or council tax. Each claim is therefore subject to individual calculation for each period when the circumstances remain consistent. Entitlement to benefit at any time is calculated by reference to figures which are set annually by the UK Government. These are known as applicable amounts. An applicable amount 2 Z:\TO DO BEFORE EDRMS STARTS\Former M Drive Folders\Committees\PDSPs\Partnership and Resources Policy Development and Scrutiny Panel\20110121\Changes to Housing Benefit Update Report.doc is the figure used in calculating HB / CTB to reflect the basic living needs of the claimant and family. A claimant's applicable amount is the same for both HB and CTB. It is the total of any personal allowances and premiums, which apply in their individual case. Individual calculations of entitlement take place in respect of each claim and are also reassessed as the claimant's circumstances change. Because of these factors entitlement to benefit can be volatile and may be subject to frequent amendment. 1.2 The UK Government's changes to benefit calculations from the forthcoming financial year onwards affect: • the scale of applicable amounts, • the level of private sector rents deemed eligible, and • the level of assumed contributions to the claimant's household These three areas are explored in detail in the remainder of the report. 2.0 Changes to Applicable Amounts Effective in 2011/12 2.1 Applicable amounts are subject to annual uprating. The Chancellor of the Exchequer announced in the budget that the Consumer Price Index (CPI) will be used as the measurement of prices for benefit and pension uprating. He stated that this was because it is a better reflection of the cost of living for benefit customers and is also deemed consistent with the Bank of England's inflation target. Therefore, most benefits applicable amounts will be increased by 3.1 per cent. Some, however, have been held at existing levels. In previous years most HB and CTB applicable amounts were uprated by reference to the ROSSI index (this is a measure of inflation which excludes housing costs rent and council taxes on the grounds that in such cases the costs are usually met by the state; it has been named after Hugh Rossi, the Senior Civil Servant who developed it). In September 2010 the ROSSI index was 4.8 per cent as compared to 3.1 per cent for CPI. 2.2 For claimants in receipt of "passported" benefits such as Job Seekers Allowance or Income Support, the level of that benefit is automatically set at the same level as the applicable amounts so there is no impact on the award of HB / CTB entitlement. 2.3 Confirmation of the applicable amounts was received from the DWP on 6 January 2011. The council's software suppliers are currently working on the uprating programmes for annual billing, but these are unlikely to be available for test purposes until 4 February 2011. 3.0 Changes to Eligible Rent Levels for Housing Benefit 3.1 There are four changes to the Regulations affecting the amount of rent deemed eligible for housing benefit in the forthcoming financial year. These were all outlined in the earlier report to the Council Executive in December. Further detail of the changes and their likely impacts are given below. 3.1.1 Local Housing Allowance (LHA) set at 30 percentile level 3 Z:\TO DO BEFORE EDRMS STARTS\Former M Drive Folders\Committees\PDSPs\Partnership and Resources Policy Development and Scrutiny Panel\20110121\Changes to Housing Benefit Update Report.doc The Rent Service Scotland sets the LHA for councils to use as the maximum eligible rent level for properties in calculating entitlement to housing benefit for privately rented properties. LHA levels are determined on an area by area basis each month. The levels are split according to the number of bedrooms that a property has. The Rent Service maintains a database of all formal contractual rents within each council's area and from this calculates the point within the range of rents, at which LHA is set. Up until 1 April 2011 LHA is set at the 50 percentile point in the range, from that date onwards it will be reduced to the 30 percentile mark. Put plainly this means that 70% of private rents within West Lothian will be outwith the amount which could be fully covered by housing benefit. A note of the most recent LHA levels is attached at Appendix A. As from 1 April 2011 all new applications for private sector housing benefit will be assessed by reference to the 30 percentile LHA rate. At present we have 1,931 existing cases that will be affected by this change. The timing of the impact on individual cases will vary as the Government has introduced a transition scheme which will delay the effect of the legislative change. Transitional protection will be lost or affected if the claimant's household circumstances change. This means if the number in the household changes or the claimant moves address. In all other cases the transitional protection will run from the point at which the LHA is due for its annual review (the anniversary date) for a period of nine months beyond this date. All private rent benefit claims are subject to annual review. The timing of this is broadly connected to the month of the year in which the claim was made originally. Anniversary dates are therefore distributed throughout the year. As has been previously stated LHA rates are set each month. When a benefit claim involving LHA is assessed the LHA rate for the month in which the claim is made is used. The amount of LHA then applies for one year before reassessment and is reviewed annually thereafter whilst the claim is in payment. At Appendix B a list of the incidence of annual reviews together with the likely effective date of the change is attached. By way of example for the 134 claims subject to annual review in April 2011, the nine month transition period would then follow and so the impact of the change would occur in January 2012. This assumes that entitlement to benefit is continuous and there are no relevant household changes during the intervening period. 3.1.2 Withdrawal of the £15 per week excess Currently customers who have a contractual rent which is less than the LHA rate will receive up to £15 per week of the difference between their contractual rent and the LHA rate.
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