Agenda Item No 10

 

THE VALE OF GLAMORGAN COUNCIL

 

CABINET: 17 OCTOBER 2007

  

REPORT OF THE DIRECTOR OF FINANCE ICT AND PROPERTY

 

Housing Benefit – Introduction of Local Housing Allowance 

 

Purpose of Report

1.                  To apprise members of the position regarding the introduction of the Local Housing Allowance from 7 April 2008.

 

Background

2.         The Housing Benefit Scheme has been subject to regular and major changes since its introduction in 1982.  The implementation of the Local Housing Allowance (LHA) will radically change the way new Rent Allowance claims are administered by Local Authorities and will affect all stakeholders that are affected by Housing Benefit.  When fully rolled out, it is intended that the change will eventually produce a rent allowance scheme that is simpler to administer as well as being fairer, more transparent for rent allowance claimants allowing improved choice and greater personal responsibility. In the meantime, arrangements for parallel running with the existing HB schemes will be required.

 

3.         The Local Housing Allowance will be introduced on 7 April 2008.  The scheme is the cornerstone of the Government’s Housing Benefits reform programme.  Its aim is to simplify the HB Scheme and ensure it supports the wider objectives for Welfare Reform.  Initially the scheme will only affect new claims and change of address claims for the private rented sector.  It is intended that all housing benefit claims will eventually move onto the scheme, including rent rebates in respect of council tenants.

 

4.         LHA is a flat rate allowance based on the size of household and the area in which a person lives.  There are no changes to the entitlement rules – this will continue to be based on a person’s income and savings and proof of a valid tenancy.

 

5.         Each local authority will be divided into Broad Rental Market Areas (BRMA).  There could be a number of BRMAs within the authority and the Rent Officer (RO) will set individual LHA rates for each BRMA.  The local authority must publish the LHA rates so that landlords and prospective LHA customers can be clear about the amount of rent that the LHA will cover. The rates will be received on a monthly basis.  LHAs are monthly rates that are set by the RO for different size properties.  They are based on the median point between the highest and lowest rental values for properties of a given size in the area. Size criteria will be based on the number of bedrooms in the property. 

 

6.         The aim of this is that prospective tenants will have more choice in respect of the property they rent . If they find a property they like with a rent that exceeds their LHA they will need, as they do now, to make up the difference themselves. If they find a property with a rent below their allowance, they will be able to keep the difference up to a maximum £15.00 per week.  Benefit payment will normally be to the tenant, who will then pay rent to the landlord.

 

7.         There will be certain situations when payment will be made to the landlord for example when a tenant is in rent arrears of 8 weeks or more and for Vulnerable Tenants. 

8.         The LHA will normally be paid into the claimant’s bank account but in some circumstances payments can be made by cheque.  The Department of Works Pensions stress that the Benefits Service must encourage people to open Bank or Building Society accounts as people without these accounts will have difficulty cashing cheques or receiving payments.  The service will also be required to encourage claimants to set up standing orders or direct debit payments to pay the landlord.  The LHA cannot be paid into Post Office accounts.

9.         The introduction LHA represents a major change in the operation of the housing benefit service.  Although the ultimate aim is to simplify the scheme initially it will add to the complexity of the benefit scheme, with 5 different rent allowance schemes for staff to administer already. 

 

10.       As the benefits service will be operating the different schemes in parallel there will still be a requirement to refer existing claims to the Rent Officer under the old scheme. Initially this is likely to be more complicated for staff, customers and landlords.  Some tenants will be receiving payment by cheque while others must have payment made direct into a bank account.  For the system to work efficiently claimants will need to have bank accounts. 

 

11.            Landlords will no longer be able to have direct payments made to them on request.  Payments will continue be made under old scheme to the landlord direct on request but under the new scheme payments will have to be made direct to the claimant.  This means that a landlord of a property in multiple occupation could be receiving direct payments for some tenants and not for others, depending on what scheme the individual tenant is on. 

 

12.       As a result of direct payments of benefit to claimants it is likely that there will be an increase in rent arrears in the private rented sector.  This could lead to an increase in pressure on the housing service if there are more breakdowns in tenancies.  The benefits service will need to develop a policy for dealing with Vulnerable Tenants where payment can be made direct to the landlord.    

 

Relevant Issues and Options

 

13.       The following tasks will need to be undertaken to ensure the smooth introduction of the new scheme-

·        analyse new regulations

·        develop an implementation plan:

·        set up project team

·        training

·        awareness training for all outside bodies

·        publicity

·        landlords forum

·        changes to office systems

·        revise claim forms and leaflets

·        meet with banks

·        inform tenants

·        inform all stakeholders

·        meet with advice agencies for debt counselling of claimants

·        devise a Policy for vulnerable people

 

Resource Implications (Financial and Employment)

 

15.       The Department of Work and Pensions (DWP) has made an allocation of £59m to local authorities in the UK to support implementation of LHA.  The funding has been allocated to authorities on the basis of a fixed amount of £51,250 and a variable amount based on caseload.  The total allocation for the Vale is £116,066, which will be paid via housing benefit administration subsidy.  Failure to implement the LHA scheme in a satisfactory manner could result in claw-back of the funding.

 

16.       The funding has been allocated by the DWP to support the following key areas -

 

·     Software development

Development of appropriate computer software systems

·     Start up Activities

Development of a safeguard policy

Set up structures to provide financial advice

Plan and communicate change to external and internal stakeholders

Test new software

·     Staff Training

Train existing benefits staff

Train new benefits staff

Train other relevant council staff on LHA

·     Communication Activities

Publicise initial LHA rates

Develop general local policy material

Develop and issue tenant material

Develop and issue landlord material

Involve and communicate changes to stakeholders

 

17.            Authorities are free to implement the LHA in ways best suited to local circumstances and the available funding can be spent in 2007-08 or 2008-09.

 

Legal Implications (to include Human Rights Implications)

18.       The Welfare Reform Act 2007, which received Royal assent on 3 May 2007 enables the Local Housing Allowance to be rolled out nationally.  More detailed Regulations are being finalised and should be available by the end of October 2007.

 

Crime and Disorder Implications

19        None

 

Equal Opportunities Implications (to include Welsh Language Scheme Issues)

20        The scheme takes account of equalities issues.

 

Corporate / Service Objectives (to include Stakeholder Consultation and Voluntary Sector Implications).

21        The policy assists the Council in achieving the key corporate aim of promoting social well being and tackling disadvantage

 

Consultation (to include Ward Member Consultation).

22.            Implementation is in line regulations and has not been subject to ward member consultation.  The landlords’ forum has been kept informed of developments. A special meeting on the forum was held at the Barry Memorial Hall with over 100 landlords in attendance. Further meetings will be organised as the scheme is implemented.   The local banks have been approached in respect of the provision of basic bank accounts for claimants to receive benefit payments via BACS.

 

Policy Framework and Budget

The matter is for Executive Decision by Cabinet.

 

Relevant Scrutiny Committee

Corporate Resources.

 

Recommendations

 

(1)               That Cabinet notes the action taken by the Benefits Section in implementing the scheme.

(2)       That the Head of Financial Services holds the budget and allocates funds to support the implementation of LHA.

 

 

Reasons for Recommendations

 

(1)              To keep members informed

(2)               For implementation

 

 

Background Papers

DWP – Letter 8 August 2007 – Payment for Local Housing Allowance Implementation

DWP – Circular HB/CTM S3 2007 – April 2007

 

 

Contact Officer:               Clive Teague

                                Head of Financial Services

Tel (01446 709204)

 

The following officers have been consulted on this report:

Director of Finance ICT and Property

Benefits Manager

 

 

Siân Davies   

Director of Finance ICT and Property