Tenants see 'loss of £100,000' in first wave of housing benefit cuts

Published by Ross Macmillan for 24dash.com in Housing and also in Central Government, Communities, Local Government

Housing benefit changes brought in by the Government last April have cost tenants of a West Midlands housing association £100,000 – with a further £100,000 cut expected next year.

Non-dependant deductions (NDDs) – which range from £10-£60 – is the amount councils reduce housing benefit by if a non-dependant lives with the claimant, usually a child, daughter or elderly relative over 18.

Under Labour, non-dependant deduction rates were frozen. However, the government is increasing them in stages so that by 2014, they will catch up to the levels they would have reached if they had not been frozen.

It says it "intends to provide a fairer deal for taxpayers and provide an expectation that adults make a reasonable contribution towards their housing costs".

However, Simon Brooke, head of tenancy support at WM Housing Group – which manages some 23,500 homes across the West Midlands, Herefordshire and Worcestershire – says the changes have already cost tenants £100,000 a year in reduced housing benefit.

He said: “The changes to non-dependant deductions have already cost our tenants £100,000 a year in reduced housing benefit. It will be another £100,000 next year.”

He added that the plethora of housing benefit cuts – outlined in the Government’s welfare reform plans – “will have a massive impact on tenants”.

He said: “In addition, the under-occupancy cuts from 2013 - which will see tenants' housing benefit cut if they have spare rooms - will cost tenants some £3m in reduced benefit.”

He said the group was in talks with payment solution providers and credit unions to safeguard its revenue stream in a way that would also support tenants managing their benefits.

He said: “We have been speaking to allpay about welfare reform and, in particular, about providing jam jar accounts. This is where it could provide bank accounts to tenants that would separate out tenants’ rent payments, allowing customers to better manage their finances and help protect our rental income.

“We're keen to pursue this with credit unions too who also offer this service.”

He added that WM was also looking at ways to transfer tenants with basic bank accounts to full-service accounts with direct debit functionality.

He said: “Some of our tenants have got bank accounts, however, some are basic and they don't allow a direct debit facility. We're going to be giving much more guidance to tenants about the move from a basic to full bank account where you have got direct debit facilities. At the moment, we don't incentivise direct debits but we may look to introduce this in the future.”