Last month I stated that things in the housing world are changing and changing fast! Well, October has certainly been no different.
By far the biggest issue this month has been the government’s Comprehensive Spending Review (CSR).An analysis of the CSR has filled our TV screens for over a week now so I thought I’d point out my understanding of some of the key issues within the CSR and outline the potential impact these could have upon the housing sector, Wirral Partnership Homes, you our customers and the communities we work in.
The main areas to impact upon us are changes to arrangements for;
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Affordable housing
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Welfare Benefits
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Local Government
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Care and Support
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Employment and pensions
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Energy.
Affordable housing
Potential impact…
As a result of the CSR WPH will be able to offer new tenants new intermediate rental contracts with rent levels at 80% of market rent. However, there will be no change to rents or tenancy rights for existing tenants. Intermediate rents could be up to around £200p.w. compared to our current rent of around £70p.w.
Government says that despite the headline cuts higher intermediate rents will encourage investment in new housing by the private and Registered Provider (RP) sectors and the so-called Home Bonus initiative, which will give councils an amount equivalent to six years of council tax on each new home, will enable councils to improve housing supply.
Welfare Benefit cuts
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Working tax credits are cut
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Sickness benefit will be limited to 12 months;
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Child benefit will be removed from “better off” families
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Universal credit benefit payments capped at “around” £500 a week for couple and lone parent households and “around” £350 a week for single adult households.
It is not clear how the universal credit (which will include housing benefit) will fit with higher, intermediate social housing rents of 80% of market rent.
In some journals it is reported that social landlords could face large drops in their income as it is being suggested that the Treasury will take the view that HB would be the payment cut if the combined benefits total came to more than the cap. In a worked example from the Chartered Institute of Housing it left £67.13 for HB whilst the average rent in England amounts to £76.51.
Potential impact…
Obviously, reductions in household income for people on benefits and in low paid employment will impact upon their ability to pay their rent. Additionally, rising market rents would mean a gap between benefits paid and social housing rents and displacement of families from more expensive areas. Add to that the fact that the Universal Credit will be paid to the individual, and WPH will need to consider very carefully the impact on rent arrears performance figures and the potential impact of increased arrears on compliance with financial covenants in our private finance agreements.
Local Government cuts and changes
These are the deepest cuts of any Government department. The CLG faces a 51% reduction in its budget.
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Funding will be made available to help councils freeze council tax in 2011-12.
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Over £2 billion a year of additional funding for social care will be available by 2014-15.
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In total there is a 26% average decrease in central Government funding to councils but council budgets reduced only by14% after taking account of council tax projections.
Potential Impact…
The Council will look to all partners, including WPH, for assistance wherever possible. There is emphasis on increased personalisation for health and social care, and increased delivery via the voluntary and community sector.
Care and Support
The Chancellor announced £6 billion funding for the Supporting People programme over the next four years, but this is in effect a cut of around £700m. This amounts to about a 12% cut, so is much less than that experienced in other areas. The Supporting People (SP) funding will no longer be ring fenced. £1.1bn funding for Disabled Facilities Grants has been protected and local authorities will have more control as to how this money is spent.
Potential Impact…
The fact that the ring-fence around supporting people funding has also been removed means that local authorities may “siphon off” Supported People funding to pay for other services where the cuts have been more severe. It is unlikely that WPH will receive further assistance from the DFG funds for adaptations.
Employment and Pensions
The state pension age will be raised to 66 for men and women by 2020 saving an estimated £5 billion a year with the timetable for an increase to 67 and 68 now likely to be accelerated.
The Government will continue with a form of defined benefit pension but seek to increase the level of employee contributions (with the exception of low paid workers).
Potential Impact…
This may have less of an impact on the organisation but far more impact on individuals who will have to plan for later retirement.
Energy Efficiency and “Green Issues”
The Government announced £1 billion funding for the “Green Investment Bank” and £860 million funding for the Renewable Heat Incentive which will be introduced from 2011-12. £200 million will be made available for the development of low carbon technologies. The “Warm Front Scheme” will be phased out in favour of the Green Deal.
Potential Impact…
These are mostly new initiatives and how they will be implemented and their exact impact is difficult to estimate at this stage. However, the Government remains committed to reducing the UK’s carbon emissions keeping green energy high up on the Government’s agenda. WPH will be able to consider a number of new funding avenues for development schemes particularly in relation to the Renewable Heat Incentive.
Conclusion
Change is here! However, as is often the case, “the devil is in the detail”.
The detail of exactly how and when many of these changes are to be implemented is not yet known, but my staff are already working on likely scenarios and possible responses.
Watch this space - I`ll keep you informed.
Brian