Written Statement - Direct Payment of Housing Benefit in the Social Rented Sector and Sustainable Tenancies

Since the UK Government’s Welfare Reforms commenced in April 2011,  the Welsh Government have been proactive in helping Welsh people cope with the impacts.   This has included making approximately £3 million available to Local Authorities through its Homeless Prevention Fund to work with landlords and tenants to address benefit shortfalls and secure affordable accommodation.

The Discretionary Housing Payments Fund, which is  non-devolved, enables  many tenants to receive temporary financial assistance when faced with a shortfall in their Housing Benefit entitlement. In 2015/16 the UK Government will reduce this  Fund from £7.8 million to £6.7 million and  the demands on an already strained fund are likely  to increase, which could ultimately lead to greater hardship.  

As a direct consequence of the UK Government’s spare room subsidy,  the demand for one and two bedroom properties has increased. Therefore, in 2013/14, the Welsh Government have invested  £20 million through the Social Housing Grant programme for the provision of smaller one and two bedroom homes.  An additional £5 million will be made available this financial year and a further £15 million is being made available in 2015/16.

Following a request from the Social Rented Sector, a  Task and Finish Group was established in July 2014 to consider the UK Government’s proposal to introduce direct payment of housing costs within the existing Housing Benefit system. The Direct Payment Demonstration Projects have already shown that direct payments to tenants result in increased rent arrears. The Group, co-ordinated and led by the Welsh Government, was tasked to consider ways in which direct payments could be implemented with minimal impact on rent arrears, therefore improving the likelihood of sustainable tenancies.

I asked the Group to prepare a report  to assess the potential impact of such a major change in the benefit system. The report Direct Payments and Sustainable Tenancies summarises the Welfare Reform Task and Finish Group’s consideration of the subject, its conclusions and suggestions for further action.  The latter includes spreading best practice across the social rented sector.

The Task and Finish Group has identified a number of important issues and I am grateful to its members for their work. We will draw the relevant recommendations to the attention of the Department for Work and Pensions, Local Authorities and Social Rented Sector Housing providers. I will carefully consider Welsh Government action arising from recommendation 14.  In relation to recommendation 15 , regarding tenants’ choice on payment of benefit, I had already written to Lord Freud ahead of completion of this report and am awaiting his reply.  Welsh Government will continue to monitor all of these issues, take action where this falls within our remit, encourage stakeholders to assist tenants to cope with the changes and make further representations to the UK Government as required.

The report will be published on the Welsh Government internet site today.