CIH Housing Conference: 13 June 2012

A speech by Lord Freud, Minister for Welfare Reform.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The Rt Hon Lord Freud

Good morning.

Let me first start out by saying how important I hold speaking to the housing sector and my thanks for being invited here to the Chartered Institute of Housing conference to discuss welfare reform with you all today.

The social housing sector is of great importance to the success of welfare reform - particularly in supporting those at the heart of your organisations; your tenants.

What we are doing, and at the centre of our reform is the aim of putting to an end to the benefits system that has kept people away from work instead of encouraging them into taking up employment.

The results of this system are pretty stark; there are 390,000 households where no one has ever worked and 1.9 million children living in workless households in Great Britain today

The object of Universal Credit is to change this reality - by directly lifting hundreds of thousands of children and adults out of poverty, and more importantly we are changing long-term behaviour.

I know the social housing sector can help us to make this change and I want to use this opportunity to discuss how we can deliver real support.

Social sector size criteria

The changes to the social sector size criteria are coming in April 2013, in a little under nine months, and many of you will be affected.

But let’s be clear here; people renting in the private sector receiving housing benefit get the support they need for the size of their family.

Broadly there is no reason why people in the social sector should be treated differently.

Every day people in the private sector make choices about the kind of property they are able to afford; be it paying more for an extra bedroom or deciding to live in a different area.

But, currently people renting in the social sector are not facing that sort of decision and this is not an effective use of our housing stock.

There are about 5 million people on the social housing waiting list in England and over a quarter of a million tenants living in overcrowded conditions.

Creating this level playing field between the private and social sectors should help increase mobility. We are working closely with landlords to support them through this necessary change.

Our hosts, the CIH, today are launching their guide for social housing providers on preparing for the social sector size criteria.

The guide - Making It Fit - gives examples of how landlords are already making these preparations.

This is the consensus I am hearing from social landlords - they are taking a pragmatic approach highlighting the need to prepare and take practical steps.

The CIH guidance is part of work to provide solid examples, background and advice for social landlords.

The guidance covers:

  • communicating with staff ;
  • supporting tenants and explaining their housing options; and
  • practical examples of support already in place

Examples of practical support in place include:

  • London Borough of Southwark’s ‘speed dating’ coffee mornings to help people find mutual exchanges     
  • Stockport Homes offering its single housing applicants the opportunity to have joint tenancies with others  
  • Wigan Council’s work with Citizens Advice to establish a social lettings agency. and
  • London Borough of Islington’s Smartmove service that matches under-occupied tenants with overcrowded tenants.

I would like to thank very much the CIH for putting this excellent piece of work together with the support of:

  • the National Housing Federation
  • the Local Government Association
  • the Northern Housing Consortium
  • the Department for Communities and Local Government, and, of course,     
  • staff from my Department.

Clearly in the social sector size criteria changes, there will be pressures on the social housing sector. 

But I am confident the sector can respond.

Universal Credit

Now let me turn to Universal Credit.

Clearly there is broad support here for the changes Universal Credit will bring.

The mechanisms of Universal Credit will change people’s lives, their behaviour towards work and their relationship with benefits.

The most important change will to bring about greater inclusion; financial inclusion, digital inclusion and social inclusion.

Universal Credit will achieve this, by ensuring that people are better of in work than on benefits and through a massive simplification of the benefits system.

Currently there are around 30 different benefits, each with its own rules and criteria and blighted by overlaps, duplication and complication.

The struggle to understand the different benefits and how they interact leaves claimants completely at a loss.

I do not think there is a single person in the country who understands the whole benefit system.

Universal Credit brings together different benefits into a single payment that will reduce as people move into work and increase hours but which they know will still leave them better off in work.

Universal Credit pathfinder

The first steps towards this change will be made in April next year in Greater Manchester and Cheshire, not a stone’s throw away from us here, where in a phased rollout the first people will start to receive Universal Credit in a pilot of the new payment.

We will learn lessons as we expand the numbers claiming.

From April, we expect to see up to 1,500 new Universal Credit claimants coming on stream each month across Tameside, Oldham, Wigan and Warrington.

And from October 2013 we start a four year process that will see nationally 8 million households gradually move over to Universal Credit from their current raft of benefits.

The first people to claim will be unemployed new claimants and those who have changes in their claims.

This means we are not disrupting claimants who may shortly be moving off benefits or those who need greater support to prepare.

From Spring 2014, we will begin the process of widening the range of people claiming Universal Credit to include those in work and those who are ill, disabled or may be lone parents.

From the end of 2015 and up to 2017, the final households will be transferring across.

The final stages are when the greatest support will be needed, and when the remaining housing benefit claims are closed.

We are actively preparing the support that will be in place for these changes.

Alongside the early roll-out in Greater Manchester and Cheshire, our Local Authority led pilots and the housing Demonstration Projects are making sure we have the early ground work in place.

I know there are representatives from the housing associations and councils involved in these here today. 

And I know many of you are eager to hear how lessons form these may be shared. 

Demonstration projects

But let me first focus on why the Demonstration projects are happening.

The issue of paying housing benefit directly to tenants will probably have vexed a lot of people here today.

It is necessary to give people a single benefit payment that allows them to budget in and out of work in exactly the same way.

Not paying your own rent creates a genuine barrier stopping people getting into work or taking a short-term position.

For those who have their housing benefit paid direct to their landlord the decision of whether to go into work is made more difficult as they have to take on the new responsibility of paying rent, while uncertain if their employment will last.

This barrier stops people taking up short-term positions that could become long-term jobs - as the effort of moving back and forth from paying and not paying rent is deemed too complex.

This complexity is on top of the uncertainty of whether they will be better off working or not.

We are aware this is a shift for many tenants and are making sure that we are prepared and that people will receive the support they need.
The Demonstration Projects are now up and running in five areas across the country, with the Scottish project due to start shortly.

The projects will make sure there are safeguards in place, just as there are safeguards in the private rented sector today. 

The first cycle of payments in the Demonstration Projects will start later this month.

The response from tenants has been strong. 

I’ve also been pleasantly surprised by the numbers who already have bank accounts in place.

For those that do not have a bank account, the projects are running support to help people set up bank accounts and direct debits, working with local banks and credit unions.

We are looking at the tools and skills that really matter - so households can take a first step to financial inclusion and we can really change their budgeting and money management skills.

Working with the banks and credit unions - we are aiming to create financial services that are far more accessible and supportive to low income households - such as ‘jam jar’ accounts that allow people to budget far more easily.

This will allow people to access fairer deals on a wide range of products - such as direct debit discounts for utility bills.

With the Demonstration Projects, we are being intelligent about who should be paid their rent directly.

As with the rollout of Universal Credit, we are moving people over gradually ensuring those who are ready and able move first.

We are not making a sudden shift.

I hope this allays fears you might have, for both your tenants and your finances.

The underlying reason for the projects is to learn lessons.

These lessons will be shared through the online learning network. Professor Paul Hickman, who is carrying out the evaluation of the demonstration projects, will no doubt talk about how lessons are being learnt and Tim Power, from Oxford City Council will be talking about how this learning will be shared.

I encourage you to get in contact


So to conclude: I want you to know that reform, now well on its way, will benefit very many of your tenants.

The benefits system will function to support those who need help with a clear safety net.

I hope that you here today and the social housing sector more widely can work with us to ensure your tenants can benefit from this transformation of our welfare system.

Thank you

Published 13 June 2012