Reform of housing benefit for “exempt accommodation”
The DWP has published research as part of the review of housing benefit and voluntary sector supported housing: DWP Research Report No. 714 ‘Exempt and supported accommodation’ (click here for copy).
(i) - History of events leading to the need for reform
In 1995 the Secretary of State proposes to amend the regulations so as to restrict the level of HB payable, by reference to “local reference rents” calculated by rent officers. Following concerns expressed by the Social Security Advisory Committee, the Secretary of State agrees to exempt certain types of accommodation from the proposed restrictions, where “care, supervision and attention is provided by, or on behalf of, the provider to residents”, as contrasted with accommodation for “ordinary housing needs”. The definition of “exempt accommodation” can be found at para 4(10) ofSchedule 3, Transitional and Savings Provisions to the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006 (SI 2006/217) (click here for link). However, where a local authority (‘LA’) pays above the rent officer’s determination for an ‘exempt accommodation’ claim, the LA only receives 60 per cent of this extra expenditure back from DWP in subsidy – the remaining 40 per cent must be funded by the LA.
In March 2001 the government issues a white paper: Valuing People: A New Strategy for Learning Disability for the 21st Century (Cm 5086) which states that independent living includes having choice and control over the assistance and/or equipment that disabled people need to go about their daily lives.
In June 2006 Mr Commissioner Turnbull issued his landmark ruling R(H) 2/07) which held that landlords who are merely a party to arranging both the accommodation and the care/support package for a tenant do not come within the definition of “exempt accommodation” and not acting ‘on behalf of’ the claimant as previously assumed. As a consequence, many local authorities have reduced the amount of housing benefit payable to tenants in supported housing projects.
In November 2008 the DWP issue ‘Housing Benefit and Council Tax Benefit Circular HB/CTB A22/2008 - Guidance to Local Authorities on dealing with claims from those living in supported accommodation’ – which considers the impact of the ‘Turnbull case’ upon supported housing arrangements.
In September 2009 a legal challenge to the Turnbull Case (R(H) 2/07) is dismissed by the High Court: R (S) v A Social Security Commissioner & Ors [2009] EWHC 2221 (Admin) (click here for transcript). In the course of his judgment, Sir Thayne Forbes made reference to the fact that the test no longer fitted with the government policy aims and that the HB legislation was currently under review:
“As the Secretary of State has already acknowledged (in the witness statement of Mr David Jones), the present reality of service provision has moved on from the time when the relevant legislation was first introduced and the present form of service provision was not envisaged at that time. … Whilst it has now been accepted that in some (but by no means all) cases this has created difficulties, I accept that this is a matter that the Secretary of State is currently examining and that there may need to be a policy and/or legislative development as a result. However, as Mr Blundell [counsel for the DWP] observed, that is a matter that needs to be carefully considered and taken forward on the basis of proper evidence. That is a proper function of the Secretary of State and not a matter for the Court”,(para [52]).
In April 2010 the DWP confirms that it is looking to change the way that those living in social and voluntary sector supported housing (or 'exempt' accommodation) are treated for HB purposes (Housing Benefit Direct newsletter, Issue 100 April 2010, page 7 (click here for link).
(ii) - What the Report says
DWP Research Report No. 714 ‘Exempt and supported accommodation’ (click here for copy) was commissioned by the DWP to “feed into a review of the way Housing Benefit is worked out for many of those who live in social and voluntary sector supported housing” and was written by Michelle Boath, Eleanor Baker and Helen Wilkinson of Risk Solutions.
The Report’s main conclusions set out in Chapter 7 include: -
Claimants living in ‘exempt accommodation’ fall into many categories e.g. learning disabilities; mental health problems; physically disabled; people fleeing domestic violence; those with or recovering from drug addition; or the homeless; ex-offenders; older people and teenage mothers and babies. These different groups have different needs in terms of the amount of time for which they require supported housing; they can range from 24 hour permanent assistance to low level support on a temporary basis (e.g. for vulnerable young people).
It is estimated that there are around 130,000 claimants in registered social landlord accommodation and a further 40,000 in other accommodation (although there is some uncertainty around these figures as the software used by local authorities does not allow them to report the numbers of claimants in ‘exempt accommodation’ reliably) (7.2).
The cost of non-registered social landlord ‘exempt accommodation’ claims is estimated at between £70m and £130m above rent officer determinations (but there is considerable uncertainty around these figures) (7.3).
The average additional housing costs (HB paid in excess of the rent officer’s determination) appear to have increased from £38 in 2003/04 to £71 in 2009/10, an increase of 85 per cent (7.4).
The findings support anecdotal evidence that there has been an increase in both the cost and the number of claims from those in ‘exempt accommodation’ (7.4).
The research highlights that local authorities have expressed concern about the complexity of the regulations and differences in interpretation in different areas; that some claimants are treated unfairly because they slip through the net; and that the challenges of administering the system are disproportionate to the overall burden on the public purse (7.7):
“Most LAs we spoke to perceive the lack of full subsidy for ‘exempt accommodation’ claims as unfair. LAs have limited or no control (especially if they are not unitary authorities) over which providers set up schemes in their area, and have limited ability to restrict rents. A small LA that attracts a relatively large number of vulnerable claimants in non-Registered Social Landlords (RSL) accommodation may have to find a relatively large amount of funding to make up for the loss of subsidy. For example, as NHS campuses close, and residents are moved into homes in the community, there may be little or no change to the cost to the public purse37, but costs are moved from central government (the NHS) to being shared between central and local government (DWP and the LA), and hence funded through a mixture of central and local taxation. Where a disproportionate share of ‘exempt accommodation’ expenditure is perceived to fall on an LA, this may be seen by the LA and local council taxpayers as unfair. Pressure on LA budgets exacerbates this. One LA manager noted that the legal requirement to pay HB combined with the lack of full subsidy meant that were certain schemes to go ahead, other services would have to be cut” (6.1.1, page 70).
(iii) - Options for reform
The various options put forward within the Report (at 7.7) include: -
In the short-term, a national, standard pro-forma for presenting rent and service charges to simplify administration, and clearer definitions of the terms ‘unreasonably high’ and ‘minimal care, support and supervision’.
long-term solutions suggested include:
- making the claimant exempt, rather than the accommodation;
- implementing a system with either a cap on payments, or several bands based on local housing allowance, plus a percentage to allow for increased housing needs plus a role for Adult Social Care or Supporting People in determining which band claimants should be allocated to.
More radical suggestions include:
a system whereby only registered social landlords provide supported accommodation as they are already subject to regulation.
- moving administration of benefits for vulnerable individuals to a centralised team or regionalised teams; and/or
- a system whereby only registered social landlords provide supported accommodation as they are already subject to regulation.
Proposal to remove the mobility component of DLA for people in residential care
In October 2010's Comprehensive Spending Review, (CM 7942) the Chancellor announced that the government would be “removing the mobility component of Disability Living Allowance for people in residential care, “where such costs are already met from public funds” (Departmental Settlements - page 29).
The proposal is expected to affect some 60,000 people (but will not affect those who are fully self-funding). The proposal includes children in residential schools (during term time). The mobility component at the higher rate is worth £49.85 a week (2010/11 rates) and the lower rate is paid at £18.95. People claiming the higher rate are eligible to lease or buy a car or electric wheelchair through the Motability Scheme. The new rules are due to be introduced from October 2012.
In a response dated 4 November 2010, Mencap (click here for link) states that it is particularly concerned for people with profound and multiple learning disabilities who, when they do not live in the family home, are most likely to be living in residential care homes. The charity states that the DLA mobility component currently helps those people get out and take part in activities and that removing it will result in people with a learning disability being stuck in their residential care homes, stripped of the control they have over their lives. Mark Goldring, Mencap's chief executive, said -
This cut will take us back to the days when people were left in care homes with just four walls for company and will undo decades of progress. Mencap is calling for the government to urgently review this proposal and prevent this devastating blow to some of the UK's most vulnerable people.'
In a response made on 23 December 2010 the Disability Benefits Consortium (DBC) in a report entitled: ‘Don’t limit mobility: The impact of the removal of the mobility component of Disability Living Allowance from adults and children living in state-funded residential care” (click here for copy of report) say that the new rules will have a huge and regressive impact on the independence of thousands of disabled people, many of whom will be left unable to afford to leave their home and denied the independence most people take for granted:
“Many people living in residential care have all their income taken to pay for their care, and are left with just the £22 per week Personal Expenses Allowance (PEA) to cover all personal costs, such as clothes, toiletries and phone bills, and DLA mobility component to meet mobility needs. Without DLA mobility component, the PEA is not enough to cover additional mobility costs and people will be left without the money to meet basic mobility needs” (page 1).
The report explains that:
“The mobility component helps people to pay for things like accessible transport, or mobility aids such as an electric wheelchair. It makes a vital difference in ensuring that people can leave their home independently and participate in everyday activities that non-disabled people take for granted, like meeting friends, attending a leisure centre or getting to college. In some care homes there are schemes where people’s DLA mobility component is pooled and used to buy or lease a car which care staff can then use to take them out and about.
For disabled children and young people in school or college, DLA mobility allows them to keep active during the school holidays and enables family members to visit during term time and take them out on weekend day trips. Family carers often use the DLA mobility component to pay for adaptations to vehicles. This enables disabled children and young people to maintain contact with friends and family, and participate in leisure and other community activities” (page 3).
The DBC also says that the assumption of 'double funding' was flawed as local authorities were not currently meeting mobility costs. As a result, rather than removing an overlap of public funds, the measure would simply transfer costs to already stretched local authorities or would leave people without the vital support that they need for independent mobility:
“In its interpretation of assessed need, a local authority does not usually include activities like going to the cinema, visiting a leisure facility or meeting with friends and family.
We know from the evidence that often when funding for transport is included within an individual’s care package, this is only to cover the costs of travel that are directly related to their specific care needs (for example regular attendance at a day centre).”
Case Law
In SA v Secretary of State for Work and Pensions (IS) [2010] UKUT 345(AAC), the Upper Tribunal considered whether an educational establishment may also be a ‘care home’ for the purposes of the Income Support regulations. The claimant was a young man aged 19 who had learning difficulties who was attending a residential college. He went home for the holidays and some weekends. The cost of the residential accommodation was in the order of £36,000 a year. This was met by three funding streams from public authorities in Wales: the Welsh Assembly Government contributed (approximately) 55%, the county council social services department 25% and the area health authority 20%. He made a claim for Incapacity Benefit (on the special youth criteria) and for Income Support. The claim for Income Support was refused however, due to a rule which treated part of the local authority’s payments towards his college fees as notional income. The income could only be disregarded (under regulation 40(2) and para. 66 of Schedule 9 to the Income Support (General) Regulations 1987 (SI 1987/1967)) if the claimant was a person living in a care home as defined by the Care Standards Act 2000. A first-tier tribunal dismissed the claimant’s appeal and concluded that the college was “first and foremost an educational establishment and therefore should not be treated as a care home”.
The Upper Tribunal held that a college could be at one and the same time a care home and an educational establishment; the terms were not mutually exclusive. The first-tier tribunal had therefore asked itself the wrong question, and had erred by adopting a predominant or primary purpose test. The question whether an establishment comes within the meaning of section 3 of the Care Standards Act 2000 was essentially a question of fact: R (on the application of Moore and others) v Care Standards Tribunal [2005] EWCA Civ 627, [2005] 3 All ER 428, considered. The Judge re-made the decision and held that the claimant was residing in a “care home” and therefore entitled to Income Support (click here for transcript).
The Supreme Court has upheld a decision that the Department of Work and Pensions did not have any right to recover overpayments of benefit by a common law action for restitution: The Child Poverty Action Group v Secretary of State for Work and Pensions [2010] UKSC 54 (08 December 2010). The Child Poverty Action Group’s (CPAG) challenge was in respect of the DWP’s practice of sending standard letters to claimants who were considered to have been overpaid benefit, but who had not misrepresented or failed to disclose any relevant fact. These letters claimed that the DWP had a right to recover an overpayment under common law. Between March 2006 and February 2007 some 65,000 common law recovery letters were sent. The Supreme Court confirmed that section 71 of the Social Security Administration Act 1992 was the only avenue to recovery in such cases. The Court took particular note of the fact that at the time the 1992 Act was enacted, there was a division of functions between the adjudication of awards and their payment, and under that scheme simple error on the part of the adjudicating authorities was excluded. In1998, the Secretary of State was made responsible for both the decision on the claim for benefit and payment of the amount of the award under the Social Security Act 1998; but this had not been accompanied by any change in the statutory criteria for recovery of overpayments under the 1992 Act. Accordingly, there was no basis for the Secretary of State’s claim that this amounted to an intention to open the door any wider to recovery than it previously had been at the time of the 1992 Act (click here for transcript).
Comment: For the ruling to apply, the overpayment must have been made 'in pursuance of a benefit award'. It does not apply to the recovery of overpayments resulting from other errors, such as those in relation to duplicate payments of benefit. Common law recovery letters can still be issued in these cases (paras 1 & 20).
The judgment applies to all benefits administered by the DWP where recovery of an overpayment depends on section 71 of the Social Security Administration Act 1992 – i.e. misrepresentation of a failure to disclose. It does not include housing benefit and council tax benefit or tax credit overpayments.
The Government intends to change the law to reverse the effect of the Supreme Court’s ruling in respect of ‘working age benefits’ in the forthcoming Welfare Reform Bill. (Minister for Employment, Chris Grayling: Hansard 10 Jan 2011: Column 137W (click here for link)). However, the judgment will continue to apply to those in receipt of benefits who are over pensionable age (currently 60 years of age for both men and women).
