20 July 2005 - New system of Housing Benefit has boosted financial inclusion
More tenants are reaping the advantages of bank accounts thanks to a radical new scheme that pays Housing Benefit directly to them.
Having a bank account means people are job-ready, making it easier for them to move off benefits and in to work – the best route out of poverty.
In pathfinder councils testing the Local Housing Allowance, nearly nine out of ten tenants receive their Housing Benefit direct compared to four in ten on the current system. Nearly a quarter of those receiving their Housing Benefit direct, opened an account to have the benefit paid in, because the new Local Housing Allowance was introduced. Tenants who are paid directly are more likely to expect to move in to work compared to those whose benefit is paid directly to their landlord.
Key findings from two reports on claimants’ and landlords’ early experiences of the Local Housing Allowance show that:
- Fears from landlords that arrears would increase once rent was paid directly to tenants have not materialised
- The introduction of the Local Housing Allowance in the first nine Pathfinder authorities has gone smoothly.
Housing Benefit minister James Plaskitt said: “The pilots of the new Local Housing Allowance are producing very encouraging results. Tenants are taking to it and landlords' fears about the scheme have been allayed. Results from the pilots are helping us to refine the scheme prior to national introduction.”
Designed to be simpler and increase choice and responsibility for tenants, the Local Housing Allowance is a flat rate of Housing Benefit which varies according to the size of household and the area in which the claimant lives.
Notes to editors
- The advantages of bank accounts can include paying bills quickly and efficiently by direct debit, discounts on fuel bills by paying by direct debit and savings on financial transactions such as money transfer and cheque cashing.
- The Government’s strategy for tackling financial exclusion can be found at http://www.hm-treasury.gov.uk/pre_budget_report/prebud_pbr04/assoc_docs/prebud_pbr04_adexclusion.cfm
- The report and summary published today in the Department for Work and Pensions Local Housing Allowance Evaluation Series are “Receiving the LHA: claimants’ early experiences of the LHA in the nine Pathfinder areas” and “Working with the LHA: A summary of landlord and agent’s early experiences of the LHA in the nine Pathfinder areas. Copies can be downloaded from the website at www.dwp.gov.uk/housingbenefit/lha/evaluation/index.asp
- The full interim report from the Landlord stream of the evaluation is due to be published in the autumn.
- The evaluation is being carried out over a two-year period following the introduction of LHA within the private rented sector in nine Pathfinder councils and will inform the eventual rollout of the scheme nationally. An independent consortium of the Universities of Birmingham, Loughborough and York along with the National Centre for Social Research has been commissioned to carry out the evaluation. As well as this the Department will be conducting analysis of its own administrative and statistical data which will feed into the evaluation and consider the effect of the LHA on meeting the objectives of the scheme.
- The summary of landlords’ experiences gives findings from a survey of 1,082 landlords and letting agents in the Pathfinder areas who all took part in the baseline survey before the introduction of the LHA and had agreed to be contacted again.
- The report on claimants’ experiences brings together findings from three sources of information including: a) The first of three large-scale surveys of a sample of claimants on the LHA being carried out over the period of the two years, b) A small number of in-depth face-to-face interviews with claimants on the LHA and c) Administrative data being collected by the Department, which covers 100% of the LHA caseload in each Pathfinder.
- The nine Pathfinder councils are Blackpool, Brighton and Hove, Conwy, Coventry, Edinburgh, Leeds, Lewisham, North-East Lincolnshire and Teighnbridge. Blackpool was the first to introduce the LHA in November 2003 and all the other councils had gone live by late April 2004.
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