Implications of Welfare Reform

Wednesday 21 November 2012

Conference Chair

Cllr Martin Hill, Lincolnshire County Council

Universal Credit and Other Welfare Reforms – a Local Authority Perspective

John Wright

21 November 2012 www.local.gov.uk

Universal Credit• Aims to make benefits system simpler by

merging out of work benefits and tax credits into one award, including Housing Benefit and make work pay.

• Implementation Oct 2013 to 2017; pathfinder roll out in Greater Manchester region from Apr 2013

• Digital by default - 80% of transactions on line• Direct payment monthly in arrears to a

household rather than an individual. • Jun 12 – Jun 13 direct payment demonstration

projects involving six councils/HAs

www.local.gov.uk

Universal Credit

• UC replaces the following benefits/tax credits:

• Working Tax Credit, • Child Tax Credit, • Housing Benefit, • Income Support, • Income-based Jobseeker’s Allowance• Income-related Employment and Support Allowance.

• Will support working age adults and children up to an upper age limit linked to the qualifying age for pension credit.

www.local.gov.uk

Pension Credit

• UC not payable to people in receipt of pension credit, except where one of a couple under pension credit age, in which case treated as household eligible for UC.

• Housing Benefit for these households replaced by Housing Credit

• To be introduced to same timescale and payment terms as UC, though not starting until 2014

www.local.gov.uk

Benefit Cap• Aims to restrict amount of benefit working

age claimants can receive to average earned income of a working household after tax and national insurance. Applies to working age households

• To be set at £500 per week for couples and lone parent households and £350 per week for single person households

• Until UC to be delivered by councils through Housing Benefit

www.local.gov.uk

Benefit Cap

• Bereavement Allowance

• Carer's Allowance • Child Benefit • Child Tax Credit • Employment and

Support Allowance (except where it is paid with the support component)

• Guardian’s Allowance • Housing Benefit • Incapacity Benefit

• Income Support• Jobseeker's Allowance • Maternity Allowance • Severe Disablement

Allowance • Widowed Parent's

Allowance • Widowed Mothers

Allowance • Widows Pension • Widows Pension Age-

Related

www.local.gov.uk

When added together the benefit cap will limit the total income that can be received from the following benefits:

Benefit Cap

• Does not include council tax benefit • Will not apply for those qualified for Working Tax

Credit or in receipt of the following benefits:– Disability Living Allowance – Personal Independence Payment (from April 2013) – Attendance Allowance – Industrial Injuries Benefits – Employment and Support Allowance, if paid with the

support component – War Widow's or War Widower's Pension

• 9 month grace period for those in continuous employment for previous 12 months

www.local.gov.uk

Local Welfare Assistance• Replaces community care grants and

crisis loans • Funded from un-ringfenced grant to be

paid to upper tier and unitary authorities• Provides local support to vulnerable

groups• Can be in cash or in kind• Indications that councils choosing mixture

of the two, but with a greater emphasis on in kind rather than cash.

www.local.gov.uk

Housing related reforms

• Oct 2011 - LHA reduced from 50th percentile to 30th percentile of market rates and frozen from Apr 2012

• From Apr 2013 to be adjusted by CPI• From Apr 2011 5 bed rate of LHA removed –

max rate is for 4 bed property• From Jan 2012 single under-35s only eligible for

shared rate of LHA• Apr 2013 – introduction of size criteria in social

housing.

Serious Fraud Investigation Service

• DWP, HMRC and council fraud investigation services to become partnership to ensure single investigation in respect of Welfare Benefit and Tax Credit fraud

• Council staff remain as council employees• Councils still responsible for non welfare

related fraud

www.local.gov.uk

Comment• While we welcome:

• Simplification of benefits and tax credit system with the introduction of UC

• Recognition that councils are best placed to design systems to support the needs of their own communities.

• Views differ on how people’s behaviour will change as a result of the reforms, but clear councils will be crucial in influencing the dynamic/behavioural changes the government is seeking, particularly in strategic housing role

• But implementation raises a number of issues for councils

www.local.gov.uk

Impacts and Issues (potential & real)

• General• Data exchange• IT readiness• New burdens• Demographic migration?• Loan sharks, Credit Unions and Stop Loan Sharks

Team (https://www.gov.uk/report-loan-shark )

• Introduction of UC• Face to Face delivery• Managing run down of HB delivery• Future of staff (TUPE issues)• Monthly direct payments• Passported benefits

www.local.gov.uk

Impacts and Issues (potential & real)

• Introduction of Benefit Cap• Provision of information• Sufficiency of DHPs• Rent arrears/increased cost of collection?• Increases in B&B and Temp Accommodation?• Overcrowding?• Increase in rough sleepers?• Reputational impact?

• Local Welfare Assistance• New role for councils• Various options being considered

• SFIS• Future investigation of tenancy and council tax fraud

www.local.gov.uk

Questions?

www.local.gov.uk

Andrew Burton IRRV - Head of Revenues, Benefits & Customer Services

Bassetlaw DC November 2012

What is happening to (scrapping of) Council Tax Benefit and -what have we done/still to do at Bassetlaw DC ?

x Bedroom Tax

X Universal Credit

X Social Fund

Practical analysis…20 mins

1) From 1st April 2013, there is no more Council Tax Benefit. Councils instead must put in place a locally determined scheme that awards discounts to residents by reference to financial need.

2) The local scheme will be funded by the Government at a level of 90 per of existing “demand led“ CTB. ……… (continued)

3) Pensioners cannot be worse off than they are now under CTB. They are protected and the Govt said this is the only intervention in schemes.

4) The new local scheme must somehow encourage the journey from welfare to work, the idea being that if councils did more about job creation and unemployment, the 10% saving in CTB would heal itself.

5) Under the equality duty , must not, disadvantage vulnerable groups. So, some working age groups should not face reductions such as the severely disabled.

CTB caseload 2012 -10,500 claimants CTB spend £9.130m 2012/13 10 per cent is >£910,000-£1m with new cases Pensioner caseload - 5089 Working age earning- 1881 Working age IS/JSA 3565 Existing spend on pensioners £4.3m Existing spend on working age £4.8m Expected spend for working age under new

scheme £3.9m

MPA and districts in Notts worked together on standard menu of options and framework

But, there is no countywide scheme as Billing Authority must reflect different challenges.

Not all Notts agree to types of change e.g. a weekly liability restriction , Ashfield ,Broxtowe and Gedling said no ….

Council Leaders -involved, informed re menu options and timetable , Difficult choices for members

LGA Chairman Sir Merrick Cockell said “Councils are being put in a very difficult position. Under the proposed scheme most councils will have to ask people on lower incomes, including the working poor, to pay more council tax than they currently do

Use the Council Tax Benefit scheme as basis- but restrict support for Council Tax for working age people yet protect the vulnerable (severe disability and war pensions)

– Everyone pays something including JSA /IS by presenting (in Bassetlaw) 80% of liability for rebating

– Indicative modelling: • Potentially nets £0.7m (cap support at 80%) - £1.003m. (cap support at 75%)

Band A ,Harworth charge now £1115.50

Gets Income support /JSA so rebate pa £1115.50 ie £ 21.39 pw

If only 80 % rebate-able so £21.39 x80% so gets £17.11pw which is £892.26 pa in new support

£1115.50 minus £892.26 = £223.24 or <£19 pm - specifically £4.28 pw to pay .

This element would account for 7/10 of shortfall ( c 700k )

Capital limit from £16,000- nets <£0.030m Scrap Second Adult Rebate for working age

(£0.012m) No backdating awards (£0.020m) Increase non dep deduction (£0.050m) Stop ignoring Child benefit (£0.220m) Stop ignoring income disregards (£0.090m) Consider vulnerable class Consider hardship fund

Consulted ………….

residents with the least money will receive the most help

Support will be distributed as widely as possible among people eligible to claim the discount

The scheme will support people moving into, and on, low paid work.

The scheme will ensure that everyone apart from the most vulnerable will pay something towards Council Tax

Leaflets /booklets- 22,000 mailshot On line survey www.bassetlaw.gov.uk Bassetlaw CAB/A1Houisng / other RSL/2

shires CU/Vol sector, Fin Incl group Parishes/local councils Road shows TRA 8+ weeks 29/8 to 28/10/2012

Mr Pickles made an announcement first reported in the Times 13/10/12

Share of £100m is £217, 275 Conditions apply, mainly IS related cases Transition, no Income Support /JSA case to

be worse off by more than 8.5% Substantially underfunds the gap Other changes in attempt 1, can’t apply Grant can’t be claimed until after scheme

deadline 31st Jan 2013 May need to re do our scheme and consult

again Initial angry reaction…………

FURY Meddling Descending into chaos. Bad thing made worse During 3rd reading, amendment to review in 3

years and include Council Tax Support in UC Threw out changes to home alone discounts Doomed to failure , takes money off poor,

lasted 3 years, late central interfering ,labelled poll tax ii

Bad week, that was the last week in October

Approx 390 On the 80 per cent- survey is split ,

disagree said do it lower than 80 per cent 250 to 90 re Hardship Count income? – do it excl war widows Other tweaks - do it said 260/75 Agree vulnerable do it said 260/50 96 per cent from Bassetlaw 61 per cent not on CTB and mostly under 60

“MY CONCERN IS THAT YOU WILL NOT BE ABLE TO MAKE THE SAVINGS AND YOU WILL INCREASE COUNCIL TAX BILLS. MIDDLE CLASS WORKERS WILL SUFFER AS USUAL!”

“I recognise that BDC are required to bring in changes to the system but I hope you are continuing to protest strongly against the rationale behind it ie that poor and vulnerable people should be hit disproportionately hard by the need to make savings”

Royal Assent to LGFA 2012 Council may decide to revise draft scheme

and take the Transitional Grant and accept its conditions

Fund the gap from tax base growth c 500k New discount powers We are unlikely to re consult year 1 Will be consulting for year 2 scheme

Collection – est 50 per cent won't pay Collection costs >£50k more . Need DIRECT

Debit Vulnerable and unknown information Discount changes- consider the impact Major publicity on scheme decision Jan/ Feb Revs staff at full output anyway- year end Customer impact rent increase and council

tax. A huge telephone demand expected

Tax base, MPA and local councils

Empty property council tax

Decide on accepting share of £100m

BDC Weekly scheme and collection approach

CTS scheme by 31/1/13 (20/12/12)

Others Major member decisions Unprecedented activity

and customer and staff impact to plan for

Workshops

Delegates attend one workshop, delegates to choose between;

Workshop 1 – West Lindsey District Councils Universal Credit pilot

Workshop 2 – Rushcliffe Borough Council and Melton Borough Councils Joint Universal Credit pilot

Universal Credit Pilot

West Lindsey District CouncilAlan Robinson

Nicoya Palastanga

What is Universal Credit?

• Universal Credit will simplify the benefits system by bringing together a range of working-age benefits into a single streamlined payment.

It aims to:

• simplify the system, making it easier for people to understand, and easier and cheaper for staff to administer

• improve work incentives

• smooth the transitions into and out of work

• reduce in-work poverty

• cut back on fraud and error.

• The first applications to Universal Credit will be made in October 2013. We expect all working age claimants to have moved onto Universal Credit by October 2017.

•Personal Independence Payment

•Universal Credit

• Child Benefit, Carer’s Allowance (will remain)

• Income related JSA• Income related ESA• Income Support (including SMI)• Working Tax Credits• Child Tax Credits• Housing Benefit

• Disability Living Allowance

• Contributory JSA and ESA (conditionality rules changing)

• Council Tax Benefit (Localised Council Tax Schemes)

• Pension Credit•… to include support for housing

and children

2013 focus pilots - Twelve pilots will run from autumn 2012 to September 2013 to explore how local expertise can support residents to

claim Universal Credit.

2013 focus pilots will look at:- encouraging claimants to access online

support independently; - improving financial independence and

managing money;- delivering efficiencies and reducing fraud &

error; and- reducing homelessness.

Post 2015 focus pilots – on the longer term role for local authorities in supporting Universal

Credit claimants.

Local Authority-led Pilots

Key: LA-led pilots

Pathfinder preparation projects

Direct Payment Demonstration Projects

North Dorset

Rushcliffe

Melton

Bath & NES

Oxford

Caerphilly Newport

Birmingham

West Dunbarton North Lanarkshire

OldhamWigan

Dumfries &Galloway

Edinburgh

Wakefield

Shropshire

SouthwarkTorfaen

West Lindsey

Lewisham

Migration - key dates

APRIL 2013 Pathfinder begins

National introduction of Universal Credit – groups of new unemployed able to claim, gradual phasing out of claims for existing

benefits

Expansion - new claims from people in work and moving current claimants to Universal

Credit in phased approach

Universal Credit roll-out complete

OCTOBER 2013

SPRING 2014

2017

WLDC Pilot

• October 2012 to September 2013

• Face to Face Delivery

• Local delivery

• Holistic approach

• Digital engagement/journey

• Reduce fraud and error

Online Claims

• Digital by default

• Housing Benefit/Job Seekers Allowance

• Access to IT

• Public Access in council offices

• Working with partner organisations

• Public Access across the district

Support for Customers

• Financial Literacy

- budgeting skills

- suitable bank accounts

• Introduction to IT

• Literacy and Numeracy

What will be different?

• Co-location of services≈ WLDC, JCP, LCC, VCS≈ Additional support from CAB, Credit Union,

training providers, NCS

The Role of Local Authorities

• Localism

• Community Champions

• Reducing Fraud

• Partnership Working

• Experience – housing, skills agenda, council tax support

Now over to you for any questions

Welfare Reform - The Impact on Housing

Introducing Kettering

Introducing Kettering

93,800 people live here (+14% in ten years) We own and manage 3,800 homes More than 950 new homes were built by housing

associations between 2006/07 and 2010/11 Private rentals have increased from 6.4% of the

housing stock in 2001 to 24.3% today 2991 households are now registered on Keyways

Welfare Reform: The Emerging Picture

Welfare Reform: The Emerging Picture

Shared accommodation rates for under 35’s – Affected 60 claimants – many are now struggling

Benefit cap – Could affect 50 households – take-up of one-to-one meetings is very, very low

Size criteria – Could affect 35% of working-age council tenants – 455 households

Non-dependent deductions – Higher levels of fraud? Localisation of Council Tax Benefit – Potentially , a

huge impact but little awareness among tenants

Welfare Reform: The Emerging Picture

Short term Raising awareness of welfare reform among tenants Staff training Logistical issues - IT, direct debits Need for more tenancy support Impact on rent arrears and homelessness Dealing with under-occupation - spending on voids Longer term Impact on the private rented sector Increase in HMOs - quantity and quality

London – Only 55 minutes away!

London – only 55 minutes away!

We are monitoring closely

Impact on private sector rents

Impact on local support services

Our Response to Welfare Reform

Action Plan

Focus on underoccupying council tenants

Identifying resources for more tenancy support

Working with HB to Identify vulnerable private tenants

Housing options interviews at first point of contact

Communication Strategy

Training and information for staff

Consulting stakeholders Information for tenants

and applicants Target individual

tenants Promote life skills

training

Dealing with Underoccupation

HomeMove Advice and practical support for tenants who want to downsize

Mutual Exchanges Advice and informationPromotion of House ExchangeIncentives for tenants

Lodgers

Life Skills Training Move On, Move In

Life skills training for young people

Life PlanHelping tenants with employment, education and training

Tenancy training houses For young people and rough sleepers

Any questions

?

John ConwayHead of Housing

johnconway@kettering.gov.uk 01536 534288

Welfare Reform: The impact on local communities Samuel Scharf

Contents

• Joining the dots of Welfare Reform• Impact of reforms on local areas and communities• Responsibilities of, and pressures on, local authorities• Solutions

Local provision: welfare assistance

• Welfare Reform Act abolishes, from April 2013:- Community care grants (CCGs) - Crisis loans (CLs) for living expenses

• Previously centrally held Council Tax rebate budget will be added un-ring fenced to LA grant (-10%) with additional policy pressures

• LAs expected to make local arrangements to meet need

• Housing benefit changes

Managing effects of benefit changes

Total benefit cap

• Families look to move to cheaper accommodation (or not as the case appears to be)

• Risks of overcrowding, HMOs (Houses of Multiple Occupation) and homelessness, increases pressure on housing and homelessness depts, children’s and adult services.

• Movement between areas risks employment problems, less social integration and child protection issues. Increases pressure on schools, health services.

Implications for local authorities

Various levels of pressures and responsibilities:

1. Local provision of formerly national schemes

2. Managing effects of benefit changes on local communities

3. Involvement in local delivery of national Universal Credit? 4. Others – PIP (Personal Independence Payments) /DLA

(Disability Living Allowance), Re-setting local entitlement criteria to discounted services

Pressures that will impact communities

• New administration of these support functions – money to existing services with high entitlement thresholds

• Support in kind versus support in cash• No rights to review – pressure on your complaints

process• Not ring fenced - potential movement of money to

statutory services• Timing• Impact if there is a local residence test

Simpified?

Personal Independence Payment

Universal Credit

Pension Credit, Child Benefit, Carer’s Allowance (will remain)

Income related JSAIncome related ESAIncome Support (including SMI)Working Tax CreditsChild Tax CreditsHousing Benefit

Disability Living Allowance

Contributory JSA and ESA (will remain)

Council Tax Benefit

Tapering

200

100

0100

£1

00

£5

00

£4

00

£3

00

£2

00

£100 £300£200

£0

£400 £500

Universal Credit payment

Total in-pocket income

Universal Credit: lone parent with two children

£600 £700

Role in delivery of Universal Credit

Delivery of UC is “digital by default” but face to face and telephone access for those who need it

Potential role of LA s, RSLs (Responsible Social Landlords) and third sector organisations in delivery:

• help access online account

• face to face / telephone contact

• budgeting support and financial capability

Top 5 challenges

1) Social Services assessments (new proxies), costs and passported services

2) Empowerment or dependency, what is the balance?

3) Individual and family capability and capacity to cope

4) Digital by default – what does this look like? Impact?

5) Coping with increase in demand both on advice services as well as high cost lenders and unscrupulous traders.

CommunicationActivity Dates Purpose of scan

Benefit Cap direct mail/ Communication

(NB further scans post Oct 12 are currently being considered)

• May 2012 -To all ‘stock’ claimants (at that

point in time)• July 2012 - To ‘new’ claimants not captured on p April 12 scan• October 2012 - To all ‘stock’ claimants (at that

o point in time)

To inform claimants of the cap and the support available to them.

DWP District scan

(NB further scans post Oct 12 are currently being considered)

April 2012 – an initial ‘stock’ scan July 2012 - A new claim scan (only cases not o on April scan) October 2012 – A new claim scan (only cases n not on July scan

Districts will use the scan from April 2012 to make contact with claimants and offer of employment support.

Local Authority Scan April/May 2012 – an initial ‘stock’ scan July 2012 - A new claim scan (only cases not o on April scan) October 2012 – A new claim scan (only c c cases not on July scan

LAs will require a scan output of potential cap claimants /households to enable them to offer housing support.

Solutions

• Accountability and transparency

• Clear information channels to citizens, need for real engagement and use of appropriate technology

• Working across teams in LAs, Job Centre Plus, with CABx and others to explain changes (Local Delivery Alliances)

• Common issues that joint thinking could provide some solutions

• New partnerships. E.g. Banks, employers.

Welfare Reform: The impact on local communities Samuel Scharfe: samuel.scharf@citizensadvice.org.uktw: @cabpartnerup

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