Wolverhampton Welfare Reform Impact Analysis...Welfare Reform Impact Analysis November 2013 In summary, the changes brought about by welfare reform are still in their early stages

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Welfare Reform Impact Analysis November 2013 NOT PROTECTIVELY MARKED (v1.6)

Wolverhampton Welfare Reform Impact Analysis

November

2013

Produced by: Jatinder Matharu Policy Officer, OCE Contact: [email protected] Phone number: 01902 554043 Damion Clayton Policy Officer, OCE Contact: [email protected] Phone number: 01902 553219 Version: 1.6

mailto:[email protected]

mailto:[email protected]

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Contents

Executive Summary ........................................................................................................................ 3

Introduction ..................................................................................................................................... 8

Housing and Household Finances ............................................................................................. 10

Indebtedness ............................................................................................................................. 17

Help and Advice ........................................................................................................................ 24

Family Stress ............................................................................................................................ 27

Employment and Economy ........................................................................................................ 28

Future Changes ......................................................................................................................... 31

Impact of child poverty on cost of services ................................................................................ 34

Equality Analysis ....................................................................................................................... 36

Appendix A: Universal Credit Main Impact Analysis ...................................................................... 41

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Executive Summary The purpose of this report is to provide an analysis of the impact welfare reform measures have had on individuals and households in Wolverhampton, as well as the consequential impacts on the Council, its partners and other service providers concerned for the welfare of those affected. This analysis follows on from the earlier ‘Greater Pressures all Round’ impact assessment completed in 2012. The Government’s reforms include: Social Sector Size Criteria (also known as the removal of the ‘spare room subsidy’ or

‘bedroom tax’) was introduced April 2013 Replacement of Council Tax Benefit with a new local Council Tax Reduction scheme from

April 2013 Benefit Cap introduced July 2013 Abolition of Social Fund and introduction of the Local Discretionary Grant Scheme from

April 2013 Continuing roll out of Employment and Support Allowance changes, initiated in 2012 Abolition of Disability Living Allowance scheme and establishment of Personal

Independence Payments scheme from June 2013 Annual up-rating cap introduced April 2013 Benefit sanctions Universal Credit yet to be introduced in Wolverhampton There are other benefit changes, such as Child Benefit freeze, Sure Start Maternity Grant and Pension Credit, and State Retirement Age changes that have not been discussed at this stage. These changes are not just affecting households who claim out-of-work benefits. Those receiving in-work benefits are also affected. Many of the Governments welfare reform changes are now in place, and the purpose of this report is to analyse the early effects of welfare reform changes across the city. Social Sector Size Criteria (SSSC) The latest data shows 2,999 households have had housing benefit restricted as a result of under occupancy. The estimated loss to the city is £2.1million, with an average loss per household of £13.63 per week. The previous forecast of large scale increases in evictions and homelessness, and the migration of benefit recipients from areas of the country where rents are more expensive, to areas (such as Wolverhampton) where they are relatively cheaper, has not yet materialised However, some claimants are currently relying on discretionary housing payments to bridge the gap between their housing benefits and their rent, which only provides a short term solution. Furthermore, in the longer term the scale of the shortfalls will exceed council budgets for discretionary payments. The Benefit Cap Those households affected currently number 150, with each suffering a £62.19 average weekly loss. This represents a significant loss in household income for the individuals concerned, but also accounts for a total annual loss of benefit income to the city of just under £0.5 million. Council Tax Reduction Scheme (CTR) 15,2051 working age households previously not required to pay any Council Tax are, for the first time, required to pay 8.5% Council Tax. There are 20,083 people who are of working age, and

1 Data from Wolverhampton City Council Revenue and Benefits team

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have been affected by the Council Tax Reduction Scheme. The average weekly amount payable is £1.40. This amounts to a £1.5 million loss to the city. This scheme is currently being reviewed, and a consultation exercise is under way to develop a proposal (in response to government grant cuts) looking at increasing the amount of Council Tax payable by individuals, while also reducing the amount of Council Tax support the Council is able to offer to help them. Employment and Support Allowance (ESA) The Department of Work and Pensions (DWP) estimates that 2,664 residents will be affected by the migration from Incapacity Benefit and Severe Disablement Allowance (and Income Support where the grounds of claim has been incapacity for work) to Employment and Support Allowance (ESA). This amounts to an average weekly loss of £43.96, which equates to an approximate loss of £6.1 million to the city. The latest data on the outcome of work capability assessments shows that 39% (1,720) of Wolverhampton’s ESA claimants referred for assessment by November 2012 had been judged fit for work and were therefore no longer entitled to claim. Tax Credits Changes The latest DWP figures show approximately 30,800 people in Wolverhampton affected by the changes to tax credits, with an average weekly loss of £15.52. A high proportion of the total annual loss of benefit income to the city from the various welfare reform measures is due to tax credits, and amounts to approximately £24.9 million. Up-rating It is estimated that an average of £320 per year will be lost by Wolverhampton households, as a result of the 1% up rating cap. This impacts working and non-working people, with those employed expected to face an average annual loss of £206, whilst those who are unemployed are expected to see an average reduction in annual income of £463. The overall annual loss to the city for 2015/16 is estimated to amount to £15.1 million. Disability Living Allowance (DLA) The DWP predicts that 27-28% of current DLA claimants2 will not receive Personal Independence Payments (PIP), which will replace DLA when it is phased out. Assuming a 27.5% reduction for Wolverhampton from the latest 16,080 caseload total, this means 4,422 people will no longer receive DLA. Sanctions The purpose of sanctions is to encourage claimants to comply with requirements to help them move into, or prepare for work. The result of a sanction is that an individual could cease to have benefits paid for a period of time deemed appropriate, which could be anything up to three years. Data for Wolverhampton shows that 8,910 Jobseekers Allowance decisions were made between October 2012 and June 2013 for the three Jobcentres in Wolverhampton. Of these 4,670 (52.4%) were adverse decisions resulting in loss of entitlement to benefit. Universal Credit The introduction of Universal Credit will dramatically change the welfare system for working-age adults. If successful, it will make the welfare system more effective and coherent, but will create winners and losers in the process. Such a radical overhaul of the benefit system will not be without problems. 36%3 of Wolverhampton residents do not have access to the internet. Job Centre Plus estimate that 20% of claimants do not have the appropriate skills to engage with this new process.

2 http://www.parliament.uk/briefing-papers/SN06538.pdf

3 Point Topic V16 Take-Up for Wolverhampton (Report on Broadband use in Wolverhampton)

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There are concerns that the change from weekly to monthly payments, the removal of direct housing benefit payments and making payments to households rather than individuals will be a significant, and in some cases unmanageable shift for families on tight budgets. There are also concerns that the “digital by default” claims process, required as part of Universal Credit, will present considerable challenges for Wolverhampton residents, where ready access to the internet is significantly below the national average and many claimants are unable to engage because they lack confidence, capability or skills online. Early indications suggest the combined impacts of the above, along with the increase in food poverty (evidenced by increasing usage of food banks) and fuel poverty (likely to be exacerbated by the recent price increases), are not only increasing financial stresses on individuals and households, but are also impacting adversely on the capacity of the Council and its partners to respond to the welfare problems being created. Some of these pressures include:

The cumulative effects of increased rent arrears, increased levels of properties sold under the right to buy, a change to the government policy on social rent, plus additional capital investment required in the Housing Stock, have resulted in an increased risk in achieving the business plan for Council housing. As a result the Council has had to consider a higher than inflation rent increase to keep the business plan sustainable in the long term, which may/will cause issues in regard to rent arrears, and push many people further into debt.

Anticipated additional costs of roughly £1.8 million4 in 2013/14 for children’s social services, as a result of welfare reform. There are further increases of up to £2.4 million by 2015/16 and around £4.4 million by 2020, as a result of the continuing growth in child poverty resulting from other factors. Children in need/child protection and looked after children budget has an overspend of £5 million in 2012/13. A potential negative impact from welfare reform could result in an increase in vulnerable families becoming more unstable through the changes to the welfare system. This presents risks due to increasing the numbers of children in need and child protection concerns, and ultimately also the number of looked after children, which will increase the financial pressure on the Council.

A risk of over £300,000 per year loss in charging revenue to Adult Social Care services due to the changeover to Universal Credit and the loss of DLA as PIP is phased in and fewer claimants continue to qualify for benefit.

Equality Analysis Whilst analysis of the equality assessment is still on-going, early findings include:

Recent applications to the Local Discretionary Grant Scheme (LGDS) have been heavily weighted to the 16-44 age brackets, and noticeably, Black African and Caribbean residents have been disproportionally accessing this fund, indicating that amendments to this scheme are likely to affect those particular demographics;

The projected reduction in DLA caseloads, by well over 20%, must also prompt the conclusion that people with disabilities will be adversely affected;

Whilst the Government has, for the time being, kept older people largely protected from the cuts, the adverse impacts will, therefore, fall on working age groups instead;

Black Minority Ethnic (BME) groups and females/families with children have always had disproportionately high representation among low income groups, so any cumulative adverse impacts on low income groups may also be expected to impact disproportionately on them.

4 Analysis undertaken by WCC using data and reports from Joseph Rowntree Foundation The public Service Costs of Child Poverty

2008, Institute of Fiscal Studies (IFS), Child Poverty Action Group , Child Poverty Needs Analysis 2012 (CPNA)

http://www.ifs.org.uk/comms/comm121.pdf

http://www.cpag.org.uk/content/local-authorities-child-poverty

http://www.wolverhamptoninprofile.org.uk/resource/view?resourceId=103

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In summary, the changes brought about by welfare reform are still in their early stages. The extent of the impact is yet to be fully evidenced and understood. The average losses per household have been estimated by each benefit change. However, many households will be affected by a number of these changes, and therefore cumulative losses will be even more significant. With 82%5 of children in poverty coming from households reliant on out-of-work benefits, supporting residents into employment is a crucial element of tackling child poverty. The changes brought about by welfare reform are not just affecting those households that are in receipt of out-of-work benefits, but also many households where people receive in-work benefits. Whether or not welfare reform will achieve its purported objective of “making work pay”, remains to be seen. However, in the meantime, many individuals and households in Wolverhampton are losing benefits whether they are out of work or not. Opportunities for taking up work to avoid some of the benefit cuts and sanctions that are being applied by welfare reform measures are inevitably limited by the lack of job opportunities and the relative low pay that are features of the current economy. Furthermore, some of the benefit cuts (including the replacement of the DLA scheme with PIP) will affect those for whom work may not even be an option. Encouraging enterprise and business, empowering people and communities and re-invigorating the city, the themes of the Corporate Plan and City Strategy, will help change the environment and prospects for many. Nonetheless, the impact of welfare reform could have a significant impact on achieving these.

5 Wolverhampton’s Child Poverty Strategy 2013 - 2018

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Introduction

Wolverhampton is one of the four local authorities in the Black Country sub-region. According to the latest Indices of Deprivation (2010) Wolverhampton is now more deprived than it was three years ago. Levels of child poverty still remain high, with nearly one third (17,925) of children in Wolverhampton living in poverty and it is predicted that child poverty will increase in the short-term as a result of welfare reform, increasing the demands made for services.

The challenges that welfare reform brings further compound the issues faced by many households. Maintaining current standards of living will be difficult for a lot of people, and not just those on benefits. Increases in the cost of living are greater than the 1% up-rating for those receiving any benefits. For many in employment, the increase in the costs of living is also greater than any wage increase. This will mean further hardship for many households already having difficulties in maintaining current standards of living, which may already be very poor. Households whose income is not low enough to receive benefits, but not high enough to live comfortably, will also experience difficulties, as the cost of food and fuel continue to rise, and increasing mortgage rates loom. All of these changes point to increasing debt for many, and increasing debt will lead to higher levels of poverty, homelessness, and family stress, amongst those who are in receipt of benefits, and many working families. This report will provide an overview of the impact of welfare reform changes on people in Wolverhampton, and identify where possible, some of the pressures on public services. Many of the changes bought about as a result of the Welfare Reform Act have been implemented. This report focuses on the following changes: Social Sector Size Criteria introduced April 2013 Replacement of Council Tax Benefit with a new Local Council Tax Reduction scheme from

April 2013 Benefit Cap introduced July 2013 Abolition of Social Fund and introduction of the Local Discretionary Grant Scheme from

April 2013 Continuing roll out of Employment and Support Allowance changes initiated in 2012 Abolition of Disability Living Allowance scheme and replacement by new scheme of

Personal Independence Payments from June 2013 Annual up-rating cap introduced April 2013 Benefit sanctions Universal Credit yet to be introduced in Wolverhampton There are other benefit changes, such as the Child Benefit freeze, Sure Start Maternity Grant and Pension Credit and State Retirement Age changes that have not been discussed at this stage. Detailed information on each of these changes can be found on the council website The report sets out the following: Housing and Household Finances sets out the current changes affecting household finances and the impacts so far. Indebtedness identifies levels of debt in terms of rents arrears, council tax arrears, debt enquiries and usage of high interest money lenders. Help and Advice identifies food bank usage and take up of the Local Discretionary Grant Scheme. Family Stress looks specifically at crime although factors associated with stress are discussed in previous parts of the report. Employment and Economy looks at employment and skills in the city.

http://www.wolverhamptoninprofile.org.uk/resource/view?resourceId=4

http://www.wolverhampton.gov.uk/welfarereform

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Future Changes highlights some of the forthcoming changes such as Universal Credit to identify future impacts. Equality Analysis provides an overview of the groups likely to experience change as a result of the implementation of the Welfare Reform Act.

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Housing and Household Finances

Household finances are affected by a number of different factors. The losses per household discussed below are based on an individual benefit change, and not a cumulative figure. Therefore, in many households, losses will be much greater than those identified per welfare reform change, as some households will be affected by a number of these changes.

These changes brought about by welfare reform are not just affecting families who claim out-of-work benefits but also those claiming in-work benefits. Many of the income reductions due to welfare reform fall on households where somebody works. The anxiety and stress of debt and low incomes has the potential to contribute to poor health and the breakdown of relationships and families.

The following section on household finances does not look at every element that collectively makes up household finance, but follows on from the measures identified in “Greater Pressures All Round?”

Key Changes Previous Data (Sept 2013

Latest Data (Oct 2013)

Average weekly loss

Benefit cap 142 households affected

150 households affected

£48.47

Households now paying 8.5% Council Tax Reduction

15,205 households affected

15,205

£1.40

Social Sector Size Criteria



£13.63

ESA 2,664 people (latest data DWP) £43.96

Tax Credit Changes 30,800 people (latest data DWP) £15.52

Data for the six months post April 2013 shows that the impact of welfare reform on household finances in Wolverhampton has been significant, but is not as great as predicted in the “Greater Pressures All Round?” report. Benefit Cap Initial expectations were that around 256 households would be affected by the Benefit Cap with an average household reduction of around £54 per week. Current data shows there have been 1506 claims capped, at an average weekly loss of £48.47. In some households whose income has been capped, Discretionary Housing Payments (DHP) are being used to offset the impact of the Benefit Cap and Social Sector Size Criteria. As of September 2013, 79% (330) of the 417 awards made have gone to people affected by the cap and under occupancy. However, DHP is not a long term solution and households will still face the challenge of living on a reduced income once the payments come to an end. For those households with difficulties accessing the labour market and not receiving any DHPs, the move to serious financial problems is likely to be rapid. Without interventions to offset the impact, social disadvantage is likely to grow over time. The full impact continues to emerge. Experiences of those households affected are as yet unknown, as no qualitative research has been published for Wolverhampton. This has the potential to lead to tensions in the home, increasing family stress and adversely impacting on children.

6 Wolverhampton City Council Revenue and Benefits Team

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Council Tax Reduction (CTR) The introduction of the Council Tax Reduction scheme has hit households at the same time as the benefit cap, and further reduced household incomes. 15,205 working age households in Wolverhampton previously covered by a 100% Council Tax Benefit subsidy are now required to pay 8.5% of Council Tax liability for the first time. This is resulting in an average weekly loss from household budgets of approximately £1.40 per week. The CTR scheme is currently under review and proposals have been made to decrease the support available to those eligible, therefore increasing the amount payable. The proposed CTR scheme could further increase the financial pressures faced by many, however the cut in the Council Tax grant also needs to be met. Social Sector Size Criteria (SSSC) The restriction on housing benefit for under-occupying a property has been labelled the ‘bedroom tax’. For those households deemed to have a spare bedroom/bedrooms housing benefit is reduced by 14% for under-occupation by one bedroom and 25% for two bedrooms or more. In December 2012, DWP data identified 4,127 households in Wolverhampton that would be affected by the reduction in benefits due to the application of size criteria. The latest data shows 2,999 households have had benefits reduced as a result of under occupancy, with an average weekly restriction of £13.63. The media have highlighted the cases of some families, where individuals or families have needed to find new homes. This has been attributed to the introduction of the SSSC, although other factors may have also contributed. For a former Bushbury Hill Estate resident, the financial loss due to under occupying has resulted in relocation to a cheaper home over 100 miles away. Employment and Support Allowance (ESA) DWP’s impact modelling tool identifies 2,664 residents affected by ESA, with an average weekly loss of £43.96. The latest work capability assessment data shows that 39% (1,720) of Wolverhampton’s ESA claimants referred for assessment by November 2012, had been judged fit for work. This meant they were no longer entitled to claim, unless they were able to successfully appeal against this decision. This figure is the highest in the West Midlands and the fourth highest nationally.

Data from appeals tribunal hearings for Wolverhampton show that between April 2012 and March 2013, 2,186 appeals were heard against work capability assessment decisions. 32% (699) of the appeals were successful, and appellants were more likely to achieve a successful outcome if they attended the hearing with representation (66%) than without (54%). However, only 140 appellants were represented.

The proportion of successful appeals, where the appellant has representation, suggests that the impact of ESA work capability assessments on household finances can be lessened by encouraging and facilitating greater representation at appeal.

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In terms of the impact on Wolverhampton’s economy, Sheffield Hallam University have estimated that ESA changes would reduce benefits income in Wolverhampton by £23 million per year, substantially more than any other welfare reform change. Recent figures for new ESA claimants since October 2010 show that 61% of the 9,550 claimants who had completed an initial assessment were found to be fit for work, as were 35% of the 3,860 having a repeat assessment. These are far above the national figures (49% and 26% respectively). Further work needs to be undertaken to understand why the failure rate at work capability assessment stage for those migrating from Incapacity Benefit to ESA is so high in Wolverhampton Benefit sanctions The purpose of sanctions is to encourage claimants to comply with requirements to help them move into, or prepare for work. The result of a sanction is that an individual could cease to have benefits paid for a period of time deemed appropriate, which could be anything up to three years. For some individuals, the impact of a sanction, and therefore a loss of their benefit, would result in them accessing support such as the LDGS, food banks or Section 17. There is also the potential that some people may turn to a high interest lender or even to criminal activity. A recent report by the Housing Rights Service suggests that those groups at greater risk of being sanctioned are:

young people in receipt of JSA

homeless people with mental health or substance use issues

people with poor English skills, such as homeless migrants. DWP sanctions data shows that under the new sanctions regime (introduced in October 2012), a total of 8,910 Jobseekers Allowance decisions were made up to June 2013 for the three Jobcentres in Wolverhampton. Of these 4,670 were adverse decisions (sanctions or disallowance imposed), 2,700 non-adverse decisions (sanctions or disallowance not imposed), and 1,550 reversed (sanctions would be applied, but the claimant does not have a current JSA claim) or cancelled decisions. However, as the data is presented at Jobcentre level, it does not necessarily relate wholly to residents in Wolverhampton’s City Council’s administrative boundary. For instance, residents in areas of Staffordshire or Shropshire may sign on at a Wolverhampton Jobcentre. Furthermore, it is not possible to determine from the data what percentages of claimants are being sanctioned per

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http://www.shu.ac.uk/research/cresr/sites/shu.ac.uk/files/hitting-poorest-places-hardest_0.pdf

http://www.housingrights.org.uk/news/benefit-sanctions-disproportionately-affect-homeless-claimants

https://www.gov.uk/government/collections/dwp-statistical-summaries

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jobcentre or the number of claimants with more than one decision. Therefore, caution is needed in interpreting the data. The following table shows that the three Wolverhampton Jobcentres, like the Black Country as a whole, have a higher percentage of adverse decisions than Great Britain. There were fewer sanctions reversed or cancelled in Wolverhampton jobcentres than in either the Black Country or in Great Britain. Further analysis will need to be undertaken in order to determine the reasons for this.

Jobcentres Adverse Non-Adverse Reversed or Cancelled

Wolverhampton 52.4% 30.3% 17.4%

Black Country 55.6% 27.5% 16.9%

Great Britain 43.1% 28.8% 28.1%

Data for ESA is not yet available below Black Country level. In comparison with JSA the numbers are relatively low with 470 decisions made across the Black Country between December 2012 and June 2013. Of these, 100 (21.3%) were adverse and nearly half (48.9%) of decisions cancelled. The Benefits Helpline and Response Team (BHART) and the Citizens Advice Bureau’s (CAB) Benefits Helpline are reporting an ever increasing number of calls from claimants regarding sanctions, and also from local organisations whose user groups are being affected or who are seeking information on the subject. Wolverhampton Homes are also beginning to see the impact of benefit sanctions on their tenants, in particular the effect on the ability of a number of tenants to pay the under-occupation penalty. Mandatory reconsiderations In response to the huge increase in the number of appeals, and in particular successful appeals against ESA refusals, the government has recently introduced a requirement that all appeals against an extended range of benefits (including ESA) must be subject to a prior process of ‘mandatory reconsideration’. In practice, this will make it much more difficult for claimants to achieve a prompt reversal of an incorrect adverse decision. Whereas under previous arrangements claimants could still continue to receive an award of a disputed benefit (albeit at a reduced rate) pending the outcome of an appeal, under the new arrangements claimants will be denied all entitlement to ESA during the ‘mandatory reconsideration’ period. They will either have to live on no benefit or else attempt to claim Jobseekers Allowance, which requires them to declare they are actively seeking work even though the basis of their claim for ESA is that they are unable to do so. The concern is that many people (in particular the most vulnerable) will, either not be able to establish or maintain an entitlement for Jobseeker’s Allowance and/or they will simply abandon any potential rights to Employment and Support Allowance. Early findings from a survey of food bank users is already suggesting an increase in demand from people who are not receiving benefit while they await the outcome of challenges. Benefit Up-Rating Rather than increasing benefits with the cost of living, a cap of 1% has been introduced on the annual up-rating of benefits at 1%. This means that key benefits - such as Child Tax Credits and Child Benefit - will increase by less than the expected rate of inflation, making it even harder for many families already struggling to keep up with the rising costs of living.

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The Government’s impact assessment7 sets out those affected and the average change in benefit receipt by family type.

Not Affected in millions

Affected in millions

Average Change per week for those affected (£)

Average Change for those affected (% of net income)

Working age and pensioner couples

0.8 0.1 -£2 -1%

Couples with children

0.9 4.4 -£3 -1%

Single with children

0.1 2.0 -£5 -1%

Couples without children

5.2 0.7 -£3 -1%

Single without children

8.5 2.2 -£2 -2%

The table shows that families with children are more likely to be affected than families without, and lone parents being affected with the highest average change (-£5 per week) increasing the challenges faced in reducing child poverty. In contrast, pensioners are the least likely group to be affected, as pensioner benefits are protected. There are a small number of pensioner households affected because they are receiving a benefit not specifically designed for pensioners – such as Child Tax Credit if they are responsible for a child. Single people without children may see a higher change to income than those families with children, as the loss in their benefits accounts for a higher fraction of their total income. The figures identified by the DWP are only averages. The LGA Local Impacts of Welfare Reform Impact Model, which estimates the cash impacts in 2015/16 of individual welfare reforms, predicts the average loss per year for Wolverhampton households as a result of the 1% up rating will be £320 (see table below). This impacts both working and non-working people, with those employed being affected by an average annual loss of £206.

Estimated impacts of Welfare Reforms 1% up rating

No. of working age households

No. of working age households claiming

benefit

Total

Numbers affected 47,171 75,316 47,171

Overall impact (£m reduction)

15.1 65.1 65.1

Average loss (£/ year) 320 865 1,381

Employed



5.4 36.1 36.1


Not employed



9.7 29.1 29.1


The overall value of losses for 2015/16 is estimated to be £15.1m. This will have a further negative impact on the local economy of Wolverhampton.

7 DWP Welfare Benefits Up-Rating Bill

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220198/welfare-benefits-up-rating-bill-ia.pdf

http://www.local.gov.uk/finance/-/journal_content/56/10180/4104978/ARTICLE

http://www.local.gov.uk/finance/-/journal_content/56/10180/4104978/ARTICLE

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Housing Possession Data Financial crisis increases the risk of people losing their homes. Shelter, the national housing charity, published a report Repossessions and Hotspots which shows the top ten hotspots where people are most at risk of losing their homes. The data which is sourced from the Ministry of Justice used possession claims issued by mortgage lenders and landlords. According to the Shelter report, from 1 July 2012 to 30 June 2013, one in 59 Wolverhampton households were at risk of losing their homes, an increase from August 2011 to August 2012, when the figure was one in 65 households. The details for each of the Black Country local authorities are shown in the table below. Both Wolverhampton and Sandwell are in the highest fifth nationally for possession claims per household.

LA Name Households 12/13 Possession Claims

12/13 Rate 12/13 Rank (national, out of 324)

Wolverhampton 102177 1721 1: 59 16

Sandwell 121498 1375 1: 88 59

Walsall 107822 968 1: 111 88

Dudley 129867 998 1: 130 133

The Shelter report goes on to state that “not everyone facing a claim will have to leave their home - but once a claim is issued, it makes the risk of eviction or repossession very real. The number of possession claims issued is a good indication of how many families are struggling to meet their housing costs.”

However, these figures require further investigation, as the figures for Wolverhampton show that 31 cases were accepted as homeless as a result of mortgage repossession. At present, the average cost per homelessness application is £1,820.

Interest Rates Currently interest rates are at an historic low. Once interest rates begin to increase, there will be even greater pressures on household finances as the cost of monthly mortgage payments for those with variable rate mortgages begins to rise. Combined with the cost of food and fuel, and with wages not increasing in line with inflation this is likely to force many who are just able to get by, into debt and a real possibility of losing their homes. Recent data released by the Office for National Statistics showed that gross domestic product grew by 0.8% between July and September, the fastest since spring 2010, which coupled with the expectation that unemployment will fall, indicates an earlier rise in interest rates. For many, this will add further financial pressure as outgoings increase further. Resident Opinion Survey: Money Worries The resident opinion survey (ROS) carried out in the summer of 2013 has provided an insight into the financial pressures faced by residents in the city. The data has been weighted to reflect the resident population of Wolverhampton. Not unsurprisingly, money worries are more acute on those households with a lower annual income. This group, i.e. those with an income of £10,000 or less, are also most at risk of being impacted by the changes made to welfare reform. The data shows that more than six out of ten households, whose income is less than £10,000 have been affected by changes to Council Tax and/or benefits, and 61.7% of those who have an income of £10,000 or less worse off financially in the last 12 months.

http://england.shelter.org.uk/campaigns/save_our_safety_net/repossession_and_eviction_hotspots

https://www.gov.uk/government/publications/mortgage-and-landlord-possession-statistics-quarterly-april-to-june-2013

https://www.gov.uk/government/publications/mortgage-and-landlord-possession-statistics-quarterly-april-to-june-2013

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0%

10%

20%

30%

40%

50%

60%

70%

Affected to someextent or a lot by

changes to Council Taxor benefits

Who worry aboutmoney all or almost all

of the time

Who are finding itdifficult or quitedifficult to get by

financially

Who are worse offfinancially in the last

12 months

ROS: Money Worries

Allhouseholds

householdincome£10k-£20k

householdincome>£10K

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Indebtedness

Debt problems can have a major impact on people’s lives, bringing about ill-health, increases in drug and alcohol use, relationship breakdown, loss of employment, as well as adverse effects on the lives of children, and contributing to both poverty and social exclusion. Debt and financial problems are also recognised as barriers to moving into employment. Those groups at most risk of over-indebtedness are low income families and lone parent families. Debts can be broken down into priority and non-priority debts.

Priority debts are those where the consequences of not paying is serious and include mortgage repayment and loans secured on the home, rent, fuel debts, child support, council tax, and TV licence.

Non-priority debts have less serious consequences, however creditors can sue for any money owned resulting in a county court judgement and if fail to keep up payments, bankruptcy and use of bailiffs. Non-priority debts include credit card debts, hire purchase agreements, unsecured bank loans, water bills and loans from friends and family.

For the purposes of this report, information predominantly focuses on priority debt. Data on non-priority has been difficult to obtain however attempts to obtain this data continue. Rent arrears As of October 2013, 10.5% of Wolverhampton Homes’ tenants (2,158) were affected by Social Sector Size Criteria (SSSC).

In terms of rent arrears, in April 2013, around 19% of the tenants affected by the SSSC were in rent arrears. By October this had increased to 58.5% (1,263).

Indicator Aug 2013 Oct 2013 Comments/Observations

Wolverhampton Homes tenants affected by SSSC in rent arrears

60% 58.5%

As of October, the total value of Wolverhampton Homes rent arrears for tenants affected by SSSC stands at £217,151, continuing the downward trend from a high point in July.

As of October, the total value of Wolverhampton Homes rent arrears for tenants affected by SSSC stands at £217,151, continuing the downward trend from a high point in July. The mitigating work that has happened has resulted in a decline in the proportion of tenants yet to pay (as shown in the graph below) but has started to plateau as it reaches lower numbers.

89.50%

88.50%

28.00%

11.80%

10.50%

11.50%

58.50%

48.0%

% Tenants

% Disabledtenants

% Tenants inarrears

% Disabledtenants in arrears

Wolverhampton Homes Rent Arrears October 2013

Not affected bySSSC

Page 18 of 45


It is anticipated that as time goes on, fewer people will be affected; however the rate of reduction is starting to level off. Numbers in debt seem to have settled around the 58-60% mark and it is expected that average debt will continue to increase, albeit slowly until such time as repossession actions start to take effect which would have the impact of reducing both the numbers affected and the average debt, but also impacting on other services.

All Managing Agents have diverted resources to arrears recovery. Wolverhampton Homes have taken on four additional staff but this is not possible for the Tenants Management Organisations (TMOs). This along with the two “rent free” weeks in the second half of the rent year will assist in keeping rent arrears within anticipated levels on the business plan, but arrears will continue to increase.

Whilst there have been reductions in total arrears and the number of cases in arrears, the average value per case continues to rise. By the start of October this was an average of £172 per case.

The chart above shows the number of Wolverhampton Homes tenants in arrears with rent, and the average case value. Work by the Performance Monitoring team has identified an increase in the level of rent arrears across all of the Council Housing managing agents (Wolverhampton Homes plus the 4 TMOs) for the same period in 2012/13. Although the Housing Revenue Account (rental income and expenditure etc.) business plan for 2013/14 projected an increase in the level of rent arrears due to the impact of welfare reform changes, the level of the increase since April 2013 has been greater than anticipated.

0%

20%

40%

60%

80%

100%

0

50

100

150

200

250

Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13

£000s Wolverhampton Homes Rent Arrears

Total arrears

% in arrears

% no payments

£0

£50

£100

£150

£200

0200400600800

10001200140016001800

Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13

No

. of

Cas

es

No of Cases Vs Average Case Value

Number of cases

Average value per case

Page 19 of 45


A key forthcoming issue will be the rent setting consultation for all of the Council’s housing stock. As a result of the cumulative effects of increased levels of properties sold under the right to buy, a change to Government policy on social rent, the level of rent arrears, (plus additional capital investment required in the Housing Stock), the business plan for Council housing is at risk. As a result, the Council has to consider a higher than inflation rent increase to keep the business plan sustainable in the long term which may/will cause issues with regard to rent arrears. Additionally the business plan could result in a freeze on the managing agents’ fees resulting in a real term reduction in income. This ‘squeeze on managing agents’ finances may over time cause a reduction in capacity to work proactively with tenants affected by welfare reform both in terms of rent arrears and actions to look at different accommodation to avoid spare room subsidy issues.

Discretionary Housing Payments Discretionary Housing Payments are being used to offset the impact of the Benefit Cap and SSSC for some of the affected households. As mentioned in the household finances section, as of September 2013 79% (330) of the 417 awards made had gone to people affected by the Benefit Cap and under occupancy. This represents 87% (£269,670) of the £310,087 paid out from available funding of £633,653. Payment of council tax by people receiving CTR As of 1 October, 9.8% (3,764) of the 38,405 people receiving CTR had not made any payment at all. This compares with 12.9% (8,781) for the 68,167 people not in receipt of CTR. This demonstrates that even those people not in receipt of CTR are struggling to pay, not just those receiving CTR.

Indicator Sept 2013 Oct 2013

No payment of Council Tax by those receiving CTR

11.0% (Sep 2013)

9.8%

No payment of Council Tax by those not receiving CTR

13.1% (Sep 2013)

12.9%

Data on the number of reminders and summonses issued suggests that it is more difficult to collect Council Tax from those people in receipt of CTR. 44% of reminders and 49% of summonses issued to the start of October were to those people in receipt of CTR who make up 36% of live Council Tax accounts. The collection rate for Council Tax as at 30/09/2013 was 51.53% compared to 52.44% at the same point in 2012. Some of this can be attributed to the CTR scheme but other causes are the removal of empty property exemptions from 1 April, the empty property premium and increased payment difficulties. Resident Opinion Survey 2013: Loans and Credit A recent source of information on household related debt information has been the Resident Opinion Survey. The survey shows a greater proportion (16.5%) of households with an income of £10,001-£20,000 experiencing difficulties accessing credit than those with an annual income of less than £10,000 (12.8%). The proportion of residents that have taken out high interest loans is twice as high amongst those with an income of £10,000 or less (11.5%) than the £10,001-20,000 category (6.4%). Taken together, this demonstrates that high interest lenders are an accessible and well utilised source of credit for residents at the bottom of the income scale. This poses even greater challenges for this group as paying back such loans on low incomes will be difficult, increasing the spiral of debt. The responses also show the amount of people struggling to pay back just the interest payments on loans. The 1% up-rating and the changes to the CTR scheme will all have additional financial impacts on these households, along with changes to any other benefits that this group may be claiming, such as DLA.

Page 20 of 45


Pay day loans are of particular concern. The Consumer Credit Counselling Service estimate the number of people struggling to repay multiple payday loans has increased threefold in three years. National trends are of concern. Local data is difficult to obtain, however some research around this is due to be published by Wolverhampton University which should give an insight into this type of loan usage amongst people in Wolverhampton. Residents Opinion Survey 2013: Loan from a High-Interest Money Lender In 2013, the ROS has included questions around debt for the first time. The data shows that 5.2% of residents have taken out a high interest loan. The chart below shows the groups that were higher than the average total, for taking out high interest loans:

Aged 16 – 24

Aged 25 - 34

Not disabled

Asian

Social renter

Earning £10,000 or less

Earning between £10,001 to £20,000

Had children in the household

0%2%4%6%8%

10%12%14%16%18%

Who have difficultiesaccessing credit

Who have had to takeout a loan from a high

interest lender

Who have difficultiespaying interest on loans

%

Residents Opinion Survey: Loans and Credit

All households

household income £10k-£20k

household income >£10K

http://www.stepchange.org/

Page 21 of 45


The information received from the ROS shows that 2% of residents earning between £20,001 to £30,000 and £40,000 to £50,000 also took out high interest loans. 10% of those aged 16 – 24 were has a high interest loan, which equates to one in ten, and in Wolverhampton, the level of unemployment amongst the 18 - 24 age group is 12.1%, the highest of Black Country authorities. Those in the 25 – 34 age group also have a higher than average take up of high interest loans. Credit Union The Credit Union is a member-owned financial cooperative, democratically controlled by its members, and operated for the purpose of promoting effective personal budgeting, providing credit at competitive rates, and providing other financial services to its members. At present, there has been little change in credit union take up, however this may change. As a part of tackling indebtedness, the Government have an expansion and modernisation plan for credit unions, aimed at increasing membership from one to two million by 2019. Take up of credit union membership will be monitored. There are also initial discussions underway around having a credit union presence at the Civic Centre. Debt enquiries at CAB Both the Citizens Advice Bureau (CAB) and the Council’s Welfare Rights Service, through the Benefit Helpline and Response Team (BHART) provide advice for residents on personal matters. Data from CAB shows that in quarter one 2013, they received 2031 enquiries relating to debt from 937 unique clients. The average number of debts per client was two, with ten clients having more than ten creditors. This helps to understand the level of debt experienced by some residents, and

5%

5% 6%

10% 8%

5% 5%

3% 1%

1%

4% 6%

5% 7%

3% 0%

3% 12%

12% 6%

2% 0%

2% 0%

7% 2%

Total

MaleFemale

16 to 2425 to 3435 to 4445 to 5455 to 6465 to 74

75 or above

Yes - DisabledNo - Disabled

WhiteAsianBlack

Mixed

Owner occupierSocial renter

£10,000 or less£10,001 to £20,000£20,001 to £30,000£30,001 to £40,000£40,001 to £50,000

Above £50,000

Yes - Children In HHNo - Children In HH

ROS: Loan from a High-Interest Money Lender

Page 22 of 45


with further changes such as the 1% up-rating and the introduction of universal credit, the numbers of people approaching the CAB for debt advice is likely to increase. The top five debt enquiry types for the CAB are identified in the table below.

Enquiry type Number % of total

Unsecured Personal loans 266 13%

Rent arrears (ALMO and housing association) 187 9%

Council Tax 182 9%

Credit and Store cards 156 8%

Water supply and sewerage debts 107 5%

Over one in ten enquiries are about unsecured personal loans, whilst other enquiries were about rent arrears and council tax, which have been discussed earlier. Benefit Helpline And Response Team (BHART) Residents contact BHART to receive help and advice. The data collected for BHART shows that in August, the numbers of unique call are reported to have fallen to 157 from 295 in July. In September there was a small rise to 173 calls. The fall in numbers was unexpected as workers reported higher activity following the Benefit Bus campaign in August. Monitoring of this service will continue. Advice Transition Funding Wolverhampton Advice Agencies Consortium was successful in a bid for Advice Transition Funding which is up-skilling workers in general advice to free up specialist advice. The lottery funded ‘Better off in Wolverhampton’ (BOW) is proactively working with young social housing tenants to increase their financial literacy. An increase in budgeting skills for these young social housing tenants will hopefully aid them in making informed financial decisions. Financial Inclusion Reducing indebtedness is one of the areas being looked at as part of the welfare reform agenda. In response to concerns regarding the increased level of debt and in particular high cost lending, a Reducing Indebtedness Plan is being developed and an awareness raising campaign planned for Christmas. Water Rates arrears For August, the total amount of water arrears for Severn Trent totalled £11.7 million, which has increased to £16.2 million for September. However further information and analysis is needed to understand these figures and has been requested from Severn Trent. Fuel Poverty The health implications of living in a cold home can be very serious. Children growing up in poorly heated conditions are twice as likely to suffer from a variety of respiratory problems as other children, and winter deaths are three times higher nationally, in the coldest quarter of housing stock compared to the warmest quarter. Once Universal Credit is embedded, the ability to manage budgets will become fundamental, and for many more the choice between food and heat will have to be made. Rising gas and electricity bills are now making media headlines on a regular basis. It has been revealed that the Government is effectively cutting a subsidy for increasing the energy efficiency of housing association homes. This is not good news for social housing tenants, who tend to be on lower incomes, and include some of the very disadvantaged families and children. Households in fuel poverty are spread across all forms of housing tenure. It is actually in the private sector rented

Page 23 of 45


accommodation that the risk of fuel poverty is greatest. This is because families on low incomes are almost twice as likely as anyone else to live in a privately rented home; and this sector generally contains the least energy efficient housing stock. Residents Opinion Survey 2013: Difficulties Paying Fuel or Energy Bills The ROS has provided an insight into how many people in Wolverhampton are having difficulties in paying fuel or energy bills. The chart below shows the survey results. Approximately 38% of residents are having difficulties paying fuel or energy bills. By age, the group that is having the greatest difficulties paying fuel or energy bills are 16 – 24 year olds, of which 54% are having difficulties, however all other age groups show some level of difficulty. 61% of those residents on incomes under £10,000 are having difficulties in paying fuel and utility bills.

A new definition of fuel poverty has been set out to ensure support is targeted at those who need it most. If total income is below the poverty line (60% of median income); and energy costs are higher than average, then you are considered to be in fuel poverty. Based on this definition 14,770 households in Wolverhampton are in fuel poverty. To establish the extent of debt related to fuel provision in Wolverhampton, information has been requested from Government office and the some of the energy companies on the following:

Total number of Wolverhampton households in debt to fuel companies

Total amount owning and average

How this compares with other areas

Number of homes entitled to Warm Homes discount in Wolverhampton

Number of pre-payment meters in Wolves and how it compares nationally

38%

43% 40%

54% 33%

40% 51%

47% 30%

25%

48% 37%

38% 54%

57% 18%

32% 54%

61% 50%

40% 15%

7% 12%

42% 43%

Total

MaleFemale

16 to 2425 to 3435 to 4445 to 5455 to 6465 to 74

75 or above


WhiteAsianBlack

Mixed


£10,000 or less£10,001 to…£20,001 to…£30,001 to…£40,001 to…

Above £50,000

Yes - Children In…No - Children In…

ROS: Difficulties Paying Fuel or Energy Bills

Page 24 of 45


Help and Advice

This is not an exhaustive list of the help and advice available to residents in Wolverhampton, and other areas of the report discuss enquiries made to the CAB and BHART. However, the information provided on food bank usage and applications to the LDGS help to understand the level of support being requested. Food banks The Government has said there is no link between benefit reforms and the increased usage of food banks. However, the combined impact of welfare upheaval, cuts to spending, imposed sanctions, low wages and the high cost of living mean millions of families are facing pressures on their budgets, and these are not only families who are out-of-work benefit recipients. These changes have led to an increasing number of recipients to the increasing market of food banks. More food banks are opening every week in the UK, with charities providing an emergency safety net for growing number of Britons. Today many people across the UK will struggle to feed themselves and their families. Redundancy, illness, benefit delay, domestic violence, debt, family breakdown and paying for the additional costs of heating during winter are just some of the reasons why people go hungry. The Trussell Trust, which runs 400 food banks across the UK, has handed out supplies to more than 350,000 people between April and September this year. However the scale of problem for some is so severe that some people using food banks have started to hand back items that need cooking, as they cannot afford to use the energy.

New figures from Citizens Advice show an overall rise of 78% in enquiries about food banks in the past six months, with an increase in enquiries in almost every region of the country. One of the hardest hit areas is the West Midlands, with a 142% rise in the past six months.

Locally, Wolverhampton has a total of 11 food banks and soup kitchens. For the purposes of this report, data has been obtained for the Well food bank. The Well provides emergency food/toiletries/baby items for people experiencing a temporary financial crisis. This extends to just four parcels in a six month period, with each parcel containing three days of food for each person in the household. The Well food bank allocates food based on a referral system, with an allocation of just 25 referrals. From their experience however, the organisers of the Well know that their supply by no means meets demand.

The Well Previous data Latest Data

Food Bank: Referrals 363 (Aug 2013) 345 (Sep 2013)

Food Bank: Number fed 757 (Aug 2013) 818 (Sep 2013)

Attempts are being made to obtain more information about users of food banks however this information is unavailable at present. BHART is about to undertake work with local Food Bank customers to see who they are and what has led them to use Food Banks. The findings of this work will be presented to Councillors in mid- December. In a recent meeting with both local food bank and soup kitchen providers 'sanction' was, without any prompting, something that kept being mentioned in the reasoning for new and increasing customer numbers. What is of concern is the anecdotal evidence which suggests that many working people struggling to pay bills and pay for food in the few days before pay day are forced to seek emergency help, from organisations such as the food bank.

http://www.trusselltrust.org/foodbank-projects

http://www.citizensadvice.org.uk/index/pressoffice/press_index/press_office20130819.htm

Page 25 of 45


Residents Opinion Survey 2013: Difficulties Affording Food The table below provides data on residents who have difficulties affording food by age, sex, disability, ethnicity, housing tenure, income and whether a household contains children. In total, 26% of residents are having difficulties affording food. Almost half (45%) of those on incomes less than £10,000 have difficulties affording food, and one in three households (29%) who struggle to afford food have children in those households. These are some of the groups most likely to be affected by the impact of welfare reform changes. In terms of age group, those aged 16-24 and 45-54 have the highest levels of residents having difficulties affording food; however the other age bands also have quite high percentages of people having difficulties. Furthermore, 41% of residents in social rented housing are having difficulties affording food.

Local Discretionary Grant Scheme (LDGS) LDGS was introduced in April 2013 to replace the Social Fund provision. The project has an available budget of £1.1m to support the most vulnerable residents of the city. The scheme provides mainly goods and vouchers to those who meet the policy requirements. The initial demand for assistance under the scheme has been much less than expected. However during the early months of operation of the scheme many applicants were signposted to other forms of help before being considered for an application under the LDGS scheme.

26%

27% 25%

35% 27%

26% 37%

23% 14%

4%

30% 24%

25% 24%

32% 31%

16% 41%

45% 27%

19% 12%

7% 1%

29% 27%

Total

MaleFemale

16 to 2425 to 3435 to 4445 to 5455 to 6465 to 74

75 or above


WhiteAsianBlack

Mixed


£10,000 or less£10,001 to £20,000£20,001 to £30,000£30,001 to £40,000£40,001 to £50,000

Above £50,000

Yes - Children In HHNo - Children In HH

ROS: Difficulties Affording Food

Page 26 of 45


Indicator Previous data Latest Data

LDGS Enquiries 1,805 (Aug 2013) 2,140 (Sep 2013)

LDGS Applications 194 (Sept 2013) 222 (Oct 2013)

LDGS Payments £165,000 £291,000

To understand why people are trying to access this scheme, the graph below shows the top five reasons for enquiries to the LDGS. The most frequently made enquiry is regarding help with food.

Recent applications to the Local Discretionary Grant Scheme (LGDS) have been heavily weighted to the 16-44 age brackets, and noticeably, Black African and Caribbean residents have been disproportionally accessing this fund.

Following a review of customer demand and a stakeholder consultation event, a report was taken to Cabinet on 23 October to amend the LDGS policy. This has increased the scope of the scheme and is anticipated to increase spend in the second half of the year. It has been identified that some demand for support following the abolition of crisis loans and community care grants was met by Section 17, rather than LDGS. An analysis of Section 17 spend is being undertaken to determine items eligible for support under the LDGS policy, so that the LDGS funds can be used to support this expenditure. Work is taking place to set up a Credit Union based loan scheme as part of the LDGS. A report about this has been taken to Budget Working Group and once details are finalised a further report will be taken to Cabinet Resources Panel for approval.

The Multi Agency Support Team (MAST) family support budget The MAST family support budget provides support to families who are part of a Common Assessment Framework (CAF). The budget goes towards helping families with the cost of electrical goods, furniture, transport, uniforms, utilities, trips and activities, counselling, food and child care provision. The budget has been reduced from £14,000 per MAST for 2012/2013 to £7,000 for 2013/14. The data shows that for the months between April 2013 through to September 2013, (with the exception of May), there has been a significant increase in spend in comparison to the corresponding months for 2012, although this cannot be attributed directly to welfare reform. However, what is clear is that a reduction in MAST budgets may lead to families requiring support through other mechanisms.

0

10

20

30

40

50

60

No

.s

Enquiries to LDGS

I need help with food

I need help with cash

I need help with food( for myselfand children (Excluded Item)

I need help with (non essentialitem/other)

I need help with fuel

Page 27 of 45


Family Stress

The media have highlighted a number of stories which link welfare reform changes, such as under occupancy to tragic outcomes. In extreme circumstances, the stress of having to find extra money has been identified as a contributory factor in at least one instance of suicide .

A number of suggestions have been made regarding the longer term impacts of welfare reform on families. For instance, it has been suggested that there may be an increase in the mental health issues as a consequence of the stresses caused. This may take years to become apparent and no suitable data source has been identified to give an early indication of this. The Real Life Reform study set up to monitor the impact of welfare reform on families in the north of England is working with a self-selected group of 74 households over the next 18 months. Their reports will be published quarterly with the next report due in December which may serve as a starting point for looking for similar trends in Wolverhampton. A number of factors which impact on family stress are discussed in other parts of this report. This section looks only at crime and domestic violence indicators. Crime There is an expectation that financial stress may lead to stress on relationships and increases in harmful behaviours, which may become apparent in ways ranging from petty theft to domestic violence. Police crime data allows instances of theft from shops and stalls and reports of domestic abuse in the City to be monitored for evidence of any such effects. However it is too soon to draw any conclusions regarding long term trends and in any case it would not be possible to demonstrate any direct connection.


Levels of shoplifting/theft 443 (Q1 2013/14) 492 (Q2 2013/14)

Levels of domestic violence 959 (Q1 2013/14) 1,050 (Q2 2013/14)

Shoplifting/Theft The number of instances of theft from shops and stalls has shown a gradual increase year on year since April, with the exception of August. It may be the case that some of this is due to increased pressures caused by the effects of welfare reform. The implications of sanctions may also result in an increase in crime, especially food related crime. Domestic abuse Reported instances of domestic abuse are currently showing a higher, if broadly similar, profile to the corresponding periods in 2012/13. This type of offending is substantially under-reported and whether or not this pattern is down to an increase in the number of actual instances, or increased confidence in reporting such matters to the police is difficult to establish.

http://www.mirror.co.uk/news/uk-news/bedroom-tax-suicide-stephanie-bottrills-2106302

http://www.northern-consortium.org.uk/assets/Policy%20Documents/RLR%20report%201_September%202013.pdf

Page 28 of 45


Employment and Economy

A key government argument for welfare reform changes is that it will encourage people to seek work. With the numbers of people affected by the changes in the thousands in Wolverhampton, if this is effective one might expect to see tens or hundreds more people in work. A contrary argument suggests that the loss of income to the local economy from the reduction in benefit payments will result in a loss of employment. With around 12,000 current JSA claimants and around 100,000 people in work in Wolverhampton, we should not expect to see any dramatic effect on employment either way. Any changes which do become apparent cannot necessarily be attributed to the effects of welfare reform. Jobseekers Allowance (JSA) Unemployment figures are reported in this section for tracking purposes. Local figures largely follow the national and regional trends, with a small decrease over the last few months which is more likely due to a slight improvement in the economy rather than welfare reform. For October 2013, the JSA data shows that 6.8% of the working-age population for Wolverhampton are claiming JSA, the highest figure for the Black Country, and twice that of the national average of 3%.


% of working age population claiming JSA under 6mths

3.3% (Q1 2013/14) 3.1% (Q2 2013/14)

% of working age population claiming JSA over 6mths

4.3% (Q1 2013/14) 4.1% (Q2 2013/14)

Employment and Pay In line with a reduction in the percentage of the population claiming JSA, the overall number of people in employment has increased from 2011-12 to 2012-13. Both full time employment and average weekly pay has increased, whilst part time working has decreased slightly.


Average weekly pay £413.20 (2011) £430.50 (2012)

Part time workers (number & %) 23,900 or 24.2% Apr 12-Mar 13

23,800 or 24.2% Jul 12 – June 13

Full time workers (number & %) 72,800 or 75.2% Apr 12-Mar 13

74,200 or 75.7% Jul 12 – June 13

Out of Work Benefits Since November 2012, the proportion of the population claiming out of work benefits (Job seekers allowance, Employment support allowance, Incapacity benefits, Lone Parents on Income Support and other income related benefits), has increased from 17.9% to 18.1%. The following chart shows the gender differences in the benefits being claimed. Between November 2012 and February 2013 there was a slight reduction in the number of women claiming out of work benefits whilst there was a larger number of male claimants. Interestingly both males and females have seen a reduction in the number of people claiming ESA and Incapacity Benefits and a corresponding increase in JSA claims. This is perhaps an early indication of the impact of work capability assessments on ESA and Incapacity Benefit claimants.

Page 29 of 45


Skills A recent study carried out in one of the benefit cap pilot areas, Haringey, found that although welfare reform had changed attitudes towards work, few households had secured employment of 16 hours or more. This was attributed to a number of barriers including job seeking skills and the availability and affordability of childcare. It is likely that the situation in Wolverhampton will be similar and further compounded by the number of households with no skills or qualifications. Addressing this issue will be a key part of enabling people in Wolverhampton to move from benefits into work. The following table highlights the issue of skill levels in Wolverhampton, which are significantly lower than the England average.

Local Economy Based on the data captured under Household Finances at section one it can be calculated that the current weekly loss to the city from the combination of the benefit cap, council tax relief, social sector size criteria, ESA time limiting and tax credit changes is in the region of £665,000. This gives a total annual loss to the city of £34.6 million.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Feb2012

May2012

Aug2012

Nov2012

Feb2013

Nu

mb

er

of

clai

man

ts

Females

Others onincomerelatedbenefitLone Parentson IncomeSupport

ESA &IncapacityBenefits

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Feb2012

May2012

Aug2012

Nov2012

Feb2013

Nu

mb

er

of

clai

man

ts

Males

0

20

40

60

80

100

%

Resident Qualifications (2012)

Wolverhampton

England

http://www.cih.org/resources/PDF/Policy%20free%20download%20pdfs/Experiences%20and%20effects%20of%20the%20benefit%20cap%20in%20Haringey%20-%20October%202013.pdf

Page 30 of 45


It is likely that the reduced income for the city will impact on local businesses, but may take some time to become apparent and difficult to attribute directly to welfare reform rather than wider economic factors. Business survival rate figures and data from business rates on the numbers of empty retail properties does not show any significant trend as yet.

Page 31 of 45


Future Changes

The changes brought about by welfare reform are still in their infancy. The extent of the impact is yet to be fully evidenced and understood. The changing economic environment and further changes yet to be introduced as a result of welfare reform will continue to change the environment for the residents of Wolverhampton and what they require from the city’s council. Universal credit (UC) The introduction of Universal Credit will dramatically change the welfare system for working-age adults. If successful, it will make the welfare system more effective and coherent, but will create winners and losers in the process. It is proposed that couples with children will gain from it and, when transitional protection expires, lone parents will lose. Such a radical overhaul of the benefit system will not be without teething problems and there are concerns that weekly to monthly payments, direct housing benefit payments and making payments to households rather than individuals will be a significant and in some cases unmanageable shift for families on tight budgets. The following summarises the key changes that will follow the introduction of Universal Credit:

Six core benefits will be integrated into one payment, namely; Income Support; income related Job Seekers Allowance; income related Employment Support Allowance; Child Tax Credits; Working Tax Credits; and Housing Benefit.

A standard monthly payment that will replace a mix of weekly, fortnightly, four-weekly and monthly payments

A new ‘fixed’ monthly assessment system that will replace the annual ‘flexible’ assessment period for tax credits, with monthly payment in arrears

Payment of housing benefit to social tenants rather than directly to the social landlord

Introduction of a single recipient model where the award is paid into one bank account

Extension of the capital allowance rule, which currently applies to those on out-of-work benefits to all Universal Credit recipients

Looking ahead, Universal Credit will require claimants to apply and manage their account on line, receive their payments monthly and pay their rent direct; therefore money management is crucial to avoid an increase in indebtedness. Some households are likely to face difficulties budgeting as benefit payments switch to monthly and are paid to one person in the household. Many claimants find weekly or fortnightly benefit payments help budgeting and the change to monthly payments could leave some households using short-term, expensive debt to cover their fuel costs at the end of the month. Universal Credit has not yet been rolled out in Wolverhampton, however Tameside CAB who have been closely involved in the introduction of UC have warned that without strong support being available, people will struggle to meet living costs. Furthermore, support with the online IT system for UC will be required, as 78% of people filling in official forms online could not do so without assistance. The lack of support or online skills could result in people struggling to meet living costs, which could result in greater demands on support such as the food banks, LDGS and Section 17. Digital Inclusion One of the drivers of Wolverhampton’s Digital Inclusion Strategy is digital by design, in recognition that current Government Policy is moving towards all customer contact and transactions with government being online or ‘digital by default’ e.g. new claimants of job seekers allowance apply on line and online job search through Universal Job Search. Although the strategy recognises that, the benefit of digital inclusion goes beyond Universal Credit in terms of employment and skills, health and reducing isolation and consumer benefits.

http://blogs.citizensadvice.org.uk/blog/tameside-cab-warns-of-universal-credit-problems-to-come/

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Universal Credit will require individuals to apply for benefits online, with implementation for new claimants anticipated from October 2013 in pilot areas (currently not in Wolverhampton). In reality, the need for benefit claimants to have access to IT is already underway with online sign-on for Jobseekers allowance and Universal Jobmatch. Jobmatch is DWP’s free, online job posting and matching service for companies and anyone looking for work. Jobcentre Plus (JCP) offices have a limited number of computers, although an increase in capacity has been announced. JCP already signpost people without access to the internet at home and those in need of additional support to public buildings who have reported an increase in demand for these purposes. As part of Wolverhampton City Council’s Digital by Design, four additional computers have been provided on the ground floor of the Civic Centre for public access. With a number of Wolverhampton residents not having access to the internet at home, it is important that there are sufficient access points in the community, and support is available to use the technology where residents lack the confidence and skills. There has been some initial work to identify those that won’t or can’t use digital technology, and this is being taken into account as part of the channel shift strategy. JCP anticipate 20% of new claimants will need support due to lacking confidence, capability or skills online. Wolverhampton’s Digital Volunteer scheme currently has limited capacity with ten volunteers committing to eight hours per month; however there is potential to build on this and other schemes such as Scribble and Scribe, as well as up-skilling frontline workers and floorwalkers to encourage a shift towards digital for those that are able.

Discussions are already underway with JCP financial inclusion as part of the Local Support Services Framework to be introduced to support the transition onto Universal Credit. In addition, an intervention is being developed as part of the Black Country European Investment Strategy around financial and digital inclusion. The Government is introducing financial education as part of the Maths curriculum from September 2014. Disability Living Allowance and Personal Independence Payments (PIP) In February 2013 there were 8,760 people of working age in Wolverhampton receiving Disability Living Allowance. By 2017 they will migrate to Personal Independence Payments and be subject to a more stringent medical assessment and regular re-testing. Nationally it is estimated that 20% of Disability Living Allowance claimants will not be entitled to PIP. The proportion locally remains to be seen. Benefit Maximisation Every year, means tested benefits and tax credits go unclaimed. The latest figures from the DWP (2009-10) on income related benefits outline data on the various benefits that were not claimed:

Up to 620,000 people failing to claim up to £2bn in Income Support, and employment and support allowance

Up to 1.6 million people failing to claim up to £2.8bn in Pension Credit

Up to 1.1 million people not claiming up to £3.1bn in Housing Benefit

Up to 3.2 million people missing out on up to £2.4bn in Council Tax Benefit

Up to 610,000 people failing to claim up to £1.95bn in Jobseeker's Allowance At a time when the effects of recession are still being felt, lone parent families, couples with children, pensioners, people without children to name but a few groups are not claiming the means tested benefits that could boost their income. The reasons for not claiming benefits can be down to the complexity of claiming; the stigma attached to claiming or simply not knowing what entitlements are available. Ensuring benefit maximisation for individual and families could help to relieve some of the financial pressures faced.

https://www.gov.uk/government/collections/income-related-benefits-estimates-of-take-up--2#group_1132

https://www.gov.uk/government/collections/income-related-benefits-estimates-of-take-up--2#group_1132

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Figures for under claiming on Wolverhampton cannot be obtained, however the welfare rights team have helped secure over £5.5 million of unclaimed benefits. The Families in Focus project, as part of their team have a Job Centre representative, whose job when meeting families on the project is to ensure that they are claiming the correct benefits. Adult Social Care The current Fairer Charging guidance (June 2013) produced by the Department of Health does not make any informed reference to Universal Credit and the impact it will have on charging revenue for councils. The ‘basic level’ of income that is still quoted as basic Income Support, or the Guarantee Credit element of Pension Credit plus 25%. With both these benefits there is an additional amount paid for severe disability which is not included in the basic level of income and therefore can be taken into account (along with Attendance Allowance and DLA) for charging purposes. In Wolverhampton those without the amount for severe disability currently contribute £7.66 per week whereas those with the amount for severe disability contribute £58.25. With Universal Credit there is no such additional amount for severe disability and therefore the impact on a very basic level would be:

845 people aged 18 to 64 (for some reason our age groups do not divide at 60) receiving Adult Social Care services

111 of which contribute £58.25 per week

If 111 contributed £7.66 instead of £58.25 there would be a loss of £50.59 per person per week.

£292,005 per year loss in revenue There is therefore a current risk that Adult Social Care Services may lose £292,000 per year of charging revenue unless appropriate amendments are made by the Department of Health to the “Fairer Charging” guidance before Universal Credit is introduced. This figure does not take into account the further forecasted loss of revenue due to any loss of DLA when people are moved on to PIP. If a service user is not in receipt of DLA or the amount for severe disability in their means-tested benefit then there is no income which can be taken into account for charging and no contribution is required. If, as is forecast, 20% of the 155 people currently contributing £7.66 per week do not qualify for PIP in the future, then there will be a further £12,347 per year loss of charging revenue. Costs of Child Poverty A national projection produced by the Institute of Fiscal Studies (IFS) suggests a rise in child poverty in 2013-14, which is largely due to welfare reform. A recent report from the Child Poverty Action Group estimates the total cost of child poverty in each local authority area, and based on a figure of 16,134 children in poverty gives a cost of £175 million in Wolverhampton. This includes very long-term costs to the individual and society (for example, the reduction in future earnings of a child growing up in poverty). Increase in child poverty According to Wolverhampton's Child Poverty Needs Analysis 2012 (CPNA), in 2010 there were 17,925 children in poverty in Wolverhampton, corresponding to 31.1% of the children in the city; substantially above the national average (20.6%). Current child poverty statistics (HMRC 2011) have shown a slight reduction in child poverty, although less than national average, however the lag in the statistics may not pick up the impact of welfare reform.

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Projecting simply in proportion to the IFS national projection, and making no allowance for the increasing total population of children in Wolverhampton, gives the following:

Year IFS % children in poverty (UK)

Number of children in poverty in Wolverhampton

Increase from 2012

2010 19.3 17,925 2011 19.2 17,832 2012 19.6 18,204 2013 21.6 20,061 1,858

2014 22.0 20,433 2,229

2015 22.2 20,618 2,415

2020 24.4 22,662 4,458

This shows an additional 1,858 children in poverty in 2013 (largely attributable to welfare reform), and a continuing rise to give an additional 4,458 children in poverty by 2020. In the context of the scale of welfare reform impacts in Wolverhampton a resulting increase of around 1,800 children in poverty appears plausible. Impact of child poverty on cost of services Joseph Rowntree Foundation work ‘The public service costs of child poverty’ found a strong correlation between the cost per child of children's social services and the number of children in poverty. Table three in the original report can be interpreted to indicate an additional cost of just over £1000 for each child in poverty (based on 2005 expenditure). A subsequent update to 2013 expenditure levels changes this figure only slightly. Strictly speaking, this analysis does not prove that child poverty is the cause of higher expenditure on services, or that increases in child poverty over time will lead to increased demand for those services. It does, however, suggest that increased demand is likely, and gives a rough idea of its scale. In the case of these particular services there are plausible reasons for believing that family stress and dysfunction due to poverty can lead directly to demand for services in the short term. Similar calculations indicate additional costs of about £1,250 for schools, £500 for acute healthcare, and £450 for police and criminal justice, per child in poverty. These are conservative estimates, and in some scenarios the figures are higher. However, the cost impacts being considered and the possible causal relationships in these cases are more complex, and most of the costs would not fall on the council. For example, the cost of the Pupil Premium (borne by central government) is factored in to the quoted additional cost of school education. Because of these issues, these costs are not considered further in this note.

19.0%

21.0%

23.0%

25.0%

27.0%

29.0%

31.0%

33.0%

2006 2007 2008 2009 2010 2011

%

% Children in Poverty

Dudley

Sandwell

Walsall

Wolverhampton

England

http://www.jrf.org.uk/publications/public-service-costs-child-poverty

http://www.cpag.org.uk/sites/default/files/Cost%20of%20child%20poverty%20research%20update%20(2013)_0.pdf

http://www.cpag.org.uk/sites/default/files/Cost%20of%20child%20poverty%20research%20update%20(2013)_0.pdf

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Wolverhampton Child Poverty Strategy has been revised around the key building blocks of financial inclusion; employment and skills; early intervention, health and educational attainment; and housing and neighbourhoods Based on the above projection and cost analysis, Wolverhampton should anticipate an additional cost of roughly £1.8 million in 2013/14 for children's social services as a result of welfare reform, with a continuing increase, up to £2.4 million by 2015/16 and around £4.4 million by 2020, as a result of the continuing growth in child poverty resulting from other factors. This service area experienced a budget overspend of £5 million in 2012/13, and action is being taken to address this, as described in a report to Cabinet (Resources) Panel in July 2013. The key aim is to reduce the number of Looked After Children (LAC), and to this end a LAC Transformation Plan is in place. The Cabinet Panel report acknowledges a potential negative impact from welfare reform (at section 5.3), but does not attempt to quantify it. This note provides a quantitative estimate: an additional cost of £1.8 million, which based on the figures in the Cabinet Panel report, would represent about 45 additional LAC. It also suggests a further negative impact of other factors resulting in a further £0.6 million in additional cost (representing another 15 LAC) by 2015/16. Economic and Social Inclusion The importance of maximising local benefit from economic growth is recognised in order that local residents benefit. Economic and social Inclusion is being embedded into Black Country Strategies including the Strategic Economic Plan which in turn is influencing on funding opportunities including the Black Country European Investment Strategy which has a particular priority around social inclusion. At a local level, economic inclusion is a cross cutting objective in Wolverhampton’s Economic Growth Plan and we are working proactively with key investors such as Jaguar Land Rover to ensure local benefit e.g. through establishing links with Wolverhampton schools and recruiting local apprentices. Wolverhampton’s Employability Partnership works closely with key providers in Wolverhampton to ensure support is available to residents to access employment opportunities, for example we are in discussion to arrange some targeted events to support residents apply for Sainsbury’s opportunities in spring.

https://wolverhampton.cmis.uk.com/DecisionMaking/Document.ashx?czJKcaeAi5tUFL1DTL2UE4zNRBcoShgo=ClXMggpYypPB0nlzvPZRs9U9zJpxYbb8WJPhTKGmv%2f1emaSRasVeqw%3d%3d&rUzwRPf%2bZ3zd4E7Ikn8Lyw%3d%3d=pwRE6AGJFLDNlh225F5QMaQWCtPHwdhUfCZ%2fLUQzgA2uL5jNRG4jdQ%3d%3d&mCTIbCubSFfXsDGW9IXnlg%3d%3d=hFflUdN3100%3d&kCx1AnS9%2fpWZQ40DXFvdEw%3d%3d=hFflUdN3100%3d&uJovDxwdjMPoYv%2bAJvYtyA%3d%3d=ctNJFf55vVA%3d&FgPlIEJYlotS%2bYGoBi5olA%3d%3d=NHdURQburHA%3d&d9Qjj0ag1Pd993jsyOJqFvmyB7X0CSQK=ctNJFf55vVA%3d&WGewmoAfeNR9xqBux0r1Q8Za60lavYmz=ctNJFf55vVA%3d&WGewmoAfeNQ16B2MHuCpMRKZMwaG1PaO=ctNJFf55vVA%3d

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Equality Analysis

The Equality Analysis (EA) has been modelled on the DWP EA. The overall DWP impacts have been apportioned to Wolverhampton’s population to establish impact. The challenges faced in creating a local picture of impact centre on the lack of data, and as such the EA for Wolverhampton does not cover all welfare reform changes. The DWP EA identified impacts on demographic groups based on each welfare reform change. However, this approach has resulted in the lack of information on cumulative impacts on groups. Universal Credit The implementation of Universal Credit has not been completed yet, but the Department of Work and Pensions (DWP) have produced both a Main Impact Analysis (MIA) of the policy and an Equality Assessment (EA). Using those analyses, it has been possible to assess the extent of the changes for particular groups such as lone parents (for example), and to attempt to quantify if changes in entitlements for particular groups will be greater within Wolverhampton compared to England. Groups were identified in accordance with DWP’s definitions, and a mix of Census 2011 data and Indices of Deprivation data were used to assess the relative percentages of each group in Wolverhampton and in England. Using this method, the table below shows which groups are winners and which are losers in Wolverhampton’s population compared to England’s.

Groups likely to gain, and are greater in Wolverhampton than England

Groups likely to lose out, and are greater in Wolverhampton than England

Couples with Children (Renters) Workless people and households

Under 25s with No Children Lone Parents(Renters)

Single with No Children

Bottom Quintile (fifth) of income bands

2nd Quintile (fifth) of income bands

Under 25s

25-49s

Single Men

Single Women

BME groups

Further detail about the likely impact on these groups, as well as other groups from the DWP’s own analyses, are available in the Universal Credit analyses available in Appendix A. Under-Occupancy In a national context, as with the Universal Credit Equality Assessment (EA), DWP produced an EA for under-occupancy (the so-called ‘Bedroom Tax’). Specified groups were identified by DWP as being particularly likely to be affected by the changes. These groups, along with those which are less likely to be affected, are shown in the table below.

Groups more likely to be affected by under-occupancy nationally

Groups less likely to be affected by under-occupancy nationally

50+ Under 25s

Single Women 25-49s

Couples Single Men

Disabled Non-Disabled

White BME

To model this data for Wolverhampton, Census data has been used which shows the relative groups in social rented housing who have more bedrooms than needed for their residents. This is the closest proxy to the ‘under-occupancy’ criteria available. The table below shows that 43% of

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social rented households were under-occupying at the time of the Census. Couples without children, couples with non-dependent children and single-person households where the occupier is aged 65+ have the highest under-occupancy percentages. However, the red-coloured categories in the table below are unaffected by the under-occupancy criteria due to their age.

More bedrooms than need More bedrooms than need

Household Composition Wolverhampton

% of social rented HHs for this group which are under-

occupied Number

One family only: All aged 65 and over

78% 807

Couple: No children 71% 1,414

Couple: All children non-dependent 55% 528

One person household: Aged 65 and over

55% 2,523

One person household: Other 46% 3,682

Lone parent: All children non-dependent

44% 657

All categories: Household composition

43% 12,350

Lone parent: Dependent children 29% 1,416

Couple: Dependent children 27% 1,017

Other household types: Other (incl. full-time students and all aged 65+)

26% 201

Other household types: With dependent children

11% 105

Comparing the characteristics of social rented under-occupiers between Wolverhampton and England, most categories are over-represented in Wolverhampton compared to England. For instance, 43% of social rented households here are under-occupied, compared to 39% for England; this is a four percentage point gap. Aside from the unaffected 65+ groups, the main groups which are notably higher than England are the couples with non-dependent children (6% points higher) and lone parents with dependent children (5% points higher).

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More bedrooms than need

Household Composition Wolverhampton % point diff between national

and local figures

All categories: Household composition 4%

One person household: Total 6%

One person household: Aged 65 and over 12%

One person household: Other 2%

One family only: Total 3%

One family only: All aged 65 and over 9%

Couple: Total 2%

Couple: No children 0%

Couple: Dependent children 4%

Couple: All children non-dependent 6%

One family only: Lone parent: Total 5%

One family only: Lone parent: Dependent children 5%

One family only: Lone parent: All children non-dependent 4%

Other household types: Total -1%

Other household types: With dependent children 1%

Other household types: Other (incl. full-time students and all aged 65+) -2%

Social Fund localisation The DWP Social Fund was devolved to local authorities to manage according to local need. In Wolverhampton, the Local Discretionary Grant Scheme (LDGS) was set up to give grants to people with urgent emergency requirements for items such as white goods. The LDGS has been running since April 2013, and the data below covers from 1 April to 5 August inclusive. Tables showing the demographics of applicants are below; please note this is applicants, not necessarily those who have been awarded money.

Age Number % CITY % Gap between LDGS & City

16 - 24 175 28.8 15.8 13.0

25 - 34 176 29.0 17.2 11.8

35 - 44 137 22.6 17.5 5.1

45 - 54 82 13.5 16.2 -2.7

55 - 64 26 4.3 13.1 -8.8

65+ 11 1.8 20.3 -18.5

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Ethnicity Number % CITY % Gap between LDGS & City

Asian : Chinese 2 0.3 0.6 -0.3

Asian : Indian 35 5.8 12.9 -7.1

Asian : Pakistani 8 1.3 1.8 -0.5

Asian : Any other background 8 1.3 2.8 -1.5

Black : African 29 4.8 1.6 3.2

Black : Caribbean 56 9.2 3.8 5.4

Black : Other 11 1.8 1.5 0.3

Mixed : White and Asian 2 0.3 0.9 -0.6

Mixed : White and Black African 4 0.7 0.2 0.5

Mixed : White and Black Caribbean 36 5.9 3.4 2.5

Mixed : Any other mixed background

5 0.8 0.6 0.2

White : British 385 63.3 64.6 -1.3

White : Irish 6 1.0 0.6 0.4

White Gypsy / Traveller 1 0.2 0.1 0.1

White : Any other background 9 1.5 2.8 -1.3

Any other ethnic group 11 1.8 1.8 0.0

Sex and Gender Identity Number % CITY % Gap between LDGS & City

Female 321 52.6 50.5 2.1

Male 286 46.9 49.5 -2.6

Other 1 0.2 no data Nil data

Trans male to female 2 0.3 no data Nil data

Disability Number % CITY % Gap between LDGS &

City

No 421 69.8 79.5 -9.7

Not Sure 15 2.5 no data Nil data

Yes 167 27.7 20.6 7.1

Disability Living Allowance (DLA)/Personal Independence Payment (PIP) Reform Analysis of the DLA caseload has been undertaken as part of this project. Data from the Office of National Statistics has been used to assess whether the impact of changes to DLA criteria is especially likely to affect Wolverhampton’s disabled residents. Disability Living Allowance rates by age and gender and benefit combinations (such as higher care award cross-referenced to lower mobility award, for instance) has been analysed against data for England to see if need is particularly acute here. Data on the specific types of medical condition for DLA claimants was also assessed, to see if there are systematic differences. Data for Carer’s Allowance has also been analysed to see if the effect of the changes to Carer’s Allowance may be more marked locally. In all instances, no particularly acute need was identified – for instance, there were not significantly greater proportions of claimants of ‘higher rate care and higher rate mobility’ awards than the national average. However, from other sources such as the 2012 Annual Population Survey, it is apparent that Wolverhampton has a greater percentage of disabled residents, in all age groups, than England, so there is a potential resource implication with the broader disabled population.

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There has also been an increase in the total caseload of DLA claimants in Wolverhampton since 2008. There was an 8.6% rise in the number of DLA claimants in Wolverhampton between February 2008 and February 2013 (from 14810 to 16080); this compares to a rise of 13.1% (2.4m to 2.7m) for England as a whole. While the rise in the total claimants for DLA in Wolverhampton is lower than for England, there will still be many claimants for DLA ruled ineligible for PIP once introduced. The DWP themselves predict circa 27-28% of DLA claimants at present will not receive PIP (see section 6.1 ‘Caseload and Savings’ of the hyperlinked document). Assuming a 27.5% reduction for Wolverhampton from the last figure of 16,080, this means 4,422 people will no longer receive DLA, leaving a PIP caseload of circa 11,658 people.

http://www.parliament.uk/briefing-papers/SN06538.pdf

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Appendix A: Universal Credit Main Impact Analysis Background The Department for Work and Pensions (DWP) has produced a Main Impact Assessment for Welfare Reform. Their document assigns an overall national projection of whether a particular income band, family type or work status group is likely to be better off, worse off, or in the same position as before. This has been used to conduct an analysis of how it might impact on Wolverhampton specifically. Methodology The ‘National Projection’ column is calculated from the proportions given in the report. For instance, the DWP says that, looking at income bands, 1,000,000 bottom quintile (fifth) households are likely to be better off, 1,500,000 are likely to have no change, and 700,000 are likely to be worse off. This means the net change is that 300,000 households in the bottom quartile (1,000,000 better off minus 700,000 worse off) will be better off as a result of the implementation of Universal Credit. The ‘Local Impact’ column looks at the proportions of residents locally in each group compared to the English average, which is used to establish what the impact might be locally for each group. The matrix behind the changes is below:

National Projection Proportion of population vs England Overall impact

Better off GREATER LOCALLY STRONG PLUS

FEWER LOCALLY WEAK PLUS

Worse off FEWER LOCALLY WEAK MINUS

GREATER LOCALLY STRONG MINUS

Same as before GREATER LOCALLY WEAK PLUS

FEWER LOCALLY WEAK MINUS

For instance, residents under 25 with no children are said by the DWP to be broadly better off overall, and there are more residents aged under 25 with no children in Wolverhampton than England as a percentage of population. Therefore, the impact of the reform for those particular residents is likely to be a ‘strong plus’ for the city.

Equality Group Section National projection Local impact

Income Bottom Quintile Better off STRONG PLUS

2nd Quintile Better off STRONG PLUS

3rd Quintile Worse off WEAK MINUS

4th Quintile Worse off WEAK MINUS

Top Quintile N/A N/A

Family type Under 25 No Children Better off STRONG PLUS

Single No Children Better off STRONG PLUS

Couple No Children Worse off WEAK MINUS

Lone Parent (Renting) Worse off STRONG MINUS

Lone Parent (No Rent) Worse off WEAK MINUS

Couple with Children (Rent) Better off STRONG PLUS

Couple with Children (No Rent) Worse off WEAK MINUS

Work Status Workless Worse off STRONG MINUS

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220177/universal-credit-wr2011-ia.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220177/universal-credit-wr2011-ia.pdf

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Analysis Whilst the DWP says that overall households will be better off as a result of Universal Credit, it is not possible to assess whether overall households in the city will benefit from Universal Credit. This is because the DWP has a category named ‘all households’ which finds that 2,800,000 are better off from Universal Credit, 2,700,000 are worse off, and 2,000,000 with no change overall. However, it is not possible to replicate this for Wolverhampton because we do not possess the interactions between different categories (such as the number of females who are disabled and BME) for all households. Therefore, a rounded assessment which considers the compounding effect of different income, family statuses and work status categories together is not possible, and they can only be considered individually for Wolverhampton. Family type and work status In the table below, the indicative impact for the particular groups is shown, along with their estimated numbers in Wolverhampton; together with the DWP’s explanation of the particular policy changes inherent in Universal Credit which advantage or disadvantage particular types of family groups.

Category Wolverhampton Census Estimate

Local impact DWP Explanation

Under 25 No Children

1,529 (People aged 16-24 in single-person HH taken as a proxy)

STRONG PLUS

“Childless 18-24 year olds (who are not disabled) cannot claim in-work tax credits under the current rules, but will be able to claim Universal Credit.”

Single No Children

19,710 (People aged 16-64 in single-person HH taken as a proxy)

STRONG PLUS

“On average single men and women both experience a small increase in monthly entitlement. The increase is around £8 per month higher for single men.”

Couple No Children

26,714 (People in marriages, civil partnerships, or cohabiting couples who have no children)

WEAK MINUS

“Couples without children, in the long-term, see a small notional reduction in their entitlement both in cash and percentage terms. Both members in such households would generally be expected to actively seek work.”

Lone Parent (Rent)

9,071

STRONG MINUS

“A higher number of lone parents would receive lower awards under Universal Credit than the current system. However, for lone parents, the average reduction for those with a lower entitlement (£87 per month) is smaller than the average increase for those with higher entitlements (£128 per month). As a result this group gains overall from Universal Credit (by £5 per month).”

Lone Parent (No Rent)

5,267

WEAK MINUS

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Couple with Children (Rent)

7,307

STRONG PLUS

“66 per cent of renting couples with children have higher entitlement as a result of Universal Credit, with only 18 per cent seeing a reduction. The reason for this is that this group benefits from the combination of more generous work allowances and a reduced benefit withdrawal rate which creates the more substantial increases in entitlement.”

Couple with Children (No Rent)

18,126

WEAK MINUS

“Couples with children see the biggest increase in cash terms, gaining an average of around £14 per month (around 0.4 per cent of net income for families of this type).”

Workless 23,892 (Unemployed or Long-term sick/disabled)

STRONG MINUS

“In most cases workless households experience no change in their entitlement in static financial terms. This is because they do not benefit from the work allowances, and their basic benefit rates are as in the current benefit and tax credit system. However, some workless households in receipt of disability premiums, aged under 25, or couples with one under and one over the qualifying age for Pension Credit are affected. Workless households experiencing higher entitlements will do so as a result of changes to the disability premiums and rates, which target support to the most severely disabled.”

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Income bands (quintiles)

Category Wolverhampton Indices of Deprivation distribution Local impact

Bottom Quintile 51% of LSOAs STRONG PLUS

2nd Quintile 21% of LSOAs STRONG PLUS

3rd Quintile 15% of LSOAs WEAK MINUS

4th Quintile 11% of LSOAs WEAK MINUS

Top Quintile 2% of LSOAs N/A

The DWP, as well as modelling the effect of Universal Credit for different family types, also looked at the impact for particular income quintiles (fifth). They determined that the changes would be beneficial overall for the bottom quintile and second-bottom quintile of households. The DWP is clear that Universal Credit is meant to be a boon to low-income households: “Around 3.1 million households will have a higher household entitlement under Universal Credit. Since these individuals are typically on lower than average incomes the impact on individual welfare may be proportionately higher. This generates a positive redistributional effect.”

Wolverhampton has a much greater share of households that are income-deprived than England, so the effect is likely to be magnified strongly in the city. In the words of the DWP: “Universal Credit will benefit low-income families, with those with the lowest incomes gaining the most as a proportion of their income...The bottom two deciles gain around £25 and £22 a month respectively (accounting for imperfect take-up in the current system and improved take-up under Universal Credit). For the bottom decile this represents a three per cent increase in weekly income.”

However, there are several income bands, which are forecast to lose out substantially as a result of Universal Credit. The DWP say that, “the most substantial reductions are in the sixth and seventh deciles, where the reduction in household income would be around £4 and £7 a month

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respectively. One of the reasons is that those in the sixth and seventh deciles are most likely to be in receipt of Working Tax Credit and no other elements of the current system; they will tend to have lower entitlements as outlined above.”