Welfare Reform Bill

Memorandum submitted by Age UK (WR 32)

1. Age UK

Age UK is the new force combining Age Concern and Help the Aged. We are a national charity and social enterprise working to transform later life in the UK and overseas. Our vision is of a world in which older people flourish. We aim to improve later life for everyone through our information and advice, services, products, training, research and campaigning.

2. Summary

2.1 The Welfare Reform Bill paves the way for wide ranging changes to welfare payments. Age UK supports the Government’s aim to simplify the benefits system in order to tackle poverty and provide better incentives to work. However we have some significant concerns regarding some of the details of the Bill. We believe Council Tax Benefit should be maintained as a national entitlement, as we feel localising the benefit alongside a cut in resources could lead to hardship as well as an uneven system of support. We are also anxious to ensure that the introduction of the Personal Independence Payment (PIP) provides adequate support for disabled people aged over 50.

2.2. We believe that the new claimant commitment under Universal Credit needs to take account of the needs of people aged over 50. With the extension of working lives, it is important that all the necessary support is provided to help older workers both remain in and re-enter employment.

2.3 More generally, we would like to see more detail about the Government’s proposals. A number of measures are welcome in principle – for example, incorporating assistance with housing costs into the State Pension Credit – but we are keen to see more details to be reassured that people will not be adversely affected by changes. We believe it is essential for Parliamentarians to be provided with more information about the Government’s plans in order to scrutinise the legislation fully.

2.4 We will be judging the success of the Bill by whether it delivers improved outcomes for people in later life – both those below the State Pension Credit age and those beyond State Pension Credit age. The Bill must provide everyone aged over 50 with the support they need to be independent.

2.5 Age UK is also working on the Bill with a number of other organisations who together produced a Second Reading briefing which set out a range of principles and key areas of concern.

3. Council Tax Benefit

3.1 The Welfare Reform Bill abolishes Council Tax Benefit. The Impact Assessment states that ‘Local Authorities will be given scope to take account of the priorities of their own communities when determining the amount of support for low-income households to meet their council tax bills’. This is a major change and follows the Spending Review announcement that the Government plans to localise this benefit alongside a 10 per cent reduction in expenditure.

3.2 Despite a statement that the Government ‘will aim to protect the most vulnerable, particularly pensioners’ we are very concerned that a national entitlement is being replaced by a local system and that, as yet, there are no proposals as to how this will work. We appreciate that the Government wants to move towards greater localism but we do not believe it is appropriate to apply this approach to Council Tax Benefit (CTB). Once taxes are set, older people and others on a low income need to have the peace of mind of knowing they will be entitled to a certain level of benefit or rebate. Localising benefit would inevitably lead to different outcomes and to introduce this alongside a cut in resources could lead to hardship as well as an uneven system of support.

4. Universal C redit and people who have reached women’s State P ension age

4.1 Universal Credit does not apply to people who have reached the qualifying age for State Pension Credit (women’s State Pension age). However, if someone over that age has a partner under State Pension Credit age then they will not be able to claim Pension Credit as the Government wants all people under State Pension Credit age to claim Universal Credit and be subject to work related conditions of entitlement.

4.2 We accept there is a case for treating everyone aged below women’s State Pension age consistently, in terms of expectations with respect to work, but we would oppose any move which would reduce the overall income of households where one member has reached the age of eligibility for pensioner benefits. Age UK would like further information about the impact of the change for couples in this position and reassurances that they would not be financially worse off than a couple entitled to Pension Credit.

5. Pension Credit

5.1 Housing costs for younger people will be included in Universal Credit and for older people a housing credit element will be introduced into Pension Credit. The intention is that someone will be broadly entitled to the same amount of support as they would have been under Housing Benefit and there are provisions for other changes such as the introduction of a capital limit for the housing credit.

5.2 Age UK welcomes the principle of incorporating help with housing costs into Pension Credit as this has the potential for simplifying the claim process and could improve take-up. (Although we would also wish to see Council Tax Benefit retained as a national benefit and linked to the Pension Credit assessment.) However, we are keen to see the details of these proposals and to be reassured that people will not be adversely affected by the changes.

5.3 The Universal Credit White Paper proposes an income-related element for pensioners with dependent children within Pension Credit. Age UK would like further information on how the Government proposes to take this forward. It is important that the growing minority of older people looking after children under 18, including those who have had to become the main carer for their grandchildren, should receive adequate support.

5.4 Clause 73 changes Pension Credit legislation in relation to the entitlement conditions for the carer addition in Pension Credit. The intention is that the definition of a carer will still include people getting Carer’s Allowance but will also include others who have substantial caring responsibilities. Age UK looks forward to more detailed information about this provision, which appears to end the current nonsensical situation whereby many older carers must apply for an allowance they know they cannot get (because there are already receiving a State Pension) in order to receive their full entitlement to Pension Credit as a carer. If this is the case, it is a very welcome move.

6. Personal Independence Payment

6.1 The Bill makes provision for the introduction of the Personal Independence Payment (PIP) to replace Disability Living Allowance (DLA) which will have two components - the daily living component and the mobility component each payable at two levels. Further details on rates, the transition process and what is to be considered in the assessment process and other aspects of the new payment will be specified in regulations.

6.2 The Government has announced that reform or DLA is expected to reduce expenditure by around 20 per cent. We do not disagree with the principle of looking at changes to DLA but we are concerned that reducing expenditure appears to be a major aim rather than ensuring disabled people have adequate support. DLA currently provides essential help with the costs of disability for many people and we have been contacted by older disabled people who are worried that they will lose the support they rely on.

6.3 Clause 81 states that a person will not be entitled to PIP after they reach State Pension age (or 65 if that is higher), although there is provision for exceptions to this. The explanatory notes say that an example of an exemption could be if someone is already in receipt of PIP before they reach that age. This is the current position with DLA and we seek assurance that people entitled to help with their mobility costs will not lose that help once they reach 65.

6.4 People currently aged 65 or over receiving DLA would be relived if the Government makes it clear that they will not be reassessed. The original announcement and the Disability Living Allowance Impact Assessment refer to people of working age being reassessed but the consultation paper on reform stated that ‘We are considering whether to reassess children and people aged over 65’.

6.5 We would also like clarity more generally on whether the Government envisages the introduction of PIP will lead to changes to Attendance Allowance for people disabled after the age of 65.

7. Claimant commitments

7.1 All Universal Credit claimants will have to sign a ‘claimant commitment’ specifying the actions they are to take in order to find work and the consequences should they fail to meet these targets. This replaces the Jobseekers Agreement, and can be tailored to an individual’s circumstances by the Jobcentre Plus adviser. Clauses 49 and 56 amend the existing legislation to set the new parameters for claimants who would at present receive either Jobseekers Allowance or Employment and Support Allowance.

7.2 Relevant claimants (those on JSA, ESA (work related activity group) and Income Support) will have to sign a commitment prior to the introduction of Universal Credit, which is broadly similar to that which is currently expected of them. Age UK supports the principle of having such a claimant agreement, but believes that for people with significant barriers, including long-term sickness, voluntary participation in job search activities is a much more effective method of engaging older jobseekers and should be used where possible.

7.3 We support the notion that those with ‘regular and substantial caring responsibilities’ will be exempt from such requirements (see Clause 19). However, greater clarity is needed on the exact meaning of this. Furthermore, there are many jobseekers who may have intermediate level caring responsibilities who will be subjected to the same job search requirements as those who are available to look for work full-time. We recommend the legislation should include a graded system of conditionality that could be applied to such carers, similar to that which is included for parents of young children; or alternatively, Jobcentre Plus advisers are given greater discretion to tailor claimant commitments for this group.

8. Contracting out powers under the Work Programme

8.1 Clause 29 provides for organisations authorised by the Secretary of State to be able to set job search requirements, for example those acting as contractors under the Work Programme. This does not, however, apply to sanctions.

8.2 Age UK is concerned that extending these powers could lead to the unfair treatment of some older Work Programme participants. Without appropriate support and supervision we are concerned that third-party providers may impost requirements on 50+ clients which are not grounded on evidence of effective interventions for this age group – in effect it could create a lottery for the standard and appropriateness of support.

8.3 For contractors to operate these powers, there need to be substantive quality assurance processes in place, and the contractors would have to operate within very strict parameters about what they can and cannot do, in order to achieve a level of consistency. This would involve working closely with Jobcentre Plus, and also the medical profession to ensure that unfair conditions are not being placed on people who may have underlying health impairments (even where such impairments are not picked up previously).

8.4 We are also concerned there is potential for contractors to misuse these powers to avoid incurring penalties for failing to support their hard-to-place clients. By setting overly stringent requirements, which for an individual could be next to impossible to fulfil, clients could be deemed as not doing what is expected of them, which could be used by contractors as a reason to avoid providing sufficient support. The Government needs to ensure that measures to prevent this are written into the terms and conditions.

9. 50+ jobseekers

9.1 In line with the policy objective of extending working lives, it is important that all necessary support is provided to help older workers both remain in and re-enter employment. For many older jobseekers the latter is extremely difficult – among unemployed people aged over 43% have been out of work for over a year - the highest rate among any age group.

9.2 For this reason we believe that it would be cost effective to refer a substantial minority of older jobseekers to the Work Programme before the standard one year delay. Evidence shows that after a 12 month wait, most unemployed over 50s are such a distance from the labour market that they are unlikely to work again. Jobcentre Plus advisers should therefore have greater flexibility to refer all Universal Credit claimants to the Work Programme should the individual be deemed likely to remain unemployed for over a year and both parties agree.

9.3 Jobcentre Plus must continue to train advisers to be more aware of the circumstances and aspirations of the 50+ age group. At present, many older claimants find the service offered is not sufficiently tailored to their needs.

9.4 Tackling age discrimination is of great importance to helping older workers find sustainable employment, and we recommend that the Government continues to advocate the benefits of older workers and work with employers to help them develop an age-positive culture.

March 2011