Welfare Reform Bill

Memorandum submitted by Surrey Welfare Rights Unit (WR 68)

1. Introduction

Surrey Welfare Rights Unit (SWRU) is a specialist Citizens Advice Bureau with expertise in social security and community care law. During April 2011 SWRU held a consultation meeting with local voluntary advice organisations to seek their views in preparing this evidence. These organisations were:

- Caterham and Warlingham Citizens Advice Bureau

- Guildford Citizens Advice Bureau – Macmillan Cancer Project

- Terrence Higgins Trust Surrey

- Ash Citizens Advice Bureau

- Leatherhead Citizens Advice Bureau

- Social Information on Disability

- Spelthorne Carer Support

- Waverley Citizens Advice Bureau

- Woking Citizens Advice Bureau

- Runnymede and Spelthorne Citizens Advice Bureau

2. Social Fund

We are very concerned about the proposal to end Community Care Grants and Crisis Loans for living costs. We do not believe that there is sufficient evidence to replace these essential "last resort" payments with discretionary provision provided by Local Authorities. Not only will this lead to inequity and postcode delivery of what is for many a safety net service, but also it is the loss of a transparent and independent appeal process which according to the last set of DWP statistics resulted in a positive decision for 41,000 individuals. Local Authorities have no mechanism for providing emergency payments across the breadth of client groups. We have not seen any evidence that Local Authorities would be in a position to deliver such a service or whether any concerns they have, have been sought by central Government.

The Social Fund does not meet current demand with many thousands of applicants failing to receive what they need despite meeting the specific criteria. Crisis Loans are immediate and reach non-benefit claimants in times of high need. Community Care Grants target the most vulnerable and prevent more expensive social care resources being expended later on. Hundreds of individual schemes will be set up by Local Authorities replacing the one Social Fund scheme that currently exists. This will use resources which are already insufficient. This is not current policy which is to drive efficiencies and pushing resources towards front-line delivery.

We are concerned that Local Authorities with social care responsibilities are used to only providing services to the very vulnerable, often applying critical or high risk thresholds. Community Care Grants have a much more preventative role and often are paid to avoid referral to social care teams. Current statistics from the Secretary of State’s Annual Report on Social Fund shows a significant number of grants and loans are paid to the unemployed. This reflects the lack of any viable alternatives for those individuals. Most unemployed people will not access top-tier Local Authorities; their interaction will be with Jobcentre Plus offices, who refer claimants to the Social Fund when necessary. By having to engage with another statutory authority, vulnerable individuals will inevitably not always access those sources of help.

It is insufficient to issue just policy expectations to Local Authorities on how they are to administer the funds. Local Authorities are facing years of budgetary pressures and increased demand on services. Some vulnerable clients will be entitled to financial support, equipment and services under community care legislation. We are concerned that there would be a conflict if those same social care departments were also making decisions on how to expend other financial resources intended for vulnerable people. By not ring-fencing these resources within Local Authorities may reduce burdens on Councils but it is very difficult to see how funds intended for vulnerable individuals will be protected in times of austerity.

The National Audit Office in their report on Community Care Grants in 2010 reported that claimants who were refused grants or who did not receive all they applied for faced significant problems subsequently such as homelessness, going without personally, accepting cast-offs, stealing, selling personal items and using credit cards. We respectfully request that the Committee considers the National Audit Office’s recommendations for an improved Social Fund in that report.

3. Disability Living Allowance Reform

The public consultation on Disability Living Allowance (DLA) reform ended on 14 February 2011 after the Welfare Reform Bill was published. We hope that the Public Bill Committee will consider that body of evidence thoroughly. We are concerned that the over-arching framework of the Personal Independence Payment (PIP) implies a move away from the social model of disability and a return to the medical model. We suggest that this cannot be the intention of Government. We are also concerned that an intended removal of financial support to 20% of the population with a disability will increase the occurrence of mental illness, poor health outcomes and access to employment, social activity and community involvement.

Increasing the waiting period to six months will seriously disadvantage those individuals who have experienced a sudden and often devastating change in their health such as a stroke or diagnosis of cancer. Often other members of the household will be coming to terms with new caring responsibilities and DLA is an essential component in recognising the extra costs of disability for those households. Fewer PIP payments than current DLA claimants will mean fewer carers entitled to Carer’s Allowance. In addition, the passported entitlements (or the replacements under Universal Credit) will be cut by presumably at least 20%. Individuals and vulnerable households will not only be losing DLA income but possibly a clutch of other entitlements due to this reform.

The proposed new system will require significant resources for more medical staff, centres and provision of domiciliary visits on a far more frequent basis. At the same time, the loss of the lower rates of benefit will result in individuals having to reach a higher degree of severity before financial support is provided. A significant body of evidence demonstrates that money worries, debts and fuel poverty will escalate the speed at which health, both mental and physical, deteriorates.

Professional evidence provided for this paper states that DLA slows up the rate of deterioration in some illnesses such as cancer, and reduces the negative impact of stress on some conditions such as HIV.

4. Restricting Contributory Employment and Support Allowance

The principles of the national insurance scheme are primarily to protect in times of unemployment, sickness or retirement. National insurance for employees has increased for the majority since April 2011. There is significant data and discussion concerning life expectancy and funding state pensions into the future. However, there has been little or no public debate about how the other parts of the insurance scheme. Time limiting payments of contributory ESA to just a year will disadvantage the most sick and disabled people despite them having met the contribution conditions during their working lives. Often these claimants will have significant reduced life expectancy and despite significant amounts of national insurance that they have paid into the scheme, they will not benefit from decades of state pension.

The ESA scheme has already undergone substantial reform and is due further adjustment in light of the Harrington review. The early feedback and levels of appeals against decisions demonstrate the scheme is far from perfect. The Government has claimed that the vastly reduced numbers being found to have limited capacity prove that the scheme is working to root out those able to work. If the scheme works correctly then there will be no-one on ESA that shouldn’t be. Those that are entitled are more likely to be manual workers or those with deteriorating conditions such as cancer, diabetes, arthritis, and who are far less likely to enjoy healthy retirements.

The proposal to only pay contributory ESA for a year will create socio-economic disadvantage for the most vulnerable. The contract between the state and the worker, financial protection in return for national insurance payments, will have been broken. A shift to extending means-testing will discourage saving, will discourage alternative private insurances and will disadvantage couples where the other partners still works.

For similar reasons the abolition of ESA in Youth should also be removed. Again, this small number of recipients reflects the most ill or disabled. The limited capacity for work test is more stringent and for young adults with learning disabilities, enduring poor mental health or complex multiple disabilities, the prospect of losing benefit after 12 months is inequitable. Families will be dissuaded from saving or making provision for their disabled young adult due to means-tested benefits being the only available entitlement.

5. Housing Benefit restrictions and the benefit cap

The Government is taking extensive steps to maximise the households who are in employment. This means that those households who will in the future rely on Housing Benefit either in part or to meet their rent in full are those households who have already met other criteria, rules of entitlement or conditionality elsewhere in the social security system. For some tenants, Housing Benefit will be a long-term contribution in order to secure appropriate accommodation. The change from setting Local Housing Allowances according to local rents and moving to the Consumer Price Index is a change that will drive households into debt and homelessness. In parts of the country, such as Surrey, housing is expensive and at a premium. Wages in the local employment sector do not always reflect the high rents within the County that are maintained by inflated London wages.

The private rental market now places significant further pressures on tenants seeking to secure and keep accommodation due to the April 2011 Housing Benefit amendments. This includes reducing the local affordable tenancies to approximately only 30% of available stock. By deliberately ensuring that benefit levels do no keep up with actual rises in housing costs will almost certainly increase overcrowding, repossessions and family breakdown.

A benefit cap on non-working households is not an appropriate step to control welfare spending. For larger families, the main households who will be affected by the cap, their non-work status will already be subject to significant scrutiny and conditionality. The "tipping-point" between families below the cap and those who have their benefits restricted will purely depend upon the number of children in the household. This cannot be equitable when this Government has committed to the child poverty target being met. Families experience changes in their circumstances when they already have had their children. It is dangerous to produce policy based on a presumption that there are substantial numbers of families choosing to have large families for welfare gain.

Families experience sudden unemployment, they take on caring responsibilities, and they can succumb to illness and disability. Families with an above average number of children cannot predict what life changes they may experience. In the Guildford Broad Market Rental Area the LHA for a 4-bed house is £357.69 (May 2011) leaving only £142.31 for an above average sized family to live on for a week. If bills and food cannot be met from this small sum then the allowance intended for housing costs will be used and the accommodation will be at risk. In some cases families will have no choice but to separate into two households in order to have sufficient funds to live.

6. Universal Credit

Surrey Welfare Rights Unit has already submitted evidence to the Work and Pensions Committee regarding Universal Credit. Most of those points still stand. Many of the issues concern the capacity and accuracy of Jobcentre Plus to be able to make timely payments to households. We are concerned that there must be a robust interim payments scheme if the award of Universal Credit is held up in the system.

Furthermore Universal Credit does not appear to improve the financial situation for families who are already working. This is a real concern in relation to the Child Poverty target as 58% of children in poverty live in working households (Joseph Rowntree Foundation, Monitoring Poverty and Social Exclusion 2010). The announcements in the Comprehensive Spending Review 2010 on cuts to benefits in the next few years will mean that those cuts will be carried forward into Universal Credit. These include cuts to childcare support through Working Tax Credit, increases in the withdrawal taper, removal of certain payments in Child Tax Credit and the Housing Benefit cuts.

7. Summary

In summary the key points are:

a. The abolition of Community Care Grants and certain Crisis Loans is strongly opposed as these are payments of last resort and often prevent far higher social costs further down the line.

b. The Personal Independence Payment must keep the social model of disability as its framework. The three months waiting period before entitlement should be kept in order to strike the appropriate balance between excluding short-term illness and meeting the financial needs of claimants who are suffering a significant change in their health, such as stroke victims. The lower rate payments currently paid with care and mobility provide independence for thousands of disabled people and often provide excellent value in preventing higher social and health costs if independence was lost.

c. Contributory Employment and Support Allowance should not be restricted to 12 months for claimants in the Work-Related Activity Group. This would create a social-economic inequity in one of the most vulnerable groups. Government should be reminded that national insurance is not solely for retirement purposes only but should provide sufficient protection for workers who become sick or disabled.

d. Housing Benefit serves a purpose in that it helps the low-paid, the retired and the out-of - work to be able to secure suitable accommodation. But deliberately failing to maintain LHA bands in keeping with the local cost of housing will lead to far greater societal costs due homelessness, poor mental health, family breakdown and debt.

e. Introducing benefit caps will have a dramatic negative effect on larger families for whom there is no solution apart from increased poverty and debt. We urge the Government to look at alternative ways to support families to move into work if that is appropriate or to maintain caring roles or deal with long-term illness. Children in these households should not have to experience deepening poverty.

f. Our detailed comments on the Universal Credit white paper have already been submitted to the Work and Pensions Committee in December 2010

May 2011