Written evidence submitted by the Royal
National Institute of Blind People
1. INTRODUCTION
1.1 RNIB has over 10,000 members, who are blind,
partially sighted or the friends and family of people with sight
loss. 80% of our Trustees are blind or partially sighted. We encourage
members to be involved in our work and regularly consult with
them on Government policy and their ideas for change.
1.2 RNIB has taken a close interest in the development
of the Universal Credit (UC) proposals. Disabled people, not least
those with sight loss, tend to have lower incomes than does the
general population. They are therefore disproportionately likely
to need means-tested support with living costs.
1.3 We believe that the UC proposals, as set out
in the White Paper,[1]
have both advantages and problems and welcome this opportunity
to put our observations to the Committee.
2. EXECUTIVE SUMMARY
2.1 The White Paper needs to be seen in the context
of wider Government strategies to reduce the current financial
deficit. The Government's approach is to rely on spending cuts
to a much greater extent than tax increases. This has major implications
for the benefit system.
2.2 Many of those concerned with poverty, disability
and social inclusion would argue that the Government "shouldn't
start from here" - preferring an approach based on progressive
taxation and less means-testing. But this is not on the Government's
agenda - or that of the Opposition.
2.3 So "we are where we are", and in that
context, the White Paper - in seeking to rationalise the tangle
of working-age benefit and tax credit means tests - offers positive
possibilities, in contrast to the generally negative tenor of
the benefit measures in the June 2010 Budget and the October 2010
Comprehensive Spending Review (CSR). It also presents some problems
and leaves a number of questions unanswered.
2.4 The White Paper is a rather less positive document
than its predecessor, 21st. Century welfare.[2]
This is because it:
- features weakened and now very complex earnings
disregard proposals;
- advances some harsh measures in relation to sanctions;
and
- and reflects some intervening and problematic
policy developments (notably concerning Council Tax Benefit (CTB)
and the Social Fund).
2.5 The proposed structure of the UC makes sense,
but the devil will be in the detail. The adequacy of benefit rates
and of earnings disregards and interactions with other parts of
the system - notably contributory benefits - will all require
close scrutiny.
2.6 The treatment of housing costs is worrying. Harsh
cuts to Housing Benefit (HB) have already been announced and the
White Paper goes further, abolishing HB and replacing it with
a housing costs component in the UC (and Pension Credit) which
is likely decreasingly to reflect real rental levels. Eligible
rents in the private rented sector, already severely cut, will
be represented by a standard amount in the UC which (if current
proposals for uprating HB "local housing allowances"[3]
using the Consumer Price Index are carried over to UC) will not
even follow movement in housing costs. This will have negative
implications for after-housing-costs poverty.
2.7 Meanwhile, there remains no adequate provision
for mortgage costs within the benefit system and although this
is to be reviewed in the context of the UC, there is no sign as
yet of an intention to rectify this omission.
2.8 The following outstanding issues are also important:
- provision for carers;
- the need for more emphasis on high-quality employment
support and less on sanctions;
- delivery of the new system and the readiness
(or otherwise) of the necessary information and communications
technology (ICT);
- safeguarding appeal rights; and
- and passported benefits.
2.9 In conclusion, we hope that the Government will
build on the positive features of the UC while revisiting aspects
that are emerging as problematic and will not seek to find further
savings at the expense of the wellbeing of disabled people and
others vulnerable to low incomes.
3. THE STRUCTURE
OF THE
UNIVERSAL CREDIT
3.1 The UC follows the structure of the benefits
it replaces by using needs allowances ("applicable amounts",
in the current jargon) to represent basic needs for various
types of household, from which other resources are deducted
and above which benefit tapers out. The sufficiency of these allowances
for their stated purpose has not been the subject of any official
cost-of-living exercise and this will remain the case. Although
annual uprating has for some years related to various inflation
indices, the base levels are essentially the result of political
judgements and historical drift. Their adequacy remains questionable
and many claimants struggle. We believe that research to develop
minimum income standards as targets for benefit rates is long
overdue.
3.2 The needs allowances in the current system entail
both basic living allowances and premiums reflecting particular
circumstances - for example, disability, parenthood, caring responsibilities.
It is important that the detail of the new structure takes into
account the full range of relevant circumstances, retaining features
such as the disabled child and severe disability premiums. Something
like the support and work-related activity components of Employment
and Support Allowance (ESA) will also be retained. These "building
blocks" of the new system should be the subject of detailed
consultation, as should the associated eligibility criteria.
3.3 21st. Century welfare rightly identified
low earnings disregards as a key problem in terms of work
incentives. Significantly more generous disregards were envisaged.
However, the White Paper introduces a clawback of 150% of help
with housing costs, pushing earnings disregards back down towards
a floor much closer to current levels for those receiving such
help. The logic of this is unexplained in the White Paper, but
we understand that it is an obscure mathematical device to shift
available resources to those nearest the bottom of the UC eligibility
range. Not only does this clawback militate against the original
objective regarding work incentives, but it restores a degree
of complexity that will baffle the public, contrary to the original
simplifying intentions. We believe that this device should be
dropped in favour of a more comprehensible model, and earnings
disregards both significantly raised and index-linked to protect
their value.
3.4 We also have specific concerns around earnings
disregards in respect of:
- "permitted earnings" rules for disabled
people, where the proposed UC "floor" rate is over £50.00
per week lower than the upper "permitted earnings" rate;
and
- single childless people, where no earnings disregard
is intended.
3.5 21st. Century welfare was also strong
on the disincentive effect of very high marginal deduction
rates (of over 90% in some cases) where means-tested benefit
and tax credit tapers interact with each other and with income
tax and national insurance contributions. The White Paper proposes
a single taper of 65%, producing a top deduction rate of about
76% for standard rate taxpayers. This is still very high, but
much better than 90%+ and also more transparent (although this
is about a 6% increase for people receiving tax credits but not
HB or CTB - helping to make the case for a lower UC taper).
3.6 However, the proposed "localisation"
of CTB creates a puzzle here. It is not clear how far local authorities
will have discretion to design their own schemes, but if they
were tapered, they would presumably ride on top of the UC, pushing
marginal deduction rates back up to confiscatory levels. The White
Paper is evasive here, but we understand that the DWP wishes to
avoid this consequence and that an element to represent council
tax is likely to be included in the UC. It would thereby be subject
to the UC taper. We do not know:
- where such an amount would sit (possibly in the
housing costs component?);
- how it would be determined;
- how adequate it would be; and
- or how this arrangement relates to the suggestion
that local authorities would run their own schemes.
These are important questions awaiting answers.
3.7 The treatment of housing costs is a cause
for concern. HB has taken a severe beating in the cuts packages
announced in the June Budget and October CSR. We have previously
submitted evidence to the Committee on this matter.[4]
The White Paper effectively abolishes HB, in favour of a housing
costs component within the UC. In the case of private sector tenants,
this component would (if current proposals for uprating HB "local
housing allowances" by means of the Consumer Price Index
are carried over to UC) be indexed in future without reference
to housing cost inflation and thus almost certainly decline in
value against rents over time. (Some sort of link with "actual
rents" is promised for the social rented sector, although
details are not given). Standard amounts for rent are problematic
enough, as shortfalls can and do push many claimants and their
families deep into poverty. But the breaking of any kind of link
with movement in rents would be a major setback and a proposal
which we believe should be withdrawn in relation to HB and not
carried forward into UC.
3.8 Meanwhile, the currently very weak housing costs
provision for owner-occupiers is to be reconsidered in
the context of the UC. We believe that the opportunity should
be taken to put mortgage costs on the same footing as rents within
the benefit system - permitting in-work claims and removing the
waiting period - thus recognising the reality of modern tenure
patterns.
4. RELATIONSHIP WITH
NON-MEANS-TESTED
BENEFITS
4.1 The contributory benefits system below
pension age has been severely damaged by the decision to time-limit
(to a year) contributory ESA for the Work-related Activity Group,
as well as the practice of shifting large numbers of disabled
people onto means-tested Jobseeker's Allowance (JSA). Contributory
JSA is already time-limited (to six months).
4.2 The White Paper continues this process to some
extent, proposing to align contributory ESA earnings rules with
the UC, which will undermine the ESA "permitted work"
arrangements (unless they are exempted - which we would strongly
urge). Some people have also read this to imply that a partner's
earnings would be taken into account - which we understand is
not the intention, although we would welcome explicit assurance
on this. We hope that further absorption of contributory into
means-tested forms of provision will not occur.
4.3 Child Benefit, contrary to one rumour,
is not to be absorbed into the UC. This is very welcome, as Child
Benefit is an important non-means-tested recognition of the extra
costs created by parenthood and the stake that we all have in
the next generation. It remains regrettable, however, that Child
Benefit is frozen for the next three years.
4.4 Similarly, Disability Living Allowance
(DLA) - an important non-means-tested recognition of the extra
costs of disability - will remain intact. A cost-cutting review
of DLA[5]
is under way, however, and we shall fully engage with this, as
we are aware of no evidence that significant numbers of disabled
people are receiving DLA inappropriately.
5. OTHER OUTSTANDING
ISSUES
5.1 The discussion of Carer's Allowance is
enigmatic. It seems to imply that its inadequate level suggests
pointlessness, rather than the need for improvement. Carers with
a working partner or other income could lose from this. We will
watch the proposed review closely.
5.2 The White Paper proposes (in England) to transfer
aspects of the Social Fund to local government, which will
administer "much of" a reformed system of crisis loans
and community care grants. It is not clear exactly what this means,
but the DWP and its predecessors have made discreet overtures
to local government in the past regarding a transfer of problematic
aspects of the Social Fund and have been rebuffed. The current
climate of major change has doubtless been seen as an opportunity
at last to pass this unwanted parcel. Local authorities would
thus inherit a difficult rationing task, with limited resources
both for payments to applicants and for administration. Moreover,
if there were no ring-fencing, this service would be exposed to
the effects of local government spending cuts. We believe that
the Social Fund should stay where it is.
5.3 The delivery of the new system is highly
dependent on technological solutions that to a great extent lie
outside the DWP. Comments to newspapers from within HM Revenue
and Customs suggest a less than robust inter-departmental understanding
regarding the timescale and capabilities of the new HMRC systems.
5.4 Claimants can - with justification - feel apprehensive
that technological innovation can go wrong and disrupt their payments.
Every effort must be made to safeguard against this. In this context,
it is worrying that the DWP tends to "talk down" the
scale of the necessary ICT systems development. Underestimation
of the challenge would be to invite administrative mishap. We
would suggest that there should be careful piloting of the new
system in a small number of areas. This would require a longer
timescale and robust fallback payment arrangements for claimants
in those areas if problems occur.
5.5 Technologically sophisticated delivery also raises
important issues concerning decision-making and appeal rights.
Substantive decisions relating to a claim should not be allowed
to decline into administrative actions that the claimant has no
effective way of challenging. This has been a problem with Tax
Credits.
5.6 Most people who are able to work wish to do so.
We would like to see more emphasis on high-quality employment
support - such as an extension of the Access to Work scheme
- and less of an artificially high profile given to sanctions.
5.7 Passported benefits are important to disabled
people, especially as they include several health-related areas
such as free prescriptions and help with dental and optical charges
- the last of these obviously being a particular concern of RNIB.
Current rules are complex, which impacts on take-up. It is not
clear to us that the proposed system based on income thresholds
will necessarily be simpler, but the opportunity is there and
we would urge thorough consultation on the details.
5.8 The White Paper promises that nobody will sustain
cash losses as a result of the introduction of the UC. Such transitional
protection is welcome as far as it goes, but does not cover
losses arising from the many other changes, so its significance
should not be overestimated.
6. CONCLUSIONS
6.1 The UC proposals have a number of positive aspects,
but these have already been watered down in translation from the
original 21st. Century Welfare consultation document, notably
in relation to earnings disregards. In a harsh financial climate
and in the context of large-scale cuts to the benefit system overall,
there is a danger that this weakening of good intentions will
continue.
6.2 There are also significant causes for concern
in the current proposals, notably the implications for poverty
after housing costs; the interaction with Council Tax Benefit;
the future of contributory benefits; the transfer of problematic
parts of the Social Fund to local authorities; and a heavy reliance
on all being well with ambitious ICT requirements.
6.3 RNIB will monitor developments with interest,
recognising that blind and partially sighted people have much
to gain and much to lose, depending on how events unfold.
December 2010
1 Universal Credit: welfare that works, Cm 7957,
Department for Work and Pensions (DWP), November 2010. Back
2
21st. Century welfare, DWP, Cm 7913, July 2010. Back
3
The "local housing allowance" is the amount of rent
eligible for HB in the private rented sector. Back
4
Response of the Royal National Institute of Blind People to the
Work and Pensions Committee consultation on the impact of the
changes to Housing Benefit announced in the June 2010 Budget,
August 2010. Back
5
Disability Living Allowance reform, Cm 7984, DWP, December 2010. Back
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