Written evidence submitted by Oxfordshire
Welfare Rights
THE ORGANISATION
Oxford Community Work Agency
(OCWA) is a registered charity. OCWA currently provides two principle
services:
- Oxfordshire Welfare Rights (OWR).
- Barton Advice Centre (BAC).
Oxfordshire Welfare Rights
provides a specialist "second tier" service on social
security benefits including:
- A telephone consultancy service for workers in
statutory and not for profit agencies in Oxfordshire.
- Representation for individual claimants at social
security appeal tribunal hearings.
- Training courses on social security benefits.
- A telephone consultancy service for advisers
within Hampshire Citizens Advice Bureaux.
Barton Advice Centre provides
a "front line" drop-in service including:
- General advice on issues including housing and
employment.
- Specialist advice on social security benefits
and debt.
OCWA's principle funders are:
- Oxfordshire County Council.
- Oxford City Council.
- Citizens Advice Hampshire.
SUMMARY
1. A commitment to simplify the social security
system in order to make work pay and combat worklessness and poverty
is to be welcomed.
2. The White Paper lacks sufficient detail to
enable an informed and detailed response. It is strong on policy
aspiration but thin on evidence and explanation - the "devil
will be in the detail".
3. Universal Credit as proposed does not represent
a fundamental reform of the social security system. In practice
the proposals amalgamate existing benefits under a new name and
tinker with their qualifying rules and administration.
4. No compelling reasons are given to suggest
that amendment to existing provisions would not achieve the stated
objectives and so avoid the need to introduce a new legislative
and administrative structure.
5. It is not clear that Universal Credit will
"make work pay" in practice for many claimants.
6. There is no evidence that Universal Credit
will simplify the means test and therefore make the system easier
for claimants and administrators to understand, and thus reduce
fraud and error.
7. The introduction of a single "taper"
and abolition of the artificial boundaries between part-time and
full-time work are positive proposals.
8. The proposals are silent on key "administrative"
issues including provisions concerning claims and payments, decision
making and appeals and overpayments.
9. The proposals appear over reliant on information
technology. The administration of Universal Credit could become
even more remote from and inaccessible to claimants.
10. The time scale for the introduction of Universal
Credit is overly ambitious - "less haste, more detail".
11. The proposals call into question the future
of the national insurance principle as a foundation of the social
security system.
12. Proposals to replace Council Tax Benefit
are of particular concern.
Universal Credit - Is it new? Will it be easier
to understand?
1. No details of how Universal Credit will be
calculated are provided. It appears that means tested benefits
provision for the calculation of the applicable amount, income,
capital and a taper will be retained [Chapter 2, paragraphs 18-20].
These rules within Tax Credits are significantly different. Drafting
a single set of rules for Universal Credit presents a significant
challenge.
2. Crudely, Universal Credit will simply re-integrate
current means tested benefits into a single benefit.[16]
Without a significant simplification of the formula for calculating
entitlement Universal Credit will not be easier for claimants,
benefit staff and others to understand.
3. The need to provide additional support for
claimants during the introduction of Universal Credit and beyond
should not be underestimated. That will include "face to
face" contact with DWP staff and independent agencies, such
as Citizens Advice Bureaux, in addition to online and other published
sources.
Universal Credit - simpler to administer?
4. Universal Credit could bring some simplification
in administration as claimants will only need to deal with a single
agency for means tested benefit.
5. However many claimants will still need to
deal with other DWP offices, for example, within the Pension,
Disability and Carer's Service to establish their full entitlements.
Replacement of Council Tax Benefit will duplicate administration.
6. Universal Credit will be heavily reliant on
information technology. Administration will become even more remote
from individual claimants within a system that is already inflexible
and unresponsive to individual need.
7. The current administration of means tested
benefits means benefit office staff do not have ownership of a
claim or sufficient understanding of qualifying rules or process.
When things go wrong claimants are often referred from "pillar
to post" with no member of staff taking responsibility for
resolving the problem.
8. The support that voluntary sector organisations
(and others) provide to individuals to help them deal with the
system is recognised [Chapter 4, paragraph 35]. In the short term
at least Universal Credit will increase the demand on those agencies
at a time when their resources are being reduced.
9. Advice agencies have difficulty resolving
problems with the DWP because of the remote nature of much of
its Jobcentre Plus service. Enhanced procedures that enable representatives
to access the system will be required. At the very least this
should include an ex-directory telephone helpline service for
advisers similar to those already provided by the Pensions, Disability
and Carer's Service.
10. An advantage of the present system of separate
benefits is that claimants may have access to some income whilst
delays etc. with other benefits are resolved. Introduction of
Universal Credit has the potential to leave claimants with no
income while their claim is processed or other difficulties are
resolved.
11. Jobcentre Plus invariably directs claimants
towards Crisis Loans in such situations. It appears to have no
mechanism in practice for applying the "interim payment"
provision.[17]
Similar problems arise with Housing Benefit.[18]
12. Universal Credit must include provision for
"interim payments" that are simple to administer and
for claimants to access; and introduce a statutory period within
which payment must be made.
ADMINISTRATION -
OTHER CONSIDERATIONS
13. The proposal is silent about how current
legislations affecting, for example:
- decision making and appeals,
- claims and payments; and
- overpayments.
are to be applied or amended within Universal Credit.
Equivalent provisions within Tax Credits differ significantly.
14. The volume of amending or new regulations
required should not be underestimated.
TIMESCALE
15. Introduction of Universal Credit appears
contingent on the introduction of HMRC's proposed real-time information
system [Chapter 4, paragraph 15]. The lack of detail suggests
that the intended time scale [Chapter. 4, paragraph 21] is overly
ambitious.
HOUSING COSTS
16. Changes to Housing Benefit already announced
in the Budget and Spending Review, proposals in the White Paper
and other recent policy announcements could mean that many claimants
will suffer a "double whammy" to both their income and
housing situation, for example, being made redundant and then
having their housing costs restricted.
17. There is little evidence that the level of
Housing Benefit payable for private sector tenancies has distorted
or led to an increase in market rents.[19]
18. Using the benefit system as a crude way of
controlling private sector rents in the absence of a significant
increase in the supply of affordable rented accommodation and
statutory control of rents will mean many people on low incomes,
including some of the most vulnerable, will endure poorer housing
conditions.
19. Poor housing with attendant problems such
as poor health may increase barriers to work and reduce geographic
mobility.
20. The conclusions of the Social Security Advisory
Committee are noted.[20]
COUNCIL TAX
BENEFIT
21. No detail of the proposed replacement for
Council Tax Benefit is provided [Chapter 2, paragraphs 34-36].
Council Tax Benefit is no more complex than Housing Benefit. They
are usually administered together by the relevant local authority.
Council Tax is a centrally imposed provision.
22. A separate system of assistance with local
taxation negates the objective of simplification.
23. Unless the replacement is to be heavily prescribed
in order to protect the most vulnerable [Chapter 2, paragraph
36], in which case it would be simpler to include it within Universal
Credit, there must be a risk that a locally administered scheme
could lead to a "post code lottery" in the types of
assistance available to those on low incomes. A council could
decide to provide financial assistance based on criteria other
than low income.
24. A localised scheme could increase disparities
between local authorities in the quality of administration (a
significant issue with Housing & Council Tax Benefits).
25. A new scheme could undermine work incentives
as increased income from earnings is disproportionately required
to meet council tax liability.
THE NI PRINCIPLE
26. The proposals to further limit the duration
for which some contributory benefits are payable [Chapter 6, paragraph
8] and proposals to change the basis of entitlement to state Retirement
Pension call into question the future purpose of national insurance
contributions.
27. The "value" of contributions in
terms of the benefits they "purchase" has decreased
over time due to piecemeal reform.
28. Further reduction may bring the national
insurance system into disrepute - "I'm paying in but I'll
get next to nothing out".
29. The future of national insurance contributions
merits further consideration.
WORK INCENTIVES
30. Work can simply replace welfare dependency
with in-work poverty and, in particular, fail to address child
poverty.[21]
31. The proposals to abolish the arbitrary distinction
between full time and part time work and separate "in-work"
and other means tested benefits have merit.
32. The introduction of a single taper [Chapter
2, paragraphs 7 to 9] is to be welcomed if in practice it reduces
the Marginal Deduction Rate for low-earning workers.
33. However the model for Universal Credit [Figure
3; Chapter 7, paragraphs 15-17; Table 1] illustrates entitlement
changes only. It does not take account of additional "in
work" costs (such as travel to work). Such costs can be a
significant deterrent to, or unexpected consequence of, taking
or increasing work.
34. Childcare costs are a significant barrier
to many claimants wishing to enter work. Help available with childcare
costs is to be reduced from April 2011. There remain unanswered
questions [Chapter 2; paragraphs 41-46] about childcare costs
that may have a significant impact on work incentives.
35. Proposed changes to Housing Benefit, housing
costs [Chapter 2, paragraph 11; Annex 3] and Council Tax Benefit
[Chapter 2. paragraphs 34-37] may also erode work incentives.
36. The impact of work on "passported benefits"
is unclear [Chapter 6, paragraphs 14-16].
37. Future application of the "permitted
work" provisions[22]
is not addressed.
38. Simplification to the assessment of the earnings
of the self-employed is not addressed. The current rules are a
particular disincentive to starting or increasing self-employment
(and produce similar problems when a formerly self-employed person
needs to claim means tested benefits).
39. Advisers are used to undertaking "better
off" calculations that take all of the costs of work into
account. Such calculations require a detailed knowledge of benefit
rules. Staff within DWP will require a similar level of knowledge
in order to effectively advise and support claimants through the
process of taking or increasing work.
40. Extensive modelling of Universal Credit is
required in order to demonstrate that it will significantly increase
the financial incentives of taking or increasing work and be easier
for claimants to understand.
ASSESSMENT AND
PAYMENT PERIOD
41. It is indicated [Chapter 4, paragraphs 12-13]
that the assessment and payment period for Universal Credit will
be monthly. Income such as earnings or occupational pensions are
often paid monthly. However some household bills can be four weekly,
for example rent. Benefits are paid weekly, fortnightly or four
weekly.
42. This discrepancy between income and expenditure
periods can lead individuals to experience short term "cash
flow" difficulties.
43. A common period would resolve the current
difficulties created by the interaction between weekly benefit
and annual tax credits assessment periods.
44. Potential disparities between the assessment
and payment period for existing benefits and that introduced for
Universal Credit will need to be addressed.
45. A significant number of claimants will have
difficulty managing their finances if Universal Credit were paid
monthly. Payment at more frequent intervals should be considered
for vulnerable claimants.
DISABILITY LIVING
ALLOWANCE
46. We are concerned by the proposal to introduce
an objective assessment for Disability Living Allowance [Chapter
6, paragraph 17; Disability Living Allowance reform Cm. 7984].
47. We have considerable experience of representing
claimants at tribunal hearings in cases concerning Disability
Living Allowance (DLA) and in cases concerning the Work Capability
Assessment (WCA) which is already based on an objective assessment
of capability.
48. We have a success rate of 86% in DLA cases
at tribunal and 93% in WCA cases. This demonstrates that there
are significant problems with the current assessment processes
for DLA and the WCA.
49. We fully endorse the findings and recommendations
of Professor Harrington's review of the WCA.[23]
50. No changes should be introduced to the assessment
of DLA until it has been demonstrated that the WCA is working
effectively.
DISABILITY AND
CARERS PREMIUMS,
CARER'S
ALLOWANCE
51. The future of disability premiums and Carer's
Allowance is unclear [Chapter 2, paragraphs.22&27], nor is
it addressed in the Disability Living Allowance consultation.[24]
Disability and carers premiums will have a significant impact
on the complexity of Universal Credit.
52. There is a policy vacuum on these issues.
CONDITIONALITY
53. It is appropriate that claimants should understand
and meet their responsibilities.
54. For Employment and Support Allowance provision
already exists to introduce a requirement to take part in work-related
activity[25]
and draft regulations[26]
have recently been referred to the Social Security Advisory Committee.
55. Individuals within the work related activity
group have a wide range of capabilities. Some are close to being
able to return to work because, for example, they are recovering
from a short term illness. Others have chronic conditions which
mean they will require significant support over a long period
before they are "work ready".
56. Regulations that introduce "work related
activity" must have sufficient protection for vulnerable
claimants including those who are a long way from being "work
ready" and should not introduce a "one size fits all"
requirement.
SANCTIONS
57. In respect of lone parents it is noted that
"failure to attend [work focused interviews] is more often
due to challenging circumstances than wilful evasion of the rules"
[Chapter 3, paragraph 14(d)]. Similar considerations apply to
claimants who, for example, fail to attend a Work Capability Assessment.
58. Whilst the current system provides safeguards
for claimants who face sanctions for a failure to comply, in practice
their operation is cumbersome and can leave claimants without
any benefit income for significant periods of time leading to
reliance on repeated Crisis Loans or "back street" income.
59. Evidence suggests that applying longer sanctions
may not be effective in practice.[27]
60. The question arises as to what claimants
who have had benefit stopped for a period will live on and, in
particular, the effect on children who are part of that claimant's
household.
61. Placing claimants into debt as a result of
a sanction or replacing hardship payments with loans is unlikely
to increase compliance and may increase costs to another part
of the public purse.[28]
62. Effective intervention[29]
is required at the point a sanction is being considered to establish
the circumstances surrounding a failure to comply and to ensure
a claimant understands and is able in practice to comply with
the requirements.
63. Research should be commissioned into the
destinations of claimants who are sanctioned before introducing
enhanced financial sanctions.
FRAUD AND
ERROR
64. Universal Credit as outlined will not simplify
the means test so may have little impact on reducing fraud and
error due to complexity. The level of mistakes made by staff since
2007 has not reduced.[30]
65. The assertion [Chapter.5, paragraph 5] that
"It will become much easier for recipients and staff to understand
and establish entitlement to payments meaning much of the error
…. will be reduced" is not justified.
66. Claimants should not be placed into hardship
and debt through having to repay overpayments caused by "official
error" [Chapter 5, paragraph 19]. Current provisions that
allow for recovery of "official error" overpayments
within Tax Credits, including the COP26 procedures, have brought
that system into disrepute and are costly to administer in practice.[31]
67. The application of fines [Chapter 5, paragraph
14] for a failure to report a change of circumstances is not justified
or likely to be effective. Investigation of the application and
effectiveness of current provisions within the Tax Credit system[32]
should be considered before inclusion of similar fines within
Universal Credit.
68. The provisions[33]
for determining overpayments contained within the Social Security
Act 1992 should apply to Universal Credit.
CONCLUSION
69. Whilst some of the proposals have merit there
is little evidence to suggest that the expense and upheaval required
to implement Universal Credit is justified.
70. Much greater detail and scrutiny of the proposals
for Universal Credit is required.
71. There can be no doubt that reform and simplification
of the benefit system is required. However if it is accepted that
the current provisions are unsustainable then Universal Credit
can be described as no more than "re-arranging the deckchairs
on the Titanic".
December 2010
16 Income Support was introduced in 1988 and was the
"universal" means tested benefit for all claimant groups
(including pensioners). Housing Benefit and Rate Rebate were separate
benefits but employed the same formula for the calculation of
the applicable amount, income & capital. The sum arrived at
by the calculation of Income Support could then be used to apply
the "taper" within Housing Benefit and Rate Rebate.
Many of these rules also applied to the then "in-work"
benefit Family Credit. Back
17
The Social Security (Payment on Account, Overpayments and Recovery)
Regulations 1988. Reg. 2. Back
18
The Housing Benefit Regulations 2006. Reg. 93. Back
19
Secondary analysis of low income working households in the
private rented sector. DWP, Working Paper 85. Back
20
Report on the local housing allowance reform regulations.
Nov. 2010. Back
21
Monitoring poverty and social exclusion 2010. Joseph Rowntree
Foundation. Dec. 2010. Back
22
The Employment & Support Allowance Regulations 2008. Reg 45
"Exempt Work". Back
23
An Independent Review of the Work Capability Assessment.
Professor Malcolm Harrington, November 2010. Back
24
Cm. 7984 Ch.3, para.5. Back
25
Welfare Reform Act 2007 Section 13. Back
26
Draft Employment and Support Allowance (Work-Related Activity,
Action Plans and Directions) regulations 2011 - copy not publically
available at date of writing. Back
27
A review of benefit sanctions. Joseph Rowntree Foundation.
2 December 2010. Back
28
For example, a local authority's duty under the Children Act. Back
29
For example in line with the proposals accepted by the Government
in The Harrington Review of the Work Capability Assessment to
support claimants through the WCA process. Back
30
Report on the DWP resource accounts for 2009-10. National Audit
Office. 23 July 2010. Minimising the cost of administrative errors
in the benefit system. National Audit Office 25 November 2010. Back
31
The Adjudicator's Office Annual Report 2010. HMRC Code of Practice
(COP 26) What happens if we've paid you too much Tax Credit? Back
32
Tax Credits Act 2002. Section 32. Back
33
Social Security Act 1992 sections 71 & 74. Back
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