Written evidence submitted by the City
of York Council
Please find below City of York Council's response
to the Government Consultation: 21st Century Welfare.
Question 1 - What steps should the Government
consider to reduce the costs of the welfare system and reduce
welfare dependency and poverty? Page 15
- A single gateway for claiming is a good idea
and could reduce the cost of administration.
It could also be a single point of failure unless
all angles are properly considered.
For example, if a Job Seeker Allowance claim is delayed
at the Department of Works and Pensions, the customer can get
Housing Benefit and Council Tax Benefit paid by the Local Authority
- there must be a safety net to ensure that accommodation is secured.
- Universal benefits such as Child Benefit and
Winter Fuel payments could be reviewed in order to reduce expenditure.
Households with higher income levels could be made ineligible.
- Review prescription charges - prescription charges
are free for patients who have life threatening conditions regardless
of their income and circumstances. This is right and proper. However,
not only are the prescriptions that relate to their condition
free but all their other prescriptions too.
When welfare budgets are under such pressure it is
inappropriate to pay these benefits to everyone regardless of
income.
- Reintroduce rent controls.
Unfettered Private tenant rents have increased welfare
spending exponentially.
- Working for benefit payments in order to promote
the work ethic.
Claimants could be provided with compulsory and practical
non-profit making work experience, such as working on social projects
for the benefit of the community. For example, removing graffiti
or clearing unused ground in cities to create pocket gardens.
This work experience could be made compulsory for
those who are able to do it.
Local Councils could work in partnership with the
Government to make this happen.
Question 2 - Which aspects of the current benefits
and Tax credit systems in particular lead to the widely held view
that work does not pay for benefits recipients? Page 19
- It is low pay that makes the benefits and Tax
credit systems more attractive. Low pay is endemic throughout
certain areas of the country, especially in the North where traditional
industries have largely disappeared. In many areas, such as York,
this leaves the hospitality industry and the retail trade who
tend to pay the minimum wage.
If £100 rent and council tax is paid by benefits,
and a single unemployed person gets nearly £70 per week benefits
for living expenses, that customer would have to earn a minimum
of £10,000 per year. This equates to a 37-hour week on the
minimum wage of £5.80. Assuming that full time employment
is available, some customers, given a choice, will not work for
largely the same amount that they can get on benefits.
In some cases single parents and couples with children
would need to get a gross pay in the region of £30,000 (sometimes
more) to equal the benefits that they receive.
- If claimants move on to low pay they will lose
the extras like free school meals, prescriptions, and school uniforms.
For example, the cost for three children when free
school meals stop is £32.25 per week, add to this car parking
at £6.50 per day or bus travel at £13.00 per week. How
is this made up for financially?
- Interruption of benefit payments causes hardship.
The transient nature of employment means that customers
have to have their benefits continually re-assessed as they go
in and out of temporary work and short-term contracts.
Juggling low pay and smaller amounts of benefit is
a hard way of life.
Question 3 - To what extent is the complexity
of the system deterring some people from moving in to work? Page
20
- Having to make claims at more that one agency
does put some people off. Generally these people have low incomes
and "can get by without the hassle."
- A lack of "joined up" and inconsistent
approaches to Benefits and Tax credits legislation.
When Tax Credits were introduced claimants were told
that they did not have to report changes in circumstances unless
their income increased above a certain notified amount.
As pointed out by Local Authorities at the time,
this ran contrary to Housing and Council Tax benefits legislation
where all changes in circumstances, however minor, had to be reported
and claims re-assessed.
Customers became confused and often distressed and
this led to more "fraud" and error.
- The affect of the complexity of the system in
deterring people from moving into work is overstated where customers
move into a full time permanent job - due to partnership work
and improved processes.
Return to work advisors as part of the improved in
and out of work process estimate the amount of Tax Credit eligibility
informing customer choices before they take work. Does this paper
take this into account?
- Low pay and short-term contracts deter people
from moving off benefits.
The changing nature of the job market with seasonal
and part-time temporary contracts has a greater impact than the
complexity of the system.
The real time collection of Pay as Your Earn data
is crucial to the success of an effective and efficient universal
credit.
- Legislation is complex.
Much legislation is absolutely necessary. It is complex
but is needed to stop abuse of the system and to protect the public
purse.
For example, Housing Benefit Regulations 7 &
9 looks at contrivance and commerciality in relation to tenancies.
Other legislation is in the spirit of this reform,
for example 13 week unrestricted Housing Benefit protection for
customers who could afford the tenancy before they fell on hard
times eg before they were made redundant and 52 week protection
if they are bereaved.
Question 4 - To what extent is structural reform
needed to deliver customer services improvements; drive down administration
costs and cut the levels of error overpayments and fraud? Page
21
- Automation of earnings information. The real
time collection of Pay as Your earn data is crucial to the success
of the universal credit proposal.
The paper suggests that if this is not achieved the
system can still work. Whilst it would achieve an amalgamation
of benefit assessment and payment it would not solve the problem
of "late" reporting of changes in circumstances caused
by varying wages and temporary employments.
- The report mentions the development of online
services. This would be needed to lessen the number of enquiries
that a centralised system would have to handle.
- The proposal does not make clear what will replace
direct credits to rent and Council tax accounts.
If these are to stop there could be massive consequences;
on Councils, in the collection of Council Tax revenue affecting
all budgets; on rental income for social landlords and registered
providers.
The Local Housing Allowance has shown that people
can't suddenly manage their finances if they couldn't before.
Although LHA is all paid to claimants, it is not always with the
desired outcome - this will affect all customers on Housing and
Council Tax Benefits.
- There would be a need for structural changes
at Local Authorities depending on the level of their involvement
following reform.
It would appear that Councils would have to employ
staff to input Council Tax data (and Local Authority rent rebates)
into accounts?
- Legislation needs to be joined up to make it
fit for purpose.
Question 5 - Has the Government identified the
right set of principles to use to guide reform? Page 24
The Government's principles to guide reform: to increase
rewards for work; incentivise those who work and save; promote
fairness and positive behaviours; support the vulnerable; and
automation of processes and the provision of self serve (where
customers are capable of this) cannot be argued with.
- There is not enough about instilling the work
ethic and helping people to find real longer term employment.
- The report mentions rewarding people for saving
and buying their own homes but doesn't say how.
Question 6 - Would an approach along the lines
of the models set out improve work incentive and hence help the
Government to reduce costs and tackle welfare dependency and poverty?
Which elements would be most successful? What other approaches
should the Government consider? Page 32
Universal Credit/Disregards and Tapers
- A single gateway for claiming is a good idea
and could reduce the cost of administration.
It could also be a single point of failure unless
all angles are properly considered.
For example, if a Job Seeker Allowance claim is delayed
at the Department of Works and Pensions the customer can get Housing
Benefit and Council Tax Benefit paid by the Local Authority -
there must be a safety net to ensure that accommodation is secured.
- Having a view of total income should mean that
the system is fair and less subject to abuse but would need Automation
of earnings information. The real time collection of Pay as Your
earn data is crucial to the success of the universal credit proposal.
- The use of Earnings and benefit disregards are
already well established.
- A single rate of withdrawal will make it easier
for customers to choose to enter into work.
- Currently due to the way that Tax Credits interact
with benefits and earnings someone at national minimum wage would
be less than £7 better off if they worked 16 extra hours
and earned an extra £92.
- We have calculated that the single unified
taper would result in a claimant keeping £23 of their extra
£92 earnings rather than £7. Dec 10 taper changed to
65%.
- There are hidden extra costs when working.
If the taper is set at 75% it's not generous enough to induce
people to work - car parking at £6.50 per day, or bus travel
at £13.00 per week, three children on free school meals £32.25,
school uniforms, prescriptions.
- Many customers will stay on low pay and will
not progress because of endemic low pay in certain areas of the
country.
- Benefit claimants may have to work longer hours
than other workers in order to live because of the obligation
to increase their earnings.
Seasonal work in tourist areas provides jobs where
there is little or no scope for promotion or increase in pay other
than by increasing hours worked where available.
- Automated payment - it can be easier to budget
monies that come in at different times.
- Child Tax Credits are generally paid to women
and men get the Working Tax Credits. It won't help child poverty
unless the money is equitably distributed.
- Tax Credit is not a benefit. There used to be
a married tax allowance that was replaced by the child tax credit
allowance for those on middle incomes. If this is removed from
"higher" earnings then these families get no tax breaks.
The Tax Credit system is viewed differently to welfare benefits.
- The report mentions the development of online
services. This would be needed to lesson the number of enquiries
that a centralised system would have to handle.
- Where are the safeguards under the universal
credit?
- Why is this proposal so sketchy - where is the
balance of the report?
Single working age benefit/Mirrlees model (far less
generous than current Income Support levels)/Single benefit (LHA
shows that the use of a median doesn't work.).
- Why are there no examples worked up under
each proposal? so that proper comparisons
can be made. It is impossible to compare these models and it seems
weighted towards the Universal Credit proposal. The Universal
credit seems to be government's preferred option.
- Mirrlees model
- The end of contributory benefits will result
in the expansion of U.S.A. like employment insurance schemes -
which is another tax on people who work.
- The end of contributory benefits will potentially
result in more means testing rather than a straight contributions
check.
- The government has not considered a time limited
welfare entitlement.
- We have questions:
- How will DWP know that a customer is liable for
Council Tax? - This could result in additional unnecessary work
for L.A. s depending on the intended payment mechanism.
- Not everyone has access to computers - alternate
routes to on-line claiming must be available. What about rural
areas where Internet access is poor?
- Focuses on working age customers - pensioners
are not covered yet they account for 52% of the benefits budget.
Is there any intention to reform this?
- We will have a Two-tier welfare system.
Question 7 - Do you think we should increase the
obligations on benefit claimants who can work to take the steps
necessary to seek and enter work? Page 36
- Yes - as long as expectations are reasonable
and possible and customers are equipped or trained to look for
work.
- Who decides what are reasonable hours and individual
factors?
- What is the definition of vulnerable?
Eg a 19 year old who has no qualifications and has
literacy and numeracy problems is vulnerable - where will they
get a job?
Eg seasonal work picking vegetables is available
but they can't get to the farm as it's on the outskirts and there
are no buses - is it reasonable to expect them to walk four miles
to work and back?
Question 8 - Do you think that we should have
a system of conditionality which aims to maximise the amount of
work a person does, consistent with their personal circumstances?
Page 36
Conditionality is right in principle as long as conditions
are reasonable and possible.
- Conditionality in itself will not instil a work
ethic.
Help customers to learn to navigate job sites on
the Internet from the time they sign on. Older claimants often
do not have the Internet at home, are not automatically offered
help and are too proud to ask. Help and motivate them earlier
in the process.
- Where is the availability of employment for everyone
on benefit who is capable of work? - ie not vulnerable.
If a lone parent can work four hours a day what job
can they get? - How is availability matched to the job markets?
Providing job experience that is non-profit making
could fill this gap.
- Low paid and manual work does not usually have
promotion prospects, therefore the only way to increase pay is
to work more hours. Up to 48 hours per week for minimum wage -
could impact on available jobs.
- There is a lack of mobility for some customers
in getting more or better work due to family circumstances or
child care (free child care provided by family).
- Increasing part time work is cited - this pre-supposes
that full time work is available.
- Will customers be expected to take multiple part
time jobs to satisfy conditions?
- Is the data for job availability used in this
report up to date?
- How do you withdraw benefits permanently without
the social consequences being too high?
Question 9 - If you agree there should be greater
localism what local flexibility would be required to deliver this?
Page 36
- There are no details or serious proposals - Local
access is seriously limited following the restructure of the DWP.
- There is no balance in this suggestion. Do Local
Authorities have a role to play? Could L.A.s enter into local
partnerships with employers to get customers back into work
- The options are not explored sufficiently in
this paper. Page 30
Question 10 - The Government is committed to delivering
more affordable homes. How could reform best be implemented to
ensure providers can continue to deliver the new homes we need
and maintain the existing affordable homes? Page 37
- Government support for the provision of affordable
homes is a laudable aim but hard to reconcile with public spending
cuts.
- This question seems incongruous with the rest
of the report - a reduction in public spending plus perceived
"threats" to the payment of rents and the risk of rent
arrears.
Payments direct to landlords must continue where
the customer chooses it.
Social landlords and registered providers need to
be re-assured that payment of rent will continue if a universal
credit is implemented. This report suggests that there will no
longer be payments of Housing Benefit direct to landlords but
that a Housing credit that will be amalgamated into a universal
credit payment to the claimant.
The Local Housing Allowance has shown that people
can't suddenly manage their finances if they couldn't before.
Although LHA is all paid to claimants, it is not always with the
desired outcome - this will affect all customers on Housing Benefits.
Question 11 - What would be the best way to organise
delivery of a reformed system to achieve improvements in outcomes,
customer service and efficiency? Page 43
- Ensure that all IT software is tested, in place
and integrated before the go live date.
- Consider the impact and do risk assessments on
all partners and stakeholders.
- Recognise that it does constitute a major IT
project and act accordingly.
- Resource the implementation adequately making
sure that there are additional staff to deal with customer enquiries.
- HRMC real time pay as You Earn records system
underpins the success of this proposal but is dismissed on page
34. December 10 ironically the small employers who are to plug
the job gap will not have this technology.
- Link these proposals to benefit expenditure cuts
in the budget.
Past experience of national IT projects and benefit
changes show that the risks are great and should never be under
estimated.
December 2010
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