Written evidence submitted
by Institute of Revenues, Rating and Valuation
INTRODUCTION
1. The IRRV is the professional body concerned with
all aspects of local authority (LA) benefits administration and
local taxation in the United Kingdom. Its membership of 5,000
individuals is drawn from both the private and public sectors.
SUMMARY
2. Areas of THE
Government's proposals that need further development are:
- (i) We strongly support the
broad principles of UC on the grounds of making work pay, system
simplification, administrative efficiency and cost reduction.
We believe housing costs should be excluded from the UC system.
The housing cost element of UC needs to be localised, to provide
assurance to the market, to develop local relations and help prevent
homelessness, and to assist in rooting out fraud and error through
local knowledge.
- (ii) Housing costs will be a
very significant element of UC. The financial implications of
including housing costs within UC need full analysis. A comprehensive
review should be undertaken to assess the trade-offs in public
expenditure, in terms of both the transitional arrangements to,
and the operation of, the new system.
- (iii) The delivery models for
UC require review. LAs show an excellent track record in providing
innovative, client-facing services that are fully inclusive of
the most vulnerable in society - that expertise is being missed
if LAs are not fully involved in, or allow to bid in, providing
alternative delivery models to the proposed DWP model. They should
be able to bid for more than a gatekeeper role. There is considerable
scope for LAs to offer efficient and cost-efficient UC solutions
that offer best fit for their areas: for example through shared
services, partnership working with the private sector and local/regional
hub working. Such models could allow for LA front office data
gathering, updating and viewing when required.
- (iv) The UC system must actively bring the
process to the most vulnerable, who will not be able to engage
through the highly automated access processes.
- (v) In place of the planned development of
a national investigation unit within the DWP, there should be
a regionally-based National Public Fraud Service, which we believe
could be funded by current related spend. This should incorporate
all public sector fraud resources including the DWP, local government,
the NHS, HMRC and all other public bodies
THE
STRUCTURE OF
UC
3. We are supportive of the broad concepts
of UC as a means of simplifying the welfare system. It is crucial
that from the outset the UC system is planned and executed correctly,
so that it is not beset by administrative disruption. We appreciate
the scale and urgency of the task faced by the coalition government
to reduce the financial deficit and rein in rapidly-rising HB
costs.
4. The proposal to include housing costs
as part of the UC and will leave the Government burdened with
additional implementation and operational difficulties (and costs).
Complexity comes from the fact that HB is being viewed as a single
benefit. However, there are two sets of HB regulations (working
age and pensionable age) and there are the numerous schemes (pre-15.0189,
post-15.01.89, post-02.01.96, post-07.10.96, post-06.10.97, LHA,
LHA post-April 2011). Who is
on which assessment scheme can depend on either the start date
of their tenancy or the start date of their HB claim. We note
the White Paper only refers to the possibility of combining housing
costs for pensioners with Pension Credit but is asking for ideas
for those who do not receive Pension Credit.
5. HB is different to other of the welfare
benefits, as it addresses the essential requirement for adequate
housing for low income households, which in turn underpins social
and economic wellbeing and stable employment. Disincentives
are already creeping into the HB regulations eg existing LHA customers
will lose the transitionally protected median rate of LHA and
go onto the 30th percentile rate post-April 2011. In order to
create a stable base from which to search for and maintain employment
it is essential that tenants are provided with an assured rate
of assistance with housing costs. Customers may already face a
move as the restrictions on the current levels of HB are realised.
To make employment a viable option they need support e.g. with
child care whether this is a school, nursery or provided by family
and friends. Relationships need to be developed with private landlords
who would be nervous if payments were continually being suspended
or terminated due to the claimant failing to undertake prescribed
activities under conditionality. Consideration
should be given to the removal of housing costs from UC on the
grounds of system simplification, administrative efficiency and
cost reduction.
6. UC is for working age claimants only,
not pensioners. UC will not take over HB for
all tenure types (exempt accommodation is expected to remain with
LAs). Social housing is intended to be included but may yet prove
more difficult; if it is not workable then a duel system will
exist for a large part of recipients. The payment direction at
least for some will continue to be direct to landlord. This introduces
the issue of what is the element for the housing; and if it is
not enough to cover the rent then what happens? There are also
overpayment recovery issues in cases of direct payments. These
aspects add complexity, administration, cost and confusion to
the intended simplicity of the scheme. Furthermore, there is discussion
about housing costs being varied on region; this makes the UC
less Universal and more tied to the LHA rate/ rent system that
is in place for HB. If the rates are recognised to have regional
variance again this is a complexity.
7. The various different rent schemes that LAs have
to use to assess the eligible rent on a claim also give rise to
complexity. The housing cost element is not a flat rate. DWP have
previously shied away from putting everyone on the same scheme
but for UC to work without taking into account the various schemes
they would have to take such drastic action.
8. It is important that there is engagement with
local government about both the transition arrangements and the
final shape of the UC system. We suggest that a phased "Road
Map" is developed, which enables transition of the implementation,
addressing our key concerns. An element of this would be to develop
a Roles and Responsibilities Matrix, incorporating elements such
as (but not exclusive of):
- Appeals;
- Fraud;
- Interventions;
- Overpayments recovery;
- Claim types and vulnerability; and
- Imminent Evictions - trigger points and process.
9. From October 2013 new cases will go over
to UC. From April 2014, tax credit cases will go over. It has
intimated by civil servants that if social housing cost cases
prove to be too difficult, the time table could be altered further
- but that would not be known until 2015. If
UC encompasses HB and there are issues with delays and payment
mechanisms the result is more drastic as they could be evicted.
It should be proven before absorbing HB. This will also help with
confidence in the private rented sectors and minimise the dangers
of landlords refusing to take tenants on benefits.
DELIVERY MODEL
REVIEW
10. The highly automated model proposed for UC will
not suit all claimants and will serve as a distinct barrier to
some. We urge that full planning is given to providing a safety
net that will bring the process to the most vulnerable.
11. Many LAs have outstanding benefits delivery records
of which they are rightly proud; and there is a culture of shared
best practice. Compared with many centralised assessment and payment
systems over recent years (Child Support Agency, HMRC and even
JobcentrePlus (JC+)), LAs generally can be proud of their speed
and accuracy of assessment. LAs also compare favourably in terms
of preventing overpayments, by way of prompt local service - whilst
also offering comprehensive welfare advice.
12. It appears that a gatekeeper role in UC is planned
for LAs if housing costs are included. Claims would be passed
to the centralised processing agency, and the LAs would have no
assessing role. The majority of LAs have well established "customer-facing"
access points, and achieve high-level service through innovative
approaches and a willingness to embrace technological change.
In the haste to bring in the new system, the skills and structures
that LAs have for high quality customer interface are being sidelined
unnecessarily. It seems absurd that these capabilities are being
shifted to the centre, with no flexibility of role for LAs being
built into the system. Use of the third sector, on-line applications,
call centres and JC+ have all been mooted for UC access points:
greater scope for local authority involvement would seem to us
to fit well into this mix. LAs
show excellent track records in providing innovative, client-facing
services, inclusive of the most vulnerable in society - that expertise
is being missed if LAs are not fully involved in, or allow to
bid in, providing delivery models. There is considerable scope
for LAs to offer efficient and cost-efficient UC solutions that
offer best fit for their areas: for example through shared services,
partnership working with the private sector and use of regional
hub working. Uniquely, such models would still easily allow for
LA front office data gathering, updating and viewing when required.
All these issues would be avoided if housing costs were excluded
from UC
13. Successful implementation of UC will rely upon
a high level of automation in its processes. We contend that the
most vulnerable require a delivery model that brings the process
to them; and the UC system must address this need. Local authorities
deal in high volumes of benefits interventions and interactions,
and furthermore in doing so they act as a first barrier to fraud
entering the system and can detect fraud that has managed to enter
into the system. Personal interaction with claimants should not
be undervalued in the race to deliver a low cost automated system.
ISSUES FOR
LAS AS
REGISTERED SOCIAL
LANDLORDS
14. Any LA with housing stock is going to be involved
in supporting tenants and guiding them through UC. LAs in effect
will take allocate staff with benefits expertise to help guide
through this. If housing cots are included in UC, LAs will probably
not get automated payments for rent this will have a major arrear
implications which will be costly to administer and would fuel
homelessness.
15. If private sector housing costs are included
in UC there could be an increased lack of confidence in the system
from landlords and investors if UC does not deliver sufficient
return. Investment into future affordable housing stock provided
by RSL's is in part funded through its rent revenue including
HB, which is a reliable source of income. If confidence drops
levels of investment for lending to RSL's and private landlords
could suffer.
FRAUD
AND ERROR
16. The White Paper refers to a new
programme to both protect the integrity of the new system and
tackle fraud and error which sits outside the scope of Universal
Credit. This has been revealed in the recently announced DWP Fraud
and Error Strategy. From 2013 a single national investigation
unit within DWP which will take on all local authority benefit
fraud investigation functions as well as DWP and HMRC. There is
merit in creation of such a joined up unit, but the creation of
such a unit within DWP would in our view be a mistake, primarily
because it cannot hope to retain the local knowledge which is
vital to detect and deter many frauds. Much fraud is opportunistic
in nature and is suited to local level focus rather than organised
on a national scale. We would recommend the development of a National
Public Fraud Service as a regionally based non-governmental public
body, which could be funded by the current related spend which
would encompass all public sector services including the DWP,
HMRC, local government, and the NHS. Otherwise, as the present
proposal stands, LAs face having to create their own investigation
units. Many of the current LA investigation units do not only
deal with benefit fraud but also cover other aspects of corporate
fraud within an authority. If these units are absorbed into the
proposed single body LAs who wish to continue to investigate corporate
fraud will need to re-establish these units having lost the skill
and expertise built up.
COUNCIL TAX
BENEFIT
17. It difficult to comment in detail
on the way in which CTB will best be administered, as so much
of the detail is yet to be revealed. It is likely
from current information however that CTB will not be as
autonomous as might be liked - again this suggests the new system
is a long way from localisation advocated in other areas. It is
possible that the cost of CTB could become lost in the tax base,
so that council taxpayers end up effectively paying for their
own rebate. Furthermore, implementing governance around discretion
will be more complex and is likely to be challenged. Also the
cost of software etc is likely to be prohibitive in terms of true
localism. What would the impact be on incentives for employment
eg if an opportunity arose in an area which meant that the customer
experienced a less generous CTB scheme when working in that area
would they take that job or stay on benefit?
OTHER CONSIDERATIONS
18. We support
the theme outlined in Dynamic Benefits[201]
that there should be specialist and private sector involvement
in aspects of JC+ work, for example in relation to its job search
role. The latest development in this arena is the Back to Work
Programme expected to be launched by the DWP next summer in which
private sector companies will be financially rewarded for those
successfully placed in work. This sets a precedent for the JC+
to act in a client role rather than being the sole delivery vehicle.
LAs could combine with each other or the private sector to deliver
UC, rather than relying on JC+/DWP as the sole delivery vehicle.
19. Regardless of the final shape of
UC, there is uncertainty in the system at present, caused by the
proposals. A significant percentage of skilled benefits staff
will leave the sector early in advance of UC being introduced.
Where natural wastage occurs LAs may be reluctant to replace staff,
therefore losing and not replacing the knowledge and expertise.
Closer to the change over dates, more staff will move into other
areas, thus depleting the pool of experienced staff. Should there
be slippage or changes in the UC plan which affect housing costs
it may be difficult for LAs to continue maintaining the service.
December 2010
201 Dynamic Benefits: Towards
Welfare That Works,
The Centre for Social
Justice, September 2009 Back
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