White Paper on Universal Credit

Written Evidence Submitted by Thanet District Council

Summary:

Thanet District Council welcomes the opportunity to comment upon the Governments proposal to replace all existing working age benefits with a single Universal Credit. This response focuses on the proposals for the replacement of Housing Benefit and Council Tax Benefit and specifically the risks the removal has on the residual Local Authority.

It is believed that there are significant outstanding issues that must be addressed if the Governments goal is to be successfully achieved. Currently the proposals risk the financial stability of smaller District authorities and there is the need for clarity over the following major issues in order to enable effective planning and transition to occur, and for the residual elements of the Local Authorities to avoid being disadvantaged by any ‘fallout’ that this transition generates..

Major issues:

1) Phasing of changes

The White Paper outlines that there will be a phased introduction of Universal Credit from 2013 with all new entrants to the Welfare System from October 2013 being awarded Universal Credit. Existing Housing Benefit customers would be migrated from Housing Benefit and onto Universal Credit between 2013 to 2017. There is no indication of this phasing – whether it be gradual, weighted, regionally based etc. Such information is essential if Local Authority staffing budgets are to remain viable. In my own authority 87 staff are directly employed within Revenues and Benefits functions, which is a very significant proportion of the overall Authority staff establishment.

If the function were to be removed in a manner other than a smooth gradual process, it would be a nearly impossible process to plan demands for staff . If the transition is greater than anticipated, then the Local Tax payers may end up meeting wage bills for staff who are suddenly no longer required . Conversely if the transition is at a slower rate the authority may find itself with insufficient staff to maintain the service once natural wastage is taken into account. This may increase a reliance on more expensive agency staff to maintain a service at greater cost to the local Taxpayer.

2) Local Authority Staffing Costs

There is subsequently no mention of the thousands of Local Authority staff who are involved in the processing of Housing Benefit nationally. Clarification needs to be obtained on whether these staff will TUPE across to the DWP at the point the Housing Costs element is included in the Universal Credit (again here, the phasing is also important). It is clear that staff are currently involved in the administration of Housing Costs within the framework of the Welfare State. That function will now be carried out as part of the Universal Credit.

Clearly the transfer of a function would mean that TUPE would apply. If staff are not subject to TUPE then undoubtedly there will be significant redundancy costs incurred by Local Government and Council Tax payers. Should staff TUPE to the DWP then the DWP would be required to meet any redundancy costs. It is my understanding that the DWP has not considered this process as part of the set up costs for Universal Credit.

Redundancy costs for a significant proportion of a District Authorities establishment would financially cripple an authority such as ours in an economically deprived area with minimal reserves and it is essential that any such costs are met centrally.

3) Treatment of current outstanding Housing Benefit Debt

Each local authority will have an amount of overpaid Housing Benefit that is currently subject to active recovery. The amount that can actually be recovered via ongoing payments is legislatively restricted. The amounts involved are very significant. At Thanet District Council, there is a total outstanding Housing Benefit debt of £3.8M.

At the point the payment of Housing Costs is made within the Universal Credit, is it the DWP’s intention to effectively buy the debt from the Local Authorities? If the debt remains with the Local Authority, the methods of recovery will be extremely limited and will lead to very significant bad debts requiring the need for bulk write offs. Such a move could render district authorities such as ours financially unviable through no ‘fault’ of our own except the accurate following of Housing Benefit legislation.

4) Localised Council Tax Benefit

Clarification needs to be obtained about just how ‘local’ is a locally designed replacement to Council Tax Benefit. A 10% reduction in funding is not insignificant. For Thanet District Council this will approximate to £1.5M at todays rates.

How much influence will central Government have in the allocation of the remaining funds? I believe that the introduction of a local scheme would only be viable if the current national scheme of discounts and allowances is also reformed to be locally set.

I hope that you agree with the points above and that they are actively discussed. I believe that I have highlighted the four main high risk areas to Local Authorities. Such bold moves as the Government are taking must be taken only knowing all the risks of such moves. I believe that without further action all four points above risk a significant burden being placed on the local tax payers, and in the extreme would risk the financial stability of the Authority

December 2010