White Paper on Universal Credit
Written E
vidence
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.
A
reas
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
.
T
he 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
root
ing
out fraud and error through local knowledge.
ii.
H
ousing 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.
S
uch 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
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.
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 e.g. 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.
I
t 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
·
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 m
inimise the dangers of landlord
s refusing to take tenants on benefits.
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 record
s
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, updati
ng 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.
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.
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 investig
ation 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
s
ector 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 is 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 e.g. 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 Benefit
s
[1]
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
combin
e
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
.
C
loser to the change over dates, more staff will
move
in
to
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 difficu
lt for LAs to continue maintaining
the service.
December 2010
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