Written submission from Age UK
ABOUT THIS RESPONSE
The Communities and Local Government Select Committee
are conducting a brief inquiry into the implications for welfare
reform and localisation in as far as it relates to the work of
the Committee. It is specifically looking at proposals to replace
Council Tax Benefit and elements of the discretionary Social Fund
(Community Care Grants and Crisis Loans for living expenses) with
localised support.
KEY POINTS AND RECOMMENDATIONS
Age UK is concerned that the Welfare Reform Bill
abolishes Council Tax Benefit and elements of the Social Fund,
without full consultation or any detailed proposals setting out
how a localised system would work.
We appreciate that the Government wants to move towards
greater localism and agree that local support can be appropriate
in some situations, but we do not believe that localising Council
Tax Benefit would provide better outcomes for older people. Introducing
this alongside a 10% reduction in expenditure could lead to uneven
outcomes, hardship and increased complexity.
An advantage with local support is that access could
be linked to other local services. However we would be concerned
that a local scheme for council tax support would make Universal
Credit more complicated to administer and provide less clarity
for individuals. It would be more difficult to publicise nationally
and there would be a less integrated benefit system for low income
older people.
Age UK agrees that there are problems with the discretionary
Social Fund. However it provides valuable support and it is important
that a system of cash payments for people on low incomes continues.
We believe that current payments should not be abolished unless
an effective alternative system has been fully explored and tested.
A major concern with proposals to localise elements
of the Social Fund is that the Government is not proposing to
ring fence money transferred so we fear this could be used to
fill current funding shortfalls. We would be extremely concerned
if funding for council tax support could be used for different
purposes.
Local authorities are already under great pressure
and we question their capacity to take on the major role of delivering
welfare benefits without detriment to those who rely on this support.
1. Introduction
1.1 Age UK works to improve later life for everyone
through our information and advice service, campaigns, products,
training and research. We welcome the opportunity to respond to
the Committee's inquiry into the localisation of benefits.
1.2 We believe that there are circumstances when
a localised approach can be an effective way of providing support
to older people particularly where needs vary in different parts
of the country and where communities and service users would benefit
from the involvement in the design of a service. However we are
not convinced that the case has been made for localisation of
Council Tax Benefit or Social Fund payments.
2. Process of reform and lack of consultation
2.1 We are concerned that the Welfare Reform
Bill abolishes Council Tax Benefit and elements of the Social
Fund, without full consultation or any detailed proposals setting
out how a localised system would work.
2.2 There was a call for evidence published in
February 2011 on replacing elements of the Social Fund with local
support but this asked for views on how a local system could be
delivered—not whether this is the best approach. Plans to
localise Council Tax Benefit alongside a 10% reduction in spending
were announced in the October 2010 Comprehensive Spending Review
but we are still waiting for more information.
2.3 Age UK believes that major changes to localise
national welfare benefits should be subject to detailed debate
and consultation and only taken forward if there is widespread
support and evidence that this would result in better outcomes.
3. Localisation of council tax benefit
3.1 We appreciate that the Government wants to
move to greater localism but we do not believe this would be the
right approach for Council Tax Benefit. We are concerned that
localisation alongside a 10% reduction in expenditure could lead
to hardship as well as an uneven system of support.
3.2 Council tax is a fixed and compulsory charge
which for many older people represents a high item of expenditure.
For example the Institute of Fiscal Studies reported that in 2007
pensioners spent 7.2% of their budget on local taxes (after benefits)
compared to 4.4% for non-pensioners.[13]
Once taxes are set older people and others on a low income need
to have the peace of mind of knowing they will be entitled to
a certain level of benefit or rebate. Benefits such as Pension
Credit guarantee are considered to be the minimum level to live
on excluding rent and council tax so it is appropriate that recipients
normally receive full help with council tax bills. Those with
somewhat higher resources can get partial help and we believe
this is an important recognition that there are many older people
with modest pensions and savings who would otherwise be in difficult
financial circumstances. Given the current benefit system is not
over generous we are very concerned about the potential impact
of a 10% reduction in expenditure.
3.3 The Government has said it "will aim
to protect the most vulnerable, particularly pensioners"[14]
but it is difficult to see how this could be guaranteed in a locally
run system. We also recognise that there are younger people in
a range of different circumstances who rely heavily on Council
Tax Benefit to meet their local taxes. In the interest of age
equality and social cohesion we believe the benefit or rebate
system should work in the same way for all groups.
3.4 Many older people currently miss out on Council
Tax Benefit as around 40% of pensioners entitled to benefit do
not claim. Access might be improved if the low income scheme was
more closely associated with other forms of local support such
as council tax discounts and rebates. On the other hand the systems
serve different purposes and a national system is easier to publicise
and links more closely with other means-tested support as considered
below.
LOCAL SUPPORT AND NATIONAL BENEFITS
3.5 One of the major advantages of Universal
Credit is that it brings together tax credits and a range of income-based
benefits into a single system with a single taper. If part of
this support is localised then this will add to complexity and
uncertainty for individuals. The introduction of Universal Credit
already provides a major challenge in terms of administration
and delivery and this could be made even harder if the system
needs to take into account different local schemes.
3.6 For older people there are currently three
main means-tested benefits. Pension Credit is administered by
the DWP and Housing Benefit and Council Tax Benefit administered
by local authorities. However the systems are based on similar
rules. A positive move a few years ago was to enable people to
claim all three benefits in one telephone call. The intention
is that with the advent of Universal Credit support with housing
costs for pensioners will be incorporated into Pension Credit.
This is likely to make the system easier for older tenants but
we are concerned that a localised system of council tax support
would be a move in the wrong direction in terms of an integrated
benefit system.
4. Social fund
4.1 Age UK agrees that there are problems with
the discretionary Social Fund. These include low awareness and
lack of take-up by older people, inconsistent decision making
and delays. However despite these problems Age UK local advisers
have expressed considerable concern at the possible loss of the
scheme. Community Care Grants can be invaluable to help older
people with no other resources to maintain independent living
through access to payments for essential items such as cookers,
fridges, mattresses and replacement of unsafe floor covering.
4.2 So while we agree there are problems we do
not believe the scheme should be abolished unless and until an
effective alternative system has been fully explored and tested.
The first step should be to look at how the current system works,
the impact that payments make and explore the problems. This should
then be the basis for consultation on how concerns could best
be addressed.
4.3 Under the proposals local authorities would
have considerable flexibility in the support they provide to vulnerable
local people. The DWP call for evidence gives examples of local
initiatives such as a scheme providing food banks and a community
credit union. Age UK recognises that there are many valuable schemes
of this nature and that additional funding could extend this support.
We also know that local organisations can often provide well targeted
support efficiently. However we believe there continues to be
a need for a national system of cash payments for people on low
incomes in times of emergency or where they need support to live
independently.
4.4 There are many charities and benevolent funds
that can provide help in particular circumstances but most would
first ensure applicants had applied for any available government
support including Social Fund payments. Many grant giving charities
already have high levels of demand and we concerned that if people
can no long access one off payments from the discretionary Social
Fund pressures on their services will increase.
4.5 It is difficult to know whether localising
support would be easier for older people to access. If a scheme
is more responsive to local need then this could be beneficial.
On the other hand if there are no clear guidelines it will be
harder for individuals and organisations to know what help might
be available. It might be particularly difficult for those not
already in contact with local authority services or local organisations.
5. Vulnerability of funds
5.1 A major concern with proposals to localise
elements of the Social Fund is that the Government is not proposing
to ring fence money provided to the local authorities nor to introduce
a statutory duty requiring local authorities to deliver the service.
At a time when local authorities are facing major financial pressures
we fear that instead of developing a new service, money could
be used to try to fill current funding shortfalls.
5.2 As there is little information about how
local support for council tax might work we do not know if local
authorities would use any of the funding for other purposes. While
we understand that local authorities have to make decisions about
priorities we would be extremely concerned if funding that currently
enables low income households to meet essential bills could be
used in alternative ways.
6. Challenging decisions
6.1 Most social security benefits are subject
to a clear system of review and appeal to an independent tribunal.
The position is somewhat different for discretionary Social Fund
payments but there is still a standard procedure whereby people
can ask for decisions to be looked at again and if they are not
satisfied take their case to the Independent Review Service (IRS).
It is important that vulnerable people have a clear and straightforward
way to challenge decisions about benefits including access to
an independent appeal scheme. This should be a key feature of
any localised benefit system although it is likely to be harder
to achieve a consistent process than through a national scheme.
7. The impact on local authorities
7.1 Council Tax Benefit is currently claimed
by 5.8 million people and it will be a major administrative task
for local authorities to take over the system of supporting low-income
households with their council tax payments. Means-tested benefits
systems are complicated but with good reason. They need to cover
people in a range of different situations. It is possible to have
a more broad brush approach but this would be less reflective
of individual needs. Local authorities will have to make decisions
about the level of support for different groups, set up and maintain
efficient systems, establish secure ways of transferring information
with the DWP, and establish ways of communicating support available.
This all needs to be carried within the backdrop of a system subject
to a 10% cut in resources. By definition means-tested benefits
are given to those with limited incomes who may struggle to meet
liabilities if support is reduced and as a result there could
be potential collection problems for local authorities. Overall
at a time when local authorities are already under great pressure
we question their capacity to take on this new task without detriment
to those who rely on support.
7.2 Taking over elements of the Social Fund would
also place an additional administrative burden on local authorities
and increase demands for financial help from low income families
and individuals in need who, under the current scheme, would turn
to the DWP.
June 2011
13 The expenditure experience of older households
IFS, 2009. Back
14
Universal Credit impact assessment DWP, 2011. Back
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