Localisation issues in welfare reform - Communities and Local Government Committee Contents


Written submission from the Chartered Institute of Housing (CIH)

1.  INTRODUCTION AND EXECUTIVE SUMMARY

Introduction

1.1  CIH welcomes the opportunity to respond to the Department for Communities and Local Government Select Committee inquiry into the "localisation implications of welfare reform".

1.2  CIH is the professional body for people involved in housing and communities, with over 22,000 members across the UK and Asian Pacific. We are a registered charity and not-for-profit organisation. Our mission is to maximise the contribution that our members make to the well being of communities. Our vision is to be the first point of contact for—and the credible voice of—anyone involved or interested in housing.

General comments

1.3  The Select Committee has already received written and oral evidence from a variety of organisations. We have not repeated the comments or concerns of those organisations due to the need for brevity. As such, our submission concentrates on documenting lessons learned from previous reforms; and consideration of how the proposed reforms to housing benefit could be modified to retain local knowledge and expertise and to reduce the risk of administrative failure.

1.4  CIH has been extremely active in drawing attention to the likely impacts of the proposed welfare reforms on claimants, and on tenants in particular. We are fortunate that one of the country's leading experts on housing benefit is part of the CIH team, and this has enabled us to generate credible and detailed comments on the reforms, often backed up by detailed modelling.

1.5  A significant part of our work has looked at the impact of the reforms to housing benefit which are being implemented from 2010-13, about which we have many concerns. These reforms will affect many claimants in the next few years—and they will have negative and damaging impacts for many households. We will not restate our arguments in great detail here because most are not localisation issues, but we would of course be very pleased to make our expertise and modelling available to you if that would help with your current or future work on this topic.

1.6  There is one particular issue created by the 2010-13 reforms which we hope Committee members will consider relevant to the terms of this inquiry. The 2010-13 reforms are important for the new system of Universal Credit because they set the baseline features of the housing costs element within it. This means that some very problematic policies will be embedded in the Universal Credit, and thus that it will not provide the support needed by thousands of low income households. Therefore, whilst Universal Credit will be a national system, there will be some sizeable local consequences which local authorities and communities will need to deal with. The method of setting and uprating the housing element of universal credit; the caps on the maximum amounts payable; and the restriction on the maximum total benefit payable all mean that the proportion of the rental housing market available to certain claimants will shrink. Consequently, displacement of these households is likely and demand for practical and financial support at local level will rise.

Executive summary

1.7  CIH has long argued for the introduction of a universal credit as being the most effective means to eliminate the deepest part of the poverty trap and to provide a more transparent pathway for claimants through the complexities of the benefits system.

1.8  There is a vast amount of administration skill and knowledge within local authorities which should be of great value as we design and implement Universal Credit and wider welfare reforms.

1.9  A partnership model of joint central and local administration based on existing administrative systems that have proven to work has better prospects.

1.10  The importance of high quality administration is a key aspect of ensuring welfare reform is a success and the importance of consistency at which changes are applied and undertaken should not be underestimated. CIH notes the limited time period and we are very concerned about the pace of change.

1.11  Whilst the overall structure of benefits will be greatly simplified by combining (nearly all) means tested benefits into a single universal credit, the new benefit will be necessarily highly complex with three main components, two of which will be variable. CIH is extremely concerned that this complexity puts the reforms at high risk of administrative failure especially given the challenging timetable.

1.12  The relationship between administrative structures and delivery is complex and the changes to that delivery may not have the immediate positive impact that government requires.

1.13  There are structures and processes in place which currently mean duplication of processing through multiple assessments. Whilst this might be inefficient it does however allow for claimants to progress from claim to payment with reasonable speed. It also provides for checks and balances of personal data to ensure accurate assessment, effective processing, and it also allows for fraud to be detected.

1.14  Removing locally administered benefits removes local knowledge on housing costs, housing availability and local employment issues. CIH argues that this knowledge is vital to ensure local authorities can deliver effective locally responsive services for claimants and the wider community.

1.15  The transition period needs to be properly managed and articulated to all concerned with the process including claimants who must be protected from disruption throughout this process.

1.16   Centralised administration is not a prerequisite to obtain the outstanding feature of universal credit which is improved work incentives from reduced marginal withdrawals and is counter to wider government ambitions for "localism". The failure to include council tax benefit also significantly weakens the overall work incentive effect.

1.17  Local authority improvements in administration over the past ten years have been outstanding and have been obtained through a successful model of partnership working. This model is being abandoned for an untested system to deliver a highly complex, untested and at high risk of failure.

1.18  CIH recognises centralising administration will offer opportunities to improve the current system of processing claims but it will also create many more challenges throughout the transitional period and beyond. We are concerned that local knowledge on the housing and employment situation will be lost and may lead to a loss of localised knowledge and detection of fraud. Being responsive to local circumstances is one of the advantages of the current system and fits with the government's overall localism and decentralisation ethos. This responsiveness would be compromised. We agree that universal credit should be a national credit, but think that is must be delivered and administered locally.

2.  LESSONS LEARNED ABOUT GOOD ADMINISTRATION

2.1  The various different systems and administration arrangements used over the last 30 years to help households meet their housing costs have taught us a great deal about administration of benefits. We have learned what enables good and effective administration—delivering best results for claimants and the tax payer. We have also learned which approaches are ineffective and inefficient—leading to waste and tardiness.

2.2  We are very keen that best possible administration practices are embedded and enabled by the design of Universal Credit. Lessons from benefit administration history include:

—  Where reforms require several different benefits to be joined together, care must be taken that the joins are smooth and that cumbersome procedures are not required behind the scenes to ensure claimants get equal treatment and outcomes Allowing incremental development of a benefit system, eg tweaking processes and eligibility to deal with specific and emerging circumstances, is tempting but leads to widespread complexity which can hinder both administration and claimants' experiences of managing their claim.

—  Staff development and professionalization is effective in ensuring smooth, fast and accurate administration of claims.

—  Close working and consultation with people involved with benefit administration, and their representatives, gives access to a level of understanding and experience which can in turn help improve administration speed and processes.

—  Where assessments for different benefits use different methods of calculation, people who claim both benefits are financially penalised—in particular through the tapers which withdraw benefit in line with increased income.

—  Online claims systems for new benefits can cause major problems for claimants if they are not fully operational and accurate from the outset.

—  The need for annual review of claims awarded can be removed without causing problems for claimants or administrators.

2.3  There is a vast amount of administration skill and knowledge within local authorities which should be of great value as we design and implement Universal Credit and wider welfare reforms. The performance improvement achieved by local authorities in the last 10 years has been so outstanding that it is now widely accepted that housing benefit, despite being the most complex of all benefits to administer is now consistently the best performing service across the whole benefits system. It would be unwise to loose these skills and knowledge as we embark on the most radical restructuring of welfare for 60 years.

3.  THE IMPORTANCE OF LOCALISM AND LOCAL ADMINISTRATION

3.1  In November 2010, following a public consultation DWP announced its proposals for universal credit that, amongst other things, would replace housing benefit with a new system of help with housing costs that would combine all the other main working age means tested benefits (JSA/ESA and tax credits) into a single payment that would be administered centrally by the DWP. For pension age claims, help with rent will be transferred to pension credit (in effect a parallel universal credit scheme for pensioners).

3.2  Although housing benefit will be replaced (starting in 2013) the 2010 Budget and Spending Review reforms are significant to the new regime because they set the baseline features of the housing costs element within universal credit.

3.3  CIH supports the government's efforts to streamline and simplify the benefits and welfare system having advocated a system of universal credits for some time. However, we are concerned that the universal credit as it is proposed to be delivered and administered nationally, is liable to fail. We agree that universal credit should be a national credit, but think that is must be delivered and administered locally. This would retain local authorities' localised knowledge on the circumstances affecting their localities (employment and housing) and would further enhance both the localism and decentralisation agenda.

3.4  This section sets out our reasoning and assumptions for retaining local administration of the housing costs element of universal credit and the resulting importance to the localism agenda. In doing so, we will not set out a detailed case for the localism agenda as this has been adequately covered elsewhere in the submissions by other witnesses.

3.5  Housing is an area of competence for the devolved administrations, although of course social security is not. There is therefore a strong case for the existing administrative arrangements to continue whereby a UK wide system of social security is maintained but the administration is carried out locally.

3.6  In our view, there are numerous reasons why local authorities are best placed to carry out the administration of "help with housing costs" element of universal credit, as follows:

—  local authorities are in the best position to provide a more customer focussed approach that more effectively integrates housing cost support with other services (eg Supporting People, social care);

—  local authorities are already delivering effective benefit services in the most complex part of the social security system. Delivering a complex new benefit to a tight timescale is a high risk strategy therefore continuity in the administrative arrangements is a much better guarantee of success (a point made elsewhere in this report);

—  housing costs vary widely across the country at the local level and therefore in the interests of good administration it makes sense for this function to be carried out by locally;

—  a locally administered service enables the authority to respond flexibly to local economic conditions in way that a centrally administered benefit never could for example, increased service provision in response to a localised increase in unemployment (loss of a major employer); and

—  local authorities are in a better position to be able to assess vulnerability not least because local authorities already have duties in this area and because an accurate assessment will require local knowledge (eg contact with other local statutory and voluntary services). This point has already largely been conceded by DWP with the decision that responsibility for discretionary housing payments (DHPs) will remain with local authorities.

3.7  At present housing benefit administration is carried out by the same tier of authority responsible for housing and homelessness. Housing benefit provides a valuable tool for housing authorities in the performance of these duties for a number of reasons:

—  it helps provide a source of valuable intelligence about the state of the economy and the local housing market;

—  it can act as a gateway to other housing services for people in need who might not otherwise approach the authority for help;

—  it assists local authorities in their engagement with key local partners such as landlords (both social and private) and other independent advice providers operating in their area;

—  it can be used as an incentive (albeit in a limited way) to help reinforce local policy priorities (for example, through direct payment decisions which can encourage a landlord to let to vulnerable people);

—  it is impossible to completely isolate the issue of housing affordability from other areas of local authority responsibility (eg economic development, anti-poverty strategies, Supporting People, homelessness) therefore a degree of local control needs to be maintained; and

—  overall, housing benefit is a means by which that local authorities can offer a more integrated approach to service delivery.

3.8  A key objective of the Government's welfare reforms is to help people back into work and especially the long-term unemployed. Successful employment initiatives invariably have a local element, and almost without exception, successful schemes to tackle long-term unemployment will have a strong local element. This is because success is dependent on personalised advice and support which in turn can only be developed from a position of trust (ideally therefore the support worker should be independent of any decision maker that has the power to sanction their benefit). Retaining local knowledge of localised circumstances will therefore be vital in ensuring the capacity of agencies to help people back into work.

3.9  The White Paper headline maximum withdrawal rate of 76% will not be achieved unless council tax is also included as an element in universal credit. A separate CTB scheme (whether with local or national rules) will preserve the multiple tapers of the current system and result in a higher top rate of withdrawal (a fraction over 80% if the current 20% rate is applied).

3.10  The outstanding feature of universal credit is that by combining all the various elements of other means tested benefits (out of work, working tax credits, child tax credits and housing costs) income is assessed in one go and a single taper can be applied as income increases. This eliminates the remaining worst excesses of the poverty trap which arise from concurrent tapers being applied separately to a number of benefits over the same range of income.

3.11  This key feature is not dependent on there being a centralised administration. Entitlement to any one of the various elements (out-of-work, child care, housing) as well as the income could be assessed locally or centrally and combined later. Provided income is assessed according to common rules and the excess income deduction is applied to the combined elements then the integrity of the scheme is preserved.

3.12  CIH believes that the proposals for the administration of universal credit will be too heavily dependent on online claims and remote telephone contact. Whilst this will work for many cases, there will be many others where the claim cannot be resolved over the telephone and will require face to face contact. We fear that DWP local office presence will be inadequate to cope with the scale of such requests and in the early stages, DWP staff will have insufficient experience to resolve some of the trickier issues (around housing costs) that are currently dealt with by the local authority.

3.13  Local authorities are more likely to fully appreciate the concerns of the many landlords operating in their area and so will be in better position to help manage these relationships. The transfer of "help with housing costs" is a potential threat to the viability of landlords business plans; a fact that is causing a causing a good deal of unease in the landlord community. Should responsibility for housing costs support be removed outside of local authorities control, landlords will have little incentive to engage with their local authority and all enquiries will be directed to the DWP with the subsequent loss of strategic partnership working on a local level.

4.  GUARDING AGAINST FRAUD AND INCORRECT PAYMENT

4.1  The causes of fraud and incorrect payment are many and complex but the key to controlling it is good administration. There are a number of commonly acknowledged risk factors that can allow fraud to leak into the system which include:

—  complexity within the benefits system;

—  poor intelligence—often as a result of the remoteness of the administrator from the claimant; and

—  a lack of rigour in procedures for verifying and checking each aspect of the claim.

4.2  The first of the above risk factors is often cited as a reason why universal credit will be more secure against fraud. It is certainly true that universal credit will radically simplify the structure of the benefits system by reducing the number of benefits available. It is also true that the current system with its multiple and often overlapping benefits provides opportunities for fraud especially since different benefits are administered by a number of different agencies and the procedures for sharing information are often not as good as they could or should be.

4.3  However, although there is undoubtedly a degree of fraud between benefits as a result of structural complexity we suspect that the majority of fraud and incorrect payment occurs from within benefits. Therefore, if anything, it is complexity within rather than between benefits that is a bigger cause of fraud. In the late 1990s, the National Audit Office identified the complexity of housing benefit as a major reason why it was particularly prone to fraud.[52]

4.4  The maximum amount of an award is also a risk factor in vulnerability to fraud. The higher the potential award the higher the risk. The high rent levels payable in the private rented sector is one reason (together with a highly mobile population) why the benefit was a target for fraudsters in London and other more expensive property areas.

4.5  Viewed from this perspective universal credit should be regarded as being especially high risk. Although it will simplify the range of benefits available the benefit itself will (necessarily) be very complex by combining out-of-work, childcare, and housing costs into a single payment with potentially very large awards.

4.6  It is also well known amongst administrators that new benefits are also often a target for fraudsters because the procedures for preventing and the opportunities for committing, new frauds can never be completely predicted even by the most vigilant authorities. This was the case with the introduction of tax credits whereby false claims for childcare costs increased partly encouraged by the remote administration and lapse procedures (online claims with inadequate verification).

4.7  Since housing costs and childcare costs are locally determined high quality intelligence for a secure universal credit service will be dependent upon local knowledge and robust procedures for identifying fraudulent claims. It is difficult to implement robust procedures in a remotely administered system because without local knowledge it will be difficult to identify when an item of evidence is suspect.

4.8  This weakness would considerably reduce if the housing and childcare elements were to continue to be assessed and verified locally. Local authorities will have good knowledge of both private rented sector housing providers and child care providers operating in their areas, including awareness of both providers and claimants that present a high risk. Where suspicion is aroused it is also easier for locally administered service to institute checks (such as verifying residency). The same arguments would apply for locally authority involvement in assessing in-work claims (they will have better knowledge of local employers).

4.9  Apart from rigorous data matching of every claim it is difficult to envisage how residency will be verified within a centrally administered universal credit. One approach would be to relax the residency requirements as they currently operate but this will result in either new opportunities for fraud or benefit being (correctly) paid to customers who have no need for it.

4.10  The volume of claims (including verifying changes of circumstance) together with the quantity of evidence that will be required to verify each element of every individual claim will create huge pressures in a wholly centrally administered system. If the new benefit is to be seen as a success then the political pressure for rapid processing will be huge. This will create a tension between customer service and security outcomes.

4.11  If local authorities have no stake in the new system and no incentive to continue to invest in sound fraud prevention measures due to the winding down of local authority involvement, then there is a danger that the levels of fraud within the legacy housing benefit caseload will increase. Without economies of scale it may become uneconomic for authorities to invest in fraud prevention for a residual council tax benefit service.

5.  ADMINISTRATION AND PAYMENT ISSUES

5.1  Much of the discussion about universal credit has focussed on payment issues especially around the issue of payment of the any housing costs element to the customer rather than to their landlord/housing provider. The concern for landlords here is payment security: the fear that tenants will not use their award (including any housing costs element) for the purpose for which it was intended and that rent arrears will rise to a level that is unsustainable.

5.2  Whilst this is undoubtedly a real issue that needs to be resolved the amount of attention it has received has distracted attention from an issue that is arguably an even more important, cash flow. The security provided by direct payment is of little use to either the landlord or the tenant if it takes months to process the claim. This is precisely the position that some landlords found themselves in during the crisis in housing benefits administration at the turn of the century.

5.3  Cash flow problems arising from the changes will particularly adversely affect local authority landlords. Under the current system, local authority tenants are paid by rebate, which means benefit is always direct to the landlord and there is no delay due to the benefit payment cycle (tenants paid by rent allowance are currently paid two weekly in arrears, or if benefit is paid directly to their landlord, four weekly in arrears).

5.4  CIH estimates that the change to payment four weekly in arrears for local authority landlords is equivalent to around a four or five per cent loss in their annual rent roll—a consideration to landlords who are currently formulating their business plans for self financing.

5.5  It is widely accepted that housing benefit is currently the most complex benefit to deliver because of the numerous aspects of the claim that need to be verified. Despite any simplification to the system that universal credit may achieve, its multiple elements mean it will be considerably more complex to deliver.

5.6  There is a real danger that the processing of any one individual claim will be slowed down to the slowest part of the process and that a strictly linear assessment (ie assessing each of the elements in turn) will result in the rapid escalation of payment delays if there is no facility for the parallel processing of each of the various elements.

5.7  Retaining a local element in administration of housing costs would enable parallel processing of initial and subsequent reassessment claims to take place. Provided the new regime allowed for the housing costs element to be paid independently (and the Government has already stated that payment of housing costs will not be subject to the labour market tests) if other aspects of the claim were problematic the tenant would at least have the means to pay their rent.

5.8  CIH would urge the government to review the proposed assessment and payment system so that elements of a claim could be paid in chunks, so claimants would not have to wait for payment pending completion of all elements of the assessment process.

5.9  The central aim of universal credit is to help people back into work; but it should be noted, that a settled home is a prerequisite for obtaining and maintaining stable employment. If payment delays are endemic, then there is a real danger that those who are willing to work will be unable to and will face unnecessary barriers to starting or maintaining work. They may also face a crisis in housing or accommodation if their claims are not settled quickly.

6.  ENSURING SUCCESS: A PARTIALLY LOCALISED UNIVERSAL CREDIT

6.1  CIH advocates the administration of universal credit is localised in order to maintain all the existing advantages of the current scheme with none of its inherent disadvantages. It would also solve the problem of how council tax benefit fits into the new scheme, allowing for local administration whilst ensuring that the maximum possible work incentive is achieved.

6.2  This would apply the partnership model of service delivery that has been so successful in raising standards of administration over the past ten years. It would also preserve the existing administrative structures and in so doing would greatly reduce the very risk of failure inherent in designing a whole new administrative system from scratch.

6.3  Concurrent processing of the various elements would also be possible and thus allow for faster claims processing times—which will be essential if universal credit is to be viewed as a success.

6.4  A partial localised scheme will help break down the award into more easily handled bite sized chunks and will help avoid the danger that the processing is slowed to whatever happens to be the most problematic element in each particular case. This is possible because universal credit will comprise of two different basic types of element:

—  flat rate elements (out of work, child and disability); and

—  variable elements (housing costs, childcare and council tax).

6.5  With the exception of the childcare element that, which assessed both locally and nationally (by HMRC), all the variable elements are currently assessed locally because they relate to costs that vary locally. In the interests of ensuring a successful transition the less risky option would be for this to continue with a minor change with respect to childcare.

6.6  The childcare element should be assessed wholly on local basis because childcare is a locally provided service. Local knowledge about providers will help prevent fraud leaking into the system. This arrangement also avoids the DWP taking on an aspect of assessment in which they have no current experience and would also mean that all the variable elements would then be processed together.

6.7  Local authorities will be in better position to make a judgement as to the need for advice and support for claimants (eg the number and location of local offices) including how best to make savings (for example, extension of the current trend for shared services).

6.8  None of the above would prevent the initial claim from being made online. Indeed online application would provide single gateway and avoid duplication of effort. However, where a claim is less than straightforward the claimant would at least have the option of being able resolve it by visiting their local service if they so wished.

6.9  It would be possible in this system, for responsibility for assessing income to be wholly with the DWP or the local authority or by either. One option would be that income assessment would be carried out by whoever processes their part of the claim first: the result would then be binding on the other.

6.10  Another option would be for the local authority to be responsible for assessing income for in-work claims and the DWP for out-of-work claims (largely retaining the current split). This option would also help guard against fraud because local authorities have better knowledge of, and access to local employers.

6.11  Whoever is responsible the process must be straight forward. Once income has been assessed the decision maker (local authority or DWP as the case may be) would deduct the tapered excess from their elements. If the tapered excess was greater any remainder would be passed over to their partner authority so that it could be applied to the remaining elements. If there was no excess income the appropriate partner would notify the other of a zero income together with the total of their elements (so that the overall cap could be applied if appropriate).

6.12  Local authorities would become responsible for assessing help with housing costs for home owners for the first time. On current caseloads this would equate to around a further 220,000 cases, or 4.5% increase in their current housing benefit caseload a modest increase which is well within local authorities' capacity to deliver.

6.13  Conversely a centrally administered universal credit scheme would involve the DWP taking on the assessment of housing costs for an extra 4.87 million customers (or 2,200% increase). The DWP caseload (ie disregarding passport cases) would increase by around 950,000 for universal credit and a further 350,000 for pension credit (circa 20% increase for both).

6.14  Responsibility for help with owners' housing costs would complement the local authority strategic housing role and would integrate well with existing services (eg mortgage rescue and the repossessions prevention fund) to help low income owner occupiers.

7.  CONCLUSION

7.1  We firmly believe that lessons from history and the experience of local administration of housing benefit show that both customers and the tax payer would benefit from the housing part of universal credit being delivered and administered locally and that this can be done whilst retaining universal credit as an overall national system.

August 2011

8.  REFERENCES

DWP, 2002, Housing Benefit Operational Database http://statistics.dwp.gov.uk/asd/hobod/index.php

DWP, 2011, Right Time Indicator http://statistics.dwp.gov.uk/asd/asd1/rti/rti_jul2011.xls

HM Treasury, (1998 The Modernisation of Britain's Tax and Benefit System, Number 3, The Working Families Tax Credit and work incentives

National Audit Office, 1997 Measures to Combat Housing Benefit Fraud, HC 164

9.  APPENDIX: LESSONS FROM HISTORY ON ADMINISTRATION OF BENEFITS

The various different systems and administration arrangements used over the last 30 years to help households meet their housing costs have taught us a great deal about administration of benefits. We have learned what enables good and effective administration—delivering best results for claimants and the tax payer. We have also learned which approaches are ineffective and inefficient—leading to waste and tardiness.

The Beveridge welfare state and the problem of rent

A1.  Beveridge was unable to find a satisfactory solution to the "problem of rent" within his scheme of flat rate benefits. Rent was a problem in a flat rate scheme because it represents the largest item in the household budget and also, unlike other essential items, it varies widely from place to place.

A2.  Unable to find a solution housing costs were excluded from his scheme—in effect the problem was deferred in order that wider reform could take place. The creation of a national housing benefit scheme some years later from local rent rebates and allowances was the eventual solution.

The evolution of the housing benefit scheme

A3.  Prior to 1982-83 there were several different schemes for helping low income tenants with housing costs which varied according to tenure and income:

—  Local authority tenants were entitled to a rent rebate based on a proportion of their rent administered by their local authority according to national rules.

—  All other tenants (private and housing association) all local authorities were required to run a rent allowance scheme but could set local rules.

—  Rrunning in parallel was a rent rebate scheme administered by the DHSS.

—  Tthe DHSS also provided a separate scheme for help with rent by including the whole of the rent in the calculation of entitlement to supplementary benefit, entitlement to which disqualified the claimant to a local authority rent rebate/allowance.

A4.  These disparate schemes were first brought together into unified housing benefit scheme in 1982-83 administered by local authorities. However, these two incompatible methods of assessment were rather clumsily stuck together. The "sticking plaster" was a complex special procedure designed to resolve cases whereby the claimant on a local authority rent rebate/allowance would otherwise be worse off after paying their rent than a supplementary benefit claimant (the so called "better off problem").

A5.  At the time when the new scheme was introduced local authority housing was the dominant rented tenure accounting for 68% of all rented housing. Housing associations accounted for less than 6% of the rented stock (the remainder being privately rented). Given that local authorities were responsible for paying housing benefit it made sense for local authority tenants to be paid by rent rebate which has the same effect as direct payment to the landlord.

The 1988 scheme and its subsequent development

A6.  A more radical restructuring took place in 1988—partly to resolve the better off problem—by providing for a single assessment of income and awards based on 100% of the eligible rent. The common method of assessing income and needs was mirrored in other means tested benefits (income support and family credit).

A7.  Ever since its introduction the scheme has been subject to an almost constant stream of amendments some of them fundamental but many more of them minor. The more fundamental changes were often as a result of consequential changes made to other means tested benefits.

A8.  The endless change and the increasing complexity of the scheme was a major factor in the crisis of administration at the turn of the century which led to a major select committee inquiry and report. However, despite the constant change the two key features of the 1988 reforms (unified income assessment and entitlement based on 100% of the eligible rent) remained largely intact.

A9.  The most significant changes to the 1988 scheme (that did not arise from changes to other benefits) where:

—  In 1990 rate rebates were replaced with community charge benefit and subsequently superseded by council tax benefit in 1993 following the introduction of the council tax.

—  in 1996 restrictions were introduced for private sector tenants so that the maximum eligible rent was based on the median rent (the "local reference rent") for similar dwellings across a fairly wide local area. For young single people the rent was based on a room in a shared house (the "single room rent").

—  In 2003 benefit periods (which restricted the life of a claim to a maximum of 60 weeks) were abolished as part of the pension credit reforms (paragraphs 2.xx-xy).

—  In 2008 (following a pilot phase which began in 2003) the local housing allowance (LHA) largely replaced the local reference rent rules for private sector tenants. The novel feature of the LHA was that it was a flat rate based on a broad average rent for appropriately sized property rather than the lowest of either contractual rent or a number of individual rent officer valuations (which included the local reference rent).

—  In 2010 the Coalition announced numerous changes to the scheme following the Emergency Budget and October Spending Review designed to reign in housing benefit expenditure. These reforms will take effect between April 2011 and April 2013.

The social security committee inquiry into housing benefit

A10.  The Social Security Committee inquiry into housing benefit in 2000 proved to be a turning point in the administration of housing benefit. The almost constant stream of complex amendments and other burdensome administrative requirements (often designed as response for the need to reduce to fraud and incorrect payment) had in many cases brought local authority administration close to breaking point.

A11.  In 2001 the average benefit processing time for new claims was 58 days but in many local authorities considerably longer. The payment delays caused considerable distress for tenants and major cash flow problems for landlords.

A12.  Following the Committee's influential report a new working relationship based on partnership developed between the DWP and local authorities whereas the previous culture was predominantly one of blame and centrally imposed sanctions for authorities that failed to improve (eg the threat of compulsory contracting out).

A13.  The new working relationship encouraged investment in staff development and professionalisation (for example, DWP funded a study into the characteristics of effective managers). DWP also embarked on a programme gradually simplifying the housing benefit scheme in close consultation with the local authority representative and professional bodies.

A14.  The LHA reforms were partly developed as a direct response for the need to simplify the system and streamline the administrative procedures. The LHA ended the need for each individual claim to be referred to the rent officer and the local published rates allowed immediate assessment and provided greater transparency.

A.15.  The new collaborative working arrangements have been so successful in harnessing the skills of local benefits managers that by April 2008 average processing times for benefit claims had more than halved to 26 days despite a 16% increase in the caseload. However, the caseload rise concealed a much more dramatic 53% increase in the number of rent allowance claims and a 71% increase in the number of private rented sector claims (both of which are progressively more complex to process).

A16.  By December 2010 (quarter 3, 2010) average housing benefit processing times had fallen further and were down to 22 days . No authority had processing times longer than 50 days—eight to nine days less than the average processing times during the low point in the administration in 2001-02 (see spread sheet supplied).

A17.  The performance improvement achieved by local authorities has been so outstanding that it is now widely accepted that housing benefit, despite being the most complex of all benefits to administer is now consistently the best performing service across the whole benefits system.

The introduction of tax credits and pension credits

A18.  Family credit evolved into the more generous working families' tax credit in 1998 and was itself replaced by the tax credits scheme in 2003. Although this did not affect housing benefit itself the new schemes were sufficiently generous to "float off" large numbers of working households from housing benefit altogether.

A19.  An intended effect of this floating off was that households avoided the deepest part of the poverty trap (ie the very high overall marginal deduction rates). The reforms also eliminated the numerous discontinuities that occurred across the income scale in which marginal deduction rates exceeded 100%. However, a relatively small number of working households—those with higher rents—entitled to both tax credits and housing benefit still faced overall marginal deduction rates in excess of 90% as a result of concurrent withdrawals being applied. Treasury models estimated that the number of households with marginal withdrawal rates in excess of 90% had fallen from 130,000 to around 20,000.

A20.  Another feature of tax credits is that they departed from the unified income assessment and were based on historic gross income rather than net current income. This added some complexity to the structure of benefits with different methods of assessing income being applied to different benefits.

A21.  It is worth mentioning here that the original tax credits processes were based on online claims which were characterised by failure eventually resulting in the withdrawal of online claims partly because of their vulnerability to fraud.

A22.  Universal credit has many more elements and will be considerably more complex not least because income will be assessed in real time (ie as and when a change occurs) rather than tax credits which are a passive system (based on historic annual earnings).

APPENDIX

Source: DWP (2011) Right Time Indicator; and DWP (2002) Housing Benefit Operational Database
 
Q3 2010-11
31 March 2002
 New
Claims
Change of
circumstances
New
Claims
Change of
circumstances
      
GREAT BRITAIN22 115918
       
ENGLAND22 106118
       
NORTH EAST   49 1
      
County Durham UA34 1776 
Darlington UA95 497
Hartlepool UA2111 492
Middlesbrough UA208 329
Northumberland UA26 932 
Redcar and Cleveland UA25 1274
Stockton-on-Tees UA.. ..7111
      
Tyne and Wear (Met County)      
Gateshead2711 5915
Newcastle upon Tyne22 85933
North Tyneside5725 3415
South Tyneside1914 ....
Sunderland185 40..
      
NORTH WEST   61 19
      
Blackburn with Darwen UA19 99424
Blackpool UA3429 4131
Cheshire East UA.. 1544 
Cheshire West and Chester UA23 1236 
Halton UA164 5327
Warrington UA1710 ..25
      
Cumbria     
Allerdale2811 5712
Barrow-in-Furness198 5614
Carlisle2410 4817
Copeland2614 5647
Eden2014 5311
South Lakeland29.. 3113
      
Greater Manchester (Met County)      
Bolton209 4926
Bury2611 564
Manchester2615 ....
Oldham167 3313
Rochdale2919 ....
Salford2410 ....
Stockport2013 ....
Tameside249 2216
Trafford148 ....
Wigan2916 ....
      
Lancashire      
Burnley185 425
Chorley177 361
Fylde4224 ....
Hyndburn1910 4315
Lancaster189 7219
Pendle199 7511
Preston2212 6223
Ribble Valley175 267
Rossendale199 6721
South Ribble2312 4024
West Lancashire159 4531
Wyre184 1099
      
Merseyside (Met County)      
Knowsley239 127..
Liverpool2413 10247
Sefton.... 5419
St. Helens2410 5622
Wirral199 8332
      
YORKSHIRE AND THE HUMBER   54 17
      
East Riding of Yorkshire UA17 57114
Kingston upon Hull, City of UA19 176819
North East Lincolnshire UA21 1252..
North Lincolnshire UA19 11....
York UA188 4513
      
North Yorkshire      
Craven228 37..
Hambleton188 6319
Harrogate248 537
Richmondshire.... 158
Ryedale259 454
Scarborough1812 419
Selby165 30..
      
South Yorkshire (Met County)      
Barnsley1910 537
Doncaster1810 298
Rotherham24.. 318
Sheffield2516 9926
      
West Yorkshire (Met County)      
Bradford1713 3561
Calderdale2012 6922
Kirklees1813 68..
Leeds1912 3813
Wakefield2210 5137
      
EAST MIDLANDS   53 16
      
Derby UA2317 5922
Leicester UA2012 125..
Nottingham UA5012 ....
Rutland UA157 303
      
Derbyshire      
Amber Valley177 368
Bolsover218 2613
Chesterfield1910 342
Derbyshire Dales247 182
Erewash197 8433
High Peak135 193
North East Derbyshire21 11479
South Derbyshire2011 103
      
Leicestershire      
Blaby166 87..
Charnwood2117 4816
Harborough2514 323
Hinckley and Bosworth13 8822
Melton1313 4711
North West Leicestershire17 8206
Oadby and Wigston107 21..
      
Lincolnshire      
Boston148 473
East Lindsey156 417
Lincoln1412 4215
North Kesteven189 421
South Holland157 431
South Kesteven176 5111
West Lindsey148 3431
      
Northamptonshire      
Corby156 7516
Daventry183 28..
East Northamptonshire18 7294
Kettering2013 6736
Northampton1712 9883
South Northamptonshire16 8687
Wellingborough176 3714
      
Nottinghamshire      
Ashfield229 7217
Bassetlaw245 448
Broxtowe2515 5325
Gedling217 34..
Mansfield2917 3817
Newark and Sherwood33 8328
Rushcliffe1910 3512
      
WEST MIDLANDS   53 25
      
Herefordshire, County of UA18 853..
Shropshire UA21 829 
Stoke-on-Trent UA158 7057
Telford and Wrekin UA15 76412
      
Staffordshire      
Cannock Chase2611 572
East Staffordshire27 146513
Lichfield2616 581
Newcastle-under-Lyme.. 13356
South Staffordshire22 128636
Stafford2615 296
Staffordshire Moorlands32 187021
Tamworth2211 4017
      
Warwickshire   63 2
North Warwickshire19 72412
Nuneaton and Bedworth12 138428
Rugby1810 274
Stratford-on-Avon199 6251
Warwick1811 5015
      
West Midlands (Met County)      
Birmingham184 ....
Coventry2117 6774
Dudley1610 4321
Sandwell217 5426
Solihull228 294
Walsall2315   
Wolverhampton2112 4015
      
Worcestershire      
Bromsgrove2010 836
Malvern Hills2311 498
Redditch2011 456
Worcester2110 6811
Wychavon2410 387
Wyre Forest248 176
      
EAST   5315
      
Bedford UA209 1028
Central Bedfordshire UA39 3442 
Luton UA148 249
Peterborough UA4220 441
Southend-on-Sea UA11 95317
Thurrock UA176 508
      
Cambridgeshire      
Cambridge125 291
East Cambridgeshire14 6416
Fenland2210 319
Huntingdonshire227 5012
South Cambridgeshire23 102811
      
Essex      
Basildon147 378
Braintree185 554
Brentwood66 4317
Castle Point197 8526
Chelmsford1912 3625
Colchester2817 4724
Epping Forest208 ....
Harlow1710 32..
Maldon137 74..
Rochford3220 382
Tendring63 5814
Uttlesford197 436
      
Hertfordshire      
Broxbourne2110 80..
Dacorum2114 ....
East Hertfordshire27 6709
Hertsmere1610 ....
North Hertfordshire15 6259
St Albans197 2216
Stevenage2416 4211
Three Rivers3531 ....
Watford2945 4516
Welwyn Hatfield146 327
      
Suffolk      
Breckland146 12456
Broadland1910 9127
Great Yarmouth14.. ....
King's Lynn and West Norfolk15 1256..
North Norfolk3111 7023
Norwich21.. 8529
South Norfolk53 91..
      
      
Babergh166 6826
Forest Heath146 6216
Ipswich3821 3716
Mid Suffolk197 89..
St Edmundsbury188 4234
Suffolk Coastal3820 3714
Waveney187 6311
      
LONDON   88 27
      
Inner London   111 25
      
Camden2510 ....
City of London2613 255
Hackney2918 2304
Hammersmith and Fulham42 37583
Haringey33.. 10223
Islington22.. 12031
Kensington and Chelsea12 952..
Lambeth2413 ....
Lewisham86 4313
Newham3319 ....
Southwark1815 87..
Tower Hamlets216 367
Wandsworth1910 12454
Westminster2522 155..
      
Outer London      
      
Barking and Dagenham22 205042
Barnet175 538
Bexley2312 7737
Brent149 18434
Bromley2211 83..
Croydon186 5814
Ealing1910 10314
Enfield3921 ....
Greenwich2512 6217
Harrow145 85..
Havering1612 ....
Hillingdon2113 5414
Hounslow209 ....
Kingston upon Thames21 66213
Merton3010 5717
Redbridge2610 4925
Richmond upon Thames17 9311
Sutton138 5522
Waltham Forest3119 313
      
SOUTH EAST   51 15
      
Bracknell Forest UA.. ..5618
Brighton and Hove UA23 8....
Isle of Wight UA1811 9311
Medway UA2612 5423
Milton Keynes UA138 9019
Portsmouth UA2414 54..
Reading UA2210 4419
Slough UA1812 4523
Southampton UA1710 5031
West Berkshire UA169 ....
Windsor and Maidenhead UA18 12263
Wokingham UA3314 7232
      
Buckinghamshire      
Aylesbury Vale104 2711
Chiltern134 245
South Bucks188 1053
Wycombe168 4415
      
East Sussex      
Eastbourne199 5519
Hastings159 4314
Lewes196 4018
Rother2013 87
Wealden3031 6035
      
Hampshire      
Basingstoke and Deane29 135111
East Hampshire167 398
Eastleigh174 5822
Fareham176 5317
Gosport125 5821
Hart156 7017
Havant136 40..
New Forest209 ....
Rushmoor82 6418
Test Valley168 652
Winchester147 4923
      
Kent      
Ashford276 3915
Canterbury168 3814
Dartford2313 294
Dover2411 615
Gravesham169 45..
Maidstone149 261
Sevenoaks3012 7819
Shepway147 108..
Swale126 5425
Thanet208 4816
Tonbridge and Malling27 8273
Tunbridge Wells139 ....
      
Oxfordshire      
Cherwell1912 5512
Oxford1410 5027
South Oxfordshire2922 585
Vale of White Horse33 26474
West Oxfordshire189 431
      
Surrey      
Elmbridge116 172
Epsom and Ewell2412 215
Guildford196 18..
Mole Valley209 285
Reigate and Banstead20 6354
Runnymede167 4416
Spelthorne2410 336
Surrey Heath158 524
Tandridge179 34..
Waverley12.. 279
Woking207 4013
      
West Sussex      
Adur168 ....
Arun158 718
Chichester147 5317
Crawley115 6926
Horsham159 31..
Mid Sussex167 431
Worthing1810 269
      
SOUTH WEST   46 17
      
Bath and North East Somerset UA19 9381
Bournemouth UA198 397
Bristol, City of UA44 167318
Cornwall UA33 1835 
North Somerset UA198 4415
Plymouth UA3018 ....
Poole UA178 4014
South Gloucestershire UA24 135047
Swindon UA1910 83..
Torbay UA268 7023
Wiltshire UA21 941 
      
Devon      
East Devon94 471
Exeter116 6914
Mid Devon177 373
North Devon176 315
South Hams148 326
Teignbridge229 345
Torridge179 ..11
West Devon188 429
      
Dorset      
Christchurch2813 275
East Dorset3012 ....
North Dorset3217 173
Purbeck187 26..
West Dorset188 339
Weymouth and Portland19 84612
      
Gloucestershire      
Cheltenham173 266
Cotswold157 3511
Forest of Dean148 3413
Gloucester219 47..
Stroud1913 36..
Tewkesbury3215 558
      
Somerset      
Mendip2414 2911
Sedgemoor77 199
South Somerset2411 532
Taunton Deane18.. 30..
West Somerset15.. ....
      
WALES22 95613
      
Isle of Anglesey / Ynys M¼n20 676..
Gwynedd / Gwynedd4011 5113
Conwy / Conwy218 6511
Denbighshire / Sir Ddinbych14 67821
Flintshire / Sir y Fflint20 11477
Wrexham / Wrecsam2610 259
Powys / Powys2313 ....
Ceredigion / Ceredigion23 10587
Pembrokeshire / Sir Benfro17 573..
Carmarthenshire / Sir Gaerfyrddin26 125413
Swansea / Abertawe15 581..
Neath Port Talbot / Castell-nedd Port Talbot 15643 8
Bridgend / Pen-y-bont ar Ogwr19 87527
The Vale of Glamorgan / Bro Morgannwg17 85512
Cardiff / Caerdydd27 13682
Rhondda, Cynon, Taff / Rhondda, Cynon, Taf 199468
Merthyr Tydfil / Merthyr Tudful21 ......
Caerphilly / Caerffili21 8285
Blaenau Gwent / Blaenau Gwent25 125111
Torfaen / Tor-faen20 12397
Monmouthshire / Sir Fynwy38 13....
Newport / Casnewydd22 94045
      
SCOTLAND23 124917
      
Aberdeen City2216 4335
Aberdeenshire2611 448
Angus208 5418
Argyll and Bute21.. 379
Clackmannanshire196 3321
Dumfries and Galloway16 55816
Dundee City3015 5324
East Ayrshire2712 6423
East Dunbartonshire30 135813
East Lothian268 7511
East Renfrewshire3016 1311
Edinburgh, City of30 126837
Eilean Siar3915 ....
Falkirk2112 4817
Fife2011 2524
Glasgow City2016 ....
Highland2311 3912
Inverclyde207 7115
Midlothian3641 65..
Moray3121 63..
North Ayrshire187 8129
North Lanarkshire2310 561
Orkney Islands238 193
Perth and Kinross3617 ....
Renfrewshire2616 2245
Scottish Borders2513 ..1
Shetland Islands2311 21..
South Ayrshire159 5719
South Lanarkshire157 208
Stirling177 2712
West Dunbartonshire25 149316
West Lothian2211 5316

Key:(in italics) New unitary authority from 1 April 2009 created from merger of two or more districts
(in italics)Figure calculated from average processsing times for combined constiuent districts weighted by caseload

LAclaim change    
Central Bedfordshire42      
Mid Bedfordshire325  Mid Bedfordshire 4,115
South Bedfordshire50 .. South Bedfordshire 4,750
       
Cheshire East44      
Congleton402  Congleton2,921
Crewe and Nantwich33 .. Crewe and Nantwich 5,247
Macclesfield579  Macclesfield5,582
       
Cheshire West & Chester36      
Chester317  Chester6,311
Ellesmere Port and N49 13 Ellesmere Port and N 4,131
Vale Royal327  Vale Royal5,747
       
Cornwall35      
Caradon188  Caradon4,243
Carrick349  Carrick5,309
Kerrier5846  Kerrier4,944
North Cornwall36..  North Cornwall 4,350
Penwith255  Penwith4,962
Restormel3731  Restormel5,480
       
Durham76      
Chester le Street80..  Chester le Street 3,912
Derwentside55 .. Derwentside 7,738
Durham729  Durham5,625
Easington48..  Easington10,236
Sedgefield12016  Sedgefield8,000
Teesdale58..  Teesdale1,284
Wear Valley99..  Wear Valley5,725
       
Northumberland32      
Alnwick252  Alnwick1,913
Berwick upon Tweed30 8 Berwick upon Tweed 1,832
Blyth Valley2611  Blyth Valley6,747
Castle Morpeth5422  Castle Morpeth 2,143
Tynedale255  Tynedale2,595
Wansbeck395  Wansbeck5,156
       
Shropshire29      
Bridgnorth25..  Bridgnorth2,227
North Shropshire35..  North Shropshire 2,541
Oswestry348  Oswestry1,870
Shrewsbury and Atcha25 3 Shrewsbury and Atcha 4,689
South Shropshire286  South Shropshire 1,893
       
Wiltshire41      
Kennet5523  Kennet3,174
North Wiltshire25..  North Wiltshire 4,480
Salisbury4219  Salisbury4,830
West Wiltshire4713  West Wiltshire 4,950
Key:
(in italics)No figure available for March next nearest date available used (June or Sepetmber)
(in bold italics)No caseload figure for March next nearest date avialable used or figure estimated






52   National Audit Office (1997) Back


 
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