Localisation issues in welfare reform

Written evidence from Age UK (LWR 04)

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 per cent 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 per cent 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 per cent 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 per cent of their budget on local taxes (after benefits) compared to 4.4 per cent for non-pensioners [1] . 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 per cent reduction in expenditure.

3.3 The Government has said it ‘will aim to protect the most vulnerable, particularly pensioners’ [2] 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 per cent 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 per cent 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