1 Introduction |
1. The Welfare Reform Act 2012, which received
Royal Assent on 8 March 2012, makes the most significant reforms
to the welfare system for 60 years. They will include the introduction
of Universal Credit (UC), a single unified benefit payment which
will subsume income-based Jobseeker's Allowance, income-related
Employment and Support Allowance, Income Support, Child Tax Credits,
Working Tax Credits and Housing Benefit. Council Tax Benefit,
which is a tax relief, will be replaced by local Council Tax Support
administered separately by local authorities. In addition, the
discretionary parts of the Social FundCrisis Loans and
Community Care Grantswill also be abolished with funding
transferred to local authorities to provide local support. The
aims of the Government in designing the changes are to make the
- "fairer and more affordable"
by capping benefits;
- more effective at tackling "poverty and
worklessness". Specifically the new system would "strengthen
work incentives" by tapering the withdrawal of payments more
gradually when claimants enter work preventing loss of benefit
being a disincentive to work; and
- a means to "promote personal responsibility"
by making UC operate like a normal wage paid monthly direct to
2. After the Welfare Reform Bill was published
in February 2011, we conducted an inquiry into the implications
of the Bill for local government, Localisation issues in welfare
reform. We looked
at all aspects of the changes, including policy and implementation.
On implementation we had the following concerns.
- "The potential negative
impact of direct payment arrangements for [the housing aspect
of] UC on social landlords and the availability of finance for
investment in the social housing sector".
- The separation of Council Tax Benefit from Housing
Benefit under UC "may introduce unnecessary complexity for
- The timescale proposed for the changes to Council
Tax Benefit was too short to ensure systems put in place were
- Funding for local replacements for the discretionary
Social Fund would not be accurately calculated to address demand.
3. With implementation due to start from April
2013 and with reports of concerns that the process might not go
smoothly we decided to carry out this inquiry to re-examine the
implementation of the changes. Drawing on our 2011 Report and
the evidence we received during this inquiry we identified the
following key pressure points.
- The volume of changes and the
timescale for implementation require that the Departments for
Work and Pensions and Communities and Local Government work closely
together to provide joined-up policy and guidance to local authorities.
We examine the extent to which this has been achieved in chapter
- Following from concerns raised in our 2011 Report,
we consider what are the consequences of paying the housing element
of UC direct to tenants, including what effect this would have
on the financial viability of housing associations. This issue
is examined in chapter 3.
- We consider, further to concerns we raised in
2011, whether sufficient
time and funding is being provided to local authorities for them
to set up properly tailored local schemes in place of the Social
Fund. This issue is discussed in chapter 4.
- We review the effects of the separation of Housing
Benefit and Council Tax Support, in chapter 5.
- The administrative challenges for local authorities
in implementing the reforms and the level of financial risk to
councils is covered in chapter 6. The chapter also covers the
operation of ICT systems.
4. We are conscious that we are not the only
committee working on these changes. Our colleagues on the Work
and Pensions Committee published their Report, Universal credit
implementation: meeting the needs of vulnerable claimants
in 2012, some aspects of which overlap with our inquiry.
We, however, approached the changes from the perspective
of local authorities and consequently examine different areas
of the implementation process.
5. During this inquiry we received 52 written
evidence submissions and held three oral evidence sessionson
19 December 2012 and 7 and 28 January 2013. We are grateful to
all those who participated and provided memoranda.
1 Ev 88 [DCLG] Back
Communities and Local Government Committee, Fifth Report of Session
2010-12, Localisation issues in welfare reform, HC 1406,
para 73-76 Back
HC (2010-12) 1406, para 72 Back
HC (2010-12) 1406, para 68 Back
HC (2010-12) 1406, para 56 Back
HC (2010-12) 1406, paras 56, 68 and 21 Back
HC (2010-12) 1406, para 72 Back
HC (2010-12) 1406, para 21 Back
Work and Pensions Committee, Third Report of Session 2012-13,
Universal Credit: meeting the needs of vulnerable claimants,
HC 576, paras 243-246 Back