Work and Pensions Committee - Universal Credit implementation: meeting the needs of vulnerable claimantsWritten evidence submitted by Crisis

Summary

Crisis, the national charity for single homeless people, broadly welcomes the introduction of Universal Credit (UC) but has significant concerns around some of the details and believes that the new system will fail to respond to non-standard claims and the needs of the most vulnerable claimants.

There are a number of policy decisions and elements of UC about which we have serious concerns. This includes the way that payments will be made, the treatment of non-dependants for housing support and the removal of some important protections from the current system.

There are also a range of important details which are yet to be finalised by the Department for Work and Pensions (DWP) as well as areas where it has not been made clear how UC will interact with other policies. This is particularly concerning due to the tight timeframe in which UC is due to be implemented.

We are disappointed by the approach of the DWP towards stakeholder engagement. We feel that the department has failed to fully and adequately engage and consult all relevant stakeholders and that little information about progress towards implementation is being made available. This makes it difficult for us to comment on some aspects of UC.

Finally, it will be very important that the impact of UC is closely monitored and evaluated and mechanisms put in place to make changes where necessary.

1. Introduction

1.1 Crisis is pleased to respond to this important and timely Work and Pensions Select Committee inquiry into progress towards implementation of Universal Credit.

1.2 Crisis broadly welcomes the introduction of UC as a way to simplify the benefits system and improve work incentives. However, we have significant concerns around some of the detail of how the new system will work and believe that there are some issues which will cause real problems and hardship and may prevent UC from operating successfully and adequately responding to the needs of all those who require it.

1.3 We are particularly concerned about the impact on the most vulnerable claimants who most need stability, support to get back to work and who are the most likely to be in non-standard circumstances.

1.4 We are concerned about the speed of the changes and that there are still details of UC to be decided and finalised, which is very worrying this close to implementation.

1.4 In our response we will address the issues that the committee is particularly interested in followed by other areas of Universal Credit which we would like to highlight for the committee’s attention.

2. The proposed arrangements for claims and payments and the provision of support and advice for claimants

2.1 We are concerned that the four week assessment period in addition to the seven days to process claims represents too long a time for a payment to be made. Some claimants could be without any source of income during this time and could be at serious risk of rental arrears, or struggle to pay bills and meet basic needs. This will be a particular concern for those who were paid weekly in their previous job, as is the case with many low paying or casual jobs, as they may not have any source of income during this time. It is welcome that short term benefit advances will be available during this period; it will be critical that all claimants who need these payments, especially the most vulnerable such as those who have been homeless or who have mental health problems, are supported to apply for them.

2.2 The stated intention for UC payments is that they should mirror the monthly wages people receive in work and therefore be made on a monthly basis. We are concerned that this fails to recognise that many employees are paid on a weekly or fortnightly basis, especially in low paid work. People used to receiving more regular payments may struggle to manage their finances across a month long period.

2.3 It could also be an issue for vulnerable claimants, such as those with drug or alcohol problems, who may have difficulties with managing their finances across that long a time period and for whom it may be a risk receiving a large sum of money in one instalment. It is vital that support is in place for these claimants and that more regular payments are available for those who need them. It is welcome that the DWP is looking at ways to address this issue and we look forward to seeing more detail on their plans.

2.4 We have concerns over the way claimants are expected to communicate with the DWP. The intention that the vast majority of claims should be made online will be problematic for vulnerable people who may be not be able to make a claim online themselves and those who are unable to access the internet.

2.5 It is welcome that a phone line will be available for people who are unable to make their claim online. However, the number should be free from all mobile networks so that people on very low incomes will be able to make use of it.

2.6 Some people will always need face to face support to help them make a claim. We are pleased that the DWP has recognised this and is running pilot projects to identify and support these people. We look forward to seeing the results of these pilots and urge the DWP to take on board their findings.

2.7 We are also disappointed that the ability to backdate payments has been greatly restricted. There are a range of reasons why people may not be able to make a claim on the day they first become entitled that should be taken into account, such as if they were homeless or had recently experienced domestic violence. We do not believe that the one month time limit will provide enough protection for claimants to access the benefits they should have received previously. We believe the DWP should keep the “good reason” test to determine eligibility and extend the time limit for backdating. We are also concerned that advance payments will be abolished in virtually all circumstances under UC. These are often used by homeless people when moving on from supported housing and can help ease the transition to independent accommodation.

3. Areas where more information is needed, including progress with developing the necessary IT systems to administer Universal Credit

3.1 There are a range of areas of UC where it appears the DWP has yet to finalise policy design. It is concerning that we do not yet know how significant parts of the system will work under UC or how our clients will be affected. This is exacerbated by the fact that the DWP has failed to properly engage and keep informed all relevant stakeholder organisations.

3.2 We are concerned that there is still a risk that the IT systems necessary to administer UC may not be ready in time for the proposed implementation. Given the scale of the changes to the benefit system and the IT system’s centrality to the operation of UC it is essential that it is fully developed. This is a particular concern given that it appears that there are still policy decisions to be made about the operation of UC and how elements of the benefit system will work.

3.3 One major area on which there is still no clarity is how the Government plans to treat exempt and supported accommodation under UC. Supported housing plays a major role in helping homeless people make the transition to independent, settled accommodation. It is difficult for providers to plan for the future when they do not yet know how housing support for supported accommodation will be calculated or paid. Likewise, they do not yet know how eligible service charges will be defined or if they will be able to make third party deductions for service charges.

3.4 There is also currently no clarity over how Temporary Accommodation (TA) will be treated under UC. This is a particular concern as there is no planned exemption from the benefit cap for households in TA. We are concerned that this could lead to repeat homelessness if households are not given the housing support they need to pay their rent in full. The Government gave assurances throughout the progress of the Act that they recognised the problems with TA and the benefit cap and would consider how best to approach the issue. However, we are yet to see any detail as to what they plan to do.

3.5 It also remains unclear how Council Tax Benefit will interact with UC. The UC taper does not take account of the rate at which Council Tax Benefit will be withdrawn. This means that in practice many working age claimants who enter work will see their total benefit entitlement withdrawn at a higher rate than the intended 65%. This risks undermining work incentives and the smooth transition into employment that UC aims to facilitate.

3.6 Crisis is concerned about plans to pay housing support directly to tenants in the majority of cases. There needs to be recognition that vulnerable claimants may need safeguarding and there should be mechanisms in place to deal with arrears. We welcome that the Government intends to retain direct payments in some circumstances and that these will be laid out in guidance. However, far more detail is needed about what these circumstances will be and how eligibility for direct payments will be defined

3.7 We are disappointed by the approach of the DWP towards stakeholder engagement. We feel that the department has failed to engage and involve all appropriate stakeholders and that as a result we have not been fully consulted nor had meaningful opportunities to input into policy design.

3.8 Whilst there appear to be a wide range of forums about elements of UC, their remit is not always clear and we do not believe that the right organisations are necessarily always in attendance. When engagement does take place, the information available is often incomplete and officials are not always able to respond to what are some fairly straightforward questions about UC and its implementation.

3.9 Additionally the timeframe in which decisions are to be taken is not clear and it is therefore difficult for us to have a good understanding of the progress being made towards implementation. The stakeholder engagement process has been a missed opportunity for Crisis and other organisations with significant expertise to explore the implications of UC and what it will mean for single homeless and other vulnerable groups.

4. The proposed arrangements for the “claimant commitment”, sanctions and hardship payments

4.1 We raised concerns throughout the course of the Act about the new system of conditionality and sanctions. We still believe that the proposed high-level sanctions of up to three years are far too long and will lead to serious hardship for those affected. We oppose the recovery of hardship payments as this will lead to debt and to claimants facing reduced levels of UC for considerably longer than the length of their sanction.

4.2 We are concerned that the Claimant Commitment will not be sufficiently flexible to meet the individual needs of each claimant and will not set out the support that the DWP is expected to provide. For the Claimant Commitment to be an effective way to support claimants into work it must be tailored to individual needs and clear in the support the claimant can expect to receive as well as their responsibilities.

5. Impact monitoring

5.1 It will be important for the DWP to ensure that robust and transparent monitoring mechanisms are in place to evaluate the impact that UC will have. If it is shown that details of the new system are causing serious problems for claimants or are undermining any of the principles of UC it is vital that the DWP makes the necessary adaptations and improvements.

5.2 We have previously raised concerns about the Local Housing Allowance (LHA) caps, changes to the way that LHA is calculated and the extension of the Shared Accommodation Rate with the select committee and it is disappointing that these changes are being brought forward into UC. We believe that this will cause serious problems for recipients and is likely to lead to a rise in homelessness. The impact of these changes should be monitored along with other elements of UC.

5.3 During the course of the Welfare Reform Act, Crisis argued strongly against plans to uprate housing costs by CPI, rather than with reference to local rents. Because rents tend to rise faster than CPI there is a risk that this will lead to large areas of the private rented sector becoming unaffordable to UC claimants. As rents rise at different rates in different areas there is the real danger that the areas which will become unaffordable first will be those with higher growth, where employment opportunities are likely to be concentrated. Research by Shelter and the Chartered Institute of Housing warned that a third of local authorities could become very unaffordable—with less than 10% of properties available to benefit recipients—after ten years.1

5.4 We believe that the impact of CPI uprating should be monitored and the method of uprating the housing element of UC amended if it proves to have a detrimental impact on the affordability of accommodation. An amendment tabled by Baroness Hollis and supported by Crisis at Report Stage of the Welfare Reform Act in the House of Lords led to a commitment from the Government that they will reconsider the method of uprating if housing support and average rents become out of sync.2 The Government must stand by this commitment. Such monitoring could be undertaken as part of the Government’s Monitoring the impact of changes to the Local Housing Allowance system of housing benefit research.

6. Non Dependent deductions

6.1 Crisis is very concerned about proposed changes to the way non-dependant members of a household are treated for the housing element of UC.

6.2 Currently, deductions are made at different levels based on the non-dependant’s income and therefore their ability to contribute towards housing costs. There are a number of cases where no deductions are made, including where non-dependents are aged under 25 and in receipt of Jobseeker’s Allowance (JSA) or Employment Support Allowance (ESA) (assessment phase). Under UC, exceptions will be more limited than currently and a flat rate deduction of £15 per week will apply to households.

6.3 We have long called for reform of the NDD system. It can cause serious problems for households, leading to rent arrears, and hardship if the non-dependent is unable to make the contribution they are expected to. It can cause family tensions and the breakdown of relationships resulting in the non-dependent leaving the family home, often in an unplanned and chaotic manner. Relationship breakdown is the biggest single cause of youth homelessness.

6.4 We are therefore particularly concerned that under UC, households with a non-dependant aged between 21 and 25 who are in receipt of the standard allowance of UC will in future be subject to a deduction. Since young people receive a lower rate of benefit they are less able to contribute towards housing costs. At a time of very high youth unemployment this is particularly concerning and is likely to lead to an increase in youth homelessness.

6.5 If more young people leave the family home and need to make a claim for the housing element of UC in their own right then this clearly has a cost implication. It will also increase the pressure on the limited supply of shared accommodation; and/or result in an increase in the use of costly hostel places. This instability is also likely to undermine young people’s preparations to enter or return to work.

6.6 We believe that this change will unduly penalise young people. It is also particularly regressive, with those on the lowest rate of benefits expected to make the highest contribution in relation to their income.

6.7 We are also concerned at the stricter criteria under UC in order for a household not to be subject to a deduction. For example it is proposed that where the claimant is part of a couple both members of the couple will have to meet a qualifying condition. This means that a household would only be exempt if both the main claimant and their partner each fell into an exempt category, such as being registered as blind or in receipt of attendance allowance. This seems a particularly pernicious move and could undermine family arrangements for providing care.

7. Loss of existing protections of housing support for households who have been bereaved or who face redundancy

7.1 We are very concerned by the changes that have been made to the way housing support is protected upon bereavement. The current system is intended to protect the bereaved household from a reduction in housing support that could put their home at risk at a time when they are facing great stress and upheaval.

7.2 The UC regulations state that in the future, existing UC claimants will continue to receive their full UC payment for just 13 weeks after the death of a household member. This is less generous than the existing system where eligible rent is protected for up to 12 months. Additionally, there will be no protection of rent for households who are not already claiming UC. We believe it is wholly unacceptable for recently bereaved families to lose out on this important protection and strongly recommend that the existing bereavement protections should be continued under UC.

7.3 We are concerned that the 13 week protection for people who could formerly afford their accommodation is being lost. In the current system, claimants who have been able to meet their rent liability without claiming housing support for 52 weeks and the need for recourse to Housing Benefit are entitled to a 13 week protection during which time their rent is met in full. This typically affects those who have been made redundant. It is an important protection as it allows an opportunity for the claimant to look for employment without struggling to meet their rent (due to insufficient housing support) and having to seek alternative accommodation.

7.4 The loss of this protection is likely to make it more difficult for people who lose their job to move back into employment as they may instead be concerned with finding alternative accommodation. This risks claimants being reliant on UC for longer periods and being less able to move into work. This is contrary to the stated aim of UC to incentivise work, as well as the Government’s deficit reduction agenda. At a time of high unemployment with more people facing the risk of redundancy this is a particularly important protection and the Government should ensure it continues.

About Crisis

Crisis is the national charity for single homeless people. We are dedicated to ending homelessness by delivering life-changing services and campaigning for change. Our innovative education, employment, housing and well-being services address individual needs and help people to transform their lives.

As well as delivering services, we are determined campaigners, working to prevent people from becoming homeless and advocating solutions informed by research and our direct experience. Crisis has ambitious plans for the future and we are committed to help more people in more places across the UK. We know we won’t end homelessness overnight or on our own but we take a lead, collaborate with others and, together, make change happen.

17 August 2012