Work and Pensions Committee - Universal Credit implementation: meeting the needs of vulnerable claimantsWritten evidence submitted by Nick Atkin, Chief Executive, Halton Housing Trust

Introduction

1. Nick Atkin is the Chief Executive of Halton Housing Trust, a housing association that owns and manages over 6,200 homes in the Cheshire towns of Widnes and Runcorn.

2. The Trust was formed in December 2005 following the transfer of homes from Halton Borough Council.

Executive Summary

3. This Memorandum contains evidence on the following specific areas:

(a)Arrangements for claims, payments, support and advice for claimants;

(b)Development of IT systems to administer Universal Credit; and

(c)The proposed arrangements for the “claimant commitment”, sanctions and hardship payments.

(a) Arrangements for claims, payments, support and advice for claimants

4. A claimant will be paid on the same date each month, which is usually seven days after the end of their initial assessment period. This will result in a delay until benefits are received for a much longer period than at present. This may well adversely affect the claimants’ ability to budget appropriately.

5. This will also result in a significant increased demand for budgeting and debt advice services from claimants to ensure priority commitments are met and to avoid penalties such as bank charges that further reduce household available incomes.

6. The Regulations allow for payments other than via the standard monthly payment, but only in genuine exceptional cases. The Department for Work and Pensions (DWP) are expecting budgeting support/products and services to have been used before a Payment Exception request can be considered. This will result in another form of increased demand on existing advice services.

7. It is recognised that organisations such as the Trust are classed as being a “trigger” for identifying when a Payment Exception will need to be paid. The implication here is that we will need to collate a database of our customers who we deem may need this additional support in order to ensure rent payments are met.

8. It is understood that the DWP will use a risk scoring approach and have provided some detail on this already. However, the score threshold has yet to be set. Whilst we know what criteria will be used and the points to allocate, this is no indication yet available on the points threshold that will allow the triggering of a Payment Exception request.

9. It is acknowledged that Payment Exceptions will not (and should) not be an indefinite arrangement but only ever a transitional way of allowing time for a claimant to become able to manage their standard monthly payment with the help of additional support networks if necessary. However there may be exceptional cases where these intensive support arrangements may be required on more than one occasion or for longer periods. As such it would be helpful if the Regulations could be amended to reflect this and provide some qualifying criteria.

10. Housing providers have already taken steps to increase their own advice service resources at a time when locally a number of such services are being cut or significantly reduced elsewhere. Consideration should be given to provide ring fenced resources for such advice services to be provided or at least for them not to be diminished at a time of such substantial change.

11. The limit on backdating will have serious repercussions for those vulnerable claimants who had an underlying entitlement but for various good reasons have had their claims delayed. The Regulations offer a significantly reduced number of reasons where a backdated claim can be requested. Furthermore if the claimant does not qualify or cannot provide the sufficient evidence needed, then no backdating (even for one month) is allowed. This will result in further financial hardship for some of the most vulnerable groups.

12. Consideration should be given on how DWP could support housing providers to encourage and promote bank accounts as the preferred mechanism for benefit payment. This could also include how providers could work in conjunction with local credit unions and other such agencies to promote their facilities and develop arrangements to protect priority payments, such as rent.

13. The significant reduction in what is considered to be an eligible service charge under the new Regulations will cause immense financial hardship on affected customer’s ability to meet their rent liability and could ultimately lead to an increased number of evictions and associated homelessness. This could also lead to a number of key services being withdrawn that will in turn have a negative impact upon the quality of housing and the types of services offered to customers. This one change has the potential to incur disproportionate negative socio-economic implications, for both housing providers and their customers.

14. There will be some protection for claimants migrating from legacy benefits to Universal Credit through the Transitional Protection arrangements. However, it is understood that this will not be uprated and will be eroded over time or cease altogether depending on certain income changes.

15. Whilst this additional financial help will be of some comfort to claimants and will ease the transition for them, it is essential to ensure such claimants understand that this protection will not be permanent. As for the Payment Exceptions, there may be exceptional cases where these intensive support arrangements may be required on more than one occasion or for longer periods. As such it would be helpful if the Regulations could be amended to reflect this.

(b) Development of IT systems to administer Universal Credit

16. At present, third parties acting on behalf of claimants in the management of their benefit claims can apply by phone for paper copies of claim forms. Under the new arrangements, this will no longer be possible. Third parties will need to have access to IT in order to assist claimants. This could be prohibitive, especially when supporting those who are vulnerable and/or during any face to face contact where the claimant has no IT facilities available or cannot access facilities themselves. Insufficient consideration has been made within the Regulations for these types of cases.

17. It is anticipated there will be an increase in self employed earners under Universal Credit due to the strict claimant commitment under other parts of the Regulations.

18. However, and somewhat perversely, the Regulations could act as a disincentive through a decrease in people opting out of self- employment as a route to employment due to the strict qualifying criteria in this part of the Regulations.

19. The Trust is actively pursuing a number of activities/initiatives under our worklessness agenda to develop and nurture social enterprise through our support to small businesses. These efforts could be totally undermined if the Regulations have the impact we predict.

20. One of the declared aims for Universal Credit is to improve work incentives, part of which may be an expectation for an increase in self employed earners. The Regulations state that self employed earners will be required to report their earnings on a monthly basis using an online tool. The associated guidance goes on to state that a “message will be sent to the claimant towards the end of the assessment period”. This suggests that the claimant will have access to an email account or will receive this message by text. Any self employed claimant must therefore by implication own or have access to a computer to enable them to report these changes and also be able to produce monthly accounts and possess book keeping skills.

21. The guidance notes state that, “the system has been designed to make it possible for claimants to report monthly without employing an accountant”. However if a report is seven days late, the claim for Universal Credit will be suspended. Furthermore if it is more than four weeks late then the claim will be terminated unless good cause can be provided to explain the delay.

22. There could be a wide variety of reasons why a claim is not submitted such as illness, IT issues/problems etc. This could result in an increasing number of self-employed claimants’ entitlements being suspended/terminated leading to under or over payments accruing and causing additional financial burden.

23. Throughout the Regulations for self employed and employed claimants it is stated that their income will align with the HM Revenue and Customs (HMRC) Real Time Information system to enable entitlement to Universal Credit to be established. It is therefore imperative to ensure that customers who are working have access to a computer to report any change in their income in view of the sanctions imposed for late submissions as described above which can lead to the claim for Universal Credit being suspended or even terminated.

24. New business starters will only be eligible or one “start-up” period (whereby they are exempt from the Minimum Income Floor (MIF)) in a claimant’s life time. This could discourage customers from considering self employment in a different area in the future if a previous business fails or is considered unsuitable/low earning and cause further pressures on the job market and so discourage local enterprise.

25. As a result of a recent change in Tax Credit legislation (whereby a couple must work 24 hours compared to 16 hours in total in order to claim for Tax Credits), many claimants are unable to gain the extra nine hours through their current employer and were encouraged to become “self employed”. In this situation and bearing in mind the strict requirements attached to self employed claimants for Universal Credit many couples may well be discouraged from taking this course of action.

(c) The proposed arrangements for the “claimant commitment”, sanctions and hardship payments

26. Claims for Universal Credit for less than a calendar month will not normally be paid unless in exceptional circumstances (only one claim in relation to Universal Credit or Guaranteed Pension Credit is cited in the Regulations). This is an excessive period of time for someone to be not earning and in receipt of no income and risks causing severe hardship to both the claimant and their family.

27. It is appreciated that hardship payments are available but these are very limited in the eligibility criteria and all have to be repaid in full. The implication is that claimants may well need to use other sources such as food and clothing banks, family and friends to support them. In some cases, claimants may feel the need to resort to the use of high interest or “doorstep” lenders or even loan sharks.

28. The sanctions appear very harsh if the claimant fails to comply with the commitment agreed when claiming Universal Credit. Because of their complexity claimants may not fully understand how the sanctions will apply to them. Consequently they could be sanctioned unintentionally thus affecting their claim for Universal Credit.

14 August 2012

Prepared 21st November 2012