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

Introduction

1. The Work and Pensions Committee has recently launched an inquiry into the progress being made towards the implementation of Universal Credit (UC).

2. This note provides Home Group’s contribution to the debate and puts forward a range of areas that need to be considered in relation to the implementation of UC.

3. Home Group (Home) is one of the leading nationwide registered providers of affordable and supported housing within the United Kingdom and the UK’s largest provider of care and support services. Home has a turnover of £313 million, provides care and support services to 26,000 people and owns or manages 53,000 homes housing more than 120,000 people at any one time. Established (through an Act of Parliament) as the North East Housing Association in December 1935, 2012 represents Home Group’s 76th year of operation.

Executive Summary

4. With increasing pressure on Government finances, the Government’s stated aims for introducing UC are welcome and a positive move for the country in addressing welfare dependency. The note considers:

The impact of the changes on registered providers.

Background

5. The notion of UC and “direct payments are one that gives greater control to people.”1 But they also raise many challenges—for the individuals holding the payments, their families, local authority staff and the organisations set up to support them such as Home Group. Home Group welcomes the thrust of the Government’s plans for UC in trying to simplify a complex system and remove any barriers to work.

The Impact of the Changes on Registered Providers

6. Background: Home Group, the National Housing Federation and many other Registered Providers (RPs) have been lobbying on a number of the proposed reforms that are being faced by the sector. For example the size criteria, overall benefit cap and the potential impact of direct payments are three of the specific areas that have caused much debate. Home Group, as mentioned above, welcomes the Committee’s call for evidence and sees this very much as one of the steps to working with government in a constructive manner to ensure that UC is implemented in a sustainable way. Nevertheless, Home Group continue to have concerns that the multiplier effect of these reforms may have the unintended consequence of destabilising lender confidence in RPs and the sector as a whole due to the fluctuation in income streams that could prevail. Furthermore, these reforms have the potential to impact Home Group customers and their lifestyles in unintended ways. The next paragraphs detail Home Group’s thoughts in to some of the key areas.

7. Eligible service charges: Home Group remains concerned over the proposals in the regulations to reduce the types of service charges which are eligible to be covered by housing benefit. The draft Regulations state three types of charges, which are:

eligible services necessary to maintain the fabric of the building;

cleaning of communal areas; and

window cleaning, where a tenant is unable to clean them.

This is effectively replacing the ten types of ineligible charges that currently exist. This over-simplification could impact on the business plans of providers and Home Group remain concerned that this list also excludes many of the costs currently eligible within supported and sheltered housing. Home Group welcomes the news that the Department for Work and Pensions (DWP) will present more detail on what service charges will and will not be eligible in future guidance. Home Group also urges ministers to agree a specification within this guidance that will be more finite in the regulations and have specific regard for the aforementioned housing types. Although not exhaustive we would include the following as necessary for inclusion:

secure building access;

play areas developed at the request of the local authority under Section 106 agreements;

communal laundry and kitchen facilities; and

concierge, groundskeeper or caretaker where applicable and appropriate.

8. Size criteria: Home Group recognise the importance of customers living in a property that meets a customer’s needs and understand the Government’s stance on size criteria. That said Home Group also believe that there are a number of areas within this area that need to be fully understood.

Under size criteria the Government has stated its commitment to exempt all pensioners including those living with a partner under the state pension age. Home Group believes this commitment should stand as there may be circumstances where younger partners may be acting as carers in a number of these homes. Furthermore where carers are involved we believe that those households with disabled children should benefit from an extension of the extra room criteria. As the role of the family unit is hugely beneficial to the cost of state care Home Group also believes that this will have positive connotations for other areas of government spending.

Finally as the run-on (following death) has been reduced to three months Home Group feel that additional criteria in this area may be required. For example an age range to which this applies (say 20–45 year olds) to ensure those nearer or at pensionable age are not penalised by this rule.

Home Group is not clear whether or how the rules around temporary absence and the size criteria are intended to apply to all groups. For example:

are students absent during term time a permissible deduction?

are dependants in the armed forces under 21 a permissible deduction?

Home Group therefore believes that this area of the temporary absence rules require further understanding in line with the UC approach and specifically size criteria.

9. Monthly payments: As we all know the intention is to pay UC on a monthly basis, seven days after each monthly assessment period. Due to the process of the initial assessment period this may lead to initial payments to claimants being between five and six weeks after the original claim. Many of these customers will therefore move from weekly, fortnightly budgeting to monthly and also be faced with budgeting including payment of housing costs as they will have the option of direct payment to landlord removed. This will be massive change for a customer base that is not used to this approach and will require more support in these areas than is currently planned by the State. Furthermore, the majority of Home Group customers do not have the basic skills (ie when it comes to budgeting 30% of Home Group customers regularly use their overdraft facility) to enable this basic process to be undertaken effectively. Furthermore research by Policis2 states that 54% of tenants feel that the shift to monthly payments of benefit will make it more difficult to manage their budgets. Home Group would therefore urge the Committee to work with RPs to devise suitable options for customers such as budgeting training, mandatory bank accounts as conditions of tenancy, Post Office accounts, Paypal accounts or even escrow accounts.

10. On-line claiming: Home Group understands the driver for on-line claiming within government and links to the digital inclusion agenda that preside within this. Home Group welcomes that the on-line approach will be consistent and understand that where a customer wishes to apply using another form of application their “agent” will do so on their behalf by completing an on-line form. Home Group believes that a high degree of support, through agents or other routes (for example volunteering), is needed for this approach to be effective. Many of Home Group’s customers (34%) do not have access to the internet due to cost and their location in relation to internet “highways” or even use the internet regularly (31% of Home Group customers do not access the internet regularly). As for access Home Group foresees the need for a solution that is both flexible and deliverable. Home Group does not believe that a fixed location of access (ie public libraries) will fully serve the population. In order to serve some of the hardest to reach groups, Home Group believes a mobile solution on site (ie staff of RPs using systems similar to chip and pin readers and access points within Post Offices) for customers is something that would help and would be keen to explore its ideas with the Committee.

Additionally when considering on-line claiming Home Group believes trigger points need to be considered at this point. Under the proposal Home Group has seen it is Home Group’s understanding that tenants who fail to pay their rent will not automatically trigger direct payments with their landlord and that in these circumstances failure to pay rent would lead to an assessment meeting with DWP. Whilst Home Group appreciates the need for this support for claimants, the process and timeframe will lead to increasing and accrued rent arrears without the trigger for direct payments. We would urge the Committee to ensure a trigger point at the maximum of six weeks arrears for claimants to have direct payments to their landlords placed on their account. This is based on research that states:

72% of Home’s customers have been in arrears by at least four weeks in the last five years and of these 77% have been on Housing Benefit (HB) at some point;

49% of Home’s customers have been in arrears by at least six weeks in the last five years and of these 76% have been on HB at some point; and

96% of older long-term benefit recipients3 don’t know what rent is.

Finally in relation to on-line claiming Home Group understands that the notification of a claimant moving to UC will be made by DWP to the local authority where the claimant resides. For the issues outlines already we would urge the Committee to consider extending this requirement to RPs and other bodies where social rents and affordable rents are charged so that transition can be smooth for the claimant.

11. Benefit caps: Additionally when considering this element of the reforms Home Group believes there are unintended consequences on vulnerable people living in supported housing and that there is a need for further regulations for these groups and especially those suffering from domestic violence. Due to the pressing timescales and interactions between different parts of the benefits system those fleeing domestic violence often pay dual housing costs for their home and refuge and Home Group believes it would be viable for the Government to insert a clause in to the Regulations exempting people living in supported or “exempt accommodation” from the welfare reform caps. Home Group also believes that this cap will enable local authorities to act in accordance with demand in their areas and also to make the best use of Discretionary Housing Payments (DHPs) which should not be relied upon to make the shortfall in this area. Indeed the Government’s own reforms of “exempt accommodation” recognise that there are legitimate extra housing costs for this group and it is inappropriate to rely on a discretionary scheme to cover these costs.

12. Additionally, from the Government’s past consultations4 into the future of Housing Benefit for supported and sheltered housing Home Group believes that this Government understands that there are legitimate additional costs in providing supported and sheltered housing. It should be a vital step of the reforms to use the outcomes of this previous consultation before any final changes are made in this area.

13. Conclusion: Finally, in summing up Home Group would urge ministers to:

(1)Implement a specification within the service charge guidance that will be more finite than in the Regulations and have specific regard for supported and sheltered housing.

(2)Exempt all pensioners including those living with a partner under the state pension age from the size criteria reforms.

(3)Extend the extra room criteria for households with disabled children.

(4)Introduce an age range to which the run-on clause following death applies to in order to ensure those nearer or at pensionable age are not penalised by this rule.

(5)Firm up the temporary absence rules to include students absent during term time and dependants in the armed forces under 21 as permissible deductions.

(6)Implement a trigger point at the maximum of six weeks’ arrears for claimants to have direct payments to their landlords placed on their account.

(7)Extend the confirmation clause of switching to UC for claimants to RPs as well as local authorities.

16 August 2012