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

Summary

Homeless Link is the national umbrella organisation for frontline homelessness charities in England. Currently we have more than 500 member organisations. As the collaborative hub for information and debate on homelessness, we seek to improve services for homeless people and to advocate for policy change. Through this work, we aim to end homelessness in England.

We welcome the opportunity to submit a response to the Select Committee’s inquiry into Universal Credit.

We would like to make the following key points for consideration by the Committee:

The process for the introduction of the first phase of Universal Credit (UC) is much too rapid for such a fundamental change.

There are no current plans to test the system with vulnerable people who are homeless and have complex needs. We think it should be tested with them.

UC’s emphasis on on-line self-service claims and direct monthly payments has the potential to severely exclude vulnerable people for whom the safety net is designed. We would like to see better access to telephony and face to face systems.

The plans for how supported exempt accommodation will fit within UC are not yet public and this is causing considerable disquiet amongst agencies in the sector. We would like this to be made public as soon as possible and for the sector to be closely involved in the design of suggested proposals.

The involvement of agencies and individuals in the design of UC has been limited. We would like there to be a much stronger involvement of individuals affected and the agencies that support them.

Wider communication about the introduction of UC has been extremely limited. We would like a much greater emphasis on communicating the changes to both the individuals affected and the agencies who will support them.

UC represents the biggest shake up in the benefit system for some sixty years and as such it is critical that there is regular monitoring and evaluation, and where this indicates a system or process is not working, disadvantages certain people or could be improved with regard to the policy intents that there is opportunity to make changes

1. Context for Our Submission

1.1 Homeless Link is delighted to submit a response to the inquiry into Universal Credit (UC). Our response focuses on the impact of the introduction of UC on homeless people and those at risk of homelessness.

1.2 The transition to UC represents one of the most fundamental changes to the welfare system since it was introduced in 1945. It is, therefore, essential to take the design and introduction of it slowly. Whilst we welcome the phased approach, the timetable for UC development is too tight. As a result the system and processes are being developed too quickly, without adequate time for testing.

1.3 We are deeply concerned that there are no current plans to test the design with people who are extremely vulnerable and for whom the welfare system is a vital safety net. This will undoubtedly result in unintended consequences when the system goes live next year. In reality this means individuals will suffer, with limited recourse to funds and fewer options to challenge this system.

1.4 The implementation of UC should not be viewed in isolation. It is coming against a backdrop of vast changes, all of which have impacted on homeless people. There is a rising demand for homelessness services at the same time as provision is decreasing. Homeless Link research showed more bedspaces were lost between November 2011 and May 2012 than in the whole of the previous year.1 The latest Government statistics show a 16% rise in demand for homelessness services.2

2. Arrangements for Claims and Payments

2.1 We have a number of specific concerns around the process for individuals making claims and the proposed payment methods. These focus particularly on the payment of the housing costs element direct to the individual, the strong focus on online, self-service claims, the type of accounts that will be available and the availability of face to face support and independent advice.

2.2 Direct payment of rent to individuals: We are concerned that exceptions to the main UC model are not embedded strongly enough with the design to safeguard vulnerable people and are being left to guidance and the discretion of the Secretary of State. This may offer flexibility and an ability to affect change more rapidly. However, vulnerable people need to have protection that is not left to political discretion. Access to direct payment to landlords of housing costs, more frequent payments than monthly, and split payments in a household are essential to prevent homelessness, prevent financial abuse and to allow people to move on from homelessness. We would like to see a stronger emphasis on an intention to protect vulnerable people, and to prevent homelessness and destitution.

2.3 Homeless Link believes the removal of the option to make a direct payment from benefits to a third party for essential housing costs such as utilities and food will lead to increased debt, arrears in essential housing costs and evictions from supported housing. We would like claimants to have the ability to choose to have direct payment of essential housing costs.

2.4 Digital by default: Homeless Link believes that the emphasis on online mechanisms as the main communication process is concerning. We think that the Department for Work and Pensions (DWP) has overestimated the number of people with access to the internet and the skills required to apply for, and manage, a claim for UC through this channel.

2.5 A recent survey of service users undertaken by St Mungo’s (a housing association providing a wide range of accommodation based and other support services to homeless people) found that many of their clients have issues around literacy, for example 35% of clients require support to complete a form, 7% are unable to speak English and 7% have learning difficulties.3 The figures on the true extent of digital exclusion amongst people who are homeless is not known.

2.6 We believe that “digital by default” is disadvantageous to the most excluded and vulnerable people in our communities. People who are rough sleeping would be further excluded from essential financial support. People living in supported accommodation will have assistance available through staff, but not all accommodation based or other support services are able to offer internet access for their clients, or where they do it is a limited number of terminals, or terminals are for use in education and training contexts, rather than personal matters.

2.7 Homeless Link would like to see guaranteed access to telephony or face to face channels for claimants, rather than placing barriers in the way of access.

2.8 Payment methods: Homeless Link is concerned that the insistence on direct credit transfers will have a significant impact on vulnerable people, particularly those who may already be financially excluded or suffering financial abuse. Whilst we understand the majority of benefit recipients receive their payments into a standard current account, we have concerns that because the UC model requires claimants take a more active role in managing their own finances there is an increased need for access to banking services with particular types of functionality.

2.9 Some of the solutions being pursued by the DWP, such as “jam jar” accounts and use of credit union accounts, will not be free of fees and charges, thus those with the least money will face costs that those in work generally do not. Despite the promotion of basic credit union accounts (and Post Office Card Accounts), these accounts do not have the functionality to support direct debits and standing orders. These are essential money management functions for people who receive a monthly salary.

2.10 Homeless Link is especially concerned about the replacement of cheque payments with the “simple payment method” whereby the claimant collects their benefit via PayPoint through a card and PIN system. We believe this will significantly increase the risk of financial abuse for vulnerable claimants. The option to have payment by cheque was used by many services supporting homeless and vulnerable people in order to prevent financial abuse.

2.11 Support and independent advice: Homeless Link welcomes the recognition that there will be a need to provide additional support and independent advice. However, we are deeply concerned that there is not yet an established process. All agencies who will be involved in supporting vulnerable people need to have their costs reimbursed. It won’t just be the money advice agencies who will provide the support, it will be the supported housing worker working with a tenant or the day centre worker supporting someone using their services. The system will be complicated to explain and vulnerable individuals will need support and reassurance to use new systems about which they are unsure. Taken against the backdrop of wider cuts to funding, increased demand for services, these services will be unable to provide this additional advice without additional resources. It does not feel that this has been adequately recognised by the DWP.

3. Proposed Arrangements For the “Claimant Commitment”, Sanctions and Hardship Payments

3.1 Claimant commitment: Homeless Link welcomes clearer communication with claimants about which conditions of benefit are mandatory and could result in a sanction if there is non-compliance as stated within the recently published Regulations. We are however concerned about what is not included in the Regulations with regard to the claimant commitment. We believe that it is essential that there is:

A definition of the claimant commitment and its purpose.

Clarification on the relationship between the claimant commitment and work related requirements.

A statement that the claimant commitment will reflect the aspirations, capabilities and personal circumstances of the claimant.

Clarity on how an individual’s claimant commitment will be reviewed and revised.

3.2 Sanctions: Homeless Link is concerned that the current design of the system with regard to the imposition of a sanction could be interpreted to mean that a claimant could be sanctioned by an amount greater than their standard allowance. This is compounded by the wording within the proposed Regulations: “reduction of an award” rather than “reduction of standard allowance” (Part 9, Chapter 1, Reg 93). The language in the Regulations could specify exactly which element of an award of UC will be subject to a sanction if a failure to comply with conditions is determined. We have been informed that the formulas to calculate a sanction, as provided in the draft, will ensure that no-one is sanctioned by more than the equivalent of their standard allowance element. As the formulas are currently not populated there is no way to prove the accuracy of this.

3.4 Hardship payments: Homeless Link believes that setting the maximum deductions from a claimant’s standard allowance in order to recover debt at 40% is too high and will lead to significant hardship for many. This has the potential to create a vicious circle of hardship and debt for vulnerable people.

4 Housing Benefit Changes

4.1 Retaining the link between level of benefit paid and actual housing costs: The Universal Credit system needs to be designed to ensure that it includes and reflects the real housing costs that people have to pay.

4.2 Homeless Link seeks assurances that the new Universal Credit will be able to reflect local and regional variations in actual housing costs. We are concerned about the proposals to link housing costs to the Consumer Price Index (CPI) rather than the rents in local areas. We are concerned that use of the CPI measure over time breaks the link between the housing costs people pay and the amount of housing support via benefits they receive. The DWP impact assessment states that CPI is expected to rise by 2% each year and rental costs by 4%.

4.3 Homeless Link would like the housing costs element of Universal Credit for tenants in the private rented sector to be calculated in response to change in local market rents, rather than uprated by CPI.

5 Introduction of the Benefit Cap

5.1 Uprating of the benefit cap: The Regulations as they have been currently issued, state the actual amounts of the benefit cap (£500 per week for families and £350 per week for single people). There does not seem to be a published mechanism for how these levels will be amended or updated. It is essential that the mechanism for how this will change is clearly publicised and understood.

5.2 Benefit cap and supported exempt accommodation: There is a current challenge around the benefit cap and how it will affect individuals in supported exempt accommodation prior to the transition of individuals onto Universal Credit. This is because not only will their rent be included in the calculation, but also the eligible service charges. Organisations that provide accommodation services to homeless people will be hit hard as the benefit cap will be first applied through Housing Benefit (HB), which is paid currently paid directly to the provider. We believe that this in an unintended consequence, but one for which transitional exceptions need to be put in place to prevent an increase in people becoming homeless and sleeping rough.

6. Localisation of Council Tax Support

6.1 Impact on vulnerable groups: Homeless Link is deeply concerned about the impact on vulnerable people of the abolition of Council Tax Benefit (CTB). The 10% cut to funding and the guidance suggesting protecting pensioners’ CTB, combine to mean that local authorities calculate that cuts to other groups could be as high as 30%. This will push people further into debt, jeopardise their accommodation and has the potential to further contribute to a rise in homelessness.

7. Supported Exempt Accommodation

7.1 Homeless Link is greatly concerned over the delay there has been in developing a resolution to how supported exempt accommodation will be included within UC. The consultation has had no public response from the DWP. There has been no ongoing involvement and consultation with the sector in the design of potential solutions. This is causing considerable disquiet amongst providers. Providers need time to plan and develop solutions to ensure essential services remain viable. With just over a year to go and no proposals, this is not sufficient, particularly given the wider context of cuts and increased demand. We believe this needs to be addressed as a matter of urgency. Any change needs to be enshrined within Regulations and also protect this funding for vulnerable individuals.

8. Monitoring and Evaluation

8.1 UC represents the biggest shake up in the benefit system for some 60 years and as such it is critical that there is regular monitoring and evaluation, and where this indicates a system or process is not working, disadvantages certain people or could be improved with regard to the policy intents, that there is opportunity to make changes.

8.2 Homeless Link is concerned currently:

There is no mention of iterative process, review and evaluation of aspects of UC;

Monitoring and evaluation needs to disaggregate the role of support and sanctions in moving people towards the labour market in order to determine which aspects needs to be emphasised and resourced; and

Monitoring and evaluation needs to account for unintended consequences.

8.3 Homeless Link strongly supports the need for annual reviews (conducted jointly between DWP and the Department for Communities and Local Government (DCLG)) of the extent to which Universal Credit housing costs provision is keeping track of actual rents, and for the calculation of housing costs provision to be amended where necessary to ensure that at least the 30th percentile of properties in the private rented sector are affordable.

8.4 Homeless Link believes that there needs to be additional work to understand the impact of the entirety of changes on vulnerable people. Each individual element of welfare reform may not result in a person becoming homeless immediately, but when the cumulative effects are considered, the consequences for an individual could be devastating. We are concerned that there has been no work to consider the cumulative impact of cuts, welfare reform and the recession on homeless and vulnerably housed people.

9. Communicating the Changes

9.1 Homeless Link appreciates there are many demands on communications about UC. We are concerned at this time by how little accessible information about the changes is in the public domain and how little is being actively pushed out to claimants, whether in work or not. And how poor the overall involvement of agencies and individuals in the design of the system has been. This is understandable given the speed with which the changes are being introduced, but is not excusable.

9.2 It is not only claimants who need this information, but the staff who support claimants outside the benefits system. For example, frontline staff in homelessness services are often the first to be asked questions about benefits by service users and thus need to become conversant in the new system sooner rather than later. Our work with staff of homelessness services has revealed a considerable amount of misunderstanding, gaps in knowledge and confusion about what is to come.

9.3 The communications strategy for UC needs to begin now and provide information to a wide variety of claimants both in and out of work. Homeless Link asks that simple, accessible information is available as soon as changes are agreed.

10. Evidence and Examples

10.1 Homeless Link has numerous examples and case studies from our members that illustrate the points made in this document. We would be pleased to present this evidence to the Committee.

16 August 2012