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

Summary

As you will note from the answers to the specific issues raised below, while Liberata fully supports the agenda of welfare reform and specifically the aims of transparency and simplification of the benefits system which Universal Credit (UC) offers, we have a number of concerns regarding progress towards implementation and associated issues. We have particular concerns around the areas which impact on local authorities and the forthcoming proposals to localise Council Tax Support and Local Welfare Provision as well as the amended legislation associated with Housing Benefit due to come into force in April 2013.

While we welcome the additional funding proposed to the Discretionary Housing Payment scheme to help alleviate some of the potential hardship caused by these reforms, this assistance is specifically designed for short term needs and the current consultation make it clear where this should be targeted. The continued administration of this fund, following the introduction of UC, could cause issues for local authorities who, under current proposals, may not have access to relevant information regarding eligible rent levels or the sums in respect of the UC housing element or the relevant payment systems to make the awards which are currently aligned to HB.

In effect, it appears that many of these proposals will in fact introduce further complexity and confusion into the welfare benefits system and we are particularly concerned regarding the different treatment of claimants receiving the legacy benefits and Universal Credit.

Comments on the Suggested Issues Raised

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

1. Liberata shares many of the concerns which we are aware have already been raised regarding the proposed arrangements for the above ie the availability of access to the relevant technology, the ability of claimant’s to use the relevant technology etc. We note there is reference within the draft regulations and explanatory notes to advocates and visits by the delivery organisation for the more vulnerable but specific details are lacking within the documents published.

2. It is difficult to comment further therefore until the details are available surrounding how the more vulnerable are to be supported and the role of local authorities in assisting with this aspect of the administration of Universal Credit. However, the fact that there will not be a clerical claim form available at all is a decision which is concerning.

Progress with developing the necessary IT systems to administer Univesral Credit

3. We have no comments on this issue other than to note that there is a lack of information available, within the public domain, from which to form an opinion.

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

4. While we welcome the majority of changes introduced regarding the claimant commitment we have a concern regarding the treatment of joint claims where one member of the couple refuses to agree their claimant commitment. The refusal to accept the claim in these circumstances could unfairly disadvantage the willing party and cause severe financial hardship for any children within the household. It would therefore make it more equitable if the claim were to be accepted and processed as a single claim.

5. There also appear to be a number of areas where matters are, as yet, undecided eg how to treat the issue of conditionality for those engaged in adult education who are not “students”.

6. A further general concern is the additional administrative burden these regulations place on staff as the regime of conditionality and sanctions increases. While we note that reference is made to the confidence the Department for Work and Pensions (DWP) has that this can be dealt with within the existing resource base, the uncertainty associated with the future delivery of Universal Credit and, in particular the role local authorities and others may play in this post 2015, may impact on the ability to retain staff at this crucial time and could threaten the ability of the DWP to deliver all aspects of the proposed regime.

Changes in the income entitlement of disabled people under Universal Credit

7. While we have no specific comments regarding the income entitlement of disabled people under UC, it is disappointing that the opportunity has not been taken to align the claim and payment regulations associated with the new Personal Independence Payment to those of UC.

8. Different methods of application, payment frequencies, not adopting the assessment period model of entitlement and the differing rules regarding changes in circumstances are all a missed opportunity to introduce the simplicity and transparency which are stated aims of welfare reform. While we appreciate the potentially vulnerable nature of these applicants, the same could be said of those receiving Employment Support Allowance (contribution based) yet they will come within the remit of Universal Credit. The Personal Independence Payment, like Universal Credit is a new benefit therefore the ability to streamline with the other proposals will be far easier to achieve on it’s inception than amending it to do so subsequently.

The impact of the changes on local authorities

9. At the present time one of the most significant impacts on local authorities is the uncertainty of progress made towards the implementation of Universal Credit and, specifically, the anticipated role of authorities within the delivery model.

10. While we appreciate that the purpose of the pilots is to inform this, the current degree of uncertainty is frustrating as authorities, and organisations such as ours, endeavour to model the potential impact with very few hard facts. An example of this would be the transition plan which was originally due for release in July 2012 but which we have now been advised may not be available until 2013. Local authorities, and their partners, pride themselves on the level of service and support they provide to their customers yet without a clearly defined role at this stage it is difficult to see how that will be sustained under UC.

11. In addition to this uncertainty around the implementation of Universal Credit there are also a number of areas where authorities have to implement changes to legacy benefits in April 2013, ahead of UC.

12. This includes the benefit cap which will clearly impact on a number of other policy areas. Most notably, for local authorities there is the threat of increased homelessness as a result.

13. While we would generally support the idea that those receiving welfare benefits should not receive more that those gainfully employed and contributing to society, the assumption that customers will simply be able to negotiate a reduction in rent with their landlord or increase their income by taking paid employment for over 24 hours a week, in the current economic climate, appears naïve.

14. Similarly, while we support the idea that public funds should not be used to cover the costs of tenants within the social rented sector who are overaccomodated the potential impact of size restriction proposed is of concern as initial discussions with housing providers reveal that the levels of smaller accommodation required are often simply not available. The suggestion that customers could alleviate this difficulty by renting out their spare accommodation again provides customers with a confusing message as they would require a detailed knowledge of the Housing Benefit (HB) calculation in order to determine how the additional income could affect their overall entitlement and which option maybe best for them to pursue as they may lose more through this than by the size restriction. Significantly the treatment of such additional income within HB and UC does not align risking further confusion and uncertainty for the customer.

15. However, of most concern, is the localisation of Council Tax Support in terms of the extremely tight timescales and the overall effect on both customers and authorities alike. Longer term, the localisation of this financial assistance appears at odds with the centralisation of benefits under the umbrella of UC. This will undoubtedly cause confusion for customers and is an additional administrative burden on local authorities quite apart from the financial strain placed upon them by the funding shortfall.

16. As the majority of authorities look to pass on the cut to those of working age, it is equally important to appreciate that this change is only one of the areas where customers could face a reduction in household income as many will be hit by the multiple reductions outlined above and customers will face unprecedented pressures.

17. Many fear the difficulties faced with collecting small debts from households with little or no spare resources who have previously been unused to budgeting for this household bill and those working in the anti-poverty arena feel this is a retrograde step which risks introducing a postcode lottery for many.

The level of earnings disregard

18. While the level of the earnings disregard per se is not an issue, the relationship with the housing cost element is.

19. The current system of Housing Benefit does not in any way influence the level of overall earnings disregard however, the proposal to reduce the maximum appropriate disregard by 1.5 times the housing element cannot be viewed as either a simplification to the current scheme or transparent for the customer. It is an unwelcome complication which could impact further upon other areas of policy such as housing and homelessness. It also introduces a perverse incentive whereby claimants could try and work out whether they would be better off hiding their housing costs, not asking for assistance with them, and thereby receiving a higher level of earnings disregard.

20. Continuing with the issue of housing costs, this is one area in which Liberata currently has a great deal of expertise. Reviewing the area associated with the housing costs element of UC it is welcome that many of the regulations mirror the existing regulations governing Housing Benefit since these have been developed and tested over time, but, there are also areas where vital ways to access assistance appear to have been closed. An example of this would be the fact that a council tenant who also works as an employee of the local authority appears to now be precluded from receiving help with their rent as there is no longer the caveat contained within Part 2 which would exempt someone from being excluded, provided the tenancy was not created to take advantage of the scheme, if they rent from a company of which they are also a director or employee.

21. In general, the provision for help with housing costs is much less generous, being limited to two years for owner occupiers, and often fails to take account of situations where help is genuinely required and currently offered. Examples of these would include the ability to receive assistance with an “unavoidable” liability, the complexity regarding whether it is a new or existing claim and eligibility to help while temporarily absent or provision to receive help for a period prior to occupation where the applicant has been awaiting a decision on a social fund application (associated with the move) and are within a vulnerable group, is no longer within the regulations. We appreciate that parts of the discretionary social fund will be devolved to local authorities from next year but a similar provision relating to a delay while awaiting the outcome of a discretionary award associated with the move etc would be particularly useful for such claimants. Without it, additional pressure will be placed on alternative sources of funding which are more likely to be discretionary therefore do not guarantee these particularly vulnerable applicants the assistance they require. It is also particularly important given the concept of conditionality which Universal Credit introduces for claimants as many may take on a liability for accommodation, at short notice, in order to fulfil these requirements as and when employment becomes available to them or as and when cheaper accommodation becomes available which they are more able to afford following the income restrictions they may suffer as a result of the combined reforms.

Impact monitoring

22. Before commenting on the specific issue of monitoring the transition to UC, Liberata would like to comment on the monitoring and evaluation of the Benefit cap. The issue that we see here is the fact that it could simply be one of a myriad of changes which a customer faces in 2013, changes as a result of both cuts in central support eg the RSL size criteria, combined with changes in locally determined support eg Council Tax Support. It will therefore be very difficult to isolate this change in order to properly verify the implications of the change on households claiming benefit and whether it has forced the behavioural change intended.

23. One way in which this could be better evaluated would be to delay implementing the change until a later date.

24. On this point however, our early indications of customer’s who have been contacted by the DWP’s advance communication strategy is that they have not yet taken steps to either increase their income or reduce their outgoings and are only likely to do so once the full effect of the reduction is felt.

25. Our understanding of the way in which the cap will work also highlights an issue we feel has unintended consequences. The initial operation of the cap from Housing Benefit means that the value of the reduction imposed may not fully absorb the full cap reduction since claimant’s must be left with a minimum of 50p HB. Those who experience a reduction in their HB as a result of the cap may take steps to cope with this eg by moving to cheaper accommodation. However, for those customers, when they transfer to Universal Credit they will be hit with a further reduction as the full amount of the reduction will then be able to be imposed.

26. It is not clear how this situation will be treated under the Transitional Credit Briefing Note issued on 4 July.

27. This could provide claimants with a double blow and cause additional distress to those who have taken active steps to cope with the initial reduction meaning that they may then be trapped and unable to take further steps to cope with the second reduction eg being prevented from moving a second time having signed a new tenancy agreement.

28. This also does not appear to fit within the ideal that no-one should be worse off, at the point of transfer, under Universal Credit.

29. In addition to the specific issue identified above we believe there are also a number of areas which could cause concern regarding the introduction of the benefit cap. These are outlined below:

30. Reg 75(B) allows the local authority the flexibility to adopt the cap “if appropriate” rather than awaiting a directive to do so by the DWP. While this introduces a degree of flexibility into the operation of the cap, this brings with it a danger of inconsistent and incorrect decision making. It also adds complexity and confusion to the process both for the local authority and the claimant, particularly with regard to the area of disputes.

31. It also seems somewhat unfair that the sums of Child Benefit and Guardian’s Allowance will be taken into account when calculating benefit income yet State Retirement Pension or Pension Credit will not. While we appreciate the reasoning behind protecting pensioners, as they are not expected to find employment and thereby reduce their dependency on benefits, the inclusion of benefits associated with children does not fit with the government agenda of reducing child poverty and will lead to confusion since these benefits are currently disregarded from many means tested benefits.

32. The regulations appear to be silent regarding the area of appeals and the fear here is that any dispute by the customer would fall between both agencies, as was the case with Extended Payment appeals prior to the amending regulations which made the decision wholly the responsibility of the local authority. If a cap is imposed and HB reduced, it is likely that the customer will appeal to the local authority but, if the decision to impose the cap has been made on advice from the DWP, the matter could not be dealt with by the local authority, presumably, unless they had made such a decision using their own initiative. However, this situation is not dealt with within the regulations.

33. Regarding the transition to UC, as stated earlier on in this document, so little has been confirmed regarding the three phases of migration that it is somewhat difficult to comment further on this specific area. However, the issues raised above highlight at least one potential problem.

16 August 2012

Prepared 21st November 2012