Work and Pensions Committee - Universal Credit implementation: meeting the needs of vulnerable claimantsWritten evidence Submitted by Notting Hill Housing

1. Notting Hill Housing is one of the largest Registered Providers of social housing in London, providing around 25,000 homes, including general needs, temporary and supported housing.

2. The implementation of Universal Credit (UC) will bring a number of challenges to the way we work and we value this opportunity to share our views.

Views on the proposed arrangements for claims and payments and the provision of support and advice for claimants, including the presumption of a predominantly online, self-service claims process; monthly payment to one person in the household; and arrangements for providing telephone and face-to-face support and independent advice for claimants who need it.

3. While we welcome the expansion of digital inclusion, we are concerned about the accessibility issues that online services create for low income households. Our own tenant profiling of young families in temporary housing suggests that only 59% have internet access.1 This number may be even lower amongst older, established social housing populations and the Department for Work and Pensions’ (DWP) November 2011 Equality Impact Assessment on Universal Credit also identified age as one of the most important factors in determining digital exclusion. It went on to identify disability and ethnic minorities as further risk categories.2

4. While we understand that telephone and face-to-face support will be made available to a small minority, we fear that central resources simply won’t stretch to all those who need it. We are also not clear on the means by which support will be signposted to some of the more hard-to-reach communities that we house. Instead, we believe the onus and costs will fall on social landlords and local government to ensure that our customers have good access to online services through office based and portable facilities.

5. Another area of concern is direct, monthly payments in arrears, to a single person in the household. We are concerned that this is likely to exacerbate money problems for vulnerable families. Our recent tenant profiling suggested that as many as:

12% of general needs customers do not have a bank account.

95% (who received Housing Benefit) said that they found it easier to have Housing Benefit paid directly to their landlord.

20% of general needs customers said that they have debts that they are struggling to manage.3

6. While we are working to improve financial inclusion amongst our customers by raising money awareness and partnering with local credit unions, we remain concerned about the most vulnerable being unwilling or unable to engage.

7. The Government’s White Paper on Universal Credit stated: “We... recognise the importance of stable rental income for social landlords to support the delivery of new homes and will develop Universal Credit in a way that protects their financial position. Options for achieving this could include some on-going use of direct payments to landlords, use of direct debits, and a protection mechanism which safeguards landlords’ income.”4

8. As yet, the vulnerability criteria which could protect thousands of households is yet to be defined. We are concerned that a number of other areas such as third party deductions for arrears and the safeguard triggers for landlord payments also remain unclear. And, while we are keen to learn from the Direct Payment Demonstration Projects, we need to have clear strategies in place to help us identify those who we have greatest concern for and will need to flag for landlord payments.

9. Since the housing element of UC is not ring-fenced, we will also need to target support for all other high risk cases to ensure that our customers are protected from expensive payday loans and are prepared for UC with bank accounts and a clear understanding of budgeting. We want to encourage as many as possible to put their rent payments onto direct debit to help counteract the impact on a single monthly payment.

10. Direct payments will pose the single biggest challenge to social landlords and could significantly undermine the stable nature of our income base. Notting Hill Housing currently receives Housing Benefit directly for more than 60% of our customers.5 Many Registered Providers have predicted an increase of between 3% and 5% in arrears6 and we are concerned that the associated costs of an increase in arrears - including additional staff for rent collection and bad debt- could eventually impact on the competitive financing rates that the sector has historically benefited from. This, in turn, could ultimately destabilise the affordable housing programme. While Moody’s Ratings Agency has placed all of its English rated housing associations in the low to manageable categories for the near term, close monitoring will remain in place to ensure that public ratings can be regularly updated, as required.7

11. We fear that the self-service claims process will bring further delays and costs to a system that is already likely to attract an increase in arrears and could even end up putting our customers’ homes at risk.

Views on progress with developing the necessary IT systems to administer Universal Credit, including the Real-Time Information system for PAYE taxation being developed by HM Revenue and Customs

12. The switchover to a single DWP IT system is another issue that will have to be factored into arrears collection for social landlords. The new system will bring a host of internal challenges to the way we work. We will need to forge new relationships where we have been reliant on named contacts for updates on customer claims and there will be considerable cost attached to processing the increased number of individual payments. We would be interested in hearing more about the safeguards that will reduce the prevalence of the kind of regional failures that are synonymous with large scale IT programmes.

13. While we understand that the Real-Time Information system has been set up to ease the reporting burden for claimants, many details remain unclear. For example, how a claimant will know if their earnings have been reported through RTI and whether they risk having their claim suspended.

14. It is also not clear if matters such as treatment of benefits-in-kind will be available by October 2013. With a large number of complex and incompatible legacy benefits being rolled into one, there is scope for any number of smaller items to impact on tax coding adjustments. These are likely to lead to delays and suspension which could ultimately impact our cashflow and ability to service finance agreements.

Views on the proposed arrangements for the “claimant commitment”, sanctions and hardship payments

15. While we welcome the protection afforded through the personalisation of requirements, we would like to see other criteria such as the Work Focused Interviews Only group expanded to include more vulnerable categories. We would also like to find out how full time students will be treated.

16. We also welcome a more streamlined and proportionate approach to sanctions than currently exists but are very concerned about the impact that one person refusing a commitment will have on income for the whole household. While we appreciate that the third and final 1,095 (three year) sanction will constitute a serious breach we are concerned about the impact of such Draconian measures on the local community. With such high stakes, we would like to learn more about the safeguards that will be in place to achieve a consistent approach and help to avoid a disproportionate amount of court time being taken up with challenges.

17. The removal of complex hardship rules may increase simplicity but at the cost of flexibility that allows targeted support to meet specific needs. We are concerned that our local partnership approach to working with troubled families may be undermined by a cycle of sanctions and hardship payments.

Views on changes in the income entitlement of disabled people under Universal Credit, including those who may receive less income under Universal Credit than at present

18. Disabled households are disproportionately represented amongst benefit recipients and under the old Disability Discrimination Act (DDA) definition, they constituted as much as 45% of the total benefit population.8

19. While we welcome the £7,000 higher earnings disregard for disabled people, we are concerned that there has been no decision on what might be appropriate once the disabled worker element of Working Tax Credit (WTC) is replaced by Universal Credit. We also assume that the Work Capability Assessment (WCA) attached to UC will be narrower than existing requirements, with the onus firmly on the applicant to challenge any decisions.

20. Where the Government recognises the extra costs that disability can bring,9 there is also concern that a number of measures will clearly have more of an adverse effect on the disabled population. The November 2011 DWP Equality Impact Assessment (EIA) on the Welfare Reform Bill Universal Credit acknowledged that the disabled population would be at greater risk from the predominantly on-line access system and that they would be less likely to be moved out of poverty by UC, as a result of a lower prevalence of work amongst disabled households. The EIA went on to make clear that where households experience a lower entitlement under UC, this is likely to be greater for disabled households: £37 per week on average compared to £26 per week for non-disabled and that disabled households are also less likely to experience an increase in entitlement: this stood at 27% compared to 44% amongst non-disabled households in the population pool.10

21. While we support plans to reduce fraud and the number of people who wrongfully receive Disability Living Allowance (DLA) on a long term basis through UC and Personal Independence Payments (PIP), we remain very concerned about what happens to families in instances where, for example, the main earner becomes seriously ill and there is a large drop in income. Such families will already face cuts such as the removal of Employment Support Allowance (ESA) (contribution based) after one year for those in the work related activity group. Welfare reform is also likely to mean that they will have to wait six months—instead of the current three- to receive support through a disability benefit.11

22. As a result of welfare reform we expect a reduction in the number of our customers who are able to claim DLA/PIP or non-means-tested disability benefit. We will be seeking to target support for those with any additional income strain through improved data sharing and tenant profiling.

Views on the impact of the changes on local authorities, including budgets, staff and support for claimants. The changes include those to Housing Benefit; the introduction of the benefit cap; and localisation of council tax support

23. We are concerned about losing the level of trust and expertise that has built up through years of close working with borough partners. This has helped to ensure that difficult caseloads are managed effectively, with minimal impact on arrears collection.

24. We are also concerned that the localisation of council tax will place undue strain on borough partners and stands in diametric opposition to the welfare reform agenda which seeks to simplify the benefits system. There is a real possibility that a locally set criteria for council tax support could result in a geographical drift of claimants in search of a better deal.

Views on the level of the earnings disregards

25. Changes to the earnings disregards that currently exist under tax credits have been identified as one of the areas which will contribute to the £2 billion reduction in expenditure that the Government expects to come out of UC implementation.12 We would argue that this does not help support people into work.

26. However, we welcome the higher earnings disregards and flexibility that are broadly attached to UC including increases to disabled and lone parent households and the removal of the 16 hours work requirement for access to childcare costs. We remain concerned that these will be substantively undermined by the treatment of housing costs.

27. At a time when households will be adjusting to the impact of the Household Benefit Cap we believe that the minimum thresholds offered to those with housing costs will act as another barrier to families settling in new areas. We are very concerned about the socio-economic costs of absorbing whole communities who have been uprooted but are still trapped in benefit dependency.

Views on the eligibility for and operation of passported benefits

28. We agree that the current system of passported benefits is in need of reform. The complexities of the existing system act as a barrier to take-up.

29. We are keen to see the current raft of passported benefits streamlined for simplicity. A more co-ordinated approach is also likely to reduce costs. However, we appreciate that the sheer scale of the different benefits involved make it unlikely that one approach will fit all and we do not feel that a cash entitlement included within UC would be appropriate.

30. We would like to see more transparency in better-off-in-work calculations by ensuring that they make some reference to the value of passported benefits. We would also like to see the associated cliff-edges which act as barriers to work removed although we are concerned about how the Government would go about achieving this based on its cost neutral stance.

31. We are disappointed that comprehensive advice on passported benefits is unlikely to be available by October 2013, despite the significant difference that they make to low-income families.13

Views on impact monitoring: what the DWP’s priorities should be for monitoring the impact of the transition to Universal Credit

32. Universal Credit is a fundamental reform of the current complex system of benefit rules and therefore leads to both increases and reductions in the level of entitlements.14 It is imperative that on-going monitoring focuses on the regional impact of the Household Benefit Cap and learning from the Direct Payments Demonstration Projects. These two areas will bare significant impact on the way social landlords operate.

33. With the dual purposes of simplification and making work pay, we would like to see the 2014–15 UC reviews focus on the impact of work incentives on younger people and lifting families out of poverty. We would also like to see the impact of changes to passported benefits being monitored with assessments on the impact on take-up of benefits and work.

17 August 2012

1 NHHT, (June 2012), Home Options customer satisfaction survey

2 DWP (November 2011), Welfare Reform Bill Universal Credit Equality impact assessment

3 NHHT, (March 2012), General Needs income survey

4 DWP (November 2010), Universal Credit: welfare that works

5 NHHT, (May 2012), NHHT Welfare Reform Strategy

6 NHHT, (May 2012), NHHT Welfare Reform Strategy

7 Moody’s Investors Services (May 2012), Special comment on English housing associations

8 DWP (November 2011), Welfare Reform Bill Universal Credit Equality impact assessment

9 DWP (November 2011), Welfare Reform Bill Universal Credit Equality impact assessment

10 DWP (November 2011), Welfare Reform Bill Universal Credit Equality impact assessment

11 CAB (January 2011), Universal Credit: an exploration and key questions

12 DWP (October 2011), Universal Credit Impact assessment

13 SSAC (March 2012), Universal Credit: the impact on passported benefits

14 DWP (October 2011), Universal Credit Impact assessment

Prepared 21st November 2012