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

1.0 Introduction

1.1 Places for People is one of the largest property management, development and regeneration companies in the UK. We own and manage around 62,000 homes and have assets in excess of £3.1 billion.

1.2 Our vision is to provide aspirational homes and inspirational places and our approach looks at all aspects of communities rather than focusing solely on the bricks and mortar provision of homes. Places for People’s innovative approach to place management and place making allows us to regenerate existing places, create new ones and focus on long-term management.

1.3 We welcome the positive implications of the introduction of Universal Credit for Registered Providers, but have identified a number of risks which we are currently working to mitigate with others in the sector and the Department for Work and Pensions.

1.4 Our response to the Select Committee inquiry focuses largely on the above work, as well as containing general comments on the issues covered by the inquiry.

2.0 General Comments

2.1 Although we welcome the positive implications for Registered Providers (RPs) of the implementation of Universal Credit (UC), we have also identified some risks inherent in the change. We are working with other RPs and the Department for Work and Pensions to mitigate these risks.

2.2 Our response to the Select Committee inquiry focuses mainly on our experiences so far of preparing our customers for the changes, as well as the work we have been doing with others in the sector and the DWP on data sharing proposals. We also give some more general views on the other issues raised in the inquiry, where we are in a position to comment on them.

2.3 Many details around the implementation of UC remain unclear. It is therefore difficult for us as an organisation to prepare for the changes fully. For our customers, this lack of clarity exacerbates the confusion they are already experiencing trying to cope with the radical changes ahead. Despite issuing comprehensive communication plans to help customers prepare, Registered Providers are unable to alleviate this confusion until Government provides clarification on specific issues, such as the changes to housing benefit eligibility rules with regards to service charges.

3.0 Response to the Issues Raised in the Inquiry

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

3.1 The move to Universal Credit represents the most radical welfare reform in 60 years. Registered Providers face a substantial challenge in making their customers aware of the changes and supporting them to manage their finances and avoid rising debt and the threat of eviction. Places for People has made a significant investment in a welfare reform action plan, including new full time posts to support the process.

3.2 In moving customers to a single monthly payment to replace their current package of benefits, many factors need to be considered, including:

the provision of advice and support for those who have limited budgeting skills;

potential disruption to channels of communication as a result of a change in service provision from local authorities to DWP;

the process for triggering payments to the landlord in the event of claimants not using their UC to pay their rent for a period of time; and

the potential high volume of enquiries to DWP from landlords wishing to establish whether tenants are in receipt of UC.

3.3 The DWP’s aim is that Universal Credit claims will be predominantly made online by claimants themselves. Based on our most recent customer surveys, we believe that only around 50% of Places for People customers have internet access. The picture is similar at Affinity Sutton where a recent survey found that 57% of their customers had internet access. DWP will therefore need to review its access channels for UC and ensure that customers can make postal and telephone claims as well as using the online self-service option.

3.4 Assuming responsibility for a single monthly payment to cover all household expenses will be a huge shift for many people currently used to individual weekly payments. This is aggravated by the fact that housing benefit will no longer be paid direct to landlords. Customers who for whatever reason fail to manage their money effectively will build up a substantial amount of arrears before the rental element of UC is switched back to their landlord. This will increase tenant indebtedness and mean that overall, an eviction is more likely to result. A rise in the incidence of evictions has very adverse implications for all parties concerned and could lead to social problems as well as negative publicity for both landlords and Government.

3.5 Currently many Registered Providers work closely with local authorities to help and support benefit claimants, both through the initial claim process and when their circumstances change. The change in service provision from local authority to DWP and disruption to channels of communication risks cutting the landlord out of the loop and restricting their ability to assist vulnerable tenants. The inability of landlords to assist with the verification process and high level of cases requiring support and assistance could also increase administrative burdens and delays within DWP.

3.6 Effective joint working arrangements between DWP and Registered Providers would mitigate against most of the risks outlined above. The arrangements would need to include the following:

the ability for landlords (where capable and qualified to do so) to act as benefit verifiers, thus reducing DWP workload and speeding up the processing of new claims;

the provision by DWP of prompt and timely information about UC claims to landlords, so landlords know which customers are in receipt of UC and are able to take appropriate action when these customers fall into arrears. This should include advanced notification of when a claimant is due to transfer over from housing benefit to UC, to enable landlords to offer support with accessing bank accounts and other financial products, as well as support in setting up payment methods for their rent. This will help to prevent customers from falling into rent arrears and possible homelessness as a result of eviction for rent arrears; and

prior notification by landlords to DWP of any changes in property charges, to ensure UC claims can be processed efficiently.

3.7 As mentioned above, Places for People together with several other large RPs are in talks with DWP to agree a feasibility study looking at the proposed joint working arrangements.

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

3.8 We believe that the introduction of the new “claimant commitment” should help to clarify to claimants what is expected of them in order to continue receiving their UC. We support the Government’s aim of providing more incentives to work through the UC system. However, we believe that the proposed system of conditionality and sanctions may prevent certain people from accessing work due to the uncertainty and hardship associated with losing their income, even for a short period.

3.9 Anecdotal evidence suggests that the rationale for sanctions can differ from area to area, with some Job Centre Plus branches taking a subjective approach to sanctioning claimants. In some instances this is the result of a recognition that in some areas of the country there is a significant lack of job opportunities; however, any subjectivity can lead to confusion for claimants which could contribute further to a perceived lack of incentive to progress into work.

3.10 We feel that the “added cost” of being in work has not been fully appreciated in calculations to “make work pay”, particularly care responsibilities which can be expensive and difficult to source locally. Whilst we support the Government’s aim to “make work pay”, we feel that these calculations need to be revisited in order that specific groups such as people with caring responsibilities do not experience a disincentive to work.

3.11 The Government’s proposals state a commitment to protecting vulnerable people and taking a balanced approach, which of course we welcome. Our concern is that there could be many valid reasons for someone to fail to comply fully with their claimant commitment at any one time. The Government should ensure that provisions are made to avoid people getting into a spiral of debt which could end up having bigger implications for state funding.

3.12 Hardship payments are clearly a last resort and we welcome the fact that these payments will still be offered to claimants who lose their benefits as a result of sanctions. If the Government goes ahead with its proposals to change hardship payments to loans where possible, we would urge them to set repayment terms that would not exacerbate any existing burden of debt to the extent that, for instance, the claimant may struggle to keep up rent payments.

Changes in the income entitlement of disabled people under Universal Credit

3.13 From April 2013, Disability Living Allowance (DLA) for adults aged 16–64 is to be abolished and replaced by the Personal Independence Payment (PIP). We acknowledge the aim to reduce costs by at least 20% as DLA spending has been increasing at an unsustainable rate. We welcome the Government’s aims to ensure that future support is targeted at people who face significant barriers to participating in society and also welcome the news that the Government intends to maintain the existing passporting arrangements including eg Blue Badge, Carers Allowance, and access to public transport.

3.14 We support the focus of the new Personal Independent Payment on the impact an individual’s impairment or health condition has on their daily life and we therefore welcome the new “daily living” component to replace the existing “care” component of DLA. However, we are concerned that with the daily living component being reduced to two rates, it is possible that many people who receive the lower rate of the care component of DLA will be at risk of losing their entitlement.

3.15 We therefore seek reassurances on the impact of reducing the care component from three awards to two. We are concerned that due to the Government’s 20% “reduction target”, and the focus on those “with the greatest need”, those currently receiving low awards will no longer receive financial assistance. There is a danger that the decision to award assistance could be led by Government targets rather than actual need. Those who receive the low-rate care component rely on this additional money to help them meet the additional costs of care they face.

3.16 The loss of DLA for many claimants will also mean the loss of the additional support through premiums and elements in other benefits, including the exemption from non-dependant charges.

The level of the earnings disregards

3.17 We welcome the new system for earnings disregards, which should see people better off even when they take up employment for a few hours a week. We acknowledge it is difficult to set the right level for disregards to ensure that “work pays”, and feel that the new system is fairer and provides better incentives to work.

Eligibility for and operation of passported benefits

3.18 The proposed system under Universal Credit will replace the current rules, which base entitlement on receipt of certain benefits, with a simpler and fairer system that bases entitlement on an income or earnings threshold. We welcome a simpler and fairer system that allows claimants to be clear about their entitlement to certain passported benefits. However, we urge the Government to give serious consideration to the appropriate level for these thresholds as well as creating a less complicated process for claimants.

3.19 We are pleased that the Government invites views on the review of passported benefits and its commitment that these benefits should not be removed completely when people enter into work. Given the potentially high monetary value and high number of passported benefits, the plans for staged withdrawal thresholds could also make it easier for claimants to manage the transition into work.

3.20 We believe an integrated, streamlined system would remove some of the administrative burdens currently associated with many passported benefits and deliver modern a service that fits within the principles of simplification and making work pay.

3.21 We would note that the consideration to devolve this process into the remit of devolved administrations could add a further complication to the effective communication of the changes to tenants. This could impact on our ability to effectively support tenants in low-income households, who may see an impact on their disposable income as a result of the changes, in meeting their rent payments.

Impact monitoring

3.22 Monitoring the impact of the introduction of Universal Credit will be a sizeable task for DWP. In our view, the DWP’s short-term priorities for monitoring the impact should be as follows:

RPs’ average rental arrears.

Number of evictions on grounds of rental arrears.

Percentage of total claimants using the online self-service portal to make and manage their claims.

Cost impact of support provided to individuals unable to manage their claims.

Number of cases where payment of the housing element of UC has reverted back to landlords as a result of rental arrears.

3.23 In the longer term, we feel that DWP should monitor the following areas in order to test whether Universal Credit is delivering on its wider objectives:

Overall number of UC claimants.

Percentage of UC claimants who have moved into work.

Number of cases involving fraud and error.

Incidence of child poverty.

15 August 2012

Prepared 21st November 2012