Work and Pensions Committee - Universal Credit implementation: meeting the needs of vulnerable claimantsWritten evidence submitted by St Mungo’s

1. Introduction

St Mungo’s has been opening doors for homeless people since 1969. We currently run over 100 projects, providing accommodation for more than 1,700 people every night and helping thousands more who are rough sleeping or at risk of homelessness. St Mungo’s delivers a range of residential services from emergency shelters to semi-independent flats, as well as non-residential health, education and employment services. We also prevent homelessness through our housing advice programmes.

St Mungo’s services are based on a recovery approach and we aim to work in partnership with clients in a personalised, effective way. Our clients often have complex problems that cause, or are caused by, homelessness; we deliver holistic support to help people rebuild their lives.

1.1 St Mungo’s welcome the opportunity to contribute to the Work and Pensions Committee inquiry into progress towards implementing Universal Credit. We consulted directly with clients to inform our response.

1.2 This response submits evidence on areas specified by the Committee. It also submits evidence on an additional area—service charges in supported accommodation—as this is of special concern to St Mungo’s and our clients.

2. General Observations

2.1 St Mungo’s believe Universal Credit has the potential to help our clients through strengthening incentives to work and simplifying the benefits system. However, we have significant concerns over the potential for Universal Credit to impact negatively on our clients and their recovery from homelessness.

2.2 There is a theme running through legislation measures that are likely to hit the most vulnerable the hardest, further excluding them from society. The State of the Nation report recognised that a core goal for the Government was to “improve the quality of life for the worst off.”1 The Social Justice Strategy2 recognised that there was a need to help people facing multiple disadvantages to successfully move into work. We are concerned that Universal Credit could work against these goals.

3. SummarySt Mungo’s Key Concerns Around Universal Credit

3.1 Direct, monthly payments to claimants are a risk to the health and safety of vulnerable people. They could also make it more difficult for vulnerable claimants to find and retain accommodation. People who live or have recently lived in supported housing should be exempt from direct payments.

3.2 Service charges are higher in supported accommodation, reflecting the support needs of people who live there. The Draft Regulations do not take account of this and are totally unsuitable for supported housing.

3.3 People with needs around literacy or who find it difficult to use computers will need assistance to make digital claims. There must be alternatives in place and robust mechanisms for identifying those who need them.

3.4 It is vital that the claimant commitment should be handled sensitively. Claimants should have the option of being accompanied by an advocate when they discuss the claimant commitment with an advisor.

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

(a) Monthly payment to one person in the household:

“It’s dangerous and it’s going to cause more homelessness.” St Mungo’s client

Claimants receiving awards on a monthly basis will find it extremely difficult to budget and their health and safety could be put at risk

4.1 We are unaware of any major issues around the current frequency of benefit payments. It is still common for many employees to be paid weekly.

4.2 Many of our clients find it difficult to manage their benefit payments over the current two week intervals between payments. If claimants were left with an entire month between payments, this would severely test their ability to budget.

4.3 This is particularly true for our clients with mental health issues and learning difficulties. It is likely that monthly payments would also put the 45% of our clients who are socially vulnerable3 at a greater risk of being targeted and exploited financially.

4.4 Under the current fortnightly arrangements, some of our clients spend much of their benefit on drugs or alcohol in the first few days after they have been paid, despite support from staff. Our staff have raised concerns that monthly payments to our clients would lead to more deaths in our projects, as our clients would potentially “binge” on dangerous quantities of drugs and/or alcohol. With such large quantities of cash, they would also be more attractive targets for drug dealers.

Direct payment of the housing element could threaten vulnerable people’s housing security and supported accommodation provider’s financial viability

4.5 Due to many of our clients’ limited ability to budget and prioritise spending, it is highly likely that they would not pay all or some of their rent. We would struggle to subsidise clients who built up arrears and would potentially have to evict them. This could increase homelessness as our clients are unlikely to have any other accommodation options.

Impact on clients’ ability to find independent accommodation

4.6 We are extremely concerned that further limiting direct payments to landlords would make it more difficult for our clients to move out of our supported accommodation into independent accommodation.

4.7 It could make it particularly difficult for our clients to move into private rented accommodation. Landlords that we work with assume that there is a risk associated with housing someone who has a recent history of homelessness, but that this risk is mitigated if Local Housing Allowance (LHA) is paid directly to the landlord.

4.8 We believe that very few of the private landlords we currently work with would be willing to house our clients if the housing element of Universal Credit (UC) went directly to clients. People who have moved out of supported accommodation should be able to have the housing element of UC paid directly to their landlord for 12 months.

Supporting a client’s transition

4.9 Paying the housing element directly to clients could also make the personal transition from supported accommodation to independent accommodation more difficult. During this period claimants may use the housing element to meet other expenses, thereby potentially putting their new accommodation at risk.4

4.10 In addition to these concerns, the proposed changes will also lead to extra complexity for our clients who will receive Personal Independence Payment (PIP), as this benefit will be paid every four weeks rather than monthly. Currently, 30% of our clients receive Disability Living Allowance (DLA) and may be affected by this.

(b) The presumption of a predominantly online, self-service claims process

4.11 There is a need for a well designed alternative to the digital by default approach for claimants for whom it is unsuitable. Many of our clients need sustained and long term support to be able to use the internet, others may never be able to use the online interface.

4.12 35% of our clients need support to complete a form, 7% are unable to speak English and 7% have learning difficulties.5 These clients will not be able to make an online claim without considerable assistance.

4.13 The claim form should contain a phone number that people can contact if they are having difficulties. Given the low incomes of many UC claimants, this number should be free to call from any phone. Claimants should also be able to send a text message, in which they can ask for someone to phone them. The initial claim form should include a tick box that the claimant can tick to confirm that they are able to maintain their awards without ongoing assistance.

4.14 If a claimant is finding it difficult to complete an application then the system should be able to pick up on this and prompt them to seek support via means outlined above. People should also be assisted to maintain their online claims, for example a text could alert claimants when a message has been sent to their online account.

4.15 Claimants should not be expected to rely on an internet connection that they cannot afford There will be a need for Jobcentres to invest in additional internet access to allow UC claimants to confidentially access their claims.

4.16 There will also be circumstances where it is not possible for claimants to submit information electronically, eg submitting a signed doctor’s note. There therefore need to be a postal address that this information can be sent to.

5. The proposed arrangements for the claimant commitment, sanctions and hardship payments

In cases where a personalised claimant commitment is drawn up it is vitally important that this is done so in sensitive and transparent manner.

5.1 The claiming process could be a stressful period for claimants, especially for those who have mental health issues or have learning disabilities.

5.2 Advisors should be aware that people who have recently been through the Work Capability Assessment (WCA) and have been unexpectedly found fit for work could find the process especially stressful, as expectations around work related activities are likely to increase dramatically. Around a third of our clients who are on Jobseekers Allowance after going through the WCA have one or more mental health problems, including diagnoses of schizophrenia, depression, anxiety and bi-polar disorder.6

5.3 Jobcentre Plus (JCP) staff may not have the necessary skills to avoid aggravating these problems when discussing the claimant commitment. St Mungo’s therefore believe that claimants should be able to request that they are accompanied by an advocate when discussing the commitment with an advisor. Claimants should also be able to ask for an independent third party or their advocate to mediate throughout their claim.

5.4 Claimants should also be able to request a of change personal advisor if their current advisor does not understand the barriers to employment that they face.

The claimant commitment should recognise the challenges that homeless people face.

5.5 Homeless people are more likely than the general population to have poor skills and education, poor physical and mental health, face practical barriers such as a lack of suitable clothing or relevant documents and to be subject to employers’ negative prejudices.7

5.6 JCP should work with homelessness organisations to ensure that staff are aware of these issues and are trained in how to support homeless claimants. JCP should also ensure that any programmes they fund/commission include specialist support for homeless claimants.

Claimants should not be pressurised by financial considerations into signing an inappropriate claimant commitment.

5.7 The Regulations state that a claim cannot be processed until the claimant signs the claimant commitment. If a person is not comfortable with the contents of a claimant commitment, it is possible that they may benefit from a longer period of time over which they can further discuss the commitment with their personal advisor. In these cases the date of the first payment will be pushed back as the person’s claim will be submitted at a later date.

5.8 The prospect of an extended period between the initiation of the claim and the first payment may discourage claimants from questioning any elements of the claimant commitment that they are uncomfortable with. They should therefore have access to an advance payment over this period in order to allow them the necessary time to develop an appropriate claimant commitment.

Sanctions should automatically trigger direct payment of the housing element to the landlord.

5.9 If people’s standard allowance is cut as a result of a sanction, then they may feel like they have no choice but make up the shortfall from the housing element, jeopardising their ability to pay for their accommodation.

5.10 People who are vulnerable could be more likely make up shortfalls from the housing element of UC if sanctioned. People with learning difficulties or mental health issues may find it more difficult to plan ahead and budget accordingly. Vulnerable clients who have been sanctioned may therefore be at significant risk of falling into arrears, risking eviction.

5.11 The loss or cancellation of benefits was a factor that led to 5% of our clients becoming homeless.8 Paying the housing element directly to landlords would act as a safety net, helping to ensure that the introduction of UC did not cause more people to become homeless.

The application of more severe sanctions could lead to complete disengagement.

5.12 The evidence around sanctions is mixed—a review published by the Joseph Rowntree Foundation9 found that while sanctions could be effective at reducing benefit caseloads, there were sufficient grounds to cast doubt over whether they had positive impacts on long term employment and earnings.

5.13 We are particularly concerned about the prospect of sanctions that last for three years. These are likely to have a significant impact on people’s income that extends over the three year period as claimants pay back hardship payments. Imposing such a severe sanction could lead people to leave the welfare system entirely, finding alternative sources of income from crime, street activity and the illegal labour market. In the words of one client, “There will be an increase in prostitution.”

5.14 It is unclear how sanctioning someone for this length of time would help them to enter employment. The evidence around long term sanctions suggests that the longer the sanction the more likely a claimant is to leave welfare unemployed or with a poorly paid job.10

5.15 UC sanctions should be rigorously evaluated from the onset. The evaluation should examine whether sanctions are more likely to be imposed on vulnerable claimants and whether sanctions improve employment outcomes for vulnerable claimants.

6. Service charges and supported accommodation

6.1 Service charges are higher in supported accommodation as residents require a higher level of service provision. These higher charges pay for services that are vital to our clients’ safety and physical well being. We are often obliged to provide these services through contracts with the local authorities that commission our services.

6.2 To make people in supported accommodation pay these charges would be wrong in principle, as the services meet needs which require support. Imposing these costs on people in supported accommodation would be similar in principle to charging people in hospital for services received while in-patients.

What is being proposed?

6.3 The draft Regulations suggest that service charges will only cover the cost of cleaning communal areas, cleaning external windows and services necessary to maintain the fabric of the accommodation. It is unclear what would constitute “services necessary to maintain the fabric of the accommodation.”11

Potential impact

6.4 If the draft Regulations were applied to St Mungo’s supported accommodation, and service charges in supported accommodation were treated in the same way as general needs housing, then there would be a dramatic increase in the amount that our clients would be liable to pay for service charges. Not only is this wrong on principle, it is also unworkable as our clients would not be able to meet the extra costs.

6.5 The extent of the extra costs that our clients would face can be demonstrated through comparing what are currently eligible service charges in one of our residential services in London, and what would be eligible service charges in the project if the draft Regulations in were applied.

6.6 Services that are currently eligible, but that would become ineligible under draft Regulations could include communal utilities, Council Tax, gardening and a communal TV aerial. These services cost a total of £14.23 per client per week. Clients would also continue to have to pay £10.00 for service charges that are currently ineligible and would remain ineligible under UC. This would mean that in total clients would pay £24.23 for service charges each week—an increase of over 142%.

6.7 If it is assumed that the standard allowance is equivalent to Job Seeker’s Allowance, ie £71.00 per week, claimants required to pay £24.23 per week to meet ineligible service charges would be left with just £46.77 per week to meet all other expenses.

6.8 The situation would be even worse for people who were under 25. If their standard allowance was equivalent to the JSA rate for this group, £56.25, then they would be left with just £32.02 per week after paying ineligible service charges.

6.9 If the draft Regulations were applied to supported accommodation then it is likely that many claimants would be unable to afford to pay for the increased ineligible charges, leading to arrears and possibly leaving providers with choice other than to evict them. It is also possible that claimants would not want to enter supported accommodation due to the potential cost, for deciding that they would prefer to live on the streets.

Service charges for supported accommodation can work under Universal Credit

6.10 Service charges vary considerably in our projects, not only because of projects’ location. They are driven by the size and maintenance requirements of the buildings and the needs of the client groups that are housed. In view of the variation caused by these factors, it would not be possible to fix levels of service charges nationally or in a given geographical area.

6.11 Service charges under UC should allow local authorities and providers of supported accommodation to maintain current arrangements, which are set at levels that are appropriate for each particular project. It is also important to ensure that the funding for eligible service charges in an area is fluid, and can respond to changes in the provision in an area, eg the opening of a new project or changes in the delivery of services in a project.

17 August 2012

1 HM Government (2010), State of the nation report: poverty, worklessness and welfare dependency in the UK

2 HM Government (2010), The Social Justice Strategy

3 St Mungo’s (2012), Client Needs Survey (CNS). St Mungo’s defines someone as socially vulnerable if they are vulnerable to exploitation or are unable to form appropriate social connections.

4 The FOR-HOME study, found that rent problems/arrears were the most common reason for tenancies failing. Crane, M, T. Warnes and S. Coward (2011) The FOR-HOME study.

5 St Mungo’s (2012), CNS.

6 St Mungo’s (2012), Client Needs Survey (CNS).

7 St Mungo’s (2010), Work Matters.

8 St Mungo’s (2012), CNS.



11 Draft Claims and Payments Regs. (2012) Section 52.

Prepared 21st November 2012