Session 2012-13
HC 576 Progress towards the implementation of Universal Credit
Written evidence submitted by South Lanarkshire Council
Factual information about South Lanarkshire Council (SLC)
SLC is the fifth largest Council in Scotland with a population of 310,930 covering an area of 1772 square kilometres in central and southern Scotland
SLC services include:-
· Landlord of 25,430 council houses
· Social Work services
· Homelessness services to its residents with approximately 2,200 presentations per annum.
Executive summary of points detailed in evidence submission:-
The proposed arrangements for claims and payments and the provision of support and advice for claimants,
Self services projections are far too optimistic and do not account properly for the client group concerned. Insufficient planning and arrangements are in place to provide face to face assistance and whilst the DWP appear to now being acknowledging that they will require councils assistance in this there is insufficient detail as too how this would operate or indeed be paid for.
Progress with developing the necessary IT systems to administer Universal Credit.
The required number and variety of IT system changes to key council systems is highly unlikely to be successfully completed within the timescales. One major aspect of system development / changes will require the two-way exchange of information between the DWP and council’s systems and will require the development of interfaces between a substantial variety of different systems. Considering the timescale for the implementation of UC and based on past experiences it is highly unlikely that fully effective interfaces will be available to all councils and other social housing providers from 1 October 2013.
The proposed arrangements for the "claimant commitment", sanctions and hardship payments.
The proposed system of sanctions is complex and will be difficult to understand, especially for vulnerable groups.
To avoid serious financial hardship, it is important that vulnerable individuals and families are not penalised for innocent mistakes and that sanctions are only applied in exceptional cases.
Changes in the income entitlement of disabled people under Universal Credit.
The proposed changes to income entitlement for disabled people under UC do not fit with the government’s intention to support the most vulnerable in our society.
The impact of the changes on local authorities.
The changes will have severe financial implications for all councils both in relation to the loss of income for house rents, reduced budgets for the replacement of council tax benefit but also the requirement to provide additional services / assistance to the substantial numbers of residents who will be adversely affected.
The level of the earnings disregards.
The levels of earnings disregard should be reconsidered if the Government is serious in its aim to create the right incentives to get people back into work.
Impact monitoring
A wide range of indicators are detailed however the 2 key indicators must be
· reduce workless households
· reduce and ultimately end child/adult poverty
1 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.
Response
The presumption of online claiming relies heavily on internet coverage and capabilities where there are currently huge regional variations. There appears to be little recognition that customers living in rural areas may have unnecessary delays in claiming Universal Credit (UC). It is important that online claiming facilities are widely accessible as not everyone has access to online facilities.
In terms of the claims process the majority of customers will be able to utilise the self-service approach however it is important that where necessary customers can easily identify other means of claiming. We believe that a substantial number of claimants will still require assistance and therefore any assisted claiming facilities must be well financed by Central Government and provide a minimum standard of help to prevent regional variations in terms of take up.
Monthly payments of UC could result in customers struggling to align new payment dates with existing benefits and outgoings e.g. customers whose rent is charged fortnightly or four weekly. Many may struggle to bridge the gap between the date their rent is due and the date their UC payment is made. The cost of overdraft facilities prevents many from utilising them. We believe that significant work has to be undertaken to ensure appropriate banking facilities are available to customers claiming UC.
Paying UC to one member of a household is a good idea in principle bringing simplification and reducing fraud in the system. However it could lead to families being without money for a number of weeks if money is misused. Safeguards need to be built in to the claims process to ensure where family relationships breakdown, changes in circumstances/payee details are processed quickly to prevent hardship.
Local authorities in partnership with the voluntary sector are best placed to provide face-to-face support and independent advice. Strong links currently exist between local authorities and advice organisations and we are already actively engaged with many of those who will require access to face-to-face support. This role would need to be adequately resourced to protect local authority budgets, safeguard other services and to provide an effective service to the customer.
2 Progress with developing the necessary IT systems to administer Universal Credit, including the real-time information (RTI) system for PAYE taxation being developed by HM Revenue and Customs.
Response
The Council has identified that there will be significant IT implications associated with the introduction of Welfare Reform, and has prioritised work within the IT Service Plan for 12/13. Currently we are aware of likely changes to a range of IT Systems including Housing Benefit, Council Tax, Housing, Housing Benefit Electronic Document Records Management System and a number of on-line systems including our online benefits calculator.
Specific changes to these systems, including the many interfaces to other systems, including DWP, are difficult to specify at this moment in time due to the lack of clarity over specific replacement schemes, and the Regulations that will govern how these will be delivered. This is particularly the case in relation to the successor scheme for Council Tax Benefit and the proposed Scottish Community Support Fund. The Council has engaged with COSLA (Convention of Scottish Local Authorities) and the Scottish Government and is currently responding to the various consultation exercises underway.
We have engaged with our various software suppliers, who are also awaiting further clarification before determining the scope of any changes to existing systems. There are also implications with contracts with software suppliers and potential decommissioning of council systems.
In terms of preparations for the implementation of RTI the Council utilises Oracle eBusiness Suite to manage and support the delivery of HR, Payroll and PAYE. Our contract with Oracle provides for legislative and statutory changes, and we expect Oracle to design and deliver an enhancement to their current solution for implementation by April 2013. Oracle have issued a White Paper on RTI implementation and this is currently being reviewed by both IT and Finance/Personnel staff. We are also aware that Oracle are running a number of customer pilots of RTI. Whilst South Lanarkshire Council are not directly involved in these pilots we are maintaining a watching brief over any outcomes.
At present there is no detailed indication of funding from the DWP to support any of the above significant system changes.
3 The proposed arrangements for the "claimant commitment", sanctions and hardship payments.
Response
Claimant Commitment
The claimant commitment focuses on what a claimant must do rather than on assisting them to move towards work. It suggests that the behaviour of the person will determine their chances of success of getting a job.
The provision of support for benefit claimants to move into work is welcomed. For this to be successful and meaningful it should be properly resourced with a stronger focus on how the individual is supported according to their individual circumstances. The scope for personal advisers to contribute to the decision making process should be broadened and monitored to ensure it contributes to the aim of giving protection to those with the greatest needs.
Sanctions
The proposed system of sanctions is complex and will be difficult to understand, especially for vulnerable groups.
The application of sanctions is unlikely to get people into sustainable jobs. For this reason the application of sanctions should only be as a last resort and after "good cause" for non compliance has been fully explored. The decision maker should have the opportunity to consider if compliance would have made a difference to the person getting a job. If the answer is yes, they should be able to consider if the sanction would have a positive affect on compliance. Time and resources to explore the full circumstance of the non compliance before a sanction is applied should be given. Input from the personal adviser as well as evidence from other professionals should be sought, e.g. GP, Social Work and other support workers.
Research shows it is the most vulnerable who are more likely to be sanctioned and the least likely to seek help when things go wrong. Some will struggle to understand the sanctions regime and how to access advice and support to challenge decisions. It is vital that claimants are properly advised of their rights and given information on sources of help so that decisions can be challenged on a level playing field.
The impact of sanctions on an individual’s or family’s circumstances may be compounded by other changes to the benefits system, e.g. benefits cap and bedroom tax. Benefits may also be sanctioned where a person is fined. Fines of £50 may be imposed where a person has made a mistake and wrong or incomplete information has been given to the DWP or more where there has been fraud.
To avoid serious financial hardship, it is important that vulnerable individuals and families are not penalised for innocent mistakes and that sanctions are only applied in exceptional cases.
Hardship Payments
If all circumstances, including vulnerability are taken into consideration and sanctions only applied in exceptional cases, then hardship payments should be minimal. Given that they would be awarded to alleviate hardship because of vulnerability it is likely that this would be made worse by any attempt to recover.
4 Changes in the income entitlement of disabled people under Universal Credit, including those who may receive less income under Universal Credit than at present.
Response
Reduced disabled child additions
At present families with a disabled child may receive support through the disability element of child tax credit. The proposal provides this through a disability addition but will reduce help by half. This will affect families with a disabled child unless the child is on the higher rate of care or registered blind.
Abolition of the severe disability premium (SDP)
SDP provides additional support to disabled adults who live on their own or just with children, as long as no one is claiming carer’s allowance for looking after them. For disabled parents who are cared for by a child this can help reduce the pressure on their children.
Additional support for disabled adults in the support group for ESA
It is proposed that the means tested addition for those in the support group will increase. This means that couples with someone in the support group will gain. However those in the support group who live on their own (or with children) and don’t have a carer will lose their SDP and will be financially worse off.
Cuts to support for working disabled people
Tax credits provide in work support for people on low incomes. The disability element of working tax credit recognises that many disabled people have a reduced earning potential. This support will not be replicated in UC unless a person qualifies as not fit for work.
It is proposed that there is no extra financial help within UC for anyone found fit for work under the ESA work capability assessment. This could mean that someone for example who relies on a wheelchair to move around but can self propel 50 metres could be found fit for work and so will receive no more support than someone with no disability. Under the current system their entitlement to DLA would entitle them to the disability element of WTC.
The impact of Universal Credit on income for some disabled people will be compounded by other welfare changes likely to affect disabled people.
For example: time limiting of contribution based ESA: change to pensioners entitlements where one of a couple is under pension age; changes to childcare costs; changes to housing benefit entitlements.
The proposed changes to income entitlement for disabled people under UC do not fit with the government’s intention to support the most vulnerable in our society.
5. 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.
Response
The Welfare Reform Agenda is expected to have the most significant impact on local authorities since re-organisation in 1996.
In respect of Council Tax support, Councils will require to manage the migration from an established Council Tax Benefit scheme to a new local (Scottish) Council Tax reduction scheme, which is currently in the process of being developed. The timescales for development and implementation of this scheme are extremely challenging for local councils and their partner software suppliers and furthermore, the scheme to be implemented in February 2013 will be an interim scheme, to be replaced within 12-18 months when new arrangements are required under the Universal Credit regime.
There are major financial implications with the abolition of Council Tax Benefit, including the requirement on local authorities to meet the additional 10% funding gap, which will be reduced to 5% in 2013/2014 with one year support from the Scottish Government. Councils will also be financially exposed to a cash limited budget for a support scheme that is demand led, which creates an additional burden on council tax payers. Local authorities will lose DWP funding, previously made through administration grant to support CTB but it is estimated that 80% of processing staff will still be required to administer the new scheme. Again, this funding burden will fall to local council tax payers. The financial impact of CTB abolition alone to South Lanarkshire Council is estimated at £3.5m, equivalent to 0.5% of Council budgets. The level of continued funding will ultimately dictate the level of support which local authorities will be able to provide to claimants, the numbers of which we believe will not be insignificant.
There are also major implications for local authorities in managing a diminishing Housing Benefit caseload. Adequate benefit administration grant has to be provided to ensure successful migration. There are also concerns regarding the retention of sufficient expertise to deliver which will be required to deliver this statutory service.
There will be substantial financial implications for providers of Social Housing and Homelessness services. The ‘bedroom tax’ alone is estimated to adversely affect approx. 25% of tenants and the recovery of this shortfall in rent from tenants is highly unlikely. All providers will require a substantial increase in bad debt provisions due to the change in the way tenants will be required to pay their rent and the vulnerability of many in this sector. At present the legislation makes no allowances for tenants’ of homeless / temporary accommodation which require far more financial support for both through the provision of furniture, additional repairs to houses and additional support as examples. At present councils are awaiting further clarification to fully calculate the shortfalls but they are anticipated to be substantial. Councils are also concerned that, as a result of direct payment, they will experience increased rent arrears and costs associated with collection. The direct payment demonstration projects need to be closely monitored and the level of funding allocated to these projects to achieve a successful outcome needs to be recognised when their results are evaluated.
The transfer of responsibility from the DWP to Councils for the Social Fund will also present councils with additional financial burdens with the growth in demand for this expected to be substantial in light of the reduced levels of benefits paid.
6 The level of the earnings disregards.
Response
The method of determining earnings disregards is complex. Maximum and minimum earnings disregard are set for 5 different sets of personal circumstances. Eligible housing costs multiplied by 1.5 will be taken from the maximum earnings disregard. If this amount is more than the minimum then this amount applies. If this amount is below the minimum disregard then the minimum applies.
Only people who own their own home or who have very little mortgage left to pay will be able to get the maximum disregard. People who live in areas where housing costs are highest will be discriminated against.
At present people in receipt of ESA, IB or SDA can earn up to £95 for one year. If someone is in the support group for ESA they can earn up to £95 per week indefinitely. The proposed maximum earnings disregard for this group is £134.61 and the minimum £40. If housing costs was more than £26.41 then the earnings disregards for disabled people would be less than they currently are.
The levels of earnings disregard should be reconsidered if the Government is serious in its aim to create the right incentives to get people back into work.
7 Impact monitoring: what the DWP’s priorities should be for monitoring the impact of the transition to Universal Credit.
The DWP /UK Govt vision in relation to welfare reform is to
· reduce workless households
· help to end child/adult poverty
by introducing a welfare system that supports and rewards people moving into work.
The key priorities to be monitored therefore should be: -
· Poverty levels, including child poverty. There have been numerous reports from reputable bodies and research centres about the likeliness of increases in poverty/child poverty levels resulting from the changes to welfare benefits.
· No’s of workless households as well and employment rates. We are experiencing major economic problems and a lack of growth impacting on the number of jobs available.
· Satisfaction with systems/accessibility (rural impacts). If one of the purposes is to simplify the system for the recipient, satisfaction/ease of use should be measured.
· Change in rent arrears in Social Housing sector
· Change in rent charges in Social Housing sector
· Number of tenants requiring budgeting ‘top ups’
· Number of in evictions in Social Housing as a result of rent arrears
· Number of homelessness cases
· Number of requests for Social Fund assistances
· Number of refusals for Social Fund assistance
· Change in the number of claimants for Council Tax Support vs. Budget transferred
· Number of cases of residents seeking debt advice.
· Mental health and wellbeing. Many support organisations are reporting examples of claimants wellbeing suffering as a result of the changes which in turn could have major impacts on health related services; family life and in turn life choices and chances.
· Number of assisted claims and who provided the assistance
· Number of new claims for Universal Credit compared with historic comparable data on new claims for legacy benefits
· Number and percentage of claims made by the different methods
· Average length of time from claim to award
· Number of requests for direct payment to landlord of Housing Credit received and approved
· Levels of fraud and error detected and recovered
· Volume of appeals submitted and outcomes
16 August 2012