The local welfare safety net Contents

3Managing the risks

24.In this chapter we consider remedies for two key potential downsides of localised welfare: blurred demarcation of national and local responsibilities; and potentially counter-productive approaches to the collection of Council Tax debt from people on very low incomes.

Better joint-working and integration with Jobcentre Plus

25.Citizens Advice and others emphasised that one of the risks of localising emergency elements of the welfare system was the potential for blurred demarcation of responsibilities and confusion amongst applicants/claimants about where to turn in a crisis.26 We heard examples of this during our visit to the Zacchaeus 2000 Trust (Z2K), a third sector welfare rights organisation in Queen’s Park. One very ill and quite elderly man had been passed between the NHS, various council teams and the DWP. Prior to receiving help from Z2K he had spent time sleeping rough, as no single public body or agency was prepared to help him resolve his situation. His story emphasised the potentially bewildering interrelationships between the responsibilities of a range of public bodies.

26.Several councils told us that confusion also existed amongst DWP staff. A number of councils said that they often received referrals to their local welfare provision from Jobcentre Plus (JCP) in circumstances in which the claimant should in fact have first applied to one of the remaining elements of DWP’s Social Fund provision. This was particularly the case in relation to Short-Term Benefit Advances (STBAs), which are available in some circumstances when DWP benefit payments are delayed, and Hardship Payments, which may be paid to claimants whose benefit payment has been temporarily stopped for an infraction of the rules if they can demonstrate that they or their family would otherwise experience severe hardship. Paul Gray CB, Chair of the Social Security Advisory Committee (SSAC), confirmed that SSAC had recently discovered that as many as 40% of referrals to some council schemes were of this “inappropriate or premature” nature.27

27.The London Borough of Lambeth confirmed that there had been “teething problems and a series of inappropriate referrals” in the early days of its scheme. Councillor McGlone believed that it was a training issue and reported that the situation was improving.28 The DWP told us that it had recently raised awareness of STBAs amongst claimants and “refreshed” its guidance to DWP staff.29 Councillor McGlone, however, was concerned that the longer waiting periods for a first benefit payment inherent in Universal Credit would increase demand on local welfare assistance.30

28.Several witnesses emphasised the importance of joint-working between JCP, council benefit teams and other services to reduce confusion and blurred demarcation of responsibilities.31 Paul Gray and several others recommended that Jobcentre staff be co-located in the same offices as related council and other services. He explained that:

[…] it is so much easier if people are essentially in the same building. If we have an issue, rather than picking up the phone or doing an email I will pop downstairs or upstairs and have a quick chat, and it just builds the relationship much more effectively.32

29.Co-location of JCP and other services is happening to some extent already. Councillor John Fuller of the LGA told us that in his area, South Norfolk, council benefits staff are located in local Jobcentres one day per week.33 We know from a visit in connection with our recent inquiry into welfare-to-work that co-location is happening in Margate.34 The Government’s response to SSAC’s recent report included other examples, such as the Erith Hub in the London Borough of Bexley.35 Some local authorities reported that “one-stop-shops” had been established in their areas; for example, in Bolton, Greater Manchester, where credit union and over 50s services were located together, and local welfare assistance, DHPs and “a range of other services” promoted.36

30.The DWP told us that it was working with the DCLG to integrate the Troubled Families programme into Jobcentres; 300 Troubled Families Employment Advisers were now located with local authority welfare benefits teams. This was helping working age members of households experiencing a range of entrenched social problems to engage with employment support while also addressing deeper family problems.37

31.The DWP Minister (Lord Freud) expressed enthusiasm for much more widespread co-location of Jobcentres with a range of other local services. There is now backing for this from HM Treasury; in the recent combined Spending Review and Autumn Statement the Chancellor of the Exchequer announced that:

DWP’s estate will be reformed and reduced by 20% and the number of jobcentres co-located with local authorities will be expanded, benefiting claimants and those using government services while delivering a total reduction of 30% in estate costs.38

Lord Freud confirmed that the current JCP estate contract will expire in 2018. The Department was “very actively looking at all of the options right now so that we are in a good position in what is less than three years’ time.”39

32.Councillor Fuller argued that the advantages of co-location would be enhanced if the DWP and local authority benefit teams could share IT systems and data, so that they could check the status of claimants/applicants and more easily cross-refer. He emphasised that both local and central government were now part of the “Secure Government Network”, and recent improvements in government data security were such that any arguments against sharing of IT and information between local and central government from a data protection perspective were merely “excuses” for inaction.40

33.We strongly support co-location of JCP staff and Troubled Families Advisers with local authority benefit teams, where possible in “one-stop-shops” with other related services for people on low incomes, including credit unions. We are encouraged by HM Treasury’s support for co-location and welcome the DWP’s assurance that it will consider all options before signing new JCP estate contracts in 2018. We urge the DWP to take the fullest possible advantage of the period between now and 2018, by ensuring that options for co-location are explored in all JCP Districts. The potential benefits of co-location must, however, be balanced by consideration of accessibility for claimants in terms of distance from and transport links to their nearest Jobcentre or one-stop-shop.

34.We recommend that the DWP explore with the LGA and the DCLG the possibility of sharing IT systems and data which would allow reciprocal access to the respective parts of national and local welfare information systems.

Effects of Council Tax debt collection

35.As noted at the outset of this Report, many more people on very low incomes are paying at least some Council Tax under the new localised arrangements. Citizens Advice and Stepchange Debt Charity reported evidence of a correlation between the introduction of the localised schemes and increased Council Tax arrears. Stepchange told us that in 2012 around 21% of people coming to the charity for debt advice were in Council Tax arrears. The figure remained at 21% in the first quarter in 2013, the period immediately before the implementation of localised schemes. In the remainder of 2013 it increased to 26%. In 2014 it increased again to 28%. Francis McGee, Stepchange’s Director of External Affairs, also noted that the total number of Stepchange clients increased “extremely quickly” over the same period, so the proportion of clients with Council Tax arrears was “a bigger percentage of a bigger number”.41

36.Citizens Advice reported a similar experience. The number of Citizens Advice clients with Council Tax arrears problems increased by 14% between 2014 and 2015. In total, it had dealt with around 100,000 enquiries directly related to the localised schemes. Rachel Badger, Head of Policy Research at Citizens Advice, also told us that there was a correlation between the minimum payment threshold set by local authorities and the number of people presenting with Council Tax arrears. Institute for Fiscal Studies research for Citizens Advice found a 30–40% increase in the number of Council Tax arrears cases where councils required a minimum payment of more than 8.5% of Council Tax liability. It should be noted that some councils stipulate a minimum payment of 40%—the wider implications of such varied approaches are discussed in more detail in chapter 6.

37.A range of witnesses raised the issue of Council Tax debt collection. In particular, many were concerned about a recent rise in court summonses and the instruction of bailiffs by local authorities.42 Research by the Money Advice Trust found that 2.1 million debts were referred to bailiffs by councils in England and Wales in 2014/15, an increase of 16% in two years. The increase has been substantially higher in some areas; for example, in 2014/15 City of Cardiff Council referred 24,105 debts to bailiffs—equivalent to 15% of all properties in the local authority—an increase of 86% over two years.43 Citizens Advice told us that there was some evidence of councils issuing court summonses to raise revenue by adding fees to the debt already owed by residents, although it did not have data on how widespread a practice this was.44

38.It should be noted that the above figures are for local authority debts of all types and that localisation of Council Tax support cannot be established as a direct cause of the increase. Z2K told us that, in the course of its research into Council Tax reduction schemes in London, local authorities were unable to provide data on the underlying causes of Council Tax debt, as they do not routinely collect it. Joanna Kennedy, Z2K’s Chief Executive, was therefore concerned that DCLG’s review of localised Council Tax schemes (announced in oral evidence to our inquiry and discussed further in chapter 6) would be severely hampered by this lack of information.45

39.Francis McGee argued that there was a strong case for statutory protection for debtors from aggressive and counter-productive approaches to debt collection. Local authorities tended to be one of the worst-offending types of creditor. He said that a cross-sectoral “breathing-space” approach, the Debt Arrangement Scheme, “works brilliantly well in Scotland” and recommended the Government consider establishing a similar scheme in England and Wales.46

40.We recommend that the recently announced DCLG review of local Council Tax support schemes in England and Wales include consideration of the underlying causes of recent increases in Council Tax arrears and whether particular local approaches to Council Tax support have contributed to the rise. Should an absence of relevant data preclude this, we would request that the review consider reasonable steps which local authorities ought to take to record and report such information. We further recommend that the review investigate, and if necessary recommend actions to eradicate, local authorities issuing court summonses, and instructing bailiffs, as a method of raising revenue.

41.We recommend the Government launch a consultation on an England and Wales-wide debt “breathing space” scheme, drawing on the Debt Arrangement Scheme run by the Scottish Government. Local authorities and other creditors should be required to offer forbearance to problem debtors, including by freezing interest payments and enforcement action, provided that debtors engage with an appropriate debt advice charity or agency and enter into a debt resolution plan.

26 Citizens Advice (LCW0043); Child Poverty Action Group (LCW0050); Q3 [Paul Gray]

27 Q3

29 DWP and DCLG (LCW0057)

30 Q88. The DWP plans to gradually replace six existing benefits and tax credits with Universal Credit, a single, monthly household payment, over the course of the next few years. Universal Credit claims will be subject to an assessment period of one calendar month and seven days processing time before the first benefit payment can be made. Typically this will mean a claimant waiting three weeks longer for their first Universal Credit payment than for a Jobseekers Allowance payment, for example.

31 See, for example, GIPSIL (LCW0008); Derbyshire County Council (LCW0010); and The Highland Council (LCW0021)

32 Q4

34 Work and Pensions Committee, Second Report of Session 2015–16, Welfare-to-work, HC 363

36 Greater Manchester Combined Authority (LCW0038)

37 DWP and DCLG (LCW0057)

38 HM Treasury, Spending Review and Autumn Statement 2015, Cm 9162, November 2015, para 2.53

42 For, for example, Child Poverty Action Group (LCW0050); Citizens Advice (LCW0062). See also Advice York, Every Penny Counts: the real cost of Council Tax support, October 2015

43 Money Advice Trust, ‘Stop the Knock’, accessed 10 December 2015

44 Q33 [Rachael Badger]

© Parliamentary copyright 2015

Prepared 11 January 2016