As part of the UK’s devolution arrangements, responsibility for welfare policy is transferred to Northern Ireland. When the UK Parliament passed the Welfare Reform and Work Act in 2012, the Northern Ireland Executive agreed to fund a package of measures, worth up to £585 million over four years (to the end of March 2020), to lessen the impact of some of the welfare changes on claimants.
The mitigation package is mainly made up of Welfare Supplementary Payments, which are paid automatically to all eligible claimants. There are two types of payments. The first are payments for up to four years which make up the difference between what claimants actually receive in benefits and what they would have received had the Social Sector Size Criteria (“bedroom tax”) and benefit cap not applied to them. The second are payments for up to one year to offset, in full or in part, loss of benefits because of a move from Disability Living Allowance (DLA) to Personal Independence Payment (PIP). The mitigation package also included one-off grants and loans through a Discretionary Support Scheme and Universal Credit Contingency Fund, and funding for independent advisory services for claimants.
The mitigation package was designed on the basis that Northern Ireland faces special circumstances that mean that welfare reforms should not apply there in the same way as in the rest of the UK. The clearest example of special circumstances is the nature of Northern Ireland’s social housing stock. Less than a fifth of social housing stock in Northern Ireland has only one bedroom, despite single working-age applicants making up 45% of the social housing waiting list. Social housing in Northern Ireland is also, in practice, segregated along cultural and religious lines. This means that the Social Sector Size Criteria (“bedroom tax”) would have a disproportionate impact on people in Northern Ireland if mitigations were not in place. Whilst the mitigation package is not a long-term solution to underlying problems within the social security system, special circumstances can justify different treatment. By the same token, however, claimants in similar circumstances in different parts of the UK should ultimately level up to similar levels of entitlement.
Overall, the mitigation package has been a success. Not all the funding allocated for the mitigation package has, however, been spent. The single main reason is that there was no Executive and Assembly to implement one of the main measures in the original proposed package. There was also a significant underspend in Discretionary Support Awards and the Universal Credit Contingency Fund, which is likely to be because they have restrictive eligibility criteria, such as the income ceiling for Discretionary Support Awards and the requirement that claimants must take out a Universal Credit advance before being eligible for grants from the Universal Credit Contingency Fund. Both these criteria should be removed.
The legislation which provides the legal basis for Welfare Supplementary Payments makes clear that the payments can only be made until 31 March 2020. The Department for Communities cannot change the legislation to extend the payments as it would need to be approved by the Assembly.
The ending of the mitigation payments in March 2020—in particular, the ending of Social Sector Size Criteria and benefit cap mitigations—would mean that over 35,000 households in Northern Ireland would see their incomes fall suddenly, some by hundreds of pounds per month. According to Department for Communities estimates, the ending of SSSC mitigation would affect around 34,000 households, who would be worse off by an average of £12.50 per week. The ending of benefit cap mitigation would likely affect 1,500 households, who would be worse off by an average of £42 per week.
A survey by the Department for Communities found that 78% of respondents were not aware of the Welfare Supplementary Payments Scheme—and 69% of SSSC (“bedroom tax”) mitigation recipients were not aware that the payments were due to end. The fact that claimants are not expecting the payments to end will only exacerbate the impact on households. Support organisations in Northern Ireland have rightly described this prospect as a “cliff edge”. The special circumstances in Northern Ireland that justified the mitigation package have not changed in the last four years.
The mitigation package should therefore be extended after March 2020. This should include the SSSC (“bedroom tax”) and benefit cap mitigations, disability-related mitigations already being paid to claimants, and DLA to PIP transition mitigation for 16 year-olds. The Department for Communities should also consider continuing the contract for independent advisory services after 2020.
The UK Government must act quickly to end the uncertainty around the mitigation package. The Department for Communities has said it would need to start contacting claimants in Autumn 2019 if it were not to continue. The Secretary of State for Northern Ireland should therefore make a statement to Parliament as soon as possible to make clear the UK Government’s intention to pass the necessary legislation to extend the mitigation package and bring forward such legislation to come into effect before the end of March 2020.
In the absence of such legislation, the Department for Communities has said that it could pay “bedroom tax” and benefit cap mitigations through Discretionary Housing Payments. The Department told us that this would be operationally extremely challenging. This is not surprising, given that around 35,000 claimants might be expected to apply for DHPs in a short period of time, through a system not designed to handle this volume of claims. The fact that such payments would be discretionary and not automatic would also risk some claimants slipping through the net. Whilst this option is preferable to the mitigation payments stopping altogether, the serious risks to claimants and the amount of money that would have to be spent on making changes to the DHP systems that could otherwise to be used to help claimants, should make clear to the UK Government that it has a responsibility to avoid this option having to be used.
We accept that legislation to extend the mitigation package falls within the scope of devolved competence. However, the circumstances surrounding the package ending are clearly exceptional: a potentially drastic impact on vulnerable people and no Assembly to extend the legislation. There are clear precedents for the UK Government legislating to continue payments, and a political consensus that the main parts of the mitigation package should continue. There is therefore no good reason why the UK Government cannot bring forward legislation to extend the mitigation package.
Universal Credit (UC) is the Government’s flagship welfare policy, which merges six separate benefits into one, paid as a single, monthly payment in arrears. Universal Credit claimants in Northern Ireland have additional “flexibilities” that are not available to UC claimants in the rest of the UK.
The five-week waiting period for Universal Credit is too long, creating financial difficulties for claimants and encouraging them to take on debt. This is not a problem specific to Northern Ireland: it is a flaw with the design of Universal Credit. The Secretary of State for Work and Pensions has recognised these problems and has said she wants to ensure that claimants receive their first payment as soon as possible, which is welcome. The Work and Pensions Committee will continue closely to monitor developments in this area.
In Northern Ireland, Universal Credit is paid to claimants fortnightly by default. This has worked well, making it easier for low-income households to budget. However, the advantages of fortnightly payment of Universal Credit in Northern Ireland would apply equally to claimants in England and Wales. We can see no reason why DWP cannot replicate fortnightly payments in other areas of the UK, and recommend that the Department for Work and Pensions give claimants in England and Wales the option to receive fortnightly payments of Universal Credit, with fortnightly statements.
In Northern Ireland, the housing costs element of Universal Credit is paid directly to landlords by default. In the rest of the UK, direct payment to landlords can only be made by request.
Whilst direct payment to landlords in Northern Ireland has generally worked well, it has not been without its problems. We heard concerns about the build-up of residual arrears, where housing benefit or the housing element of Universal Credit does not cover the full cost of an individual’s rent, and technical arrears, which occur because the payment schedules and payments due do not match. Because of direct payment to landlords, if claimants move house during their Universal Credit assessment period, their new landlord will sometimes receive the Housing Element for the full assessment period. It is, however, unclear why this happens if the Department receives the necessary information from claimants about their change in landlord. We recommend that the Department for Communities set out in detail, in response to this report, the work it is currently doing to address these problems. The Department for Work and Pensions should also work with the Department for Communities to ensure that the planned automations of UC flexibilities in Northern Ireland are in place within 18 months.
In Northern Ireland, a couple making a joint Universal Credit claim can have the payment ‘split’ between them on request. However, take-up of UC split payments in Northern Ireland has been extremely low, with only two Universal Credit claims making use of them. The experience of Northern Ireland shows that offering split payments on request is not enough to encourage and enable uptake by those who most need it. Split payments could be implemented in a number of different ways, and the Scottish Government’s planned implementation of UC split payments is an opportunity for the Department for Work and Pensions and the Department for Communities to learn what approach works best, with a view to applying it more widely, including in Northern Ireland. In the meantime, the Department for Communities should work with organisations that support claimants to advertise the option to receive split payments more widely.
The two-child limit is the Government’s policy that families are not able to claim child benefits for any third or subsequent child born on or after 6 April 2017.
Families in Northern Ireland are likely to be disproportionately affected by the two-child limit: 21.4% of families in Northern Ireland have 3 or more children, compared to 14.7% of families in the UK as a whole. We heard concerns that the two-child limit may discriminate against families with particular moral or religious convictions. In Northern Ireland, Catholic families are particularly likely to be affected in this way. The Government has argued that the two-child limit policy is designed to influence families’ decision-making. But the fact that many pregnancies are unplanned suggests that a number of families are not making an active decision to have an additional child. In Northern Ireland there is further complexity, because of the religious and cultural context and because of the legal status of abortion in Northern Ireland, notwithstanding recent Westminster legislation on this issue. The evidence we heard leaves us deeply concerned about the impact of the two-child limit on families in Northern Ireland.
In Northern Ireland, unlike the rest of the UK, there is a legal duty on third parties to report any information about serious offences that may help apprehend, prosecute, or convict an offender. In theory, this may mean that any woman who applies for the non-consensual exemption to the two-child limit should expect to have the case reported to the police by Jobs and Benefit Office staff. The result could be that women are deterred from applying to receive money to which they are entitled, and which their families need. The Department for Communities has offered various reasons why this duty is unlikely to apply to professionals who process applications for the non-consensual exemption. However, subtle distinctions and qualified assurances are unlikely to provide enough reassurance both to affected women and to professionals. If the two-child limit continues to apply in Northern Ireland, this anomaly must be addressed urgently, by the Secretary of State for Northern Ireland in the continued absence of an Assembly and Executive, or by an incoming Northern Ireland Executive.
The Northern Ireland Audit Office has an important role to play in reporting on the implementation of Executive objectives. In the absence of an Assembly, this scrutiny is more important than ever. Addressing poverty and deprivation is a clear objective from the 2016 draft Programme for Government. The NIAO should prioritise work on the effectiveness of measures to reduce poverty in Northern Ireland, and whether there is a “policy gap” in addressing poverty in Northern Ireland. As part of this, they should also report on the broader context, including the main drivers of poverty in Northern Ireland.
Published: 9 September 2019