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Update and Impact of Welfare Reform

Update and Impact of Welfare Reform. Wednesday 20 th November 2013. Welcome from Chair. Welfare Reform: The emerging picture. Allen Graham Chief Executive Rushcliffe Borough Council. Reforms to date. Localised Council Tax Support Schemes Local Housing Allowance Reform

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Update and Impact of Welfare Reform

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  1. Update and Impact of Welfare Reform Wednesday 20th November 2013

  2. Welcome from Chair

  3. Welfare Reform: The emerging picture Allen Graham Chief Executive Rushcliffe Borough Council

  4. Reforms to date • Localised Council Tax Support Schemes • Local Housing Allowance Reform • Under occupation penalty • Benefit Cap • Local Welfare Assistance Schemes

  5. Welfare Reform Steering Group • Representatives of upper and lower tier authorities • Sharing experience, intelligence and good practice • Data collection exercise

  6. The emerging East Midlands picture …. • Localised Council Tax Support Schemes

  7. Localised Council Tax Support Schemes analysis • The data in the previous slide demonstrates that the benefit claimant count in the East Midlands has increased or remains static. • DWP position nationally is that benefit count should be falling due to unemployment falling but the reason for the East Midlands profile may be due to many claimants in part time work or on zero hours contracts • Implications of other benefit changes are also impacting on low paid working families-Tax Credits • Collection rates vary between an increase of 0.59 in one district to a fall of 1.25% . • 88.9% of respondents report a fall in collection • Cost of recovery is increasing • Initial rates of recovery are falling further down the year as more people are finding it harder to pay

  8. Local Housing Allowance Reform

  9. Local Housing Allowance Reform Analysis • Local authorities could lobby for additional funding in respect of DHPs • Have DHP budgets been profiled? • Potential for local authorities to work as a consortium providing support particularly for smaller authorities

  10. Under Occupation Penalty

  11. Under occupation penalty analysis • Numbers affected have come down • There may be issues regarding initial data accuracy due to discrepancies in local and central government data • Thought could be given to how the DHP criteria is drawn up in individual local authorities to support these vulnerable people • Stock profile-smaller properties are not immediately available?

  12. Benefit Cap • Numbers of people affected by the benefit cap

  13. Benefit Cap analysis • Numbers have fallen from those predicted due to improved data accuracy from initial predictions

  14. Welfare Assistance Scheme Analysis • Early issues with interpretation from DWP staff • Local provision has led to more efficient delivery of the fund • Local authorities can react to local circumstances • Move away from cash to benefits in kind • Most schemes have been reviewed. One authority has withdrawn the scheme in 2014/15

  15. Universal Credit

  16. Where next? Building a further suite of indicators including:- • Homelessness presentations • Empty residential properties • Social Housing Rent arrears • Advice and guidance services requests

  17. East Midlands Labour Market • November DWP figures indicate falling unemployment 7.1% and rising employment 72.4% • A fall in the number of people claiming JSA (0.1%) but an increase in those claiming JSA for 12 months or more (5.2%) and 5.6% increase for those claiming for more than 24 months • National data confirms that increase in employment is particularly in part time employment

  18. Key Issue for Members • Does this picture resonate? • What are your key concerns despite what the data may imply?

  19. Local impacts of welfare reform Rose Doran, Senior Adviser, Local Government Association East Midlands 20/112013 www.local.gov.uk

  20. The welfare reforms Changes to tax credits Changes to Housing Benefit (HB) for renters in the private sector Tightening of eligibility and the restriction of contributory Employment and Support Allowance (ESA) to one year The replacement of Disability Living Allowance (DLA) with Personal Independence Payment (PIP) The replacement of Council Tax Benefit with locally-determined Council Tax Support schemes The removal of the “spare room subsidy” for most HB recipients in social housing The introduction of a cap on total benefit receipt The uprating of benefits and tax credits by 1% instead of the CPI The replacement of the Social Fund with Local Welfare Support The introduction of Universal Credit

  21. Breakdown of projected savings in 2015/16, Great Britain (£ million) www.local.gov.uk

  22. Universal Credit UC replaces the following benefits/tax credits: Working Tax Credit, Child Tax Credit, Housing Benefit, Income Support, Income-based Jobseeker’s Allowance Income-related Employment and Support Allowance. Will support working age adults and children Monthly payment to household Online claims and interface

  23. The LGA will Help councils as they support their residents through the changes the government’s welfare reform programme will make Influence the government’s decisions about councils’ future role in the welfare system.

  24. The local impacts of welfare reform The LGA commissioned the Centre for Economic and Social Inclusion (CESI) to look at the scale of overall aggregate gains / losses resulting from the reforms at local authority level and the scope for mitigation through a housing and / or employment route for those affected by reductions in household income.

  25. Cumulative impact Estimates that the income of households claiming benefit will be on average lower by £1,615 a year – or £31 a week – in 2015/16 as a result of welfare reforms. This excludes the impact of Universal Credit. At a local authority level, the average impacts per claimant household are relatively evenly spread – with all regions except London seeing average losses between £1,500 and £1,650 per year. Larger impacts due to more people out of work and/ or on low incomes in work in the northern half of the country balanced by far higher housing costs in the southern half of the country. The impacts of reforms are likely to be most strongly felt in areas with the highest dependence on benefit

  26. Impact of Housing Benefit reforms Around one in ten working age households will be impacted by one or more of the Housing Benefit reforms, with an average loss of £1,215 per year - or £23 per week . (If you exclude London, the average loss per household falls to £940 per year). 70% of which will be households where no one works. Households are generally more likely to be impacted in the north than the south of the country Impacts per household are significantly greater in southern England – reflecting the high costs of housing in these areas.

  27. Strivers v skivers? Overall, 45% of households of “working age” receive one of the main state benefits (ie a department for Work and Pensions (DWP) benefit or tax credits) The report estimates that three fifths (59%) of all welfare reform reductions fall on households where somebody works. The reductions for working households are greater than the reductions for households where no one works in 314 of the 325 local authorities in this analysis Will Universal Credit improve work incentives? Increasing local focus on the working poor

  28. Mitigation The Government’s own research suggests that behavioural responses to welfare reforms have been limited so far CESI estimate that in their (relatively generous) central scenario 23% of the total households impacted by the key housing benefit reforms may be successful in taking steps to mitigate the impacts of reform through a housing or employment route Once plausible responses by tenants are taken into account DHPs would cover just £1 in every £7 of the impact of housing reforms on tenants.

  29. For the reforms to work… There is a need for greater local freedom and flexibility for councils to address the under-supply of affordable housing There is a need for greater freedom and flexibility for councils to deliver strong local economies and support people into employment The is a need for local knowledge and discretion in supporting people with particular needs or vulnerabilities both with claiming Universal Credit and managing / mitigating the impact of the reforms – Community Budgets approach All of the above must be adequately and appropriately funded

  30. Managing impact at the local level Local context: housing; employment; economy Individuals and households: support with claiming; debt advice; stability and resilience

  31. Council and LGA concerns Universal Credit Housing Employment SFIS Disability reforms Local welfare schemes; council tax support 12th December conference

  32. Further information… www.local.gov.uk/finance www.cesi.org.uk rose.doran@local.gov.uk

  33. Understanding Community Concerns Richard Evans & Helen Child LeicesterShire Citizens Advice Bureau @LeicsShireCAB

  34. The National Picture • 2,294,740 benefit enquiries in last 4 quarters • 36% total CAB enquiries • 191,994 in East Midlands = 39.4% of enquiries • 1,854,983 debt enquiries in last 4 quarters • 29% total CAB enquiries • 130,803 in East Midlands = 26.8% of enquiries

  35. The National Picture Universal Credit is yet to reach Leicestershire – already advised 17 clients enquiries Welfare Reform has reached the service

  36. National Trends Benefit Change Under-occupancy Universal Credit PIP Sanctions Knock-on Impact Referrals to food banks Energy price rises Rising pay day lending

  37. Under-occupancy nationally Huge concern about impact, particularly on vulnerable people Highlighted the lack of available alternative accommodation for people who do want to downsize The number of clients presenting with rent arrears owing to local authorities and housing associations are rising – up 10% and 6% on this time last year

  38. Under-occupancy locally Single disabled client, prompted to move from 4 bed to 2 bed, but has been told she does not qualify for overnight carer exemption. Client can either move again or absorb payment of £11.91 p/w Single client with depression, he is carer for his adult son who lives with him. They have a 3 bed because client’s ex-partner and her children have only just moved out. Now struggling to pay 14% and NDD

  39. Universal Credit nationally Conducted baseline research into UC Identified UC was relevant to 50% of clients Of those, 92% would need support to transition 85% would need help in more than one area of transition 81% of clients likely to be UC either unaware of UC, or unaware of impact

  40. Universal Credit locally In Q1 47% of issues raised involved benefit which will be subsumed by UC – suggesting our client group will be significantly effected We already assist significant numbers of clients with forms – at least 175 in September alone Greater impact expected in Leicester – more clients who are not confident in reading/writing English

  41. PIP nationally Q1 – 8,395 advice queries relating to PIP Collecting evidence on processes and decision Concern about removal of lower rate care equivalent Loss of enhanced mobility component for people who make effective use of mobility aids – motability equipment lost, independence compromised

  42. PIP locally Limited roll out, but have already advised 431 people about PIP No local assessment centres – one client asked to go to Cardiff! Capita missed 2 home visit appointments for one client, without any notice or explanation One client – a British national since birth – asked to send their original passport before a claim could be started

  43. Sanctions nationally Q2 – 64% increase in problems with sanctions on last year Focus on the available options – increased demand for food banks and reliance on local welfare provision

  44. Sanctions locally • Client sanctioned for not attending an interview when he was told by potential employer – twice – that he should not attend because he lacked necessary skills for the role • Client has been left with no money coming in. He has become reliant on local food banks. He feels he has been labelled a “scrounger” but was acting on the instructions he was given

  45. Sanctions locally • Client sanctioned for 3 months and not eligible for hardship payment • Client had no money for food or essential bills. He could not wash himself or his clothes. He resorted to using disabled toilets with shower facilities and drying himself with paper towels

  46. Sanctions locally Many clients report not being told about hardship payments Research in Leicester suggests people with mental health or addiction problems, and people who do not speak English confidently are over-represented in people receiving sanctions

  47. Knock-on impacts National Referrals to food banks East Midlands CABx report 125% increase in referrals in last 6 months Rising energy prices Choosing between heating and eating Pay day loans Clients struggling with benefit cuts or sanctions are using high cost loans. UC monthly payments likely to exacerbate this Local Local food banks report being swamped – asking to be removed from referral lists Our own hardship funds used to buy energy credits One client using Wonga to pay the rent

  48. Local welfare provision Some local experiences... • ESA claim lost – no advance could be paid – welfare refused • not in receipt of qualifying benefit • Client claiming but not receiving ESA – welfare refused – not in receipt of qualifying benefit • ESA appeal mysteriously cancelled – welfare refused – not in receipt of qualifying benefit

  49. Predictions • Mandatory review – no payments during this period, no deadline for how long decisions can be reviewed • Likely to lead to more people with no income and no access to local welfare provision • Claimant Commitment replacing the Job Seekers Agreement • Likely to be more stringent – we could lose volunteers – one volunteer now needing to apply for 30 jobs per fortnight

  50. Increasing role for Citizens Advice Explanation – independent review of what changes mean to the individual client Options – holistic discussion about what client can do to minimise exposure Action – help with forms, accessing other support Training – over 20 of our staff and volunteers can now deliver financial capability training Debt advice – helping people stay in their homes, helping councils reduce the costs of debt recovery

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