Universal Credit and Other Welfare Reforms – a Local Authority Perspective

John Wright

21 November 2012 www.local.gov.uk

Universal Credit• Aims to make benefits system simpler by merging

out of work benefits and tax credits into one award, including Housing Benefit and make work pay.

• Implementation Oct 2013 to 2017; pathfinder roll out in Greater Manchester region from Apr 2013

• Digital by default - 80% of transactions on line• Direct payment monthly in arrears to a household

rather than an individual. • Jun 12 – Jun 13 direct payment demonstration projects

involving six councils/HAs

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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 up to an upper age limit linked to the qualifying age for pension credit.

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Pension Credit

• UC not payable to people in receipt of pension credit, except where one of a couple under pension credit age, in which case treated as household eligible for UC.

• Housing Benefit for these households replaced by Housing Credit

• To be introduced to same timescale and payment terms as UC, though not starting until 2014

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Benefit Cap• Aims to restrict amount of benefit working age

claimants can receive to average earned income of a working household after tax and national insurance. Applies to working age households

• To be set at £500 per week for couples and lone parent households and £350 per week for single person households

• Until UC to be delivered by councils through Housing Benefit

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Benefit Cap

• Bereavement Allowance • Carer's Allowance • Child Benefit • Child Tax Credit • Employment and Support

Allowance (except where it is paid with the support component)

• Guardian’s Allowance • Housing Benefit • Incapacity Benefit • Income Support

• Jobseeker's Allowance • Maternity Allowance • Severe Disablement

Allowance • Widowed Parent's

Allowance • Widowed Mothers

Allowance • Widows Pension • Widows Pension Age-

Related

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When added together the benefit cap will limit the total income that can be received from the following benefits:

Benefit Cap

• Does not include council tax benefit • Will not apply for those qualified for Working Tax

Credit or in receipt of the following benefits:– Disability Living Allowance – Personal Independence Payment (from April 2013) – Attendance Allowance – Industrial Injuries Benefits – Employment and Support Allowance, if paid with the

support component – War Widow's or War Widower's Pension

• 9 month grace period for those in continuous employment for previous 12 months

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Local Welfare Assistance• Replaces community care grants and crisis

loans • Funded from un-ringfenced grant to be paid to

upper tier and unitary authorities• Provides local support to vulnerable groups• Can be in cash or in kind• Indications that councils choosing mixture of

the two, but with a greater emphasis on in kind rather than cash.

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Housing related reforms

• Oct 2011 - LHA reduced from 50th percentile to 30th percentile of market rates and frozen from Apr 2012

• From Apr 2013 to be adjusted by CPI• From Apr 2011 5 bed rate of LHA removed – max

rate is for 4 bed property• From Jan 2012 single under-35s only eligible for

shared rate of LHA• Apr 2013 – introduction of size criteria in social

housing.

Serious Fraud Investigation Service

• DWP, HMRC and council fraud investigation services to become partnership to ensure single investigation in respect of Welfare Benefit and Tax Credit fraud

• Council staff remain as council employees• Councils still responsible for non welfare

related fraud

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Comment• While we welcome:

• Simplification of benefits and tax credit system with the introduction of UC

• Recognition that councils are best placed to design systems to support the needs of their own communities.

• Views differ on how people’s behaviour will change as a result of the reforms, but clear councils will be crucial in influencing the dynamic/behavioural changes the government is seeking, particularly in strategic housing role

• But implementation raises a number of issues for councils

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Impacts and Issues (potential & real)• General

• Data exchange• IT readiness• New burdens• Demographic migration?• Loan sharks, Credit Unions and Stop Loan Sharks

Team (https://www.gov.uk/report-loan-shark )

• Introduction of UC• Face to Face delivery• Managing run down of HB delivery• Future of staff (TUPE issues)• Monthly direct payments• Passported benefits

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Impacts and Issues (potential & real) • Introduction of Benefit Cap

• Provision of information• Sufficiency of DHPs• Rent arrears/increased cost of collection?• Increases in B&B and Temp Accommodation?• Overcrowding?• Increase in rough sleepers?• Reputational impact?

• Local Welfare Assistance• New role for councils• Various options being considered

• SFIS• Future investigation of tenancy and council tax fraud

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Questions?

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