Submission to Work and Pensions Select Committee Inquiry on Universal Credit

Submission to Work and Pensions Select Committee inquiry on Universal Credit

Introduction

1.COSLA has been heavily engaged with the Department of Work and Pensions over the last five years as it has been involved in planning and implementing the transition to Universal Credit. Universal Credit has been an important issue for local authorities because these changes impact upon some of the more vulnerable individuals in our communities, many of whom also require support from local authority services. In addition, the replacement of Housing Benefit by Universal Credit impacts upon some of the core business of local authorities and all local authorities also have responsibilities in relation to housing and homelessness with many Scottish local authorities acting as social landlords.

2.While COSLA has welcomed a simplification of the benefits system, we have always had concerns that such an ambitious and challenging change could produce unintended consequences. Along with this, the introduction of whole variety of cuts to benefits and restrictions on eligibility to certain benefits have also impacted on individuals and local authority services.

Universal Credit processing and impact

3.While we understand that DWP is now reporting on improvements, authorities are advising that it has not uncommon that some claimants are not receiving payments until after 6 weeks and sometimes there have been long delays in the payment of housing costs.

Universal Credit payment monthly in arrears

4.Problems have also been noted related to the fundamental design of UC. The 7-day waiting period followed by a 5-week delay in receiving the first UC paymentis causing problems for UC claimants, landlords and Council Tax/rent collection. The assumption that claimants on low incomes leaving work will be able to cover rent and living costs for the whole of this waiting period is highly optimistic. Many claimants are starting off their UC claim with accrued debt on their rent and Council Tax accounts. The design of UC is adding significantly to those arrears. The longer time for the first payment can produce greater stress for households and more intensive early intervention required by local authority staff to minimise risks to collection.

5.COSLA has previously expressed our concerns about how effective Universal Credit would prove to be in relation to the payment of housing costs. Local authorities are now reporting significant rises in rent arrears. These appear to be compounded by the long delays in receiving the initial payment.

Has Universal Credit improved the accuracy of payments?

6.Universal Credit is designed to place more responsibility on the claimant and relies perhaps too much on the claimant’s knowledge of rent and service charges etc. There is considerable change for both claimants and DWP staff and the danger that payment can be based on inaccurate information.

7.A report by East Lothian Council in December 2016 stated, ‘The increased reliance on automated data transfer between DWP/JCP has seen many repeated experiences of errors, missing documentation and Data Protection breaches on the part of the DWP.’

It also referred to ‘lack of consistency and knowledge amongst DWP Service Centre staff’ and ‘lack of training of DWP staff in Service Centres dealing with vulnerable people.’

1. Local authorities are now less aware of the level of accuracy of payments or otherwise as they no longer have the same level of information as they would previously have had when administering housing benefit payments. This can present difficulties e.g. when someone applies for a discretionary housing payment or assistance from the Scottish Welfare Fund. Local authorities no longer have ready access to information on payments made by DWP such as Short Term Benefit advances.

What impact is Universal Credit having on rent arrears, what effect is this having on landlords and claimants, and how could the situation be improved?

1. East Lothian and Highland Councils have had most experience to date of the Full UC service in Scotland. There has been a marked increase in rent arrears. Highland Council has experience of 82% of Universal Credit claimants in arrears and an almost identical figure was cited by ELC in December. East Dunbartonshire Council which has more recently come onto full service has also identified a 56% increase in rent arrears among council tenants receiving UC. This is borne out by national figures emerging from social housing in England and in London boroughs such as Croydon.

1. East Lothian reported in December that, ‘the average rent arrears for a UC claimant is £898.89– to put this into context, the average rent arrears against a non-UC case are £589.49.’

1. COSLA has been consistently raising concerns about these impacts with DWP at all levels. We are aware of a variety of improvements DWP are making both to the ‘Live’ services and to the build of the digital system for the Full service. While we also understand that a full end to end review is underway on the ‘Housing Cost’ journey, these very significant impacts in the full UC service to date are alarming.

Would certain groups benefit from greater payment process flexibility and, if so, what might the Government do to facilitate it?

1. Powers were transferred to the Scottish Parliament over UC flexibilities under the Scotland Act 2016 and while these have yet to be implemented this has generally been welcomed by stakeholders as something which can assist both tenants and landlords. While the choice for all UC claimants to have more frequent payments, payments of UC housing element direct to landlords and the option of split payments in households will assist, COSLA believes that they will not be a panacea in mitigating all adverse impacts on rent collection and debts.

1. It is our understanding that the design of UC is such that there would still be a minimum of 6 weeks to receiving the first payment, which, for someone choosing a more frequent payment, might then only be half the regular payment. The dilemma of a reduced initial payment will arise for claimants at whatever point they choose to exercise this option is likely to act as a disincentive even if more frequent payments would assist their budgeting over time.

Does Universal Credit provide people in emergency temporary accommodation with the support they need, and how could this be improved?

1. The government’s welfare changes have changed the way the benefits system provides funding for temporary accommodation in several ways over recent years. In Scotland, the combination of payment under UC based on LHA rates and devolved funding to cover all other intensive management costs will still leave at least a £20m gap in the real costs of current temporary accommodation. The funding gap for local authorities will become more acute as Full UC rolls out.

1. Unfortunately, we are unsurprised about the difficulties now arising, in homelessness accommodation, difficulties which we have been advising DWP consistently over the last few years were likely to occur in the context of a monthly payment, incorporating housing costs, direct to individual claimants. These difficulties are compounded by the lack of any support for the first 7 days and the further 5 weeks before an initial payment and are threatening funding to vital homelessness services.

1. We understand that DWP has been working with a few London boroughs to gather data on the impact. COSLA members take very seriously their responsibilities in relation to homelessness and vulnerability and consider it important that action is taken in the short term to address the difficulties now arising before more vital provision is undermined.

1. It is also important to recognise that there are now considerable differences in statutory homelessness duties of local authorities in Scotland since devolution as compared to England, both in the range of people to whom a statutory duty is owed and in how temporary accommodation is organised. COSLA considers that,for all temporary accommodation provision used by local authorities in Scotland in discharge of their statutory homelessness duties, the most practical solution would be for local authorities to continue to pay the housing costs through the Housing Benefit system. Where individuals are already on Universal Credit, or would have to claim UC, this should be paid only for non-housing costs. In addition, the default solution should be that these housing costs are normally paid direct to the landlord providing the accommodation. Moving quickly to these arrangements would provide greater stability and safeguards for existing provision.

1. Regarding a longer-term solution, COSLA would advise against departing from this approach without full testing and learning from the likely impacts of any future alternative approaches. Now, it is unclear how long government intends that local authorities will continue to carry responsibility for housing benefit delivery. It appears that this will be for the foreseeable future, at least in relation to the payment of housing costs for those of pensionable age. Therefore, there appears to be no overriding reason to find a solution outside housing benefit for some considerable time and we would recommend that, the burdens on local authorities are fully considered, that housing costs for those in emergency and short term accommodation, including all temporary accommodation in Scotland are paid and fully funded through the housing benefit system.

What impact is Universal Credit having on the income and costs of local authorities, housing associations, charities and other local organisations?

1. Over and above the impact on rent incomes streams mentioned above, East Lothian and Highland Councils have also highlighted issues with the disconnect created between Council Tax Reduction claims and Universal Credit that did not exist under the previous legacy systems. A separate claim is now required for those on UC wishing to claim Council Tax reduction. Councils and DWP work coaches are alerting claimants to this requirement locally, however it still remains unclear how effective these local interventions are.

1. Councils are also reporting increased time and costs involved in processing of Housing Benefit stop notices, council tax reduction, discretionary housing payments and other assistance as well as rent collection activity

1. It is also not yet clear how far impacts are down to the inefficiency of processes and unfamiliarity of staff and service centres which DWP is continually working to improve. These impacts do however raise concerns about the preparedness of DWP to accelerate rollout later this year.

How well is Universal Support working, and how could it been improved?

1. COSLA would call upon DWP to take further action. The first week of a claim, when no payment is due, is clearly counter to the intentions of Universal Credit to provide a smooth journey and should be abandoned as it only serves to exacerbate problems arising. We would further suggest that the evidence is that a longer pause in rollout is needed to ensure that staff and systems are ready for the planned accelerated rollout programme due to commence after the summer. The department should not proceed with this faster pace, at the very least, until it can report on effective actions and improvements to the service. It is in no-one’s interest to proceed without confidence that staff and systems are fully ready.

What impact has the introduction of full Universal Credit service had in areas where it has replaced the live service?

1. The scale of adverse impacts on individuals and local authorities is increasing with much greater numbers of claimants and increased complexity of needs.

1. Issues are also arising because of the design of the Full service offering with the approach to implied consent no longer a feature of the Full service and previously agreed data sharing protocols no longer applying. This is curtailing council officers’ ability to make telephone enquiries about UC claimant’s entitlement and there is an increased reliance on the UC claimant providing information from their online UC Journal.

1. It is not clear yet how effective recent steps by DWP to improve communication by allowing claimants to give consent to the sharing of information through a UC journal entry is proving.

Contact:

Michael McClements

Policy Manager

0131 474 9307

March 2017

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