IRRV Submission: Welfare Reform Bill: Public Bill Committee: Call for Written Evidence

Summary

1.         The Institute’s position has been to support the principles behind "Dynamic Benefits"; and to support the introduction of the Universal Credit (UC).  However, we do not support the inclusion of housing costs within UC in any of the current proposed delivery models, as it will not bring about the intended system simplification.  

2.         The housing cost element of UC needs to be localised, in order to provide assurance to the housing and rental market; develop local relations and help prevent homelessness; bring the claim process to the vulnerable; and to assist in rooting out fraud and error through local knowledge.  

3.         All other aspects of UC should be introduced first, and a housing costs component only introduced once the system has been tried and tested; otherwise housing provision for existing housing benefits claimants and some of the most vulnerable in society will be thrown into disarray. The Institute seeks full completion and discussion of the following prior to the Bill being enacted: a risk assessment on the introduction of UC; a full equality impact assessment on the inclusion of housing costs in UC; and an impact analysis been undertaken on the extent to which the Universal Credit will impact upon rented private sector provision.The Institute also seeks in the legislation the saving of housing benefit and council tax  benefit provisions, as a contingency measure

4.         The level of support for housing costs and support for mortgage interest is expected to be significantly reduced under UC.  We have concerns that this will bring further disruption to households, communities and housing markets at a time of heightened economic uncertainty.  The Institute seeks in the Bill provision for centrally funded emergency support for those most disadvantaged in the move to UC. 

5.         The Institute seeks provision in the Bill for LAs to have a clear and key role in delivering UC.  Local authorities (LAs) can provide a better delivery model for UC and should be able to bid for more than a gatekeeper role for UC, as they can deliver innovative, efficient and effective client-facing services for UC.  Crucially they can provide the localised service provision that is lacking in the present UC delivery models and which is a fundamental requirement for UC. 

6.         The provision to allow payment of housing costs to the landlord in respect of social sector tenants should be maintained in the long term under UC; and not just in respect of exceptional cases.

7.         LAs face significant costs in the transition to UC.  The Institute seeks provision in the Bill for the DWP or Treasury to meet these costs.

8.         The Institute is opposed to the provision at Clause 107 to curtail the prosecution powers of local authorities in relation to housing benefit and council tax benefit.  We ask for the Bill to retain for local authorities the full powers to participate and lead in the investigation and prosecution of fraud cases. 

Body of Submission

Under the present proposed delivery models UC will not bring about system simplification if housing costs are included

9.         The government view is that UC will be easier to understand and claim than the existing benefits system and will bring about significant improvements in take-up, which in turn will help to alleviate issues of acute need, such as child poverty.  UC will not be a simplified system if it includes a housing costs component, because it will still require means testing, and will still require a complex set of rules and calculations to deal with the myriad different financial circumstances that apply to claimant households.

10.       UC can be viewed as simply a rebranding of the pre-1982 supplementary benefit system, which was in operation before HB was transferred to LA’s to operate.  That original system failed to deliver an adequate service, which is why it was transferred to LAs to operate.  We believe that the same will happen with UC if it includes housing costs. Many significant issues require delivery safeguards, including the following:

·         The system will rely heavily on HMRC delivering a "real time" computer system, which does not exist yet.  It has already been reported that delivery delays may be possible.  Real time reporting of myriad changes in circumstances will be a major system challenge.

·         We understand that there is uncertainty about whether the technology will deliver payments in respect of children direct to the main child carer in the household, which the present system provides.

·         The system needs to be able to calculate and process claims, and amend for household changes in circumstance, without creating payment delays – otherwise there will be destabilisation for claimant households. 

Keep housing costs out of UC until the system is tried and tested

11.       The housing element in UC is markedly different to the other five benefits components of UC, which simply include the basic living needs.  To reduce the risk of severe disruption in housing provision all income related benefits for living needs should to be set up and working properly before a merger of housing benefit (HB) into UC is considered.

12.       The Institute seeks completion and discussion of the following prior to the Bill being enacted:

·         a Risk Assessment on the introduction of UC;

·         a full equality impact assessment on the inclusion of housing costs in UC; and

·         an impact analysis been undertaken on the extent to which the Universal Credit will impact upon rented private sector provision.

The level of financial support for housing costs

13.       The level of support for housing costs and support for mortgage interest is expected to be significantly reduced under UC.  We have concerns that this will bring further disruption to households, communities and housing markets at a time of heightened economic uncertainty.  The policy to reduce funding for housing costs, at a time of radical system upheaval, produces a increased threat of household and community destabilisation.  The Institute seeks in the Bill provision for centrally funded emergency support for those most disadvantaged in the move to UC.    

14.       The Institute seeks provision in the Bill of measures to ensure claimants do not end up having to accept substandard accommodation, simply because it is all that they can afford due to the reduced financial support.  Consideration could be given to achieving this by linking benefit entitlement with good quality housing and accommodation that meets minimum standards; covering for example heating and insulation levels.  

Local authorities can provide a better delivery model for UC

15.       The Institute seeks in the Bill provision for LAs to have a role in delivering UC. Local authorities (LAs) can provide a better delivery model for UC and should be able to bid for more than a gatekeeper role for UC, as they can deliver efficient and effective client-facing services for UC.  Crucially they can provide the localised service provision that is lacking in the present UC delivery models and which is a fundamental requirement for UC.  There are many aspects of UC that require or would benefit form this localised approach:

·         To combat fraud creeping into the system LA’s carry out regular intervention work on claims to ensure that the details held for the claim is still correct.

·         Operation of any ‘local scheme’ elements, such as the current disregard of war disabled pensions and war widows pensions

16.       Claimants will be expected to apply on-line over the internet for UC.  But the majority of LA customers will not have the skills to apply on-line or will face accessibility issues. Additionally, a large proportion of customers are vulnerable.  Convenient, face-to-face facilities will be required. 

17.       LAs carry out a large number of home visits for vulnerable people to assist in form filling and gathering information to process HB. This will also be a service requirement under UC.

18.       LAs have well established and proven customer facing services for older people.

19.       Localised knowledge possessed by LAs aids in the validation of private sector tenancy information, verification of non-dependants, sub-tenants, lodgers and excluded tenancies; conducting residency checks etc.

20.       LAs can demonstrate an excellent track record in providing innovative services that are fully inclusive of the most vulnerable in society.  That expertise is being missed if LAs are not fully involved in, or allow to bid in, providing alternative delivery models to the proposed DWP model.  There is considerable scope for LAs to offer UC solutions that offer best fit for their areas: for example through shared services, partnership working with the private sector and local/regional hub working.  Such models could allow for LA front office data gathering, updating and viewing when required.

21.       The Institute seeks an impact analysis of the proposed delivery models, in addition to impact analysis of using LAs as a delivery vehicle.  Post-introduction, there will be a need for an independent performance monitoring system for UC.

Allow housing cost payments to the landlord in respect of social sector tenants

22.       We have concerns that under UC payment of housing costs for social sector tenants will be made to the tenant instead of the landlord, except in vulnerability cases.  It is understood that payments to landlords will still be available when UC is introduced; but the longer term intention is for payments to be made to the tenant.  We ask for this intention to be reversed, and for the option of payments to the landlord to continue under UC, for social sector tenants.  Otherwise, we face a rise in housing disruption for tenants and revenues shortfalls for LAs.

Transitional costs to local authorities

23.       LAs face significant costs in the transition to UC.  The Institute seeks provision in the Bill for the DWP or Treasury to meet these costs, including:

·         Consequential staffing costs, generated in part by the movement of HB professionals out of the sector.

·         IT costs, in developing legacy systems,

·         Costs in supporting legacy systems

·         Contractual severance costs

Prosecution Powers of Local Authorities

24.       The Institute is opposed to the provision at Clause 107 to drastically curtail the prosecution powers of local authorities in relation to housing benefit and council tax benefit, which instead will fall to a new Single Fraud Investigation Unit. Such a Unit cannot tackle housing and council tax benefits fraudata sufficiently local level.  We ask for provision in the Bill to retain for local authorities the full powers to participate and lead in the investigation and prosecution of fraud cases.