The impacts of welfare reform on residents in Brighton & Hove

The impacts of welfare reform on residents in Brighton & Hove

A report to Brighton & Hove City Council from the Centre for Economic and Social Inclusion and Rocket Science UK

Jane Colechin

John Griffiths

Tony Wilson

10 June 2015

Contents

Executive summary ........................................................................................... 3

1 Introduction ............................................................................................. 15

Aims and objectives ........................................................................................ 15

Methodology .................................................................................................. 15

Report outline ................................................................................................ 18

2 Context and welfare reform overview ..................................................... 19

The Brighton & Hove context .......................................................................... 19

An overview of welfare reform ........................................................................ 24

Estimating cumulative impacts of welfare reform .............................................. 26

The cumulative financial impacts of welfare reform in Brighton & Hove ............. 27

Understanding non-financial impacts ............................................................... 36

Conclusion ..................................................................................................... 38

3 Resident experiences of welfare reform .................................................. 39

Resident characteristics .................................................................................. 39

Residents’ levels of understanding of changes to benefits ................................. 41

Key groups impacted by welfare reforms ......................................................... 43

Cross-cutting impacts of welfare reform ........................................................... 48

4 Resident responses to welfare reform ..................................................... 57

Residents’ capacity to respond to benefit reform impacts .................................. 57

5 Supporting residents ................................................................................ 68

Identifying impacts on residents and communicating effectively ........................ 68

Engaging with those residents most at risk or at crisis ...................................... 72

Providing targeted support to respond to reform .............................................. 75

Building resilience ........................................................................................... 79

Annex A – Characteristics of research participants ....................................... 82

Annex B – Approach taken for cumulative impact modelling ........................ 86 The impacts of welfare reform on residents in Brighton & Hove

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Executive summary

The Centre for Economic and Social Inclusion (Inclusion) and Rocket Science were commissioned by Brighton & Hove City Council to assess the impacts of government welfare reforms on Brighton & Hove residents and services, to explore how residents have responded to changes, and to provide the Council with recommendations on the design and delivery of future support and services. The research commenced during the spring of 2014 and the fieldwork with residents was completed between September 2014 and January 2015.

Inclusion adopted a mixed, quantitative and qualitative approach. This comprised four key stages of work:

 Scoping – a rapid review of local and national evidence, supplemented by twenty in-depth interviews with staff and stakeholders and an online survey of stakeholders

 Quantitative analysis – in particular combining local administrative Housing Benefit data with national survey and administrative data, to enable modelling of the cumulative impacts of reform for different areas and family types

 In-depth qualitative research with residents – comprising 35 face-to-face interviews and three focus groups with those affected by reforms

 Options appraisal – through two workshops with Council officers and stakeholders, supplemented by a further round of in-depth interviews

The Brighton & Hove context

Brighton & Hove has recovered strongly from recession, with more residents now in work than ever before and average wages rising. However this strong recovery has been driven by higher skilled and higher paid work, with most of the gains not being shared by those claiming ‘out of work’ benefits or on low earnings. Overall, 18,300 residents in Brighton & Hove claim an out-of-work benefit – more than one in nine of the adult population.

Brighton & Hove is among the more deprived areas in the country, and particularly in the south of England. The City ranks in the top 20% of local authorities nationwide for its concentrations of deprivation and in the top 30% for the proportion of the population living in deprived areas. Deprivation is particularly pronounced on measures of income and employment. The impacts of welfare reform on residents in Brighton & Hove

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The city is also characterised by a housing market that has become increasingly unaffordable. Fewer than 2% of the homes advertised for rent would be affordable for those claiming Housing Benefit, and no homes would be affordable for claimants aged under 35. The shortfalls between the lowest priced rented houses and the maximum Housing Benefit award are over £300 a month. And while the Council has succeeded in building the first new Council homes in a generation, demand for social housing far outstrips supply, with around 20,000 households on the Housing Register.

Compounding these challenges, Council funding has reduced by £77 million over the last four years and is expected to reduce by a further £102 million over the next four – at a time of population growth and rising demand. Inevitably, this means that the Council will continue to shrink in size, employing fewer people and working in new and different ways with its partners, providers and residents.

The cumulative impacts of welfare reform

It is within this context that the government’s welfare reforms have been felt. This research has been concerned with capturing the impacts of all reforms since 2010, including changes to disability benefits, Housing Benefit, tax credits, sanctions and the introduction of the benefit cap and the social sector size criteria (or bedroom tax/ spare room subsidy).

The financial impacts of welfare reform within Brighton & Hove have been significant and widespread. Using modelling developed for this project, we estimate that around 25,400 households within Brighton & Hove have seen their benefits reduced as a result of reforms. On average, these households are £2,300 per year (£44 per week) worse off than would have been the case if benefit reforms were not introduced. Welfare reforms have reduced benefit spending within the City by around £59 million per year.

The average impacts in Brighton & Hove are in the top 10% nationwide. This is driven by very high private sector rents, which in turn lead to significant losses from reforms to Housing Benefit. We estimate that 85% of the cash impacts of reform are accounted for by cuts to tax credits, lower uprating of benefits, and reforms to Housing Benefit in the private rented sector. The social sector size criteria and the benefit cap account for just 3% of the financial impacts of reform (£1.5 million).

These headline figures mask wide variations in household impacts. The benefit cap, for example, affects only 163 households but has an average impact of £3,964 per year. Meanwhile benefits uprating affects over 24,000 households with an average The impacts of welfare reform on residents in Brighton & Hove

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impact of £306 per year. Reforms to the Local Housing Allowance in Housing Benefit affect 10,455 households with average losses of £1,192 a year.

Cumulative impacts for different household types

We have modelled reform impacts for eleven household ‘types’ based on their age, family formation, tenure and disability. We find that:

 Impacts on disabled people are on average 13% higher than for non disabled people – at £2,490 per year. Around 40% of those impacted are disabled.

 Women see losses around 22% higher than for men, at £2,520

 Older people (45-64) see smaller losses than for younger age groups, with young people aged 18-24 seeing the largest losses, at £2,600

Looking at household types, we find that those living in social housing or not on Housing Benefit generally face smaller impacts. However, those living in social housing who are disabled face far larger impacts than their non-disabled peers: £1,780 compared with £1,035.

For private renters, age, disability and children all make significant differences to the impacts of reform. Among the under 35s, impacts for those with children are more than twice as high as for those without. Over 2,000 young families with children are over £4,400 worse off this year as a result of welfare reforms. For the very small group of these families where one or more family member is disabled (around 245 households), those impacts rise to over £5,000. For those aged over 35, childless households see losses of less than £2,000, compared with losses of around £4,000 for those with children (and larger losses for larger families).

Understanding non-financial impacts

Welfare reform is likely to be a contributing factor to the large growth in temporary accommodation in the City (which has more than doubled over the last five years), the growth in the waiting list for social housing (now standing at 20,350 households) and the growth in homeless decisions (up by nearly 50% since 2010).

For residents of social housing, welfare reform is contributing to a growth in rent arrears. 55% of Council households affected by the size criteria are in arrears, on average by £292 (with 71 households owing more than £500). Overall, arrears have risen by 52% between 2012/13 and 2013/14, from £639,000 to £971,000. The impacts of welfare reform on residents in Brighton & Hove

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Impacts of welfare reform

Residents interviewed for the study were from a variety of backgrounds and the research captured a wide spread of welfare reform impacts. Participants had typically been affected by three reforms, with six participants had been affected by more than five reforms.

Levels of understanding of changes to benefits

Residents’ knowledge and understanding was found to be weaker for two main reasons: first, a lack of trust in official communications, and/ or secondly, due to lower capacity to understand written communications. This former group tended to ignore communications and relied instead on their own networks for information. The latter group included those with learning difficulties, dyslexia or health conditions. Some vulnerable residents had had home visits from Council staff, and as a consequence were much clearer about reform impacts and support options.

There were also differences in the level of residents’ understanding between different reforms, partly linked to differences in capacity and trust. Most of those affected by reforms to disability benefits, sanctions, the benefit cap or the size criteria understood that they had been affected or would be in the future. Less well understood changes were to Council Tax and to the Local Housing Allowance. Many residents reported having their (private rented) housing benefit reduced, but few – if any – understood why this had happened.

Across all participants, there was a general confusion and bewilderment at the scale and succession of changes to benefits, with it often being difficult to distinguish between changes.

Cross-cutting impacts of welfare reform

By far the biggest impacts reported were financial. For those with multiple reform impacts, or affected by benefit reforms with large financial penalties, impacts were often significant and growing. Some households in the private rented sector had benefit shortfalls of upwards of £500 a month, with residents rapidly acquiring debts and being threatened with eviction or receiving court summons for Council Tax arrears. Most were acutely aware that their position was unsustainable, but were not clear on what they could do to alter it.

More broadly, the research found both immediate and medium term impacts on standards of living – with residents eating less, heating less, buying cheaper food The impacts of welfare reform on residents in Brighton & Hove

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and attempting to mitigate effects on their children. Most described growing gaps, as benefits increased by less than bills and housing costs.

Residents also reported that their capacity to manage money and deal with financial emergencies was significantly reduced, with savings depleted and sources of spare income gone.

There appeared to be series of responses that residents would make towards dealing with their debts.

 For those who could, additional loans from family or friends were used. However, residents felt increasingly guilty about using these channels.

 For those without access to informal lending, residents generally either looked to crisis loans or Discretionary Housing Payments. However, some residents felt that there was now no funding available to help meet their financial needs.

 In a small number of instances, residents turned to pay day lenders in order to make up shortfalls. This included some residents with mental health problems, who appeared to have poor social networks and were particularly vulnerable to irresponsible lending.

The majority of residents reported significant effects on their health and wellbeing. Residents reported feelings of powerlessness and a lack of perceived options to change their situations, leading to stress, anxiety and in some cases insomnia and low level depression. For those with pre-existing conditions, financial strains exacerbated these or made them harder to manage. In addition, we found widespread impacts on residents’ ability to maintain relationships with family, take part in social activities and engage with friends and networks.

A number of participants, particularly those claiming health-related benefits, were significantly impacted by the perceived constant need to (re)apply for benefits, justify themselves and challenge decisions. This contributed to deeply negative views about their own skills and abilities, and to be constantly reminded of the negative impacts of their illness or disability.

At family and community level, welfare reform could both strengthen but also add strain to existing bonds. Some residents reported that cuts in benefit had led to strains in relationships and arguments. More broadly, familial and community networks appeared to be rallying round to help ‘tide over’ members that were in financial difficulty. However, it was also clear that residents felt that this mode of support was unsustainable over the longer term. The impacts of welfare reform on residents in Brighton & Hove

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Responses to welfare reform

This study found little evidence of desire or capacity to move to affordable accommodation or to find employment as a solution to their reduced benefit income. Overall, residents were in ‘crisis management’ mode – dealing as best they could with individual crises around benefits, money, housing, family and so on, with the underlying drivers of those crises almost always going unresolved.

On housing, many residents reported significant structural barriers. Most commonly, those in the private rented sector wanted to access social housing at affordable rents – but knew that they were unlikely to get this. Those looking in the private rented sector were acutely aware that it was unaffordable, leading some to live in over-crowded, sub-standard accommodation. All residents had very strong desires to stay in the city – driven by emotional and community ties, family networks and children’s needs.

The research found very little evidence of respondents finding employment or taking steps to prepare for or look for work. Many reported that they wanted to work, but faced a range of barriers. Internal barriers were around health conditions and disability, relevant work experience and the length of time out of work (due to ill health, caring or unemployment). Many also reported that there were unlikely to be suitable jobs – in particular, that could fit around caring or health conditions.

Experiences of advice and support

A number of residents were benefiting from multiple different sources of advice and support. These were particularly services in the voluntary sector including Brighton Housing Trust, The Federation of Disabled People, Citizens Advice, The Bridge and the Brighton Unemployed Centre. Disabled residents and those with health conditions who could access advice services were greatly helped by these, particularly where they were seeking to navigate the complexity of the system.

Care workers appeared to be effective gateway practitioners to other services for the most vulnerable residents and were often singled out for praise, while food banks were identified as an important support – providing ‘breathing space’ where there were particular short-term needs.

There were mixed experiences of support from the Council and Jobcentre Plus. Negative experiences were usually around their roles in administering welfare reforms – in particular Council Tax or checking benefits eligibility. This led to often low levels of trust and negative views of services. Where residents had received more personalised support – for example from a Council housing adviser or a The impacts of welfare reform on residents in Brighton & Hove

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Jobcentre Plus work coach – experiences could be very positive. However, many of those interviewed had had very little or no recent experience of employment support, or had not approached the Council so were not aware of what support may or may not be available.

A number of participants reported that they had received Discretionary Housing Payments, although there was less evidence that this had led to any longer-term changes in their circumstances.

In general, support was often (necessarily) short-term in its nature, with few signs that this was linking with longer-term support around budgeting, housing or employment. People often then conceived of their own needs in the short-term. A number of residents felt that they needed a concrete, practical solution to their problems.

Finally, many respondents were aware of Universal Credit, and most wanted specific information on what the changes would mean for them. Some felt that monthly payment would be a positive step, but the great majority were worried about it. Some residents without IT skills were concerned about the move to an online only system, feeling that support should still remain in person. Most residents felt that they would simply deal with Universal Credit when it arrived.

Supporting residents

We consider that there are four key priorities for future work, as follows:

 Identification and communication – monitoring impacts, identifying key groups and residents most negatively affected, targeting communications

 Engagement – reaching those at greatest risk and engaging them effectively

 Targeted support – to manage and mitigate the impacts of reform

 Building resilience – towards longer-term responses (financial, employment and housing)

Identifying impacts on residents and communicating effectively

Whilst many of these issues have been identified as areas of concern both by the Council and by stakeholders, they are not systematically and regularly monitored at a City level. There would be value in the Council, and its partners, exploring the scope to regularly collect, share and monitor data on the impacts of welfare reform across the City. This sort of approach would ideally monitor both The impacts of welfare reform on residents in Brighton & Hove

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Coping/ struggling

•ikely most of those affected

•ften working households

•maller losses, fewer 'cumulative' impacts

At risk of crisis

•amiles in the private rented sector

•isabled people or those with health conditions

•Those affected by multiple reforms, sanctions

•ontributing factors, e.g. poor mental health or poor networks

In crisis

•here multiple problems or impacts combine

•Those reaching a tipping point - debt, illness, housing or family problems, sanction

the known financial impacts of reform on areas and groups, and how the consequences of reform are felt on key indicators around housing, debt and inclusion.

This City-level monitoring should help to identify priority areas and groups, but would not in itself identify individuals that may be at crisis point or at risk of falling into crisis. A common theme in the research and in workshops was the need to identify risks earlier and to assess needs in a more systematic way. We would consider that households affected by reform can be loosely grouped into three: those coping or struggling, those at risk of crisis, and those in crisis. This is set out below.

Figure 1 – Grouping residents affected by welfare reforms

Recommendation 1: Consideration should be given to developing an ‘early warning system’ for identifying residents that are at risk of crisis or falling into crisis.

The early warning system should build on the evidence in this research, and in particular on the factors set above. Ideally, this would be a common approach between partners – including the Council, advice services, food banks and Jobcentre Plus. It could be applied not just where individuals approach services for support, but also where key tipping points are being reached – such as sanctions with hardship support, or housing debt. The impacts of welfare reform on residents in Brighton & Hove

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As part of this, there may be scope for the Council to develop light-touch guidance for its own staff on identifying those at risk of crisis, the support available, and how to help residents to access more specialist support where needed.

The research finds mixed levels of understanding of the impacts of reform and of how to get help. One area of specific concern was around Housing Benefit in the private rented sector, where there are the most significant impacts and where it was felt that many residents get very little information on changes to benefits and their options. It may be worthwhile therefore to review the approach taken to communicating with residents that claim Local Housing Allowance.

Engaging with those residents most at risk or at crisis

The fieldwork with residents identified a number of stages in accessing support to deal with welfare reforms: first from friends and close networks, then community resources, then city-wide or national help, and finally emergency supports. This was not always a linear journey – residents could be accessing emergency help as well as support from friends, or may approach an agency before their family – but this general pattern was followed in most cases. At each stage, numbers of residents reduce but also needs increase.

There is clear value in engaging earlier with residents at greatest risk. Both the new Moneyworks service and the pilots of ‘Money Mentors’ in Council housing would be good models to build on.

Recommendation 2: The Moneyworks ‘community frontliner’ model and ’Money Mentors’ in Council housing should be built on to try to engage residents earlier and to link them up with support services.

A further, existing approach that could be built on is the Benefits Advice Outreach Service, which operates in GP surgeries in Brighton & Hove (funded by the Council and delivered by Citizens Advice). Given the overlaps between poor health and welfare reform, that mental health has been identified as a contributing factor to negative impacts, and that illness is likely to be one of the events that could trigger a crisis, there is a strong rationale for building on this service in order to engage residents affected by welfare reforms and not yet in contact with support.

The research also identifies that in some cases, residents struggled to understand messages that were being communicated through letters from the Council or Jobcentre Plus, or to understand where they should go for support. In many cases The impacts of welfare reform on residents in Brighton & Hove

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this appeared to be linked to issues around literacy and numeracy. There would be value in reviewing systems both for identification of needs and then engaging with those residents.

Providing targeted support to respond to reform

Five key support needs were identified in the research: income, benefits, housing, health and employment. Issues were also raised around how support is joined up.

Benefits and housing advice services appear to be under significant pressure in the City, driven largely by changes to funding but also by rising caseloads and demand. The Council is currently reviewing the commissioning of advice services. This research suggests that housing advice, particularly for those with rent shortfalls in the private rented sector, is an area of high priority need within the city.

Alongside this, since July 2014 the Council has invested in caseworker support for those affected by the overall benefit cap. This caseworker approach appears to have been effective. This research suggests that there may be a similarly strong business case for intervening to support those affected by LHA reforms but not subjected to the cap.

Recommendation 3: A more intensive, caseworker-led housing support for those affected by LHA reforms and at risk of eviction should be considered.

On health needs, welfare reforms appear to be exacerbating issues for some residents around poor mental health, anxiety and stress. The Brighton & Hove Wellbeing Service should be well placed to support many of these residents, while secondary mental health services are often well placed to support or refer on those that appear to be being adversely affected by the impacts of welfare reforms. We consider that it would be worthwhile for the Council, voluntary sector and Clinical Commissioning Group to work to raise awareness of the Wellbeing Service among those affected by reforms, and to improve signposting to support to deal with welfare reforms for those in contact with specialist services.

The research identified a clear gap around employment support for residents affected by welfare reform. Where this support is provided in a co-ordinated and intensive way, it can often be effective. The Council and Jobcentre Plus in the first instance should work together to explore the scope for commissioning more targeted support to residents affected by reform, potentially through the Flexible Support Fund and/ or European Social Fund projects. The impacts of welfare reform on residents in Brighton & Hove

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Recommendation 4: There should be consideration of joint commissioning of intensive employment support for residents that are out of work, want to work and affected by welfare reform.

The research identified that often residents had had contact with different support services and local public services. There may be scope therefore to explore how services can best be linked up so as to reduce the burdens on individuals and the risk that people slip through gaps. The Council is currently exploring the potential for this through a European funding bid, and if successful this could be built upon.

Building resilience

The City Council is currently developing its new employment and skills strategy. We consider that there would be value in exploring how support can be extended, improved and better aligned for those claiming ESA and IB, those in large families (including lone parent families) and those with complex needs. In other city regions, these debates have gone hand-in-hand with negotiations around greater devolution and local control over central government funding for those further from work, and it is likely that similar discussions will take place in the new Parliament.

Alongside this, the new funding round for the European Social Fund opens up the opportunity to extend employment support for disadvantaged residents. In total, just over £10 million will be available across the ‘Coast 2 Capital’ area between 2015 and 2020, targeted at groups identified in this research. There should be scope for the Council and its partners to develop bids that would extend and improve employment support.

On housing, workshop discussions highlighted that there may often be a reluctance among frontline staff to have difficult conversations about finding work, moving home or finding accommodation outside the city. This may lead to problems getting worse and contribute to perceptions that moving home or finding work was not an immediate priority. We recommend looking in more depth at this, to determine whether residents are being made aware of their longer-term options and receiving (or being signposted to) the right support.

Recommendation 5: Residents at risk of homelessness from the private rented sector with shortfalls between Housing Benefit and rent should be encouraged to have difficult conversations earlier. The impacts of welfare reform on residents in Brighton & Hove

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Finally, it is important that the Council begins its preparations now for the rollout of Universal Credit. This will place new demands on services to ensure that residents are not digitally or financially excluded, and that partnerships are able to link up to provide appropriate support. The Council and partners should look to learn from the current ‘Universal Support delivered locally’ trials being run in other areas, and to reflect on their own readiness for Universal Credit.

Recommendation 6: As part of preparations for Universal Credit rollout, a joint taskforce should consider how services may need to respond in order to improve triage, budgeting support, digital support and partnership working for residents entering the benefits system. The impacts of welfare reform on residents in Brighton & Hove

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1 Introduction

The Centre for Economic and Social Inclusion (Inclusion) and Rocket Science were commissioned by Brighton & Hove City Council to assess the impacts of welfare reform on Brighton & Hove residents. The research commenced during the spring of 2014 and the fieldwork with residents was completed between September 2014 and January 2015. This report presents the findings of all research conducted during this time.

Aims and objectives

The aim of the research study was to assess the impacts of government welfare reforms on Brighton & Hove residents and services, to explore how residents have responded to changes, and to provide the Council with recommendations on the design and delivery of future support and services. The focus of the research has been on residents of ‘working age’ – i.e. aged between 16 and 64.

Research questions

Brighton & Hove City Council set the following three key research objectives:

 To review the national evidence on the local likely cumulative impact of welfare reforms;

 To review the national and local evidence to identify those who are most affected by welfare reform; and

 To assess the impact of welfare reforms for those people experiencing greatest impact locally.

Methodology

Inclusion adopted a mixed, quantitative and qualitative research approach. Owing to the spatial differences across Brighton & Hove, the research team actively recruited in a number of different areas of the city – with a particular focus on Moulsecoomb, Queens Park, Brighton City Centre, Portslade and Knoll.

The methodology was designed in the following sequence: The impacts of welfare reform on residents in Brighton & Hove

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Scoping

Between March and June 2014, we conducted a rapid evidence review on the impacts of reform on local areas and existing research evidence on Brighton & Hove. This stage included an analysis of:

 National and local levels assessments conducted by Inclusion, IFS, DWP and comparative data for other local authorities; and

 Brighton & Hove assessments and data tools including the City Snapshot report of statistics 20141 and Community Insight2 tool.

1 http://www.bhconnected.org.uk/content/reports

2 http://brighton-hove.communityinsight.org/

In addition, we undertook 20 in-depth interviews with key stakeholders in the City including advice agencies; debt management, benefits and mental health specialists; landlords; Council staff; and others involved in the delivery of services to residents. The interviews captured representatives’ views on:

 The scale and impact(s) of welfare reforms on residents

 The responses of residents to welfare reforms

 Changes in the level of demand for services and the profile of residents requiring support

 The extent of any cumulative impacts of welfare reform on residents

 The capacity and capability of local support services to meet these needs

 Key support needs and priorities for the future

This was supplemented by an online survey of stakeholders to further explore issues around reform impacts, responses, impacts on services and changes over time.

Quantitative analysis

Alongside this, we analysed administrative data from Housing Benefit records (the Single Housing Benefit Extract), the 2011 Census and national (government) estimates of the impacts of individual reforms in order to model the cumulative impacts of welfare reforms on Brighton & Hove residents. This data was combined to create an Excel-based model that could estimate the cumulative impacts for: The impacts of welfare reform on residents in Brighton & Hove

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 Different family ‘types’ – which drew on subsequent findings for those most at risk of negative impacts; and

 Groups with different characteristics – including protected characteristics where available, in particular age, gender and disability.

In-depth qualitative research with residents

Following the collation of these findings, we conducted 35 in-depth face-to-face interviews and three focus groups with residents affected by welfare reforms. These were sampled through a mix of:

 Open recruitment via advice agencies, Children’s Centres and other services within target areas;

 ‘Opt-in’ mailings to residents in receipt of Housing Benefit, that lived in target areas and that met criteria identified in the earlier stages of research; and

 Targeted recruitment, working with more specialist organisations to ‘top up’ samples for under-represented groups.

This approach was intended to ensure that the qualitative findings would capture both the range of experiences across different groups likely to be impacted by reform, and also differing levels of engagement with different kinds of statutory and voluntary and community sector (VCS) support services. Final interview sample characteristics can be found in Annex A.

The qualitative in-depth research aimed to capture:

 Direct impacts of welfare reform – including what reforms residents were being affected by and their feelings towards reform

 How residents had responded to welfare reform

 Experiences of support and the impacts of receiving support

 How residents would cope with monthly payment of benefits and claiming online under Universal Credit

Due to the complexity and range of different welfare reform impacts that could affect interviewees, the interviews were structured using paper ‘impact capture tools’ which enabled the respondent to create a visual timeline of different welfare reforms and attendant impacts. The impacts of welfare reform on residents in Brighton & Hove

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The three focus groups provided small scale forums in which research participants could discuss in-depth their different experiences of welfare reforms. The group dynamic allowed participants to discuss their different standpoints and explore the reasons behind similar or different perspectives. This allowed for a richer understanding of residents’ views and to move beyond purely descriptive accounts. The groups were structured as ninety minute sessions which covered the major reform impacts, experiences of statutory and VCS support services and knowledge of future benefit changes. A participatory ‘solution tree’ method was used to map the different welfare reforms and impacts. Following discussion of available support services and strategies to cope with these changes, participants were then invited to propose solutions that they would recommend to those facing similar challenges.

Options appraisal

The final stage of the project involved identifying and exploring potential options and recommendations for the future design and delivery of support for residents. This involved two workshops with Council officials and key stakeholders (the first in August 2014 and the second in January 2015) and a small number of further in-depth interviews and discussions with stakeholders.

Throughout the research, the project was supported and overseen by a steering group comprising City Council officials, the Advice Partnership and Community Works.

Report outline

Chapter 2 assesses the quantitative impacts of welfare reforms on residents of Brighton & Hove. This sets out both the direct financial impacts (including cumulative impacts) and the impacts on wider indicators including housing and debt.

Chapter 3 describes those who participated in the qualitative research and their experiences of welfare reform. It identifies key groups impacted by reforms, their understanding of reform, and the impacts of reform on their finances, their health and wellbeing, their family and relationships, and other indicators.

Chapter 4 then sets out how residents have responded to welfare reforms. In particular, this explores the extent to which residents have been able to take steps to increase their income, make up shortfalls in income, and make housing choices.

In Chapter 5, we set out options for how future support and services for residents can help to address the impacts of welfare reforms. The impacts of welfare reform on residents in Brighton & Hove

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2 Context and welfare reform overview

The Brighton & Hove context

Employment and benefits – a dual economy

Brighton & Hove has recovered strongly from the recession, and is now well placed to benefit from the emerging economic recovery. As Figure 2.1 below shows, Brighton & Hove was hit hard by the ‘double dip’, with the employment rate falling below 70% for most of 2011. However since then, the labour market has recovered strongly – with the employment rate now close to historic highs, and more residents in work than ever before (137,000).

Figure 2.1 – Working age (16-64) employment rate in Brighton & Hove

Source: Annual Population Survey

This improvement in the jobs market has been driven in particular by employment in senior and professional occupations – which now account for 60% of all employment The impacts of welfare reform on residents in Brighton & Hove

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among residents, up from around 50% five years ago3. At the same time, employment in medium-skilled and technical jobs has declined by a similar amount (from 30% to 20% of employment) while lower skilled employment has remained constant at around 20% of the workforce. This ‘dual economy’ – of strong growth at the top of the labour market and stagnation at the bottom – is also reflected in wages, with gross weekly pay for the lowest-paid quarter of the workforce still just below 2008 levels4.

3 Source: Annual Population Survey

4 Source: Annual Survey of Hours and Earnings

5 Jobseeker’s Allowance, Employment and Support Allowance, incapacity benefits or Income Support for lone parents

6 Source: NOMIS and Annual Population Survey

Given these trends, it is perhaps unsurprising that the headline strong growth in employment among residents has not been shared by those claiming ‘out of work’ benefits5. In common with many cities and coastal communities, Brighton & Hove has always had high rates of benefit receipt and concentrations of deprivation. However as the labour market in the city has recovered, employment overall has grown three times faster than benefit receipt has fallen – so most of the gains since 2011 have been felt by those not previously on benefit. Overall, 18,300 residents in Brighton & Hove claim an out-of-work benefit, equivalent to more than one in nine of the adult population (11.7%). This compares to under one in ten (9.4%) in the South East as a whole6.

Underneath these figures, as Figure 2.2 below shows, all of the fall in benefit receipt since the recession began has been amongst those claiming Jobseeker’s Allowance (JSA) or claiming Income Support as lone parents. For lone parents, this in turn has been driven by changes in eligibility for benefit – with most lone parents now no longer entitled to claim Income Support (with most instead claiming JSA).

Meanwhile, receipt of Employment and Support Allowance (ESA) and incapacity benefits (which ESA replaced in 2007) has remained virtually unchanged over the last decade. Claimants of these benefits have a health condition or disability that substantially limits their ability to work, and usually have little or no additional support to prepare for or find work. Fully 12,800 residents – or 70% of all those claiming benefit – are on ESA or IB (up from 56% in the depths of the recession). These groups are far less likely to be able to respond to the impacts of welfare reform, and are also more likely to be negatively impacted by reforms. The impacts of welfare reform on residents in Brighton & Hove

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Figure 2.2 – The number of residents claiming ‘out of work’ benefits in Brighton & Hove

Source: NOMIS

Concentrations of disadvantage and deprivation

As noted, Brighton & Hove is a city of contrasts, with a number of areas seeing high concentrations of disadvantage and deprivation. At Ward level, benefit receipt is far higher in East Brighton and Queen’s Park, with around one in five residents claiming an ‘out of work’ benefit (predominantly ESA or incapacity benefits). Receipt is also high (around one in eight residents) in Moulsecoomb, South Portslade, Hangleton and Knoll and St Peter’s and the North Laine.

On a composite measure of deprivation compiled in 2010 (the Index of Multiple Deprivation), Brighton & Hove as a whole ranks in the top 20% of local authorities nationwide for its concentrations of deprivation, and in the top 30% for the proportion of the population living in deprived areas7. This deprivation is particularly pronounced on measures of employment and income. 0 5000 10000 15000 20000 25000 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Employment and Support Allowance/ IB Income Support (lone parents) Jobseeker's Allowance

7 Source: English Indices of Deprivation, 2010

Figure 2.3 below sets out in more detail where those areas of deprivation are found. Many of these are in the Wards identified above, particularly the East and North of the city. However we also see distinct pockets of deprivation around Brighton City Centre, Hove Station, Preston Barracks and Portslade. The impacts of welfare reform on residents in Brighton & Hove

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Figure 2.3 – Brighton & Hove Super Output Areas ranked on Index of Multiple Deprivation, 2010, with proposed case study areas highlighted

Source: Indices of Multiple Deprivation, Brighton & Hove City Council analysis

Housing – high rents, high demand, constrained supply

Compounding these challenges around benefits dependency and deprivation, Brighton & Hove is also characterised by a housing market that has become increasingly unaffordable for those living in the city. Both house prices and private rents are among the very highest outside of London, and the Council has estimated that 88,000 households cannot afford housing on the open market without either subsidy or disproportionate cost8.

8 Assessment of Affordable Housing Need Report 2012: http://www.brighton-hove.gov.uk/sites/brightonhove.gov.uk/files/downloads/ldf/Assessment_of_Affordable_Housing_Need.pdf

The city’s housing strategy identifies a range of factors driving this: particularly geography (bounded by the sea and National Park), proximity to London, student demand and the attraction of the city to those on higher incomes.

For those claiming benefits however, the high costs of housing exacerbate the impacts of welfare changes and make it harder still to respond to reforms. Analysis The impacts of welfare reform on residents in Brighton & Hove

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by the Council shows that in the private rented sector, fewer than 2% of the homes advertised for rent in the latest month would be affordable for those claiming Housing Benefit, and no homes would be affordable for claimants aged under 359. -100 0 100 200 300 400 500 600 Room/ LHA shared Studio/ LHA 1 bed 1 bed flat/ LHA 1 bed 2 bed flat/ LHA 2 bed 2 bed house/ LHA 2 bed 3 bed house/ LHA 3 bed Shortfall - median rent Shortfall - 30th percentile

9 Brighton & Hove City Council Rent and Local Housing Allowance Comparison, February 2015

10 Brighton & Hove City Council Housing Strategy 2015

This lack of affordability in large part stems from changes made to how the Local Housing Allowance in Housing Benefit is calculated, which are explained in detail later in this Chapter. The net effect is a wide and growing gap between the costs of renting and the level of housing support. This is illustrated in Figure 2.4 below, which shows significant shortfalls both against median rents and the lowest rents (the 30th percentile) for all housing types except studio flats. Even the lowest priced rented houses are over £300 a month more expensive than the maximum available Housing Benefit.

Figure 2.4 – Shortfall between advertised monthly cost of renting and maximum Local Housing Allowance, Brighton & Hove, Q4 2014

Source: Brighton and Hove Housing Costs Update

And while the Council has succeeded in building the first new Council homes in a generation, demand for social housing far outstrips supply, with around 20,000 households on the Housing Register, and an estimated shortfall of affordable homes of around 17,000 by 201710. The impacts of welfare reform on residents in Brighton & Hove

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The fiscal and delivery context

Finally, welfare reform is clearly not happening in isolation from wider pressures on service delivery and funding. Within Brighton & Hove, Council funding has reduced by £77 million over the last four years and is expected to reduce by a further £102 million over the next four – at a time of population growth and rising demand (driven in particular by social care).

Inevitably, this means that the Council will continue to shrink in size, employing fewer people and working in new and different ways with its partners, providers and residents. For those affected by welfare reforms, it means that the Council will play less of a role as the direct funder of services, and more of one as an enabler, facilitator and collaborator.

An overview of welfare reform

It is within this context that the government’s welfare reforms have been felt – of a strong but unequal labour market, continued high rates of benefit receipt, concentrations of deprivation, an unaffordable housing market and shrinking funding for local government.

The welfare reform agenda represent the most fundamental changes to the benefits system in a generation: intended both to reduce dependency on social security and also to play a key part in the Government’s deficit reduction strategy – generating savings of more than £15 billion per year across Britain by the end of the Liberal Democrat/ Conservative Coalition Government, equivalent to £1 in every £7 spent11.

11 Source: HM Treasury and Inclusion calculations

Reforms have been made to the way that benefits are delivered, eligibility for benefits and their generosity. The breadth and scale of reforms means that in practice, nearly every adult household that claims benefit has seen their benefits changed or reduced. This research has been concerned with capturing the impacts of all reforms that have taken place since 2010, namely:

 Changes to Housing Benefit for renters in the private sector which began in 2011: restricting the maximum Local Housing Allowance payment to the thirtieth percentile of average local rents, introducing Housing Benefit caps, restricting HB to a (lower) "Shared Room Rate" for most claimants aged under 35, and changing the formula for annual increases in benefit.

The impacts of welfare reform on residents in Brighton & Hove

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 Changes to tax credits. These began in 2011 and predominantly affect low income working households – including reductions in the basic, 30-hour and childcare elements of tax credits; increases in the child element; and changes to working hours requirements, thresholds, disregards and withdrawal rates.

 The uprating of benefits and tax credits by 1% instead of the Consumer Prices Index. This lower uprating affects all of the main benefits and began to take effect in April 2013. By increasing benefits by less than inflation, it reduces benefits in ‘real’ terms and further increases the gap between household income and living costs.

 The introduction of ‘size criteria’ for most Housing Benefit recipients in social housing, reducing awards by 14% where tenants are deemed to have one spare bedroom and 25% where they have two spare bedrooms. Introduced in April 2013, this is also known as the ‘bedroom tax’ or ‘spare room subsidy’. In this report we describe it as the social sector size criteria.

 The introduction of a cap on total benefit receipt for most households where no adult is in work, of £500 a week for families or £350 a week for single people – introduced in August 2013 in Brighton & Hove.

 Increases in the deductions taken from Housing Benefit and Council Tax Benefit in respect of other adults living at the property – known as ‘Non Dependant Deductions’.

 The replacement of Disability Living Allowance with a new benefit called the Personal Independence Payment (PIP), with generally tighter eligibility and often lower awards. PIP is now in place for all new claimants, with existing claimants of DLA due to be reassessed from late 2015.

 The restriction of contributory Employment and Support Allowance to one year for claimants in the "Work Related Activity Group" (that is, those deemed as capable of preparing for work). This was introduced in April 2013 and mostly affects households where someone is in work or where there are other sources of income. Previously, contributory ESA was paid without any time limit.

 The reassessment of existing claimants of ‘incapacity benefits’12 under the new Employment and Support Allowance regime. This was announced by the Labour government but took place during the period of Coalition Government (and has not yet been completed). Around one in five claimants of

12 Defined as Contributory Incapacity Benefit, means-tested Income Support with Disability Premium, means-tested Severe Disablement Allowance The impacts of welfare reform on residents in Brighton & Hove

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incapacity benefits have been found fit for work as part of this process, leading to lower benefits and increased requirements to look for work.

 The localisation of Council Tax Support (and abolition of Council Tax Benefit), which took effect in April 2013. As well as replacing the national CTB system with new local schemes, this reform also included a built-in funding cut of around 20%. As a consequence, many Local Authorities now require out-of-work benefit claimants to pay part of their Council Tax liability. In Brighton, these claimants are required to pay 8.5%.

 Reform of sanctions – where there has been an upward trend in sanctions referrals, some growth in ‘adverse decisions’, a large increase in sanctions for those on ESA, and since October 2012 far larger penalties.

 The introduction of Universal Credit, which is replacing the main means-tested benefits for those on low incomes in and out of work13 with a single benefit paid to the head of the household. Universal Credit is being rolled out in phases, and will lead to significant changes in benefit entitlement for some households (particularly those with low earnings or with disabled people in them) as well as changing how benefits are claimed and paid.

13Housing Benefit, Jobseeker’s Allowance, Income Support, Employment and Support Allowance, Tax Credits

14 Wilson, T., Vaid, L. and Morgan, G. (2013) The cumulative impact of welfare reform, Local Government Association

Estimating cumulative impacts of welfare reform

The Government produced national estimates of the financial impacts of individual benefit reforms at the time that reforms were being introduced. However, with a few exceptions, ongoing assessments of the financial impacts of reforms have not been made by central government, nor have there been assessments of impacts at the local authority level. In addition to this, no assessment has been made by central government of the cumulative impact of benefit reforms on households with different characteristics or circumstances. This has limited the ability of local areas to understand the financial impacts of changes to benefits on their residents.

To help to address this, Inclusion undertook detailed modelling for the Local Government Association in 2013 to estimate the financial impact of the main benefit reforms – individually and cumulatively – to Local Authority level14. This used the Government’s published national estimates of reform impacts, and apportioned these to local authorities according to the profiles of relevant benefit recipients and The impacts of welfare reform on residents in Brighton & Hove

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expenditure. This modelling enabled us to estimate the average impacts of reform on benefit claimants in different areas, the contributions of different reforms to those impacts, and how those vary between areas. However, the estimates are necessarily ‘top down’ – drawing on estimated rather than actual data – and limitations to the data mean that it was not possible to estimate the impacts of reform according to claimants’ characteristics or circumstances.

In order to address this, for this project, a new modelling approach has been developed that builds up from actual, local authority-level data on Housing Benefit claimants supplied by the City Council. This data provides both actual impacts of a number of specific reforms (all reforms to Housing Benefit, Council Tax reform and the benefit cap) and detailed information of the characteristics of residents and the benefits that they claim. This in turn allows for detailed modelling of cumulative impacts for different groups. Estimated impacts of benefit reforms not directly captured in the HB data15 were then apportioned to claimants based on robust methodologies similar to those used in the 2013 LGA project. In addition, data from the Census and the Family Resources Survey was used to further estimate the average impact of reform on the minority of benefit claimants that do not claim Housing Benefit (i.e. owner occupiers and higher-income renters).

15 Specifically: cuts to Tax Credits, the introduction of Personal Independence Payment, the time-limiting of Contributory Employment and Support Allowance, and the 1% uprating of benefits

More details on the modelling approach and assumptions used are at Annex B.

The results of this modelling are presented in this report – producing estimates of cumulative impacts overall (all claimants in Brighton & Hove), at Ward level and for a range of family types and protected characteristics. It is believed that this is the first time that a cumulative assessment of impacts has been produced for family types and characteristics.

This analysis includes all of the reforms listed above, except for the reassessment of IB claimants for ESA and the introduction of sanctions – where data limitations mean it is not possible to robustly estimate impacts. Universal Credit is also excluded, as this has not yet been implemented.

The cumulative financial impacts of welfare reform in Brighton & Hove

Using the modelling developed for this project, we estimate that around 25,400 households within Brighton & Hove have seen their benefits reduced as a result of The impacts of welfare reform on residents in Brighton & Hove

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Tax Credits, 21.3Local Housing Allowance, 14.91% uprating, 7.8DLA replacement, 5.9Shared accommodation rate, 2.8ESA Time Limiting, 2.8CTB localisation, 1.4HB social sector size criteria, 0.9Benefit Cap, 0.6

welfare reforms. On average, these households are £2,300 per year (£44 per week) worse off than would have been the case if benefit reforms were not introduced. In total, welfare reforms have reduced benefit spending within the City by around £59 million per year.

We estimate that the average impacts in Brighton & Hove are in the top 10% of impacts nationwide. These high impacts are driven in particular by very high private sector rents, which in turn drive very significant losses from reforms to Housing Benefit. This is set out in more detail below.

The impacts of specific welfare reforms

Figure 2.5 below sets out the estimated cash impact of specific welfare reforms within Brighton & Hove. We find that – in common with almost all other areas – the reforms with the largest impacts are those that affect the most claimants – so changes to uprating, to tax credits, and to private rented sector Housing Benefit.

Figure 2.5 – Breakdown of savings in 2015/16, Brighton & Hove (£million)

Source: Inclusion analysis The impacts of welfare reform on residents in Brighton & Hove

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Benefit cap 163 ESA time limits 964 Tax credits 23,500 Size criteria 1,192 PIP 6,084 LHA reform 10,455 Shared accommodation 4,695 1% uprating 24,637 Council Tax 10,765 - 5,000 10,000 15,000 20,000 25,000 30,000 £0 £500 £1,000 £1,500 £2,000 £2,500 £3,000 £3,500 £4,000 £4,500 Number impacted Average impact

Figure 2.5 shows that 85% of the cash impacts of reform (£44 million) are accounted for by tax credits, uprating and private rented Housing Benefit reforms (LHA and shared accommodation rate). These reforms affect large numbers of claimants both in and out of work. Conversely the size criteria and the benefit cap – which have been the focus of most public and political attention – account for just 3% of the financial impacts of reform (£1.5 million).

It is also noteworthy that around £1 in every £7 of savings is accounted for by reforms that specifically target disabled people and those with health conditions, namely the introduction of PIP and the time-limiting of ESA (£8.7 million).

The analysis above only shows the total financial impacts of reform, rather than the numbers impacted or the average impact per household affected. Looking at these dimensions gives a slightly different picture, as Figure 2.6 below shows.

This shows the number of households affected on the y-axis (bottom to top) and the average impact on the x-axis (left to right). The labels next to each data point also set out the number affected. This analysis gets below the headline financial losses described above to consider the likelihood and the impact of households being affected by welfare reforms.

Figure 2.6 – Number of households affected by specific reforms, and average yearly income reduction per household (£/ year)

Source: Inclusion analysis The impacts of welfare reform on residents in Brighton & Hove

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A number of points stand out from this analysis:

 First, while uprating and tax credits affect very large numbers of claimants in Brighton & Hove, the impacts of these reforms on their own are relatively smaller – at £306 and £837 per year for households affected.

 Secondly, Council Tax reform has affected a very large number of claimants – 14,408 – but with generally smaller financial impacts (£124)

 Local Housing Allowance reforms have, as expected, affected significant numbers of claimants with generally large impacts, with an average loss of £1,192 per year

 Both the benefit cap and ESA time-limiting affect far fewer claimants, but have significant financial impacts (£3,964 and £2,286 respectively). This is most stark for the benefit cap, which affects fewer than 1% of all households impacted by welfare reform but has led to average cuts to benefit of £185 per week.

 The size criteria has impacted relatively few claimants and had a relatively lower financial impact than other reforms, at £744 per household.

It is important to note in this, however, that the analysis above presents only the financial impacts of reform – it does not give us information on households’ ability to respond to or cope with those reforms. This is covered in the qualitative research, which shows that for many disadvantaged households even relatively smaller financial reductions – such as from the size criteria – can lead to significant impacts on household finances, wellbeing and life chances.

The impacts of welfare reform at Ward level

Table 2.1 below sets out our assessment of the financial impacts of welfare reform at Ward level. This shows that the areas with the largest impacts are in the centre and the East of Brighton. This is driven in particular by large numbers of households impacted by reforms in these areas. However beneath this, there are some key differences in their characteristics.

In St Peter’s and North Laine, claimants are more likely to be in the private rented sector, with this therefore reflected in higher average impacts than in Queen’s Park or East Brighton. In East Brighton, residents are far more likely to be in social housing, with consequently lower average impacts. Queen’s Park has a mix of both private and social housing. The impacts of welfare reform on residents in Brighton & Hove

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Areas with the fewest claimants tend to see far smaller overall impacts. However there are generally much larger average impacts in these areas, which in particular reflect large shortfalls in private rents for those claiming Local Housing Allowance.