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Universal Credit – Where are we now ?

Universal Credit – Where are we now ?. GWSF Conference November 2013. Bill Irvine - Background.

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Universal Credit – Where are we now ?

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  1. Universal Credit – Where are we now ? GWSF Conference November 2013

  2. Bill Irvine - Background • Ex Head of Housing & Revenue Services (Benefits, Revenues & Advice) responsible for 40,000 council rents; £100m in Housing & Council Tax Benefit administration; collection of Council Tax and provision of advice services • COSLA Advisor to HB Standing Committee, Westminster, London • Welfare Rights Advocate for 20 years, representing before all types of tribunals, including Tribunal of Social Security Commissioners. • Provided written and oral evidence to Local Housing Allowance Inquiry in 2010/11 on behalf of the Scottish Association of Landlords. • Consultant to a number of UK’s largest RSLs; Residential Landlords Association; CIH; specialising in Housing Benefit disputes and Welfare Reforms - website, newsletters and bulletins. • HB Advice & Advocacy www.hbadvice.co.uk and www.ucadvice.co.uk

  3. Which aspects of Universal Credit and wider reforms most concern you? • The proposed shift to digital claims? • The onus placed on tenants to claim UC & update changes in circumstances? • The continuing uncertainty in terms of phasing arrangements and migration process? • Continuing uncertainty with regards to direct payments, and interaction with sanctions, "third party deductions & benefits cap? • Need to commit more time & resources to support tenants? • Too much reliance placed on DHPs to plug losses short term? • The role of the DWP; its relative lack of inexperience in housing matters and its intended mode of delivery – online and remote regional offices?

  4. Housing ElementWhat rent will be covered? • For private tenants the ‘housing element’ in Universal Credit will carry forward Local Housing Allowance (LHA) provisions. Uprated each April in line with VOA assessment or 1% - whichever is the lower. • For council tenants and tenants of Registered Social Landlords (including Housing Associations) the actual core rent + eligible service charges will continue to be assessed separately from other elements of UC. From the resulting figure you must deduct a) Under-occupation penalties & Housing Contribution costs (HCC) of any Non-Dependants • At the point UC kicks in, the amount of the “UC Housing element” will be incorporated into one single payment, paid on a monthly into the claimant’s bank account, but in arrears. • If the contractual rent is charged weekly, fortnightly, 4 weekly, DWP will simply convert to monthly.

  5. Housing Element • LA/RSL interfaces, currently used in annual rent increase exercise – will continue to be used, as now, for Housing Benefit purposes. • BUT not for UC purposes! • At point of claiming UC - onus on claimant to include housing costs in UC claim and notify annual rent increase in advance of April change. • Delays in claiming and reporting changes – very limited - restricted to 1 month on either backdating or revision. • Penalties can also be imposed for late notification of changes in circumstances causing overpayments.

  6. UC calculation – Example 1- Lone parent with 2 kids • Eleanor (35) lives with her two children in a HA property (appropriate to their size) for which she pays £480pcm. There is no evidence of ill health or disability. Her only income consists of Child Benefit • Universal Credit calculation: • Standard Allowance £311.55 • Child Element (2 kids) £498.75 • Housing element £480.00 • Total £1290.30 Step 2 applies because she has no income other than Child Benefit which is ignored. She therefore gets the Maximum Award £1290.30, paid monthly in arrears on the same payment date each month. In addition, she has her Child Benefit.

  7. UC – Example 2 –Single Person, working with disability • Amin is aged 24. He is single and has no children. He has a disability and receives DLA at middle rate (CARE) higher (Mobility). DWP accept he has limited Capability for Work. He lives in a HA flat which is the right size for him. His rent is £400pcm. He works and has net earnings of £416 pcm. • Step 1 – Calculate Maximum UC • Standard Allowance £246.81 • Limited capability for Work £123.62 • Housing costs £400.00 • Total £770.43 Step 2 – Work out income other than earnings As Amin’s DLA is ignored as income and he has no other unearned income we move to Step 4

  8. Amin’s UC Calculation from Stage 4 – Work out earnings! • Step 4 - Work out earnings! • Amin has £416.00 a month net earnings • Step 5 –How much of his earnings actually count? • £416 less Disregard Allowance of £192.00 = £224.00 • £224 x taper of 65% = £145.60 – assessable earnings • Step 6 – Take assessable earnings from Max Award Step 1 • £770 - £145.60 = £624.83 Universal Credit So Amin’s monthly income consists of: • His DLA awards for Care & Mobility • Net earnings of £416 • Plus Universal Credit of £624.83 (including his £400 housing element)

  9. How will UC be claimed? • DWP insist Universal Credit will be 'digital by default'. • Claimants will be expected to http://www.gov.uk/universal-credit/overview and then attend a face-to-face interview. • Short term - 50% of claims will be made on-line via DWP’s secure website, strictly controlled by passwords and Identity Assurance. • 45% of claims made via telephone • 5% face-to-face. • Longer terms – 90% plus made online with notification/award letters to be sent electronically instead of hard copies. • DWP support in the form of “Digital Champions” for those who cannot access or easily use such a facility (local JCP offices). • “Real-time” data to be drawn from DWP and HMRC systems for new claims and UC will be updated monthly to take account of most up to date earnings. • RSL staff and Voluntary organisations to play a major part of support services.

  10. Social Responses …next steps will include work to estimate the contribution this support can bring to reducing volumes 3. Local Support Orgs 2. Agents & Appointees 4. Housing 1. Friends and Family Trusted intermediaries - Carers, POA, etc Third sector organisations such as CAB, CPAG, Gingerbread, MAS Etc Landlords Housing Associations Local RSL services Supported Accom Hostels etc. Uncle Joe Carers Other Claimants – Word of mouth Etc Libraries Debts Advice Services On line schemes General benefit support services One stop shops Tell us Once 5. Local Authority DWP, HMRC Jobcentres Work Programme UC Services inc Telephony and F2F 10. Govt. Social Responses GP Local NHS services Health workers Addiction / support schemes Gas Water Electric Etc E/Rs Local Education services Careers advice services Etc PO Banks & Building Societies Credit Unions Etc 9. Utility Companies 6. Health & Social Care Initial focus has been on identifying the potential support networks….. 8. Financial Orgs 7. Work & Education

  11. How will UC be paid? • Bank Accounts - If claimant doesn’t possess bank account DWP to determine payment facility. See https://www.youtube.com/watch?v=fx-i4v1T1s8 • Paid monthly in arrears to one claimant for each household • Separate UC payments to non-dependant sons, daughters etc. • Paid on different days of the month, determined by the initial date of claim • Budgeting advances to offset shortfall at point of transfer to monthly payments. • “Safeguards” or “Exceptions” – recently produced briefing note to be found in Universal Credit Toolkit • https://www.gov.uk/universal-credit-toolkit-for-partner-organisations#explaining-universal-credit • DWP, Councils and Support organisations to provide advice & assistance to those in need of help with budgeting & claiming.

  12. Direct Payments to Landlord • UC default position will be to pay tenant, rather than landlord. • However, Lord Freud announced: • 1. Payment of the ‘housing cost’ element could be paid from day one in “vulnerable” cases and would automatically be redirected to landlords when 2 months of rent arrears accrued; • 2. The DWP, if alerted by the RSL, that 1 months’ cumulative arrears had built up due to housing costs not being handed over, payment of the housing costs would be suspended and a decision made as to whether payment should, at that point, be reverted to ‘Landlords’ Managed Payments’; • 3. Tenants could be required to repay the missing rent by way of accelerated deductions over a 6 to 9 month period, assuming they had no other ‘third party’ deductions. • 5. The principles of how these various ‘Exception Payment’ provisions would be applied would be explained in DWP Guidance, shortly to be published. • 6. Neither tenant or landlord will have any appeal rights.

  13. Vulnerable Groups • Mental health issues, learning difficulties, sensory disabilities • Drug or alcohol addiction • Homelessness, transient lifestyle • English language limitations, literacy difficulties & numeracy difficulties • Prisoners & Detainees, MAPPA claimants • 16 and 17 year olds, over 18 care leavers • Physical disabilities • Domestic violence victims • Severely indebted, track record of debt related problems • Gambling addiction • Supported by the Troubled Families programme • Rural isolation

  14. When will UC be introduced? • New claims but only from those selected who would otherwise have made a new claim for JSA starting from October 2013 (initially by Pathfinder 29th April, July and later rollout to six others from October 2013. • New claims from those starting work from April 2014 (UK wide replacing Tax credits) - Timescale likely to slip! • Existing claimants will be transferred over to Universal Credit in a migration exercise starting from April 2014 with completion scheduled by 2017. Expect slow process & slippage! • Pathfinders suggest a host of IT difficulties being encountered. Take–on numbers dropped from 500K to 60K to £7K – Pathfinder total. • 3 month warning before date of migration. Should ensure Landlord receiving LHA direct is notified in advance as they are still a “person affected” at that stage.

  15. Pensioners – Unaffected as far as UC is concerned – but! • From October 2014 no new claims for HB were anticipated - instead housing costs to be included as part of Housing Credit in the assessment of a new all-inclusive Pension Credit for new claimants. • Now likely to be pushed back until after May 2015 • In the meantime, HB will continue to be paid to landlords if that is the preferred choice of tenant? • Uncertainty remains in relation to “new” cases with numbers affected increasing as “pensionable age >66 by 2020

  16. Universal Credit Changes- Non-dependants! • New structure for non-dependant deductions or Housing Cost Contributionsas they will be called under UC. • More exempted categories avoiding charges being made • Single rate of deduction for those aged 21 and working £68.00 per month (i.e. £15.70 per week ). • No deduction for anyone unemployed under 25 years of age or in receipt of Pension Credit age • Those currently 25 and over and unemployed will experience hike to £15.70 fro £13.60 • Amending regulations introduced - Under 25’s on UC to pay nothing. • NB – Non Dep Couples are each entitled to a bedroom in the size criteria but each has to have a HCC made unless they fall into an exempt group (Blind, DLA/PIP etc.).

  17. Impact on Non dependent deductions in Housing Benefit – 2013/14 • Out of work < 25 years £ nil £ nil £NIL • Out of work > 25 years £ 7.40 £11.45 £13.60 • Earning up to £183 pw £17.00 £26.25 £31.25 • Earning up to £238 pw £23.35 £36.10 £42.90 • Earning up to £316 pw £38.20 £59.05 £70.20 • Earning up to £394 pw £43.50 £67.25 £ 79.95 • Earning over £394 pw £47.47 £73.85 £87.75 • Above deductions significantly more punitive than Universal Credit deductions creating major anomaly

  18. Universal Changes – Temporary Absence & Others • 52 week provision dropped to 26 for most claimants • People fleeing threat/fear of domestic violence still 52 weeks • “Existing live claim” - Prisoner claims entitled to 26 weeks maximum • First-time UC claimant moving to prison – no protection. • 4 week benefit run-on for those securing a job - inexplicably ends! • 4 weeks overlapping provision will be restricted to those unable to move due to adaptations.

  19. Conditionality • ESA recipients, capable of doing so, may be required to take part in work-related activity to help them prepare to move into work; • Lone parents whose youngest child has reached the age of five will need to actively seek work unless they are disabled or have a health condition which prevents them working, or are a carer; and • Couples with youngest child five or more, and where neither partner is disabled or has a health condition which prevents them working or is a carer, will need to make a joint claim to Universal Credit, requiring both partners to actively seek work. • “Claimant commitment” clearly setting out what is expected. • Sanctions – Loss of benefit for non-compliance – 4 weeks; 13 weeks and up to 3 years.

  20. Impact of “Claimant Commitment” • New rules of “Claimant Commitment” being rolled out nationally from October 2013 • Ultimately 20,000 Job Centre Plus Offices will be applying the stricter and potentially punitive approach • Guardian Report on how the sanctions are being applied: • http://www.youtube.com/watch?v=0XLgg75stn4

  21. Impact of Welfare Reforms Impact Assessment & Mitigation Proposals

  22. Problems for landlords • Continued uncertainty and worry on a number of levels • As UC develops there could arise a mixture of tenants on HB/LHA or UC or Pension Credit. More difficult when pursuing arrears. • Liaison difficulties with DWP “elephant in the room” • Regional Office delivery • Poorly trained staff; difficult to deal with, particularly at arms-length • Tendency to hide behind cloak of “confidentiality” and “Data Protection” • Unwillingness to accept “mandating” due to perceived “conflict of interest. • Exceptions uncertainty at present and reliance on “guidance” as opposed to regulations. • Tenants & Landlords NO rights of appeal on question of “payment exceptions”– major setback! • RSL staff need to be well informed, be much more hands-on and act as the tenants’ advocate. • Will undoubtedly experience an increase in rent arrears, and costs associated with collection and recovery etc.

  23. What should you do? • Don’t panic! • Timescales being pushed back and numbers of tenants likely to be affected are low in number because of phasing process. • Following notification of transfer - take control and adopt a hands-on approach. • Learn as much as you can about the fundamentals of claiming these new benefits and the pitfalls of delays, failures to comply with demands for information. • Work in a collaborativefashion with tenants wherever possible. • Remember what happened after the LHA Inquiry in 2010 – softening in Government attitude as rent arrears levels rose resulting in LHA being paid on a much more frequent basis to landlord!

  24. UC Advice website information • Universal Credit Regulations 2013 http://www.ucadvice.co.uk/housing-associations/2013/06/universal-credit-regulations-2013 • UC Briefing Note • http://www.ucadvice.co.uk/housing-associations/2013/08/universal-credit---advice-for-frontline-staff • UC Bulletins • http://www.ucadvice.co.uk/housing-associations/subsection/bulletins • UC discussion forum • http://www.ucadvice.co.uk/housing-associations/forums

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