Category Archives: Local Authorities

Submission to the DCLG Select Committee inquiry on welfare reform

A submission by the Welfare Reform Club on the progress towards the Implementation of Universal Credit

About the Welfare Reform Club

1. The Welfare Reform Club was founded by three experienced experts in welfare policy and its implementation.
• Paul Howarth retired in October 2011 after 38 years working for the DWP where he was responsible for Housing Benefit, Council Tax Benefit and Support for Mortgage Interest.  Paul has a detailed insight into the relationship between central and local government; he helped to transform the relationship with local authorities through better engagement and communication.
• Malcolm Gardner has worked as a manager and a consultant for local authority revenues and benefits departments since 1996 and has successfully transformed several revenues and benefit teams into smarter services, offering real value for money.
• Deven Ghelani is one of the architects of Universal Credit.  He has worked on it since its inception at the Centre for Social Justice, where he leads on welfare, employment and public spending policy.  He has also published several books on these subjects. He has a background in consultancy and supports the implementation of policy through the Welfare Reform Club.

2. With over forty local authority members, and commissioned work with local authorities on the Universal Credit pilots, and on council tax support schemes, the Welfare Reform Club is ideally placed to assess progress on welfare reform implementation.   The Welfare Reform Club is dedicated to help local authorities plan for, and understand the impact of, proposed changes to the welfare system, primarily the introduction of Universal Credit and its interaction with local welfare support through changes in housing and council tax support, and the social fund. 

3. The Welfare Reform Club has three core objectives:
• To promote local delivery of welfare reform where appropriate and support local authorities deliver the reforms;
• To help local authorities engage constructively with central government on welfare reform;
• To help central government to make better policy decisions, through better communication with local authorities and a clear, evidence-based understanding of the impact of policy changes at a local level.

4. We would be happy to provide further assistance to the Select Committee if required, or to give evidence in person to the Committee. 

General Implementation Challenges

5. Universal Credit is a radical re-casting of the benefit system, shaping it into a system that supports positive decisions in the lives of recipients.  These decisions include in particular: to move into work, to progress in work and to take steps toward independence. 

6. Our understanding is that the broad principles of Universal Credit retain cross-party support, and are backed by welfare rights groups and of the majority of the British public.  Those with experience of the current welfare system want a simpler, more accessible system.
7. It is critical that the implementation of Universal Credit is properly scrutinised.  A change on the scale of Universal Credit will undoubtedly raise concerns and create uncertainty.  Citizens and welfare organisations will want to know how it will affect them.  And there will undoubtedly be difficulties in the implementation of Universal Credit, and legitimate questions asked about the decisions that were made along the way.
8. However, we firmly believe that the implementation challenges can be overcome, through the full co-operation and commitment of central government departments, local authorities and other local stakeholders. The implementation challenges should not derail a fundamental reform of the benefit system that is long overdue.
9.  In our view, Universal Credit will succeed only if its structure remains reasonably simple.  In bringing together four income-related benefits with tax credits, Universal Credit is a major simplification of the benefit system.

10.  However, it cannot possibly cater for every individual circumstance without becoming just as complex as its predecessors.  So there is a vitally important role for local authorities to help develop solutions to the challenges that this raises.

11.  In order to keep Universal Credit relatively simple, local authorities will inevitably need to provide more discretionary help, with cash-limited budgets, for those with exceptional and unusual requirements.
12.  This means having the systems and processes in place to be able to manage this discretionary support effectively. This presents another implementation challenge; but if it is not recognised, and does not succeed, it will put implementation of Universal Credit at risk as well.

13.  Local authorities also have a very important role in the delivery of Universal Credit itself.  Apart from handling the transition (particularly from Housing Benefit to Universal Credit), local authorities will be the key provider of face-to-face support for those people who need it.

14.  This could well be a bigger task than the central departments currently planning for, particularly in the early days, so it will be vital that local authorities are appropriately resourced and that they have access to the Universal Credit data needed to provide helpful and accurate advice to the customer.

15.  This is particularly true of the housing element of Universal Credit.  Whilst we support in principle the integration of Housing Benefit into Universal Credit, its delivery by local authorities from 1982 until now has facilitated close links with local authority housing departments.  It will be important to develop new effective links between those responsible for the delivery of Universal Credit and those responsible for housing strategy and the delivery of local services. 

16.  This means that central departments must work closely with a range of partners, particularly local authorities.  They are doing some of this but could do more – delivery of Universal Credit is a partnership and all partners need to work effectively together.  To be truly effective, this may mean giving local authorities a more active role in the administration of Universal Credit.

Specific implementation challenges

17.  This response focuses on specific challenges to the design and implementation of Universal Credit and local welfare schemes:

How effectively are the DWP and the Department for Communities and Local Government working together to implement welfare reform?

• There is a lot of liaison taking place, and a clear recognition of the need for close working between the DWP and DCLG.

• However, the two departments inevitably have different perspectives. The main difference focuses on central versus local service delivery.  Also, the departments need to respect decisions that have been made, for example on localisation of council tax support, and concentrate on effective implementation of the agreed Government position.  If policy disagreements re-surface, implementation of welfare reform will be severely hindered.

Is the guidance available to local authorities from central government on implementing welfare reform adequate and are there areas where more or better guidance is required?

• There is a limit to the amount of guidance that should be provided in a localised environment.  Many local authorities have proposed significant policy changes in their council tax support schemes, partly to reflect local circumstances.  Central departments need to trust local authorities to make the right decisions.

• In any case, central departments cannot provide guidance on every possible local policy, nor should they, even though local authorities are used to receiving direction from central departments and may struggle most where they have been asked to take on new responsibilities and need to come up with new designs.

• Rather than guidance it may be more helpful, particularly for smaller authorities, to co-ordinate best practice, something the Welfare Reform Club are facilitating through our work with leading local authorities.

• That said, central departments have provided a good deal of advice, guidance and statements of intent, some very helpful, some less so.

• For example, one point where more advice might have been provided is on how to make the 10% cut in council tax support schemes. The inference is that DCLG would prefer local authorities to adopt the default scheme, with no cuts, and find the resources to fund the gap from elsewhere.  This is not very helpful, as those local authorities who have decided they have no option but to implement the 10% cut in their scheme are left with no pointers on the best way of protecting work incentives in these circumstances. 

Is the government’s timetable for implementing welfare reform achievable?

• The Government has allowed four years for the transition to Universal Credit, so in theory it should be achievable.  However, this assumes no delay to the planned implementation timetable.  There is a risk that the main part of the transition will be crammed into the latter part of the four year window. Central departments may have underestimated the complexities of Housing Benefit and this may yet prove problematic.

• Central departments will need to work effectively with local partners to achieve successful implementation. 

• The timetable for council tax support schemes is very stretching and many local authorities have concluded that they can implement only an interim solution from April 2013.

• Delays, even within the constraints of the existing time frame, could have a financially detrimental effect on local authority budgets, as it will be difficult to plan for appropriate resources and enter into cost-effective contracts with software suppliers.

Are local authorities being allocated sufficient resources to deliver services such as localised council tax support and advice to claimants on Universal Credit?

• Overall, almost certainly not (although some local authority budgets will be decided later this year). 

• It is very likely that the local authority contribution to the successful delivery of Universal Credit will be a bigger task than central departments currently envisage.  Funding is by no means the only issue (for example there are gaps in information and expertise) but it warrants careful examination. This is a clear DCLG responsibility, in conjunction with Treasury.

• Local authorities will need to find ways to overcome gaps in resources as well, with respect to staff and expertise as well as funding. This comes at a time of challenging financial constraints and reductions in skills, as local authority staff are being made redundant or being redeployed. 

• The Government envisaged a skills transfer to the private sector, and that the private sector would also be picking up public sector work.  However, the reality in many areas is that public sector skills are being lost as former local authority staff move to different types of employment in the private sector.
Are there financial risks to local authorities from welfare reform changes and are such risks being adequately addressed?

• The main risk is that local authorities will find that they have to do more than currently planned in order to help deliver welfare reform. In particular, local authorities are devoting a lot of resources to designing council tax support schemes.  This is a new responsibility, so they have either to develop new skills quickly or buy them in. With a tight timescales and uncertainty over information available from central government, this presents a significant financial risk. The 10% cut in council tax support budgets could easily backfire.

• There is some evidence that local authorities are shedding staff with skills in delivering revenues and benefits services. This is unlikely to be very prudent in the short-term.

• Central departments need to be alive to these risks and be prepared to act quickly if necessary. 

What impact have welfare to work schemes had, or are likely to have, on the numbers of benefit claimants?

• Latest results clearly show that there is more work to be done. The sound principles behind the Work Programme are not yet working effectively in practice.  The latest statistics tend to suggest that the existing schemes are not as effective as they could be.

• Local schemes, which see partnering between local authority and local business groups, underpinned by a national scheme, are likely to deliver better opportunities to get people back into work.

What evidence is there that local authorities are able to use effectively existing services or contracts for the delivery of new local social fund schemes?

• Local authorities have put a great deal of thought and effort in creating local schemes.  Some authorities have chosen to reinvest the funding into existing support schemes, therefore targeting known vulnerable families, while other such as Wolverhampton, have developed schemes that make full use of local providers and third parties to create a cashless financial support for families in crisis.

How will the separation of the administration of council tax benefit and housing benefit affect claimants?

• The local administration of council tax support provides a very clear case for sharing information between DWP and local authorities in order to achieve the broader aims of simplifying the administration of benefits and enhancing work incentives.

• It may cause some difficulty for customers in the short-term as they will be used to having Housing Benefit and Council Tax Benefit processed together.

• It will take time for people to appreciate that their housing costs will in most cases be included in their Universal Credit. Effective communication will be vital.

• The biggest risk is that the drivers for council tax support and Universal Credit may be different if local authorities do not have shared ownership of Universal Credit delivery.  Council tax schemes may work against Universal Credit and create a disincentive to work.  If local authorities were more involved in the delivery of Universal Credit, it would allow for more creativity and greater likelihood of a consistent approach.

How significant an issue is housing benefit fraud under the proposed new system and what measures are being taken to address it?

• Some fraud and error will be eradicated under the new arrangements (for example failure to declare tax credits when claiming Housing Benefit).

• But fraud and error will always be a significant feature of income-related benefits. Housing Benefit fraud is often linked to housing fraud, with the same family involved in both types of fraud at the same time.

• Therefore the links with housing and other local authority services need to be catered for under the new system. It is hard to see how the Single Fraud Investigation Service will address the nature of what is, in effect, a cross-boundary activity.

Are there sufficient safeguards to protect social landlords from financial harm resulting from the payment of housing benefit direct to claimants?

• The DWP demonstration projects are addressing this issue. But it is vital that Universal Credit looks and feels like a salary and therefore it should, with some limited safeguards, be paid directly to the household and not the landlord. 

• Financial advice and support will of course be important in making this work. But social landlords should not in effect rely on benefit dependency to provide their credit rating with lenders.

• Despite the willingness of some welfare recipients to manage their own affairs, it is likely the rent arrears will increase, at least in the short-term.  This should not come as a great surprise.  There has been some increase in rent arrears in the private-rented sector as a result of the Local Housing Allowance, particularly where authorities have kept strictly to the policy to pay landlords only in very limited circumstances.  If more people are presented with an opportunity to default, whether or not they receive benefits, a proportion of them will do so.

• Landlords already have to manage rent arrears for those not receiving benefits, or not enough benefits to make direct payments possible, and they are likely to have to extend and enhance these processes at least to some degree.

• People who are likely to have difficulty managing their finances, for whatever reason, are often well known the local authority, for example through troubled families schemes and child protection.  Local knowledge will be essential to inform decisions about the nature of help to be offered to such people, including direct payments.  Local delivery of welfare will help this process, but it will be just as important to ensure that communications between central departments and local authorities are highly effective.  It is central to welfare reform that as many people as possible are encouraged to be independent and resourceful, but at the same time there should be reasonable protection for social landlords, particularly during the transition.

Concluding Statement

18.  Universal Credit is the most important welfare reform since the beginning of the welfare state.  It has the potential to bring long-promised radical simplification of the benefit system, and greatly enhanced work incentives.  It could really help to change people’s lives. So it is vital that as much effort goes into implementation as it has into design.  Local authorities have a vital role to play and there has been some recognition of this by central departments. 

19.  Local authorities are keen to play a significant role. Whilst not necessarily agreeing with every reform, they appreciate that the wider objectives around work will have a positive impact on the local economy. Welfare reform is a mixture of national and local programmes.  To work well, it will require national and local agencies to work together in a dynamic and equal partnership.

The Welfare Reform Club
13th December 2012

An Argument for a Localised Joined Up Welfare Service.

In early August 2012, David Hyde won his appeal to the local government ombudsman.  The ombudsman has now ordered that David’s disable brother should receive the £180 per week support payment that he was entitled.  It was an appeal that has taken 11-years.

Some would argue that this is an argument against the government’s plan to give councils full responsibility for administering the payments, which are currently made by through the independent living fund (ILF).  However, this is a weak case, and argues a cure based on the symptoms rather than the causes.  If anything this is an argument for a more localised joined up approach to welfare support.

Forty-two year-old Antony Hyde has severe learning disabilities.  Antony was in receipt of £180 per week from the fund while he lived with his parents. In 2001, Antony moved into supported living accommodation that was provided by Bradford Council and as a consequence the funding ceased.  The administrators of the ILF determined that has Antony has gone into residential care; he would therefore be no longer be eligible for funding.  This was of course an error because Antony was in fact not in residential care but a tenant and in receipt of Housing Benefit from the very same Bradford Council.

It was not until 2008 that Bradford admitted its error and only after r David Hyde had exhausted the complaints procedure and taken the case to the government’s care watchdog. Even then, Bradford Council failed to recompense for their mistake.

Anne Seex, The Local Government’s Ombudsman has now ruled that Bradford “provided erroneous information to the ILF” and should itself pay Antony Hyde just over £100,000 and David £5,000 for legal costs.

If there had been whole customer approach to the financial support then to my mind this could have been avoided.  It is a strong argument for where personal intervention is critical.  I would not argue against the use of online, self-service portals.  However,  until such channels can deal with the claimant’s entire set of needs then then there must be a requirement to have local face-to-face service.  One that can review and, where necessary, act, to ensure that the claimant has access to all the financial support that they need to live an independent life.  This would also reduce double claiming from funds.

David has said that the loss of the funding had dramatically affected his brother’s lifestyle, as it had previously allowed for activities such as swimming, a weekly disco outing and trips to the coast.

In bringing the case, it had often involved David in daily correspondence and phone calls and had put a huge strain on David’s own family life.  The way David saw it: “From day one the council were breaking the law, full stop. They did absolutely nothing and treated my brother and my family in a disgraceful way.”

This is a bit of an indictment of the Council but quite typical of way in which the letter of the law is followed, even in error, and then Council Officers, find it difficult to back down.  The truth is these kind of mistakes are often made.  Following codified rules operated by different departments and organisation means a silo approach to claimants and customer who have complicated lives.  This is further acerbated by having remedial systems that are confrontational.

Enviably, David will see that retaining the independent ILF body as being better than letting Bradford Council run the scheme.  While I can understand David’s reasoning I can would argue for a stronger joined up approach for a localised financial support service.  It would be cheaper than having to spend public money on defending appeals such as this one.  It would also be cheaper than having to pay compensation for mistakes.  More importantly ensure that instead of punishing Antony because he has disabilities it creates a financial environment that allows for independent living.  By passing information between agencies all that has happened is that Antony has, for a decade, been denied something the rest of take for granted.

Data Sharing and Fraud Investigation Under Welfare Reform

There have been two pieced of guidance issued that set the scene for data sharing under a reforming welfare state.  The DWP’s circular A5/2012 and the DCLG’s “Localising support for council tax: A Statement of Intent on information sharing and powers to tackle fraud”.

A5 defines the specifics of how, and with who data can be shared under Section 130-133 Welfare Reform Act 2012 (WRA) and the Social Security (Information-sharing in relation to Welfare Services etc.) Regulations 2012

While A5 and the statement of intention are not legislation it does give some idea of the government’s thinking in relation to data sharing.  It seems to be something of that Ministers are quite keen on but departmental civil servants are somewhat less smitten.

This legislation for data sharing within the WRA came into effect from 2 July 2012.

S130 & 131 creates provisions that allow for information sharing for specific circumstances.

  • S130 -Information-sharing in relation to provision of overnight care etc.
  • S131 Information-sharing in relation to welfare services etc.

These sections allow data sharing for certain welfare services, council tax and social security purposes.  While S132 makes unlawful disclosure of information under section 131 an offence.  S133 is supplementary to S130-132 and relates to other peripheral matters.

The “Social Security (Information-sharing in relation to Welfare Services etc) Regulations 2012 (SI 2012/1483)” specifically details what can and cannot be disclosed under S130 and 131 WRA.  The provisions are permissive and are not mandatory! Therefore, there is no requirement on DWP,  LAs and other qualifying persons that are covered by this legislation to supply or use data to other data users who are also covered by the Act.  In other words LAs can share with other LAs but they don’t have to.

In particular, this legislation permits the DWP to supply data to LAs for identifying people who might be supported under the “Troubled Families” Program.  For all other purposes data supply and exchange between the DWP and other bodies is a work in progress and subject to the development of new IT systems.   The DWP say that until that work is completed they are unable to put in place any new data sharing arrangements and requests from LAs will continue on a ‘business as usual’ basis.  In other words, watch this space!

Nonetheless, the DWP are encouraging LAs to have local arrangements to access DWP data.  This includes any joint teams still in operation, where existing arrangements can remain in place.

The alternative arrangement requires that LAs must submit requests to the relevant DWP office in order to seek claimant data in the normal manner.  However, LAs no longer need to get the claimants consent as the request is being made under the provisions of the new regulations.

There is to be an update of the “Guidance for local authorities on the use of social security data’ (2010)” in order to take account of the new legislation.  Again, watch this space.

The Department plan to lay further legislation before the end of 2012 to allow data to be shared for the purposes of assessing entitlement to local Council Tax Support Schemes, and the of local welfare reform provision that is replacing elements of the social fund.

Circular A5/2012 has detailed explanation of the provisions and some useful examples.  But they are examples and things may play out differently in the real world.  The circular is not law but it does give an indication of the Departments intention.   Restrictions the DWP envisage now may seem reasonable to the them now but the situation for the exchange of data will be fast moving and no doubt volatile, so they should expect to adjust their position.  I tend to think that Minsters, such as Lord Freud and Francis Maude envision something more free flowing than that being implemented by the Department.

The statement of intent on exchange of data that has been issued by the DCLG is focused on

a)      Regulations permitting the supply of information from DWP and HMRC to billing authorities for prescribed purposes relating to council tax administration

b)      Regulations to provide necessary powers, offences and penalties for local authorities to tackle fraud in relation to local council tax support

This supplementary document sets out a permitted chain of data supply from HMRC via the DWP to English billing authorities for the purposes of granting a local Council Tax Support discount.  It would include fraud investigation of false claiming of the discount.  It does not appear to extend to the recovery of council tax but it does include investigation into legitimacy of other discounts (more later).  It is difficult to understand the motivations of civil servants in creating legislation that is so over detailed that it ends up legal get out of jail cards for fraudulent activity.  It speaks to the distrustful relationship between the civil service and local authorities.

Information may be supplied by the DWP to billing authorities under existing powers in the WRA.  Although I would have thought that there were two things that need to be considered.  Firstly, WRA is a bit woolly on this matter, and I am not convinced that all of the required legislation is in, so data exchange around CTS could be challenged and we know from A5 that it may take a while for a technological solution.

According to the DCLG there will be powers and regulations to tackle CTS offences and penalties to address those offences.  This will place a clear onus on LAs to investigate and prosecute fraudulent CTS claims. These provisions will be similar to existing CTB rules which will cease in April 2013. I suspect that the offences are likely to be civil rather than criminal but we wait for more advice.

What we have so far is only the intention of the DCLG to make new counter-fraud regulations under paragraph 15A of Schedule 2 to the Local Government Finance Act 1992.  However, time is short and it will require the co-operation of HMRC and the DWP.  The challenge for LAs will be to get the process and procedures into place, especially with depleted counter-fraud resources.  None of it is likely to be automated for quite a while.

There will of course be the equivalent of S132 WRA in the LGFA.  Probably, 15D LGFA making a person will be guilty of an offence if they disclose without lawful authority any information which relates to a particular person which they obtain from HMRC  Under WRA a person found guilty of illegally disclosing HMRC information can be imprisoned up to two years or be fined, or both.   On summary conviction, it could be imprisonment for a term not exceeding 12 months or a fine.

CTS and other Council Tax discount create a reduction in the Council Tax bill.  If someone has supplied false information or documents to create a fraudulent reduction then this will be an offence.  Therefore, powers to prevent and investigate, such fraud, including data sharing powers, will extend across all discounts.

Remember that there is nothing in WRA or the DCLG’s intention that forces either the DWP or HMRC into supplying information.  LAs will find it important to give sufficient assurances to the DWP and DCLG that the information being sought by the authority is to assess that the entitlement to a discount is accurate.

LAs should not ignore the fact that the DCLG is expecting LAs to investigate and prosecute Council Tax Fraud.  The certainly drive that point home in the document.  In the DWP’s Single Team business plan there is an expression of interest that CTS and other governmental fraud investigations may in the future be migrated into the Single Team.   So LAs need to get their act together if they do not want this to happen.

Like much of welfare reform, this is messy and will be sorted out after it goes live, but to my mind there is much that LAs can be doing to start to take control of data sharing and fraud investigation.  You cannot wait for the DWP or the DCLG to put everything in place.  It is also a bit one sided.  The LGA do not seem to be representing LAs very well on this matter.  Data and intelligence exchange is a two-way event.  I would have thought that LAs need some reassurances that LA data is going to be used by government departments in a way that is compatible with the desires of the Local Council.  There is much more work to be done on this but like everything else in welfare reform it is YOU who needs to make sure that it works the best it can under the circumstances.

Lord Freud’s Speech to LGA conference July 2012

Lord Freud

Minister for Welfare Reform

“Welfare Reform Act 2012 – Implications and challenges for Local Authorities”

Local Government Association Conference

Local Government House, Smith Square, London

I want to thank Sharon Taylor, the Local Government Association and local authorities for your longstanding work in providing welfare services in your local communities that make a difference.

And for your crucial support as we reshape welfare for the future.

It is a pleasure to be sharing the platform with Lord Adebowale.

He has made a valuable contribution to debates on the Welfare Reform Bill. And helped many people with complex needs find work and get their lives back on track through Turning Point.

I will be announcing the recommended local authority led pilot sites to help residents prepare for the introduction of Universal Credit in a moment.

With so many excellent bids, we’re having a very difficult time making our selection.

You suddenly see the real enthusiasm and determination of local authorities to promote financial and digital access, so they can bring everyone in their communities into 21st century society.

You will have the opportunity to hear more about the impact of our welfare reforms, and discuss them, in the plenary sessions and workshops later today.

And I look forward to taking your questions.

All the changes happening mean that local authorities will take on a breadth of new powers and responsibilities.

And the community and voluntary sector will have an even more important role to play.

I know there are challenges ahead too and I want to touch on those later.

And I fully understand the funding challenges that local authorities will face.

But I want to start by setting out what our reforms are really about: providing a lever for social change.

Helping people regain the independence and self-reliance they have lost because our welfare system kept them trapped down in dependency.

And how I see welfare reform changing the social ecology of communities throughout the country.

  • At the heart of welfare change is Universal Credit.
  • Universal Credit will change the benefits landscape.
  • Transforming the way services are delivered, and transforming local communities as a result.
  • We have been working closely with the LGA and local authorities to support the introduction of Universal Credit from October 2013
  • And local authority led pilots will provide a unique opportunity for councils to shape the development of Universal Credit

Universal Credit

Universal Credit will tackle the root causes of welfare dependency, providing a simpler, more efficient system that will make work pay.

And because Universal Credit is not restricted to people out of work, it is safe for claimants to try a job, or increase their earnings, without the fear of losing their benefit.

Universal Credit will help claimants and their families manage their benefits and wages independently and, where possible, become independent of state support.

Financial and Digital Inclusion

What I see developing is a whole new area of common ground where social inclusion can take root and flourish.

We want to make it as fertile as possible.

And we recognise this will need a lot of different intermediaries.

Local authorities, the community and voluntary sector, credit unions, and social landlords among others.

Most people on a low income already have bank accounts, and manage their money well.

However, we recognise that some people will need extra support when Universal Credit comes into force.

People on low incomes who can’t get mainstream financial services face a poverty premium.

They end up paying more because they cannot get direct debit discounts or affordable credit.

And they can fall prey to loan sharks and doorstep lenders.

This hinders the regeneration of whole local communities.

So we are working with banks to increase access to accounts that accept income from wages as well as benefits; transactional accounts, which will allow facilities like direct debits and simple standing orders.

And we are exploring the types of budgeting advice and information services that claimants will need.

We are also looking at ways to provide specific, practical support at the start of their claim for people who have debt problems, poor numeracy skills, drug addiction or mental health issues.

We are designing Universal Credit to be digital by default to boost online access for people of working age.

Clearly where broadband access is not available we intend to make sure that appropriate alternative support is at hand for them.

New research [by Ipsos Mori, published by DWP) reveals that 74 per cent of claimants surveyed have a broadband connection at home.

And 62 per cent say they would be willing to apply for a benefit or Tax Credit online. These are encouraging results.

Wider Context

But let’s take a moment to stand back and look at why we need to take action.

Our welfare system is failing the very people it was set up to help.

A system that stifles incentive, opportunity and responsibility.

A system that denies them the opportunity to get on in life that everyone deserves.

We have to restore integrity and fairness. And end the complexity and cost which has spiralled out of control.

Housing Benefit spend doubled in the last decade from £11 billion to £21 billion in 2010/11 in cash terms. We simply can’t afford to continue paying Housing Benefit as we have done in the past.

So we have capped Housing Benefit. Putting an end to the scandal of families on benefits living in houses hard-working families could never afford.

This is the right and fair thing to do.

Housing Benefit will still be able to meet rents of £20,000 a year.

Independent research into housing benefit reform [ by the Centre for Regional Economic and Social Research at Sheffield Hallam University, published June] shows many scare stories about housing benefit reform are simply not happening.

77% of LHA landlords say they intend to continue letting to LHA tenants in the next 12 months. Most landlords work with tenants to reduce arrears. And a third of all LHA landlords said they had either reduced rents for tenants in exchange for direct payments or would consider doing so.

The six demonstration projects we have set up to trial direct payments to Housing Benefits claimants living in social sector housing are underway.

These will help us learn how best to introduce directs payments when Universal Credit comes in.

These reforms illustrate how the relationship between central and local government is changing.

We understand this means you will have much greater involvement with your tenants.

On Social Sector Size Criteria, nearly one third of working age social housing tenants on Housing Benefit are living in accommodation that is too big for their needs.

Despite the fact that a quarter of a million households today are living in overcrowded social housing and there are very large waiting lists.

We will stop the practice of the state paying for rooms beyond the claimants needs and help tackle the social housing shortage that blights too many lives.

Without this reform our Housing Benefit bill would reach £25 billion by 2014/15 in cash terms.

Another important area of reform is the Benefits Cap.

It is simply not fair that people on benefits can receive more in welfare payments than hard working families. And where a life on benefits robs people of achieving their potential.

We have to put an end to the culture that says a life on benefits is an acceptable alternative to work.

A Benefits Cap of £26,000 will mean that no family on benefits will earn more than the average salary of a working family (£35,000 a year gross or £26,000 net).

The rationale behind the pilots

Let me now turn to the local authority led pilots.

These pilots will help local authorities and DWP identify the best ways to help Universal Credit claimants when Universal Credit comes in.

They will test different propositions and help local authorities set up their systems.

I know from my visits to Lewisham and Sevenoaks Councils earlier this year the vital work that local authorities already offer many of those who will be Universal Credit claimants.

Many local authorities are involved in the various steering, assurance and working groups on the design of Universal Credit.

We are working with the LGA right across the Universal Credit programme.

And we recognise the very important contribution that housing sector and voluntary sector organisations are making to Universal Credit.

Local Authority Led Pilots Announcement

The idea for the pilots came from a roundtable I had with the LGA, and various representatives of all national local authority associations, at the beginning of the year.

From these talks we developed proposals to run a dozen or so local authority led pilots across Great Britain, to deliver face to face support to people who may need to claim Universal Credit.

The pilots will look at:

  • encouraging claimants to access online support independently;
  • improving financial independence budgeting support and helping people find work;
  • delivering efficiencies and reducing fraud and error; and
  • reducing homelessness.
  • The LGA had the unenviable task of choosing from 38 strong applications.

All the recommended local authorities offer very interesting ideas on how they might help people with their claims for Universal Credit and progress into work.

And I am pleased to announce that the LGA has recommended 15 proposals as potential local authority led pilot sites in England for us to make our final selection.

We have a separate process to select around five pilots for Scotland and Wales and we will expect to announce those shortly.

They based this choice on the best fit with what we agreed we wanted to test.

Digital self-service, financial inclusion with a focus on work, efficiency, and reducing fraud and homelessness;

And they made sure their recommendations for us to select from represented a broad range of demographic mix and type of authority.

The 15 authorities recommended by LGA are:

  • Barnet
  • Bath and North East Somerset
  • Birmingham
  • Hammersmith and Fulham (in consortium with Kensington and Chelsea, Wandsworth and Westminster)
  • Leeds
  • Lewisham
  • Melton
  • Newcastle under Lyne
  • North Dorset
  • Oldham
  • Oxford
  • Rushcliffe
  • A consortium of North Yorkshire authorities led by Scarborough
  • West Lindsey; and
  • Wigan.

I met representatives from all 15 authorities last week, and I was really excited by the quality and scope of their plans.

They have a very clear focus on increasing online access and reducing reliance on mediated support, and promoting financial inclusion.

All the recommended local authorities offer very exciting ideas on how they might help people with their claims for Universal Credit and progress into work.

We are now working through the long-list with a view to announcing the final dozen or so successful authorities across Great Britain in the summer.

We are talking to all the authorities individually to see how effective their proposals are in practice, how they line up with DWP’s own operational work in these areas, and to check on value for money.

The pilots will start in the autumn.

But even for those authorities we can’t include in the final selection, we are keen to involve all those who are interested in this agenda.

And we will develop a network of all local authorities who are interested in working with us, so we can keep them plugged into developments as we move towards Universal Credit going live in October 2013.

The breadth of responsibilities local authorities will have

Looking beyond Universal Credit, the whole direction of welfare reform will provide greater powers for councils to localise welfare support.

You have the local expertise and knowledge to apply it where you can have a real impact.

And we strongly believe the most effective solutions are designed and delivered locally.

You will gain a breadth of new responsibilities.

Let me be clear about this. All local authorities will have to look at changing their systems.

You will have to look hard at how you organise yourselves.

When you look at the responsibilities moving across to local government , you will have to decide who gets Social Fund payments, localised council tax support, and direct payments for Local Housing Allowance

You will provide support for troubled families, continue help for homelessness, and have a greater role in supporting the most vulnerable members of your communities.

It will be up to you to help ensure that financial inclusion and digital inclusion work in practice.

So it’s vital that the services you design and provide have a real fit with Universal Credit and our reforms, so that people get the seamless support they need.

We will work with you to make sure we get this right.

I am absolutely determined we will do all we can to help local authorities in this vital work

And clearly the pilots are a very important part of this.


So let me sum up. Welfare reform will bring about radical social change.

It is a challenge.

But I am confident it is a challenge the Local Government Association, local authorities and the community and voluntary sector will meet.

Working together we can really start to transform our communities.

And help people regain the independence, self-reliance and wellbeing our welfare system has denied them for far too long.

Face-to-Face Universal Credit Pilots Short-list Unveiled

Fifteen councils have been short-listed to pilot support for claimants of the government’s new single universal credit benefit,

Welfare reform minister Lord Freud revealed the councils in the running during a speech to councillors and local government officers attending a welfare reform conference on Friday, 20 July 2012.

The councils, whittled down from 38 applications by the LGA following discussions with Lord Freud, will now enter talks with the Department for Work & Pensions before a dozen are selected later this summer to run the pilots from this Autumn.

The 15 areas include two consortiums, one in London and one in north Yorkshire, and are as follows:

  • Barnet LBC
  • Bath & North East Somerset Council
  • Birmingham City Council
  • Hammersmith & Fulham LBC, in consortium with Wandsworth LBC and triborough partners Kensington & Chelsea RBC and Westminster City Council
  • Leeds City Council
  • Lewisham LBC
  • Melton BC
  • Newcastle-under-Lyne BC
  • North Dorset DC
  • Oldham MBC
  • Oxford City Council
  • Rushcliffe BC
  • North Yorkshire consortium led by Scarborough BC
  • West Lindsey DC
  • Wigan MBC

The successful councils will be tasked with testing face-to-face and online support to claimants in the 12 months between Autumn this year and the start of the national roll out of universal credit in October 2013.  DWP said the pilots would focus on helping claimants with budgeting as they make the switch from multiple benefits, including housing benefit which is often paid direct to landlords, to a single benefit which will be paid monthly. Councils piloting support are also expected to assist with job searches, reducing fraud and error, and reducing homelessness.  The DWP has previously said that it is “keen to see diverse models emerging where the local authority is not the key delivery agency”.

Lord Freud said: “Local authority led pilots will provide a unique opportunity for councils to shape the development of universal credit. “All the recommended local authorities offer very exciting ideas on how they might help people with their claims… and progress into work.”

When DWP and the LGA formally invited pilot applications in April, it was made clear the pilots were “voluntary”, and would not be classed as a new burden. This means they won’t qualify for funding based on a formal assessment.  However, the DWP has said it would “reimburse additional costs that an authority incurs in running the pilots”, such as staff, evaluation, estates changes, communications. A breakdown of costs had to be supplied in applications and is set to be paid in arrears.

The 12 successful pilot areas join four ‘pathfinder’ councils in the north-west – Tameside, Oldham, Wigan and Warrington MBCs.


The main risk to the successful implementation of Universal Credit


The successful implementation of Universal Credit is clearly a key priority for the Government and all we have heard so far indicates that DWP will, as planned, begin taking claims from October 2013. 

Such a major reform of the benefit system is, of course, a very challenging task. It involves a wide-ranging programme of work, not only in DWP but also in other government departments, local authorities and a host of other interested organisations. Continue reading

What do you want from the Welfare Reform Club?

The Welfare Reform Club is part think-tank, part discussion forum and part consultancy, with the overall aim of promoting the role of local authorities in delivering welfare reform.

We aim to create something different, a novel blend of web-based support, workshops and conferences, together with solid, practical consultancy.  We have already started work with a number of authorities and we are building partnership agreements with several suppliers.  For example, we have actively supported several local authorities in their Universal Credit pilot bids and developed the Universal Credit calculator.

The transition to Universal Credit is a major task in itself.  But local authorities will also be (simultaneously) devising council tax support schemes, introducing new local welfare provision as an alternative to parts of the Social Fund, and developing a range of existing responsibilities including Discretionary Housing Payments.

Local authorities will play a key role in welfare reform over the next few years.  Please leave a comment below or contact us to let us know what you want.

Local welfare – the new Social Fund


This paper looks at the development of the discretionary Social Fund and analyses the issues arising from the Government’s decision to abolish parts of it and set up a new arrangement whereby first-tier local authorities will be funded to provide locally administered assistance to vulnerable people. Continue reading