The impact of changes to housing benefit in Wales

Transcription

1 House of Commons Welsh Affairs Committee The impact of changes to housing benefit in Wales Written evidence Only those submissions written specifically for the Committee and accepted by the Committee as evidence are included. Ordered by The House of Commons to be published. 1

2 List of written evidence 1 CHB 01- L. Walsh 2 CHB 02 - Residential Landlords Association 3 CHB 03 - AdviceUK 4 CHB 04 - UNISON Wales 5 CHB 05 - Citizens Advice Cymru 6 CHB 06 - Cynon Taf Community Housing Group 7 CHB 07 - The Royal British Legion Wales 8 CHB 08 - Rhondda Cynon Taff Local Authority 9 CHB 09 - Shelter Cymru 10 CHB 10 - Welsh Government 11 CHB 10B - Supp Ev Welsh Government 12 CHB 10C - Supp Ev Welsh Government 13 CHB 11 - Tai Pawb 14 CHB 12 - Community Housing Cymru 15 CHB 12 B+C Community Housing Cymru 16 CHB 13 - Wales & West Housing 17 CHB 14 - Crisis 18 CHB 15 - Department for Work and Pensions 19 CHB 15B - Department of Work and Pensions 20 CHB 15C - Supplementary evidence from DWP 21 CHB 16 - The TaxPayers' Alliance 22 CHB 16B -The TaxPayers' Alliance 23 CHB 17 - Institute of Economic Affairs 24 CHB 18 - National Landlord's Association 25 CHB 19 - Hafal 26 CHB 20 - Welsh Local Government Association 27 CHB 21 Bron Afon Community Housing 28 CHB 21 B - Bron Afon Community Housing 29 CHB 22 - Welsh Tenants

3 CHB 01 Written evidence from L. Walsh Personal Evidence I believe the changes to housing benefit that will come into action April 2013 will affect my family extremely negatively. I have 2 boys aged 12 and 14 with no partner. We live in a 3 bed house with my children having a room each. According to the reforms I will have a spare bedroom. I will have to pay rent due to this apparent spare bedroom. We will be at risk of increased poverty within our family. The following paragraphs explain how the reforms will negatively effect mine and similar families in Wales. 1. My 2 children need a separate room from each other due to a need for privacy and also to prevent conflict and ensure a happy, productive family life. 2. I currently do not work due to depression. Therefore I am living on basic benefits and not claiming ESA due being told I am fit for work. I already struggle from week to week to provide for my family and regularly go without a meal to ensure my children eat everyday. 3. The cost of living is constantly rising and the money we are allowed to live on does not correspond to those rises. Currently my families monthly spend is - 80 electric, 100 gas, 70 water, 70 hire purchase, 50 tv/internet/telephone, 20 mobile, 280 food, 50 travel, 30 pet care, 30 toiletries/cleaning products, 50 shoes/clothing, 12 tv license and 12 household insurance. These costs are before I buy things my children constantly need for school i.e. cooking ingredients/nonuniform days/design technology materials etc. These are basic costs that need to be met which total more than the 850 I get for a month and leave no leeway for things like hobbies and clubs which my children do not attend as I can not afford them which could in the long run could effect my children's confidence, self-esteem and social skills. 4. If the changes to benefit say I need to pay even 5 a week for my apparent extra bedroom that means another 20 a months will come out of the money I have to spend leaving me even shorter of money and my family closer to the poverty line.

4 Written evidence from the Residential Landlords Association (CHB 02) 1.0 About the Residential Landlords Association 1.1 The Residential Landlords Association (RLA) represents over 16,000 small and medium-sized landlords in the private rented sector (PRS) who manage between them over 150,000 properties in England and Wales. It promotes and maintains high standards in the sector, provides training for its members, promotes and runs local landlord accreditation schemes and helps drive out those criminal landlords who bring the sector into disrepute. 2.0 Summary 2.1 The RLA supports efforts to reform the benefits system to better support the transition from welfare to work. That said, as demonstrated by a joint survey of members of the RLA and the Scottish Association of Landlords (SAL), there are clear concerns about the way that Universal Credit is currently designed. 2.2 Whilst the RLA recognises the need for changes to the system of housing benefit, in common with a number of other organisations it is worried about the impact some of the measures proposed will have on all tenants dependent on benefit, particularly younger ones. There are worries that an unintended consequence will be to reduce the number of landlords able or willing to rent to benefit recipients so forcing local authorities to look after them. 2.3 The RLA is calling on Ministers to enshrine a tenant s right to choose who the housing element of the new Universal Credit is paid to under regulations implementing the Welfare Reform Act. 2.4 The Government should reconsider its decision that the housing element of Universal Credit will be paid a month in arrears. Unless tenants have the financial resources to pay their rent upfront, which is unlikely, they will be starting off on the back foot, causing many landlords to become wary of letting to those on benefits and putting potential new landlords off investing in much needed new rented housing. 2.5 The Government needs to provide urgent assurance to the sector over the circumstances under which payments of the housing element will be made directly to the landlord. Whilst at present landlords can demand that payments are made to them when a tenant reaches 8 weeks of arrears, Ministers have failed to provide a clear pledge to retain this right. A backstop right for the landlord to require direct payment is vital as it underpins landlord s security of income.

5 2.6 Greater clarification is needed over the status of pre-existing decisions made by local authorities on vulnerability and arrears cases when the implementation of universal credit transfers from local authorities to the Department for Work and Pensions. 2.8 Regulations should be issued as to the information that landlords will be entitled to know and at what stage when a tenant makes an application for housing support under Universal Credit. This should cover ensuring the landlord is notified when a claim is being made; the final award made and details of the procedures and circumstances under which a landlord can make a claim for payments to be made directly to them. 3.0 Impact of Housing Benefit Reforms - Landlords Survey Results 3.1 Between 22nd October and 5th November 2012, 1,023 members of the RLA and SAL took part in a survey to measure landlord s attitudes to Universal Credit. 3.2 The results showed that 65% of respondents do not support the Government s plans compared to 20% who did support them and 16% who did not have a view. 3.3 When asked whether there are sufficient numbers of shared properties in their areas to cope with the extra demand as a result of the decision to increase from 25 to 35 the age at which housing benefit claimants can claim only for a room in a shared property, 55% said there was not, 6% said that there was and 39% did not know. 3.4 Following pronouncements made recently by Welfare Reform Minister, Lord Freud, that the Government s temporary policy of allowing landlords in the private rented sector to have housing benefits paid directly to them in return for reduced rents had been a success, 62% of respondents said they would not lower rents in return for direct payments, compared to 24% who would and 14% who did not know. 3.5 Asked how they would respond if the right to demand direct payment once a tenant gets into 8 weeks of arrears as is allowed at present, became only a right to request, 92% of landlords said it would make them less likely to rent to those on benefits only, 2% said it would make them more likely to do so whilst 6% said it would make no difference. 4.0 Tenant Choice 4.1 The RLA, alongside a number of organisations including Shelter, Crisis, Citizens Advice Bureau and the Money Advice Trust, has consistently argued that, to help them budget, tenants should be given a choice as to who should receive the housing element of universal credit themselves or their landlords. Whilst Ministers have argued that tenants should by default have the benefit paid directly to them to encourage financial responsibility, for many it would be a perfectly rational and financially responsible decision to have the assurance that their rent had been paid so

6 that they could decide on how to spend the remainder of their income. Surely as part of its ambition to promote responsibility Ministers should trust tenants to make their own decisions based on their own circumstances, rather than seek to restrict this ability. This is especially important in helping budgeting now that Universal Credit is to be paid monthly. 4.2 Ministers in Westminster and Stormont agreed that the housing element of Universal Credit would be paid to landlords in Northern Ireland. If there, why not in Wales? 4.3 Enabling tenant choice would also help tackle the high rates of Housing Benefit fraud. As outlined by the National Fraud Authority s Annual Fraud Indicator (March 2012), Housing Benefit remains the largest area of fraud loss within the benefit system, increasing from 250 million in to 300 million in Under Universal Credit, there remains a very real danger that families with multiple financial pressures will find it difficult to prioritise payments, and find the housing element of the credit being used for other purposes. 4.4 Evidence shows that particularly those tenants struggling to manage their finances would prefer to have the right to choose to have their Local Housing Allowance (LHA) paid directly to their landlord. In October 2009, data from a survey of LHA claimants by Shelter found that of the claimants who would choose payments to be made directly to their landlord, 95% were struggling to manage their finances. Almost half of the claimants who had experience of both forms of payment believe that landlord payment better helps them in managing their rent and household budget. 4.5 Given the multiple pressures claimants will face under Universal Credit, especially for those who will be affected when the benefit cap is introduced, it is all the more important that claimants are able to seek the security of knowing their rent has been covered. 4.6 Support for tenant choice has also been given by the Money Advice Trust who run the national debt line. Their Chief Executive, Joanna Elson, has said of the proposal we feel that this would enable many tenants to avoid housing benefit arrears and thus tackle their debts and manage their money wisely. 4.7 An inevitable consequence of the current arrangement is that many landlords are now reluctant to rent to tenants on benefits for fear that they will not receive the rent. This makes life more difficult for tenants seeking accommodation and may force them to accept lower standard housing. In a survey of RLA members, of those who would not rent to tenants receiving housing benefits, 45% reported that it was due to a lack of guarantee of receiving the rent. 5.0 Arrears and Vulnerability

7 5.1 The most recent Tenants Arrear Tracker for the Chartered Surveyors, Templeton LPA, has shown that the second quarter of 2012 saw an 8% increase in the number of tenants in severe financial difficulties, with over 7,000 more finding themselves in two months of arrears than the first quarter of This brought to 100,400 the number of tenants in England and Wales in severe arrears, a 24% increase over the year and the highest on Templeton s records. 5.3 Sadly, for tenants, the consequences of incurring severe arrears are eviction. In the second quarter of 2012, 26,060 tenants faced eviction notices 6% more than in the previous quarter, and 5% more than in the same period of For landlords, decisions about investing in vitally needed new properties hinge on the security of knowing that they will not be faced with a position whereby a tenant mounts crippling arrears followed by what can often be a lengthy and costly legal process for eviction, with no prospects of recovering the arrears. Likewise, tenants ending up in arrears are having a serious impact on landlords ability to pay back their buy-to-let mortgages with figures released recently by the Council of Mortgage Lenders showing that in the first three quarters of 2012, 0.13% of buy-to-let sector properties were repossesed, over double the 0.06% in the owner occupied sector. 5.5 At present, up to 30% of LHA claimants have their benefits paid direct to their landlord either because of vulnerability or arrears. 5.6 The RLA does not believe that the current DWP approach to identifying vulnerable claimants is sufficiently robust. Furthermore, if there are arrears there needs to be an immediate switch back facility so that payment is made direct to the landlord straight away, rather than waiting for two months arrears to build up as at present. 5.7 It has been suggested that existing LHA vulnerability policies should be carried over as the criteria for determining who is vulnerable. Whilst they provide a good starting point, they do not go far enough, since they need to place the interests of keeping a roof over the heads of claimants and the need for landlords to receive the rent at the heart of the guidelines. 5.8 Matters are made more uncertain because of the Government s proposals to introduce financial products (or jam jar accounts) to help tenants budget. Whilst we do not disagree with the concept of promoting tenant s financial responsibility, there is a risk that tenants are pushed into these arrangements. Funds in these accounts may not be used for the intended purpose of paying the rent. A lump sum is a big temptation for a tenant facing other financial pressures such as repaying loans. If constraints are put in place on how these accounts can be used then this will make a mockery of promoting financial inclusion. If the vulnerable tenants are steered into financial products of this kind, rather than direct payment of housing costs to the landlords, landlords will see this as a serious threat to the security of their incomes. In consequence, they will be less willing to rent their properties to vulnerable tenants,

8 especially as it will be uncertain at the outset whether the housing costs will be paid direct to the landlord or not. 5.8 The Government should reconsider its decision that the housing element of Universal Credit will be paid a month in arrears. Unless tenants have the financial resources to pay their rent upfront, which is unlikely, they will be starting off on the back foot, causing many landlords to become wary of letting to those on benefits and putting potential new landlords off investing in much needed new housing. The reality is that unlike many who work, claimants do not have any savings to fall back on. There are proposals to make advance payments to landlords, but as these are clawed back there will be a short fall each month to meet the ongoing rent, risking arrears. 5.9 The Government needs to provide urgent assurance to the sector over the circumstances under which payments of the housing element will be made directly to the landlord. Whilst at present landlords can demand payments to be made to them once arrears reach a certain level, Ministers have failed to provide both a clear pledge to retain this right and clarity as to vulnerability and rent arrears will be dealt with under Universal Credit Swiftly publishing in draft form guidance outlining the circumstances under which automatic payments will be made to landlords covering arrears and vulnerability will provide greater assurance to landlords. This would give them confidence knowing that they would be protected should tenants have problems with payment and therefore make them more inclined to rent to those on benefits and invest in new properties Linked to this is a need for much greater clarification over the status of preexisting decisions made by local authorities on vulnerability and arrears cases when the implementation of universal credit sees responsibility transfer from local authorities to the Department for Work and Pensions Where sanctions are imposed then claimants should be treated as vulnerable straight away We are particularly concerned at the loss of appeal rights regarding decisions about recipients of payments. 6.0 Landlord Information 6.1 It is essential that landlords receive ongoing information about the progress of any claim for housing costs; otherwise they will be reluctant to rent properties to claimants. At present, when an existing housing benefit claimant moves, notifying the local authority constitutes a new claim for a new property. This will no longer be the case under Universal Credit which will treat it as a change of circumstances. It is vital

9 for the landlord to know that either a change of circumstance has been notified or a new claim made. At present landlords can ensure that a claim is lodged for LHA and they seek proof of this has been done. There is no facility built into the Universal Credit processes for this to happen. 6.2 It is also essential that landlords are made aware once payments of housing costs are being made, even where they are paid to the tenant as they may be prepared to wait for payment. At present some local authorities pay the first month s rent by way of a payment order in favour of the landlord but sent to the tenant. As payments are now being made to Jam Jar bank accounts, removal of this facility, which is a means of combating fraud, is most concerning. If Universal Credit is paid a month in arrears, the RLA is urging the Government to maintain this practice. 6.3 We are concerned that the DWP has not yet considered the impact of data protection laws regarding what information about progress including payments can be made to the landlord. 6.4 Data protection requirements can be met where there is statutory provision overriding them which allows appropriate information to be provided to landlords about the progress of a tenant s claim, information which is vital to a landlord being willing to let their property to a claimant. 6.5 For vulnerability and arrears policies to work effectively, it is also important that appropriate facilities are established to allow landlords to make contact if arrears occur; so as to enable direct payment to the landlord to be made immediately even while the situation is being investigated. 6.6 Regulations should be issued detailing the information that landlords will be entitled to know and at what stage. This should cover ensuring the landlord is notified when a claim is being made; the final award made and details of the procedures and circumstances under which a landlord can make a claim for payments to be made directly to them. 6.7 Linked to this is the need to ensure a smooth process for the transition of information to the DWP. Further, existing decisions made by local authorities regarding direct payments should be carried into Universal Credit from the outset. December 2012

10 Written evidence from Advice UK (CHB 03 ) 1. Summary 1.1. AdviceUK is deeply concerned about the impact of welfare reform, including changes to Housing Benefit, on members of the public in Wales as well as on our 27 member organisations in Wales, who pick up the pieces when services fail to deliver for people It is highly likely that independent advice services will be unable to cope with the increased demand for advice that will result from HB reform. The National Audit Office (NAO) has acknowledged that increased support will be needed by claimants and that the burden of providing this will fall on local authorities 1. We believe the majority of local authorities in Wales will not be in a position to fund increased capacity in the advice sector to meet the spike in demand for HB advice We share the NAO s concern about the risks for effective implementation that will result from the new burdens placed on local authorities. Our work with systems thinking methodology has provided very important learning about benefits administration and its interface with local independent advice services Our Vanguard Method for systems thinking work shows that when systems, including the administration of benefits, are not designed specifically to deliver what matters to customers, they fail to deliver in customer terms. This leads to waste, failure and cost, driving people to seek advice from AdviceUK members and others, increasing cost further AdviceUK s work has shown how collaboration by local authorities and advice services to understand and deliver benefits services from a customer perspective can lead to real improvements and cost savings. The implementation of HB changes should provide an important opportunity for local authorities and DWP to work with advice services to get the system right first time for customers Based on our experience, we would urge the Welsh Affairs Committee to call on DWP and local authority HB services to engage with us and our members to learn how to design systems that work, improving customer service, reducing waste and failure, and minimising cost that is ultimately borne by the state and taxpayers. We have commenced work in Cardiff with full engagement of the local authority and will keep the Committee informed regarding the learning from this work.

11 2. About AdviceUK 2.1. AdviceUK is a membership organisation with 27 members organisations in Wales. Our membership is broad, but at its heart are community organisations based in some of the poorest areas of Wales and working with people and communities largely untouched by other advice services. Our members provide advice across the range of social welfare law issues, the main areas being debt, welfare benefits and housing More information about AdviceUK s work in Wales is available at: AdviceUK s role is to support members to improve the quality and effectiveness of their services and to provide a national voice. AdviceUK takes an evidence-based approach to tackling the problems faced by our members and their clients. We advocate a method to understand and to address: what matters to people who use advice services; the underlying issues and systemic failures that cause people to seek advice; and the drivers of demand to improve effectiveness and efficiency, rather than the traditional approach of rationing supply Since 2008, we have worked with advice organisations and local authorities to better understand demand for advice and the pressures faced by advice services using the Vanguard Method for systems thinking 2. This work has unearthed important learning about the welfare benefits system and its impact on and interaction with advice services. We have shared our learning with the Department for Work and Pensions. 3. Claimant support: The capacity of the advice sector 3.1. We have strong concerns that there is no recognition of or provision for the significant impact of the changes on demand for independent advice services. The NAO acknowledges the likely increase in demand for advice and recommends that Early awareness of the extent of changes to benefits would help households to prepare for reforms and smooth the demand for advice and support The NAO report also identifies concerns regarding the additional administrative costs for local authorities associated with implementing changes to HB and notes that: Local authorities will be expected to meet costs relating to the additional provision of existing services such as support and advice on applications. [Para 1.16]

12 3.3. There is no evidence that early awareness campaigns will smooth demand for advice. Systems whose design is not based on studying actual customer demand create waste and errors, the fallout from which will cause an inevitable spike in demand. We further doubt that local authorities will be able to meet the additional costs of providing increased support Demand for advice has risen to record levels since the start of the economic crisis in % of AdviceUK members report 3 that demand has increased by 10% or higher in the last 12 months. Demand far outstrips supply: Pleasance et al (2010) 4 found that 36% of the UK population had a civil justice problem but fewer than half manage to access advice AdviceUK members and others are already experiencing rising demand resulting from welfare changes, which is only going to increase further, against a back-drop of reductions in advice service funding, for example through cuts in local authority budgets and the loss of Legal Aid The advice sector will be unable to cope adequately with these twin pressures. As a result, people will suffer hardship as they fail to navigate the new maze of benefit regulations The recent report of the House of Commons Work and Pensions Select Committee 5 supports the need for funding for advice services for them to support claimants of Universal Credit. This principle applies equally to HB reform However, we firmly believe that simply ensuring that advice provision is in place to meet increased demand for support when the system fails would be an inadequate response. A far better approach would be for the DWP and local authorities to work collaboratively with advice services to gain knowledge about the demands their customers present: not abstracted customer insight surveys but real people, placing real demands on services in real time. Only then will they have any prospect of designing services that truly meet citizens needs, eliminating costly failure and waste AdviceUK has recently begun working with advice agencies in Cardiff. The local authority is engaged in the work so they can learn alongside the independent advice providers and understand how their activities generate demand for advice. This will enable the authority to learn how they can improve and reduce cost. AdviceUK would welcome the involvement of Job Centre Plus in this work so the DWP can also learn how to transform its services at the same time as reducing cost.

13 3.10. AdviceUK is involved in work to advise the Welsh Government s current review of advice services. We are sharing the learning from our systems thinking work with the advice review team and other stakeholders in Wales. We will keep the Welsh Affairs Committee appraised of progress and learning. 4. Managing the impact of HB reform from a system perspective Background 4.1. The Vanguard Method for Systems Thinking starts by studying demand for the service from a customer perspective, for example: The type and frequency of demands customers are presenting; The level of value demands (work that the service should be doing to meet its purpose) and failure or preventable demands (demands that only exist because the service (or another service) failed to do something, or failed to do it right for their customer This approach is significantly different to a traditional approach to managing organisations, in which all demand is treated the same as activities to be undertaken leading to high levels of waste and unnecessary cost, because the levels of preventable demand caused by system failures are invisible in traditional performance data. Consequently the true levels and type of error and duplication also remain invisible Our analysis has shown that significant amounts of demand for advice is the result of other services most notably benefits administration failing to get it right first time for their customers The majority of this preventable failure is not caused by errors in benefit processing. It is the result of systems that are not designed outside-in from a customer perspective and so fail to meet the needs, including the information needs, of customers (although when Portsmouth City Council s Tenancy Support service 6 analysed the circumstances of all their customers who were in receipt of at least one benefit or tax credit, 65% were found to be in receipt of the wrong amount) In addition, the introduction of technology and the drive to reduce cost has led to the withdrawal of face-to-face interaction in favour of contact centres and back-office processing, and Universal Credit presages the move to digital-by-default. The received wisdom is that these approaches reduce cost: indeed the cost of individual transactions will likely fall as a result. However, forcing people to make themselves service-shaped rather than designing services that are people-shaped reduces the ability of those services

14 to respond effectively to the variety and complexity of demand and drives up cost overall as customers are forced to place multiple demands on an atomised service in an attempt to secure the information and assistance they need to solve their problem In benefit terms, failure by DWP and local authorities to design against the real demand of customers causes repeat demands on the department and, when customers needs are not met, places demand on the independent advice sector, creating further waste and cost for the advice services that pick up the pieces for citizens. For example, recent AdviceUK work in Portsmouth and Nottingham has shown that 41% and 31% respectively of all the demand presenting to advice services was caused by the failure of public services. Around 25% of this preventable demand relates to DWP services Whilst we have met with DWP staff and management to discuss our work, we have had limited success in engaging them to come and see the work and learn how they could improve their systems to transform service quality, minimise waste and reduce cost. By contrast, a number of Housing Benefit services have adopted the Vanguard Method, resulting in exponential improvements in customer satisfaction. At the same time, cost savings in the region of 20-30% are not unusual. In 2011, AdviceUK worked with Nottingham City Council s HB service and local independent advice centres to develop a shared approach that produced striking improvements. A Systems Thinking approach to Housing Benefit: what have we learned? 4.8. Following the study of demand for advice in Nottingham that showed that 31% of all demand was preventable, the local authority s HB service agreed to pilot a shared Systems Thinking approach to service design alongside independent advice services Analysing the service end-to-end across both the benefits and advice service made waste that does not feature in traditional performance measures visible. The pilot team categorised the highlighted demands in the table below as preventable predictably over 65% of all demands as the service should make correct decisions quickly and communicate them to customers clearly. Advice Services % What am I entitled to? 9% Help me claim 6% My circumstances have changed 19% I've claimed: what's happening? 16% I don't understand 19% Total Preventable Demand 66%

15 I want to challenge / appeal 3% Help me sort it out 28% TOTAL 100% Benefits Service % What am I entitled to? 4% I want to claim 20% My circumstances have changed 9% When will you assess my claim? 19% What's happened [about my claim]? 9% I don't understand [your letter / decision] 19% How have you made your decision? 6% I want to challenge / appeal 7% I want to backdate my claim 6% Please reduce the overpayment recovery rate 2% TOTAL 100% Total Preventable Demand 67% Based on the analysis of demand and on an assessment of what matters to customers, the pilot team agreed the following shared purpose for their services Help me pay my rent and Council Tax by making a Designing work decision to deliver and what paying matters my to customers benefit quickly resulted in dramatic improvements in performance. As the graph below shows, prior to the pilot, HB and CTB cases that had come to an advice service took on average 99.5 days to resolve. In the early stages of the pilot, this reduced to 23 days, and by the end of the initial pilot, it had fallen to 5 days.

16 4.11. Independent evaluation of this pilot after six months showed that significant performance improvements were being maintained. Advice agencies are able to close cases in a quarter of the time taken previously, involving fewer than 50% of the average number of adviser hours, with a cost per case falling from to The local authority data also shows that cases were resolved in 16 days rather than 56 days in comparator cases. The authority has now extended the approach across the advice sector Similar evidence of the impact of designing benefits administration using the Vanguard Method for Systems Thinking is also available elsewhere. For example, in East Devon District Council: Measure Before After Processing time for new claims 36 days 16.9 days Processing times for change in circumstances 20 days 3.8 days Preventable demand 42% 5% Cost per claim * * does not reflect full extent of saving as change implemented in Q4

17 5. Conclusion 5.1. The work AdviceUK has led in advice services based on the Vanguard Method for Systems Thinking demonstrates the extent to which public service design leads to waste in the system, creating problems for individual citizens, causing unnecessary, preventable demand for advice services and increasing the cost to taxpayers Based on our experience, we would urge the Welsh Affairs Committee to call on DWP and local authority HB services to engage with us and our members to learn how to design systems that work, improving customer service, reducing waste and failure, and minimising cost that is ultimately borne by the state and taxpayers AdviceUK s work with advice services and the local authority in Cardiff to learn how better system design can deliver better outcomes at reduced cost should be noted in particular by Welsh local authorities and DWP. December Managing the impact of Housing Benefit reform, National Audit Office, Department for Work & Pensions, November AdviceUK has worked closely with Vanguard Consulting who have pioneered the application of Systems Thinking using Vanguard Method based on the work of W Edwards Deming in UK service organisations. For more information see Vanguard Home Page 3 Online member survey, December Based on 60 responses, 79% are from members based in England Universal Credit implementation: meeting the needs of vulnerable claimants (November 2012) 6 In 2011, AdviceUK supported Portsmouth City Council to study and re-commission advice services in the city. This finding was made in a parallel exercise undertaken by the authority s Housing Department into its own in-house advice and support services. 65% of clients of the Tenancy Support services who were claiming at least one benefit or tax credit were found to be in receipt of the wrong amount, although benefits problems would not necessarily be the reason they were accessing the service. In other words, this level of error was invisible until the circumstances of real people were studied.

18 Written evidence from Unison Wales (CHB 04) Summary UNISON welcomes the opportunity to make this submission to the Work and Pensions Select Committee. UNISON is the largest public service trade union in the United Kingdom. It represents thousands of people who undertake housing and council tax benefits administration for local authorities and their contractors. Changes to the local housing allowance have resulted in reduced support towards the housing costs of people on low incomes throughout Wales and restricted access to the private rented sector. The support provided throughout 2012 remains below the level provided in March 2011 before the changes were implemented. The decision to restrict future increases in local housing allowance to CPI on 1 April 2013 and to just 1 per cent from 1 April 2014 and a further 1 per cent from 1 April 2015 will, on the evidence available, result in local housing allowance not keeping pace with rent increases and resulting in further restricted access to that sector for people on low incomes. The bedroom tax that is due for implementation in April 2013 will affect some 40,000 tenants in Wales but the supply of smaller accommodation does not generally exist and; where it does; rents in the private rented sector (and consequently local housing allowance costs) are higher meaning that the policy is likely to lead to increased rather than reduced housing benefit expenditure. The Benefits Cap that is also due for implementation in April 2013 will impact on large families with 4 or more children in the rent officer areas covering Cardiff; Flintshire; Monmouthshire; Newport; Pembrokeshire; Vale of Glamorgan and West Cheshire. The Job Seekers Allowance Online pathfinder (which has been piloted on applicants from South Wales and the Eastern Valleys may prevent people from claiming JSA and other benefits including housing benefit. Section 1 Private Rented Sector 1. The Budget (June 2010) announced several changes to housing benefit from April Local Housing Allowance: set at the 30th percentile of local rents from This change resulted in the Local Housing Allowance being set at the 30 th percentile instead of the median. One of the effects is that people on low incomes have restricted access to the private rented sector and are now only able to rent in the cheapest 30 per cent of the sector.

19 2. At the same time the 5 bedroom rate was abolished. The impact of this change can be seen from table 1 below which shows the change in Local Housing Allowance by local authority and property size between March 2011 and April Table 1: Reduction in Local Housing Allowance by local authority and property size ( /week) Local Authority 1 bedroo m with shared facilitie s 1 bedroo m self containe d 2 bedroo m 3 bedroo m 4 bedroo m 5 bedroo m /week /week /week /week /week /week Blaenau Gwent Brecon and Radnor Bridgend Caerphilly Cardiff Carmarthenshire Ceredigion Flintshire Merthyr Cynon Monmouthshire Neath Port Talbot Newport North Clwyd North Powys North West Wales Pembrokeshire South Gwynedd Swansea Taff Rhondda Torfaen Vale of Glamorgan West Cheshire Wrexham Monthly upratings continued throughout 2011/12 until April 2012 when they ceased. The change in Local Housing Allowance rates during 2011/12 is shown in Table 2. Table 2 Change in LHA rates by local authority and property type.

20 LHA change April 2011 to April bedroom with shared facilities 1 bedroom self contained 2 bedroom 3 bedroom 4 bedroom /week /week /week /week /week Blaenau Gwent Brecon and Radnor Bridgend Caerphilly Cardiff Carmarthenshire Ceredigion Flintshire Merthyr Cynon Monmouthshire Neath Port Talbot Newport North Clwyd North Powys North West Wales Pembrokeshire South Gwynedd Swansea Taff Rhondda Torfaen Vale of Glamorgan West Cheshire Wrexham Despite the increases that took place during 2011/12 the LHA rates as at April 2012, with the exception of 4 bedroom properties in Flintshire and South Gwynedd and shared accommodation in North West Wales the LHA rates in March 2013 will be below the LHA rates that applied in March Table 3 Local Housing Allowances

21 Local Housing Allowances Change March 2011 to April bedroom with shared facilities 1 bedroom self contained 2 bedroom 3 bedroom 4 bedroom 5 bedroom Blaenau Gwent Brecon and Radnor Bridgend Caerphilly Cardiff Carmarthenshi re Ceredigion Flintshire Merthyr Cynon Monmouthshir e Neath Port Talbot Newport North Clwyd North Powys North West Wales Pembrokeshire South Gwynedd Swansea Taff Rhondda Torfaen Vale of Glamorgan West Cheshire Wrexham According to the Department of Work and Pensions impact assessment, the package of reforms implemented in 2011/12 would affect 48,530 of the 48,710 claimants receiving LHA in Wales. As Tables 1 and 3 clearly show; almost 100% of claimants were losers.

22 6. According to the Department of Work and Pensions impact assessment the average loss would be 9 per week or 468 per year. (Impacts of Housing Benefit proposals: Changes to the Local Housing Allowance to be introduced in 2011/12) (Department of Work and Pensions, 23 July 2010). Table 4 shows where the loss was greater than the average loss estimated by the Department of Work and Pensions. Table 4 Local Authority 1 bedroo m with shared facilitie s 1 bedroo m self containe d 2 bedroo m 3 bedroo m 4 bedroo m 5 bedroo m Blaenau Gwent Brecon and Radnor Bridgend Caerphilly Cardiff Carmarthenshire Ceredigion Flintshire Merthyr Cynon Monmouthshire Neath Port Talbot Newport North Clwyd North Powys North West Wales Pembrokeshire South Gwynedd Swansea Taff Rhondda Torfaen Vale of Glamorgan West Cheshire Wrexham In April 2013 Local Housing Allowances will be uprated by the Consumer Prices Index (CPI).

23 8. Following the Autumn Statement (5 December 2012) Local Housing Allowances will be uprated by 1 per cent in April 2014 and by a further 1 per cent in April Between 1 April 2011 and 1 April 2012 (while monthly LHA upratings continued) LHA rates rose by more than 1 per in most areas and for most property types. 10. The decision to restrict future increases in local housing allowance to CPI on 1 April 2013 and to just 1 per cent from 1 April 2014 and a further 1 per cent from 1 April 2015 will, on the evidence available, result in local housing allowance not keeping pace with rent increases and resulting in further restricted access to that sector for people on low incomes. LHA change April 2011 to April bedroom with shared facilities 1 bedroom self contained 2 bedroom 3 bedroom 4 bedroom % % % % % Blaenau Gwent Brecon and Radnor Bridgend Caerphilly Cardiff Carmarthenshire Ceredigion Flintshire Merthyr Cynon Monmouthshire Neath Port Talbot Newport North Clwyd North Powys North West Wales Pembrokeshire South Gwynedd Swansea Taff Rhondda Torfaen Vale of Glamorgan West Cheshire Wrexham

24 Social Rented Sector 11. The Budget (June 2010) announced changes to housing benefit in the social rented sector from April Social sector: limit working age entitlements to reflect size of family from From 1 April 2013 new size criteria will be applied to new and existing working age Housing Benefit claimants living in the social rented sector. 12. The change will only apply to working age Housing Benefit claimants. 13. In the social housing sector from April 2013 one bedroom will be allowed for each person or couple living as part of the household with the following exceptions: child of 15 or under will be expected to share with another child of the same gender; and child of 9 or under will be expected to share with one other child aged 9 or under, regardless of gender. 14. No exemption or account will be taken of children whose main residence is elsewhere. 15. A percentage reduction will be made to the eligible rent when making the housing benefit assessment. 16. Where a tenant is under occupying by one bedroom the reduction will be 14% and where a tenant is under occupying by two or more bedrooms the reduction will be 25%. The deduction will apply to the total eligible rent including any eligible service charges. For example a couple living in a three bedroom property with two children aged one and three: Rent = 60 plus service charges of of the service charge is ineligible so total eligible rent = 75. They are deemed to be under occupying by one bedroom so a 14% reduction of is applied to the eligible rent of 75 resulting in Housing Benefit entitlement of In cases of joint tenants the eligible rent is apportioned appropriately between the tenants after the percentage reduction has been applied. For example three individuals jointly responsible for rent live in a four bedroom property. Total eligible rent = 100. A 14% under occupancy reduction is made and then the rent is apportioned , divided by 3 = Benefit Cap

25 16. In April 2013 the Government will introduce an overall benefits cap set at 500 per week. The cap applies to the combined income from the main out of work benefits plus housing benefit, child benefit and child tax credit. Impact of Maximum Benefit Cap per week Single Couple Couple + 1 Couple + 2 Couple + 3 Couple + 4 Basic Credits Maximum Housing Credits University of York Professor Steve Wilcox 17. As can be seen from the diagram above as family size increases the amount left for housing costs reduces until with a family consisting of a couple with 4 children less than 150/week is available for rent. 18. Using the April 2012 LHA data this suggests that out of work private sector tenants with large families (4 plus children) are unlikely to be able to meet their rent in the following rent officer areas Cardiff; Flintshire; Monmouthshire; Newport; Pembrokeshire; Vale of Glamorgan and West Cheshire. 19. April bedroom /week Blaenau Gwent Brecon and Radnor Bridgend Caerphilly Cardiff Carmarthenshi

26 re Ceredigion Flintshire Merthyr Cynon Monmouthshir e Neath Port Talbot Newport North Clwyd North Powys North West Wales Pembrokeshire South Gwynedd Swansea Taff Rhondda Torfaen Vale of Glamorgan West Cheshire

27 Jobseekers Allowance Online Trailblazers 20. In August 2012 the Department for Work and Pensions introduced a trailblazer as part of its attempts to force new JSA claimants to make their applications online. An application for Job Seekers Allowance is a passport to a housing benefit application. 21. The trailblazer applied initially only to South Wales and the Eastern Valleys. 22. Telephone applications for JSA from South Wales and the Eastern Valleys were identified by the Contact Centre and the applicant is asked whether use the internet. If the applicant says they can then the applicant is advised that they can apply online and telephony access to JSA applications for that applicant is denied. 23. This not only denies the applicant choice in the application process, which may be contrary to the DWP Customer Charter, it may result in applicants being unable to access JSA and other benefits including housing benefit. 24. For further enquiries relating to this submission please contact Pete Challis, National Officer either by phone on or by p.challis@unison.co.uk December 2012