Tower Hamlets’ Council Speaks for All LA’s About DWP Failings

_52802919_52802918 Back in February this year the London Borough of Tower Hamlets submitted evidence to the Communities and Local Government Select Committee outlining the difficulties it was having in supporting vulnerable families who were suffering the impact of welfare reforms. Their evidence is reproduced below, It speaks for all Local Authorities struggling to cope with the fallout of Iain Duncan Smith’s precious baby, welfare reform.

Housing-Crisis-Continues-001 Tower Hamlets was dubbed an ‘Islamic Republic’ by the Telegraph back in 2010 after it elected  Lutfur Rahman as mayor. In a 2012 local election the Tories expressed concern that that there had been vote rigging and electoral fraud.

1315088493-edl-fail-to-demonstrate-in-tower-hamlets--london_815479 Perhaps because Tower Hamlets has a big Muslim community it has been a magnet for extreme right wing groups such as the English Defence League whose recent attempt to hold a rally in the borough was thankfully successfully blocked by concerned residents of all creeds. Its a close knit community and a community that is suffering badly thanks to benefit caps and bedroom tax. In this sense it has a lot in common with many more Local Authority areas in the UK so the evidence its councillors presented to the Select Committee could have come from anywhere in the country. Here’s what Tower Hamlets said,

HC 833 Implementation of Welfare Reform by Local Authorities

Written submission from the London Borough of Tower Hamlets (IWR 49)

The London Borough of Tower Hamlets welcomes the Communities and Local Government Committee inquiry on the implementation of welfare reform by local authorities, and the opportunity to respond.

As Service Head for Corporate Strategy and Equality I oversee the Tower Hamlets Welfare Reform Task Group. This Task Group brings together officers from across Council departments, including Housing Options and Benefits, as well as health partners, advice agencies, housing providers and Job Centre Plus.

The close working of this group allows us to stay abreast of all critical developments around welfare reform and ensures we are able to work across the partnership. It also allows us to draw on a wide range of expertise and experience, from how we inform our residents to monitoring the impact of the changes.

Our submission reflects the expertise across the Welfare Reform Task Group and although I am its primary author, I credit the work of my colleagues in enabling us to submit this comprehensive response.

1. Executive Summary

1.1 Inner London, and Tower Hamlets in particular, are particularly impacted by welfare reform due to high housing costs, low wages relative to the cost of living and barriers to employment.

1.2 The Council and its partners have real concerns that for some families the impact will be increased hardship which is likely to increase pressure on already stretched public and voluntary services locally.

1.3 In particular, we are not sure that the potential impact of a policy such as the national cap, unrelated to local rent levels, on high rent areas such as inner London has been fully considered.

1.4 The somewhat arbitrary nature of the cap, impacting those on sickness benefits, or those caring for them, and those exempt from seeking work due to responsibilities for young children as well as those fit for and seeking work, is a particular concern.

1.5 Our evidence is that it does have a differential impact on black and minority ethnic and female-headed households and that its equality impact should be further reviewed with this in mind.

1.6 We also have concerns about how the impact of the benefit cap on council finances, both directly through our duty to those who are found homeless, and indirectly through the pressure that increased hardship or forced moves amongst families, will put on services such as schools, social care, health and mental health provision, amongst others. Whilst difficult to quantify at this time, it will be important to explore further whether these new pressures and the impact it will have on the 1600 households and nearly 5000 children, will outweigh any savings achieved by the cap.

1.7 Other changes such as the localisation of Council Tax Support and localisation of the Social Fund will bring additional administrative burdens to the Council. It is difficult to see how devolving these very similar processes and having them run separately within separate authorities, potentially requiring a myriad of new IT systems and processes, can be cost effective overall.

1.8 More generally, we have been disappointed in the quality of information and guidance that has been forthcoming from the DWP in enabling us to deal effectively with these changes. Greater sharing of information about those to be affected or, in the case of the Social Fund about current caseloads and recipients, would have helped us prepare better for these new burdens.

1.9 Within these difficult circumstances, we have found real commitment within our authority and amongst our partners in registered housing providers, third sector advice agencies, health and Job Centre Plus, in working with us to ensure the implementation of these changes is as smooth as possible and that those affected are informed and supported to prepare. The extent of work we have done in this field has been identified as amongst the most comprehensive in London and we would like to take this opportunity to share with the Committee this material which is all available on our local Council website atwww.towerhamlets.gov.uk/welfarereform

Finance

2. Are local authorities being allocated sufficient resources to deliver services such as localised Council Tax Support and advice to claimants on Universal Credit?

2.1 We have significant concerns that sufficient resources are not being allocated to support this major change to the welfare system. Indeed resources are being cut back.

2.2 Reductions in funding include:

· 10% plus cut in award funding for Council Tax Support (CTS)

· DWP has recently informed the council that Housing Benefit (HB) / Council Tax Benefit (CTB) admin funding will be cut by almost £500,000 for 2013/2014. (Circular HB/CTB A5/20012)

2.3 In addition, there are significant other resource pressures:

· We believe there is a risk of significant further reduction in Government admin subsidy funding to local authorities.

· The rationale for this would be that local authority admin requirements would reduce in line with the number of HB claims lost to Universal Credit. However, our analysis in Tower Hamlets shows that there will not be a significant reduction in caseload and assessments when HB migrates to UC.

· We also currently operate a joint HB/CTB processing system and the complexity of CTS assessments will remain on par with CTB assessment (and possibly more complicated).

· We therefore doubt that significant savings in respect of admin will be realised.

2.4 Lack of clarity about future funding: Considering the new burdens being faced by local authorities through the implementation of the various welfare reforms, it is yet unclear whether:

· The CLG / DWP have undertaken an analysis of the resource pressures and new burdens local authorities are facing and will continue to face.

· Funds will be made available to reflect this additional resource requirement, what the rationale for the apportionment would be and how much local authorities will be allocated.

3. Are there financial risks to local authorities from Welfare Reform changes? Are such risks being adequately addressed?

3.1 Benefits Cap: The most significant resource challenge for local authorities, primarily those in London, will not be the implementation of localised council tax support or advice on Universal Credit, but mitigating, as much as possible, the severe impact of the Benefits Cap.

3.2 Based on DWP scan data around 1600 households in Tower Hamlets will have a shortfall in benefit payments following the introduction of the cap. The average loss will be £103 per week (£6,706 per annum). The households affected include nearly 5000 children who will be impacted, at threat of losing their homes.

3.3 Tower Hamlets has implemented a number of actions to mitigate the impact of the cap including:

· Borough wide awareness campaigns of the changes

· Personalised joint housing options / employment advice visits to every household who is at ‘high’ and ‘medium’ risk

· A series of high profile drop in roadshow events (“Money Matters Month”) providing advice to over 600 residents in one month

· A short welfare reform video, booklet and practitioners guide

· Ongoing training for council, housing provider and partnership staff

· A rich number of resources for residents and practitioners on our website: www.towerhamlets.gov.uk/welfarereform

3.4 Despite these activities, we still envisage a large impact on a significant number of households across the borough.

3.5 In Tower Hamlets some of the biggest losers are black and minority ethnic families and single parent households, usually headed by women. We have concerns about the extent to which the equalities impact of this policy was fully assessed and considered before implementation.

3.6 Our biggest concern is about the human impact of this change on some of our most vulnerable residents. There will also be consequent financial risks to the local authority which include:

· Cost to the local economy: Based on DWP scan data the estimated total loss to Tower Hamlets residents in lost benefit payments due to the cap will be approximately £8.5m per annum which will have a serious impact on the affected households. As spending patterns are not entirely clear, it is difficult to calculate what percentage of this loss will be felt in the local economy, but the overall loss is likely to be significant, potentially exacerbating depressed demand, increasing debt and reducing local economic growth.

· Temporary accommodation costs: There are currently 450 households living temporary accommodation due to homelessness who will be affected by the cap. The Housing Benefit lost to these claimants has been calculated to be £3.27m per annum. The Council has a duty to house these residents. Tower Hamlets Council will be forced to meet these costs unless able to find alternative and less costly housing options for these families.

· Lack of affordable housing options: There are no private rented options within the borough or within most of the neighbouring boroughs which will be affordable to families affected by the benefits cap. The average rent for a two bedroom property in the Tower Hamlets is £350 per week, and a four bedroom is £524 per week as of March 2012, in itself over the £500 per week cap. The Council will therefore have little choice but to consider rehousing homeless families outside of the borough, and potentially some distance from families, disrupting communities, schools and support networks.

· Increase in homelessness: On top of those families already homeless and in temporary accommodation, there are a further 460 households currently in the private sector who will be affected by the cap. The average shortfall for these families is £104 per week (very slightly above the £103 average for all types of dwelling. The loss for those in the private sector is above a £79 average weekly shortfall for those renting in Housing Association dwellings and below the £143 shortfall for families in homeless accommodation). They are unlikely to be able to negotiate lower rent levels with their landlords or find alternative local housing solutions. Many will find themselves in rent arrears and subject to eviction, leading to further homelessness applications to the Council.

· The cost of rehousing: There is a massive human cost in re-housing families out of the borough – with the loss of support networks and community ties. There are also potential hidden financial costs to the public purse which may outweigh benefits savings. For example, many provide or rely on informal care from families and these costs may in future fall to the state. Allocating new schools, new GPs, new addresses, new practitioner contacts and of course new housing are all additional costs relating to rehousing some of the most vulnerable residents in society.

· Increased demand for emergency support: Those affected by the cap will face the sharp dilemma of paying their rent or feeding their families and heating their homes. Local authorities who will from April be delivering the Social Fund face a potential significant increase in demand for these, and for other payments including child care costs and discretionary housing payments. Our whole Localised Social Fund budget is currently £1.4m compared to an estimated benefit shortfall of £8.5 million. There are also additional administrative costs related to the localised Social Fund which each individual council is having to bear, calling into question the efficiency and rationale of devolving the Social Fund.

3.7 Planning for these risks is hampered by:

· Lack of information and funds from CLG / DWP making it difficult for Tower Hamlets to plan accordingly for the forthcoming changes, and to enable us to attempt to maintain the current level of service provision

· The timetable for implementation is too tight to ensure enough support is given to residents to cope with changes – both rehousing and finding employment solutions for vulnerable residents take time.

· There has been little or no information about the historic demand for Social Fund payments (i.e. who is demanding what and why) making planning and effective delivery of the new Localised Social Fund more challenging and less efficient.

Housing

4. How will the separation of the administration of Council Tax Benefit and Housing Benefit affect claimants?

4.1 LBTH, like most Local Authorities are committed to maintaining a seamless service in respect of both Housing Benefit and Council Tax Support, whist the Council retains responsibility for the administration of HB.

4.2 This is being achieved in the following ways:

· Initially involving the retention of a single application form and joint HB/CTB processing via integrated ICT processing systems which issue separate award notifications.

· In addition to Housing Benefit and Council Tax Benefit the application form also incorporates an application for education and welfare benefits.

· Currently recipients of ESA(IR), IS, and JSA(IB) are passported to full HB/CTB without LA’s having to enquire further regarding any other income they may have. However, the inclusion of Housing Benefit within Universal Credit and the fact that it is impossible to separate and disregard the Housing Cost element of the final Universal Credit award, means that “passporting” will not be possible and this is likely to complicate the Council Tax Support assessment process.

4.3 Local Authorities will have significant difficulty replicating the passported provision inherent in the current HB and CTB schemes. This means that a relatively streamlined, joined-up process currently faced by claimants is likely to be significantly complicated in the future.

4.4 It is also likely to increase the assessment requirement for Council Tax Support – meaning claimants will have to complete separate forms and provide information to both the DWP and to the Council.

4.5 Universal Credit is being designed to be One Benefit and One Payment and CTB local schemes are likely to closely resemble the benefits incorporated within UC. The rationale for operating a local CTS scheme independent of Universal Credit has therefore not been made clear.

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

5.1 Tower Hamlets has a number of mechanisms in place to prevent fraud. The investigations team works closely with other agencies including other departments within our council, other councils, the Department for Work and Pensions, the police and members of the public to ensure incidents of fraud are continuously addressed.

5.2 The committee may want to consider how media coverage remains overwhelmingly negative with regards to those receiving benefit payments. A report by Turn2us, part of the poverty charity Elizabeth Finn, illustrates the level of disinformation here [1] . This amount of disinformation can have a negative impact on the quality of the debate on welfare reform, and the subsequent solutions to challenges around welfare.

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

6.1 Social landlords have considerable concerns about the payment of benefit direct to claimants.  Residents as well as their landlords will face considerable pressures as a result. The full scale of the impact has not yet been clarified – the pilots have not reported in sufficient detail to be able to take a view on the risk to rental income and that in itself is a worry. However, there are some key areas where social landlords do have concerns:

6.2 Impact on Landlords

· The increase in transaction costs decreases provider income which is used to invest in homes and services.  That income will instead be paid to the companies such as AllPay or the Post Office or the banks who facilitate the transactions.

· Feedback from partner landlords suggests that all are increasing the resources we spend on supporting residents and chasing arrears – at the expense of improving homes and services to residents – this is on top of the pressure on income should arrears start to increase

· We still don’t know how the courts will view arrears cases which are as a result of these changes – guidance to the courts from the Government would be useful.

· We would suggest that the level of arrears necessary to trigger a direct payment needs to be low enough such that there is a realistic prospect of the arrears being paid in a reasonable timescale and servicing the arrear is not significantly onerous on the tenant.

6.3 Impact on claimants

· Many of our residents are vulnerable to financial abuse, from legal and illegal lenders – we will need to provide additional services to identify and support these residents as otherwise this cash will be diverted to their abusers and we will end up pursuing arrears. Locally, we have a financial inclusion network which is seeking a range of ways to increase local people’s skills in managing money and avoiding debt, but the level of change associated with welfare reform is likely to significantly increase demand on these resources.

· Once direct payments are introduced, many residents may also be more open to abuse from family members and acquaintances. With the payment going to the notional head of household it will put many already vulnerable residents – particularly but not exclusively women – more dependent on their abusers and so more trapped in abusive relationships with the associated risks. Residents are also considering moving back in with abusive family members as a consequence of falling incomes because of the cap.

· We would suggest that the Committee seriously consider recommending a change to this aspect of the policy, specifically where a tenant wants to have their rent paid direct to their landlord they should be able to request this at the outset.  If it is an informed choice then we do not see how this would undermine the Government’s publicised intent that people should take responsibility for their finances.

Employment

7. What impact have Welfare to Work schemes had, or are likely to have, on the numbers of benefit claimants?

7.1 Our contact with our affected families in temporary accommodation, coupled with discussions with Job Centre Plus, local employment support agencies and housing providers have stated that the overwhelming majority of those affected by the cap and not in work are unlikely to be able to move easily into work.

7.2 This is often because of childcare responsibilities and/or childcare costs make it financially unviable for lower earners. Nearly half (46%) of those affected by the cap in Tower Hamlets are single parents. Many of these have children under 5 and thus are not expected, even within new stricter job seeking rules, to be available for work.

7.3 Other residents have poor health and are receiving Incapacity Benefit or Employment Support Allowance in reflection of this.

7.4 In the move from IB to ESA the Government has itself recognised that assisting long term claimants of sickness benefits is a long term approach which needs to be accompanied by training and support. There is no quick fix which will enable employment options to be realistic for those affected by the cap on implementation in April next year.

7.5 Often part time work is a useful option for those moving back into work following ill-health – but part time options below 24 hours will not exempt people from the benefits cap.

7.6 Even where those affected are available and looking for work, the lack of job opportunities, particularly in a job market hit by recession means finding employment is not a simple solution. In addition, many residents lack relevant competencies, which require significant additional investment in training and skills.

Other

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

8.1 In general, we have been disappointed about the level of information and guidance available to local authorities to implement these reforms. This includes:

8.2 A lack of information on the progress being made on Universal Credit implementation and likely timescales

8.3 A lack of information on the level of contingency funding available to help offset the impact of the reforms.

8.4 A lack of accurate information about numbers affected – the DWP scan produced to identify residents likely to be affected by the cap, appears to be flawed as it is not based on current data. We have received three different scans each with different numbers and names of those affected. We have worked with the DWP on these issue, but to help us identify errors with the scan it would be helpful if DWP were to publish their assessment formulae.

8.5 A lack of information with regard to local Social Fund administration – in particular DWP were extremely slow to publish statistics regarding current administration of the Social Fund and although figures have now been published on the DWP website, we feel it would be beneficial to visit the local DWP centre which processes Social Fund applications from LBTH residents. However, our requests have been refused, which is a pity as we feel this would be of more practical use than the regional and generalised Social Fund seminars being conducted by DWP.

8.6 DWP HB/CTB Circulars are less frequent and HB Direct does not provide the level of guidance we are seeking.

Methodology:

9. Is the Government’s timetable for implementing Welfare Reform achievable?

9.1 We believe it will be exceptionally difficult. The DWP have only recently set up specialist teams to deliver the benefits cap which will involve merging benefit streams to calculate the total. Effective UC delivery is likely to require the integration with HMRC’s RTI system, but developments on this have not been forthcoming

10. 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

10.1 The new work to operate the Social Fund for Tower Hamlets will require additional claim handling and assessment staff and new systems. Workload planning is hampered by the lack of recent detailed information from DWP on the volume of applications and on the number, values and purposes of grants or loans.

10.2 We are evaluating potential suppliers of systems to administer the Social Fund, including some with whom we have an existing contract. However, it is very unlikely that we can make variations to a contract to encompass the Social Fund, given the potential value of the contract and the need to ensure best-value, fair and transparent procurement. This gives some concern in terms of the timescales to evaluate options and procure a system.

10.3 All of the potential suppliers are still developing their systems, so there is a risk that we may move to procure a system which is not ready for testing, training and adapting for local criteria in time for 1st April 2013.

10.4 Some council services, especially in the social work fields, already help people with their applications for Social Fund payments from the Job Centre, and we are working to ensure that this support will still be provided. However, it seems likely that there will be an increase in applications to the Social Fund, and there would be no additional resource in social work or in local advice agencies to provide support for higher numbers of applicants.


[1] Benefits Stigma: how newspapers report on welfare; Guardian Data Blog http://www.guardian.co.uk/news/datablog/2012/nov/20/benefits-stigma-newspapers-report-welfare Accessed 11/12/2012

©Parliamentary copyright

Prepared 5th February 2013

250px-Canary.wharf.from.thames.arp As you can see Tower Hamlets council is pretty critical of the DWP. It seems that the DWP are not only reluctant to give us, the public, any clear and unambiguous information about their plans, but they also keep Local Authorities in the dark making it harder for them to plan ahead to help those in the most need – which they have a duty to do.

Personally, when people are vague and downright obstructive with me I tend to think they’re up to no good…so what is the DWP really up to?

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