Welfare reform: Implications and Options for Northern Ireland Goretti Horgan

 Much of this presentation is based on work carried out for the Northern Ireland Commissioner for Children and Young People (with Marina Monteith, Unesco Centre at Ulster).  Full report available at:

The Assembly CAN make a difference Section 87 of the NI Act 1998 (Consultation and co-ordination):- The Secretary of State and the Northern Ireland Minister having responsibility for social security (“the Northern Ireland Minister”) shall from time to time consult one another with a view to securing that, to the extent agreed between them, the legislation to which this section applies provides single systems of social security, child support and pensions for the United Kingdom There is no need to get Westminster’s permission for changes to the Bill – although cost has to be taken into account

 Prohibitive cost means that breaking altogether from parity is not an option – Universal Credit will have to be introduced. However, this does not mean that the Assembly cannot decide not to introduce other elements of welfare reform.  Also, the Assembly can decide that elements of the rules around Universal Credit will be different in Northern Ireland than in Britain.  This presentation will look at some of those possible changes

Source: Joyce, (2012)

 This most recent IFS analysis confirms largest average losses as % of income from reforms currently before Assembly will be in bottom half of the income distribution and households with children are set to lose the most from the proposed reforms. Why?  Benefit rates will reduce as the Consumer Price Index (CPI) is used to uprate them rather than the Retail Price Index (RPI) or the Rossi index;  Contributory Employment and Support Allowance (ESA) is to be time-limited to one year. Many of those in the Work-Related Activity Group (the majority of ESA recipients), will lose ESA altogether due to means testing;  Cash freezes to Child Benefit and Working Tax Credit will gradually reduce income. 

Why is NI so badly hit by welfare reform?  Higher proportion of households with children than any other region of the UK (34%); the UK average is 28%  As well as having more families with children, NI has more children within families, an average of 2.4 children per family compared to an average 1.8 in GB.  Around 23% of working age people claim a key benefit, compared to 13% in GB; (Wales 19%)  NI has twice the proportion of DLA awards than the average for GB and a considerably higher proportion than the next highest regions of Wales and Scotland

Behind Changes to Housing Benefit  NI’s lower wages or higher rate of benefits receipt higher proportion of tenants (social and private rented) receiving HB  In England, 24% of private renters are on housing benefit. In Northern Ireland, it’s more than double that at 57%.  Housing Benefit in respect of rent in NI was £312m in 2003/04, by 2010/11 it had risen to £573m – mostly as a result of the increase in Private Rented Sector housing.  2009 House Condition Survey – 124,500 private rented properties or c17% of total housing stock. Over a third (37%) of lone parent households live in private rented sector.  Average amount paid by private rented tenants in Northern Ireland to supplement LHA was £20 a week. (McAnulty and Gray, 2009).

Since April 2011 HB has been calculated on 30th percentile rent in private sector Changes in Mortgage Interest Support Increasing age in relation to single room rent from under 25 to under 35 All above problems meeting housing costs Introducing size criteria in social housing sector contained in Bill could cause housing crisis

Table 1 Difference From Bedroom Standard By Tenure Difference From Bedroom Standard (Persons) Owned Outright Owned With Mortgage Rented From NIHE Other Rented 1 Or More Below Standard2332 Equals Standard Above Standard Or More Above Standard Source: NIHE Housing Condition Survey

Assembly MUST think through implications of changes in Housing Benefit and eventual social cost of increased homelessness.  As a matter of urgency, DSD needs to work with mortgage lenders to explore ways in which families can remain in houses that are being repossessed, especially since the state of the housing market means those houses are likely to remain vacant  DSD could work with mortgage lenders and landlords to bring down PRS rents through reductions in rent-to- mortgage ratios demanded by mortgage lenders

Actions that require costing:  The Assembly should ask for cost of not introducing the “bedroom tax”, as the under-occupancy rules are known colloquially OR it could agree to introduce it, but not until there is housing stock to meet needs of those in ‘under-occupied’ homes (which may cost temporarily)  ‘Under-occupied homes that contain children could be exempted from ‘bedroom tax’  Defer under ‐ occupancy penalty where tenant is willing to relocate but no suitable alternative accommodation is available;

DLA and Personal Independence Payment  Intention is to cut 20% of the budget  Those receiving DLA for reasons of mental ill- health main target for cuts  NI has 25% more people awarded DLA for reasons of mental ill-health than rest of UK – a full 3 percent of our population  Higher levels of mental ill-health linked to PTSD from conflict

What can the Assembly Do?  Assembly could set up an expert group to develop a WCA and PIP assessment that takes into account the particular issues of a region emerging from conflict where our high levels of mental ill-health are severely exacerbated by PTSD  AdviceNI suggest that the contract with the medical assessment provider in NI should contain: annual reviews of performance; penalties for under ‐ performance (including complaints, number / percentage of decisions based on the medical report that are subsequently overturned at appeal).  Those with the severest disabilities could be ‘screened out’ and exempted from the trauma of the assessment process

 At least 6,500 children in Northern Ireland will see their families lose because of the benefit cap – this is because there are 5 or more children in their family.  Families with three or more children where there is a severely disabled child are at risk of being affected by the benefit cap  Given that Northern Ireland prides itself on having strong family values, the Assembly will have to consider whether it thinks that those on benefits should be forced to limit their family size or whether there are ways of helping such families to meet the needs of their children outside of UC. Benefit Cap

Social Fund  Over half (52%) of all awards of Community Care Grants are to lone parents (DSD, 2011).  Nine out of ten parents of severely poor children have no money to replace worn or broken furniture or broken electrical goods (Monteith and McLaughlin, 2004).  Assembly must ensure that enough money is allocated to meet the basic material needs of families with children and that this money, however it is to be administered, is ring-fenced.  Ensure that there is an effective review / appeals mechanism in place;

Conditionality  The Assembly can ensure that UC regulations around conditionality and sanctions take into account Northern Ireland’s high levels of mental ill- health and its lack of accessible and affordable childcare.  Provisions about ‘best interests of the child’ in the current JSA regulations must be replicated for UC regulations  Parents bringing up teenage children in disadvantaged areas must be allowed to work only during school hours.

How far can the Assembly Go?  Almost certain to have Westminster’s agreement to fortnightly payments and to maintain direct payment to landlords.  Willing to break parity in relation to Corporation Tax, at a cost of £ million – why not break it to a far less costly degree to protect vulnerable families?  Cost may be less in long run in any case as some of these reforms will lead to homelessness and other costly social problems