What Does Welfare Reform Mean for East Sussex? Presentation to 2012 East Sussex Assembly 5 th July

From Politics to Devil in the Detail Politically controversial. Process happening in a particular context. Key changes across a 9 year period: –‘Salami slicing’. –Localisation. –3 key transitions. Responses, continuing and new.

Policy and Politics I Partly cuts driven- £18bn cut to help other departmental budgets. Partly about concerns about inactive or ossified welfare state: –People not being incentivised to work. –Benefits not reflect changes in individual circumstances. –System not reflect changing society. Will not be able to judge ‘success’ for a long time. In terms of ‘fairness’, different conceptions and detail/ implementation questions. Focus within this presentation is on the more clearly visible negative consequences.

Policy and Politics II Forget about the benefits cap, that was about politics pure and simple. Forget any simple and solid split between ‘benefit claimants’ and ‘hard working families’. –Many people in work claim means tested benefits or tax credits. –Many people in work claim disability related benefits. –People move in and out of work all the time. –It’s about families, not just individuals. Protection for pensioners, unless you’re in an age gap relationship.

Context Going into the Reform Process Ongoing economic issues affecting East Sussex: –9,900 people claiming JSA in East Sussex currently, twice the lowest level, though 1,000 lower than the peak. –Not just about the stock of people out of work, but flow of people in and out of work. –1900 people per month on average making new claim for JSA each month (Feb 2009 saw 3,500 new claims). East Sussex poverty; 19,000 children live in poverty, 5,700 in Hastings, 3,200 in Wealden the most affluent district. East Sussex ‘Squeezed’: –High employment, low wage economy, jobs may be insecure. –Stagnant wages. –High and differential inflation. –High house prices.

Impact Across the Changes Reduced income and increased financial stresses and pressure on low income households who are often already struggling. Pressure on basic household bills: –Rent/ mortgage. –Utilities. Potential for debt and arrears. Financial exclusion and potential for false economies within a household.

‘Salami Slicing’ Series of often seemingly technical and small, but highly significant changes. Tax credits example of April 2012; increase in number of hours have to work before can claim. Range of changes to Housing Benefit picked up in presentation following. Difficult to get at precise local figures, but consequences of tax credit changes will include: –Less encouragement to work. –Reduced income as people unable to increase hours.

Localisation: Key Changes Social Fund and Council Tax Benefit abolished from April Social Fund: –Crisis loans and Community Care Grants to be replaced by locally managed funds. –Budgeting loan to be replaced by ‘payments on account’ system. Council Tax Benefit: –Locally determined. –Central grant, 10% reduction with requirement to protect older claimants.

Localisation: Consequences East Sussex and districts working together to do a ‘mini Beveridge’, requiring: –Agreement of rules. –Setting up of system to decide on awards and process payments. –Communication with partners and potential claimants. Council Tax Benefit replacement raises questions about: –Reduced income for local authorities. –Response to arrears.

Transition 1: Incapacity Benefit to Employment Support Allowance. New claimants since 2008, transition since 2011, to conclude Assess people on IB/ new claimants as fit for work, as needing support to prepare for work, and as unable to work. Former group receive JSA. Latter two groups receive ESA, paid at higher rate than JSA. Onto income based (means tested) ESA after one year.

The Impact of ESA Potential numbers of people affected in East Sussex: –4,800 people going from claiming ESA to JSA, losing income as a result. –1,400 people likely to make successful appeals, support makes a difference. Assessments subject to huge criticism, and large numbers of successful appeals: –Tick box system- mental health and fluctuating conditions dealt with poorly. –Straightforward mistakes and ‘horror stories’. Reductions in income for some people who are long term unemployed who may struggle to find work. Stress on often vulnerable people. Potential health consequences.

Transition 2: Disability Living Allowance to Personal Independence Payment New assessment for claimants in context of 20% cut in overall budget, only to affect people of working age. Range of changes including: –Reassessment based on points system, and requirement to complete new form as part of transition. –Increased qualifying period. –End of life awards. –Requirement to inform of change of circumstances. Uncertainty about where cuts will fall.

The Impact of PIP? Financial loss to East Sussex residents and economy is substantial, as much as £19m. Numbers of people impacted upwards of 5,400 people. ‘Son of’ IB to ESA transition in terms of problems? –How well will the assessment process function? –Particular concerns about people with mental health problems. –Potential for high levels of appeals and burden on advice agencies. Impact on vulnerable people could be severe. Potential impact on purchase of care. Damage ability of disabled people to work?

Transition 3: Universal Credit Introduction from October 2013 to Bringing together of all means tested benefits, (not including CTB) work related benefits, and tax credits. Housing benefit abolished, includes housing element. Calculated through range of components analogous to current benefits. Reduced rate of withdrawal at lower incomes, higher rate of withdrawal at low to middle incomes- lower levels of maximum income for claimants. Real time communication between HMRC and DWP. Payment from two weekly to monthly. Vast majority of applications to be made on line.

What will Universal Credit Mean? Could mean rates of underclaiming fall, but reliance on online engagement is problematic. Teething troubles will happen. Housing Benefit issue picked up by next presentation. Impact on those at upper end of those claiming tax credits. Deliberate challenge to financial capability being set by government, learn to budget as those in work. Overall situation, possibly less money, responsible for more and a longer time frame to manage.

Challenges in Responding. Advice sector critical role, and likely to be burdened in playing it. Key themes: –Early intervention through partnership working. –‘Business’ cases for funding in difficult environment. Information, to frontline staff and managers, and, critically, to people affected. Crisis responses to people with urgent needs. Financial capability, and development of product responses to back that up. Identifying and bearing witness to the impact. ‘Pessimism of the intellect, optimism of the will’.