Download presentation
Presentation is loading. Please wait.
1
Social Housing and Universal Credit
Preparing for the challenges of Universal Credit in social housing, Lemos & Crane, London 10th May 2012 Andrew Parfitt Head of Housing Policy, DWP
2
Most HB reforms so far directly affect PRS only…
From April 2011: Local Housing Allowance (LHA) reform (removal of 5 bed rate and £15 excess, caps to weekly rates) size-criteria: additional room for a non-resident carer where a disabled person has need for overnight care staged increase in non-dependant deductions LHA set at the 30th percentile of rents in each Broad Rental Market Area, rather than the median From January 2012: LHA – extend shared accommodation rate to those under 35 From April 2012: LHA rates frozen
3
…but a major reform to working age SRS from 2013
LHA rates to be uprated annually by reference to the Consumer Price Index from April 2013 – this will end the monthly uprating of LHA rates and bring the system in line with other pensions and benefits Housing Benefit for working age social-rented sector customers will be restricted for those who are occupying a larger property than their household size and structure would warrant from April 2013: affecting 19% of working age Social Rented Sector Housing Benefit claimants in London, with an average loss of £21 p/wk; compared to 32% and £13 p/wk in GB
4
Size Criteria in the Social Rented Sector
The June 2010 Budget announced that size criteria rules would be introduced into the social rented sector. Housing Benefit entitlement for working-age tenants in the social rented sector will be restricted to reflect the needs of their household. This will take effect from April 2013 for all current and new claimants. Claimants will see a reduction in housing benefit of 14% for under occupation by one bedroom and 25% for under occupation buy two or more bedrooms. The number of bedrooms housing benefit will cover will be based on the Local Housing Allowance size criteria rules (but with no Shared Accommodation Rate): One bedroom for each of the following: - a couple - a person who is not a child (age 16 and over) - two children of the same sex - two children who are under 10 - any other child
5
Preparing for the change – Communication is key
We have been working closely with Local Authorities and Housing Associations in developing implementation plans and writing guidance. The Chartered Institute of Housing is producing a toolkit designed to aid landlords in the implementation of this measure. We have engaged with welfare rights organisations while developing this policy to ensure the needs of different customers are taken into account. We will be producing products to aid with implementation that will include letters, leaflets and posters designed to draw customer attention to the changes.
6
Universal Credit vision
Poverty is a life and death matter … For every tube stop on the Jubilee line going east, from Westminster to Canning Town, life expectancy decreases by one year. Life expectancy in two different neighbourhoods of Glasgow, one rich, one poor, vary by as much as 28 years. reducing workless households helping to end child and adult poverty a simplified welfare system in which claimants and taxpayers can have confidence Worklessness has become a major issue for society. Universal Credit will start to change this. It will reintroduce the culture of work in households where it may have been absent for generations. Households with the lowest incomes will see their net income rise the most. Substantial increase in entitlement take-up, in combination with the above, could lift 350,000 children and 500,000 working-age adults out of poverty.The ‘dynamic’ effects of a more transparent system, with improved work incentives and reinforced conditionality, could reduce the number of workless households by around 300,000 Losses from fraud, error and overpayments will be reduced by more than £1bn per year in the long term. Annual flow of savings due to greater administrative simplicity
7
How are we simplifying the system?
Current system New system Income related JSA Income related ESA Income Support (including SMI) Working Tax Credits Child Tax Credits Housing Benefit Universal Credit Disability Living allowance Personal Independence Payment Pension credit … will include support for housing and children Child Benefit, Carer’s Allowance (will remain) Council Tax Support (still considering how this will work) Contributory JSA and ESA (still considering how these will work)
8
A simpler system with clear work incentives
9
When will we deliver Universal Credit?
Feb ‘11 Apr ‘13 Oct ‘13 Apr ‘14 Oct ‘14 Oct ‘15 Oct ‘16 Oct ‘17 Design & build Path-finder Go Live New claims from out of work customers New claims from in work customers “Natural” migrations as a result of changes of circumstances Managed migrations The transition to universal credit will be carefully managed over a period of years. Before the formal launch, we intend to run a full Pathfinder to test all the components and the way they work together. The Pathfinder is an early implementation of UC The Pathfinder will go live in April '13 in a specific location [yet to be determined]. It will mimic as far as possible the service offering intended for October '13. It will take on new claims as prescribed by the Migration Strategy and it will manage any changes of circumstances of those claims ensuring that they remain on UC and do not revert to Legacy benefits. The exact approach to implementation will be decided as part of more detailed planning work, but the current assumption is that From October 2013 new claims for any of the out of work benefits will be taken as claims to universal credit, From April 2014 that will be extended to in work claims. Also from April 2014, we will start the process of converting the existing caseload. Whenever possible, we will use the fact of the person’s changed circumstances – such as finding a job – to trigger the switch. Those ‘natural’ transitions will reduce the JSA caseload by about 95% over an 18 month period. But we will also need to manage transitions where natural change is less frequent, which we will do with the aim of completing conversion by October 2017 2.5m 4.5m 6m 8m Legacy load JSA, ESA, IS, HB, WTC, CTC UC load 9
10
Universal Credit and housing (1)
Housing Benefit will be: integrated into Universal Credit, over time potentially more broad brush in its approach - less tied to individual rents and with fewer exceptions available to pensioners through Pension Credit social sector - will build on current support provided by Housing Benefit and announced changes. No further change in short to medium term We are currently considering policy for eligible service charges and non dependants
11
Universal Credit and housing (2)
Direct payments in Universal Credit responsibility prepares people for the world of work: managing your rent or mortgage is a social responsibility progress has already been made through the LHA private rented sector tenants will generally be paid as now social-sector landlords need stable incomes: Welfare Reform Act pledges appropriate protection Demonstration projects to commence June 2012 People should manage their own budgets, including paying the rent or mortgage, in the same way as other households: The LHA has increased the share of HB recipients who receive direct payments to 81% compared to 46% for non-LHA cases (February 2010) Private rented sector tenants moving onto Universal Credit for the first time will generally be paid as now But we recognise the importance of stable rental incomes for social-sector landlords: In the Social Rented Sector all Local Authority tenants on HB (approx 1.5m claimants) have payments credited direct to their Rent Account, rather than paid to the claimant For Housing Association tenants in receipt of Housing Benefit (approx 1.8m claimants), only a small proportion have payments made direct to the tenant Welfare Reform White Paper pledges to develop Universal Credit in a way that protects the financial position of social sector landlords and keeps a facility to pay landlords directly Demonstration Projects to commence June 2012
12
Impact of the direct payment to tenant policy
20% Working age adults claiming Housing Benefit & new to Direct Payments All households in the Social Rented Sector, Great Britain 35% Working age adults, not claiming Housing Benefit 10% Working age adults in receipt of a partial Housing Benefit payment 25% Pension age tenants claiming Housing Benefit 10% Estimate of vulnerable group of working age adults claiming Housing Benefit Only 20% of households in the Social Rented Sector will be affected by the direct payment to tenant policy.
13
Direct payments - Demonstration projects
In January 2012 we announced the five areas selected to take part in the demonstration projects to test some key elements of the incorporation of housing support into Universal Credit whilst protecting social landlords’ financial position The purpose of the projects is to: test the impact of various trigger points and safeguard mechanisms on social landlords test the mechanisms to safeguard vulnerable groups, and trigger points for making payment to landlord; and support them, where possible into the transition to direct payments test financial products and budgeting tools used by claimants for financial management evaluate the claimant communication strategy used ahead of the demonstration project roll out to inform preparations ahead of Universal Credit implementation test the strategies adopted by social landlords to minimise the loss of income and maintain financial viability The demonstration projects will run from June 2012 to June 2013, with a five-month lead in starting in January 2012 For further information, please contact us at:
14
The Direct Payment Demonstration Projects
Participating Local Authority areas: London: Southwark, with Family Mosaic Housing Association West Midlands: Shropshire, with Bromford Group, The Wrekin Housing Trust, Sanctuary Housing Northern England: Wakefield, with Wakefield & District Housing (WDH) Southern England: Oxford, with the GreenSquare group Wales: Torfaen, with Charter Housing, and Bron Afon Housing Wakefield Shropshire Oxford Torfaen Southwark Evaluation will be led by Professor Paul Hickman of the Centre for Regional Economic and Social Research at Sheffield Hallam University.
15
Direct payment: impact on the tenant
Bank account needed Monthly budgeting discipline More support and monitoring from landlord Understanding the risks of arrears Section 4 Engaging with stakeholders
16
Direct payment: impact on the landlord
Greater tenant engagement and communication Budgeting and financial support for tenants Arrears monitoring Staff training Increase in rent collection Section 4 Engaging with stakeholders
17
Direct payment: the plan
Tenant selection and information gathering Risk and support process and decisions on involvement IT changes in place Support products and information provided Payments made Arrears monitoring Ongoing management Section 4 Engaging with stakeholders
18
Benefits for LAs and Housing Associations
Section 4 Engaging with stakeholders Early preparation for Universal Credit in a controlled environment Effective lessons learned and implemented early A chance to influence and contribute
19
Conclusion Major programme of welfare reform to help achieve fiscal consolidation in a way which is fair and strengthens work incentives. Transitional protection and increased discretionary housing payments to help smooth implementation. Radical changes to move towards Universal Credit over time. Similar reforms envisaged for pensioners. Housing element of UC for social tenants will be based on actual rents, subject to the underoccupation penalty. Demonstration projects to explore direct payment of rent to landlords in social rented sector.
20
Universal Credit and related welfare reforms in 2013/14
Annex Universal Credit and related welfare reforms in 2013/14
21
Household Benefit Cap The Household Benefit Cap will be introduced from April 2013 and will apply to the combined income from the main out-of-work benefits, plus child benefit and child tax credits The working assumption is that the cap will be: £500 per week for couples and lone parents £350 per week for single adults 67,000 households will be affected by the cap in 2013/14 (75,000 in 2014/15) The average benefit reduction is £83 a week per household
22
Household Benefit Cap - Exemptions
The following households will be exempt from the cap: those entitled to: Working Tax Credit those in receipt of: Disability Living Allowance Attendance Allowance the support component of ESA Constant Attendance Allowance War Widows and Widowers pension claimants who have been in employment for 52 weeks or more when they claim benefit (and the loss of employment is not of their own making) will be exempt from the cap for up to 39 weeks
23
Household Benefit Cap - Implementation
Phase 1 - from April 2012, Jobcentre Plus and Local Authorities will be providing support to those households claiming out-of-work benefits that will be impacted by the Benefit Cap in April 2013 Phase 2 - implementation of the Benefit Cap for new and existing claimants from April 2013, via a deduction from Housing Benefit Phase 3 - new claims to Universal Credit will be subject to the cap from October 2013
24
Other 2013 Reforms (1) introduction of localised support for Council Tax: DCLG has consulted on plans to localise support from April 2013 and introduced a Local Government Finance Bill in December 2011 April abolishing the discretionary elements of the Social Fund. New locally-based provision to replace Community Care Grants and general living expenses Crisis Loans will be designed and administered by local authorities in England and devolved to Scotland and Wales
25
Other 2013 Reforms (2) Disability Living Allowance to be replaced with a new benefit to be introduced for eligible working age people (16-64) in 2013/14 called the Personal Independence Payment Single Fraud Investigation Service: to consolidate benefit/tax credit investigation service across the DWP, local authorities and HMRC to increase investigations, improve efficiency, consistency and fairness and provide better value for money to co-design an organisational structure for 2013 high level design workshops are underway including regional workshops with operational staff …and of course introducing Universal Credit We plan to introduce the new Personal Independence Payment from April 2013 for eligible working age people (a decision will be made about extending Personal Independence Payment to children and recipients of DLA aged over 65 after learning from our experience of reassessing the working age caseload Now is the time to reform DLA and replace it with a new benefit designed for the 21st Century that better reflects the desire from disabled people to live independent lives and considers them as individuals. Disabled people receive a diverse range of support from Government, including aids and appliances which can make a real difference to people’s lives. For example, Local Authorities spent over £230 million on aids in Through Personal Independence Payment, we wish to target support to those disabled people who are least able to participate and to live independently. We therefore believe it is right for the assessment to take some account of the successful use of aids and appliances. We accept that there are costs associated with aids and appliances, e.g. grab rails and walk in baths, that availability can vary and that disabled people should have choice and control over their lives. As such, when Personal Independence Payment is implemented we are clear that only aids and appliances which are normally used by an individual will be considered. We will continue to work with disabled people and their organisations on this. Note: This is a contentious area: However if pressed if the audience has specific issues relating to aids and appliances we will send an answer after the event An important element of the reforms will be creating a fairer, more objective and more transparent assessment than currently exists. In most cases this will involve a face-to-face consultation with a trained independent assessor, probably a health professional, to assess their needs.
26
What are our key aims? (1) What is a MDR? MDR measures the incentive for someone to increase their hours of work as the earnings of a household increase, means-tested benefits and tax credits start to be withdrawn in addition, above a certain level of earnings, the increase in their wages will also be partially offset by income tax and national insurance contributions MDR is calculated as the proportion of a small increase in earnings which is lost in lower Benefits/Tax credits and/or higher income tax and national insurance payments 1) Reduce worklessness, reward work and personal responsibility as a result of the single withdrawal rate under Universal Credit, 1.2 million households will see a reduction in their marginal deduction rate (MDR) virtually no household will have a MDR above 80 percent, compared to 500,000 households with a MDR above 80 per cent in the current system a single taper rate and a simple system of earnings disregards so people in work to see clearly how much support they can get while making sure that people considering a job will understand the advantages of work clear conditionality rules that strike a balance between dependency and support
27
2) Simplify the application process
What are our key aims? (2) 2) Simplify the application process no need to ‘sign-off’ benefits to take an employment opportunity support continues seamlessly based on dynamic financial need rather than simple employment status 3) Tackle the cost of the benefits system automating the delivery of the system
28
What is Universal Credit? (details)
Universal Credit will provide a new single system of means-tested support for working-age people who are in-work or out-of-work. Support for housing costs, children and childcare costs will be integrated in the new benefit. It will also provide additions for disabled people and carers under Universal Credit, couples living in the same household will make a joint claim for the benefit payment. We will assume that ordinarily the benefit will be given in a single monthly payment to a household. It will be for the family to decide who receives the benefit no entitlement if capital of claimant or couple exceeds £16,000 the Government has agreed a package of transitional protection which will ensure that there are no cash losers at the point of change as a direct result of the migration to Universal Credit, where circumstances remain the same UNCLASSIFIED 28
29
UC: How are we making work pay?
30
How will we deliver Universal Credit?
Universal Credit is being designed from the outset to: support policy outcomes, helping people become more self-sufficient support efficient delivery, cutting out unnecessary paper and processing provide high quality service, understanding and meeting claimants’ needs The service will be: digital by default, but supported by other channels for those who need them automated, to reduce processing costs and increase responsiveness Everything we are doing is based on practical understanding: claimants and frontline staff have been involved in designing the service from the outset
31
Developing Face to Face Services
Since the announcements in May 2011 we have worked in partnership with local authorities to co create the design options for the face to face service delivery from 2013 DWP National Service Offering Labour market services Claimant support Complex needs Budgeting support Visits Online access Risk identified Local Flexibility Claimant support Complex needs Budgeting support Online access The joint design team established that a national service offering with targeted local flexibility is the optimum solution from October 2013. The design teams preferred option is a national service and outcome framework which allows for local flexibility - this allows us to build on the localism agenda, allows flexibility where the capability and capacity are in place and develop a stable backbone to meet demand.
32
Migration: what’s the plan?
Phase 1 October 2013 and April 2014: 500,000 new claimants will receive Universal Credit in place of one of the old working age benefits or credits. At the same time a further 500,000 existing claimants (and their partners and dependants) will also move on to Universal Credit when their circumstances change significantly, such as when they find work or when a child is born. Phase 2 April 2014 to around end of 2015: will give priority to households who will benefit most from the transition, such as those Working Tax Credit claimants who currently work a small number of hours a week but could work more hours with the support that Universal Credit brings. Overall 3.5 million existing claimants (and their partners and dependents) will be transferred onto Universal Credit during this second phase. Phase 3 end 2015 to end 2017: will see around 3 million households being transferred to Universal Credit by local authority boundary. This phase will have the flexibility to respond to the circumstances of particular local authorities as they change and will focus on safeguarding financial support, such as Housing Benefit payments, to claimants as the old benefit system winds down.
33
How will people migrate?
new Universal Credit claims – where legacy benefits are closed to new entrants natural migration – where a change of circumstance no longer results in new legacy award but a migration of the entire household entitlements to Universal Credit managed migration – where DWP initiates the transfer of an entire household from legacy benefits to one Universal Credit entitlement
34
Who will deliver Universal Credit?
from October 2013, Universal Credit will be delivered by DWP, drawing on the expertise of HMRC and local authorities the best of the current capability will be used to deliver the new service, taking the opportunity to modernise and improve it to deliver better efficiency for the taxpayer and better service for claimants minimises risk to implementation based on external advice how Universal Credit will be delivered in the longer term is under active consideration. Decisions will be taken in 2015, so that we can learn from our early experience of delivery How will this affect my job? The Government has made it clear that DWP will be responsible for the implementation of Universal Credit and for organising its administration. The Department is currently examining in detail how best to achieve this and what impact that might have on its existing delivery agencies. Jobcentre Plus, HMRC, Local Authorities and the Pension, Disability and Carers Service have a wealth of expertise and knowledge and this will be crucial as the Department develops it plans.
35
Preparing customers for the changes
we have set up a Support and Exceptions Working Group, at the request of Ministers. This group will look at support required for claimants to make the move and what exceptions are needed the Migration Strategy will look at the steps required to prepare claimants for the behavioural changes and what moves can be made ahead of transition: Household Accounts and managing household budgets four weekly/monthly payments budgeting and Financial Management conditionality and variable conditionality self service/Digital the Migration Plan was published on 1 November 2011
36
Working with Local Authorities to Test the Universal Credit Proposition
Model Business and Model Office Programme initiatives to develop the end to end business proposition for delivering Universal Credit and test the (physical) space for delivering Universal Credit The Direct Payment Demonstration projects will test the impact of direct to claimant rent payments and means of managing the associated risks to social landlords' financial position The LA led pilots will test service integration at local level for improved claimant support and work focus The Pathfinder will test live running of the Universal Credit offering in a real world setting
37
Changes to Pension Credit (1)
as a result of the introduction of Universal Credit the following changes will be made to Pension Credit: help with eligible rent. Support for eligible rent for customers over Pension Credit qualifying age will be provided through a new component of Pension Credit called Housing Credit help with dependent children. A new additional amount will be included in the Guarantee Credit element of Pension Credit for dependent children the earliest date that these changes will be incorporated into Pension Credit new claims is currently 12 months after the go-live of Universal Credit e.g. October 2014 Housing Credit will broadly replicate existing Housing Benefit rules so that pensioners should continue to receive the same support as now
38
Changes to Pension Credit (2)
the current planning assumption is that migration of Housing Benefit and Tax Credit information for Pension Age customers will be completed by October 2017 the number of customers over Pension Credit qualifying age in receipt of the above benefits is as follows: Pension Credit only – 1.4m Pension Credit and Housing Benefit – 1.3m Housing Benefit only – 0.3m Child Tax Credit – 0.1m
39
Implementation and support for Universal Credit
work with local authorities, Housing Associations and other government departments on implementation is a key priority Stakeholder and communications strategy – new working groups and workshops a new dedicated Universal Credit web page accessible through the local authority area of the DWP website is now available guidance, best practice and model products transitional protection and new direct payment safeguard
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.