Welfare Reform Sam Lister, Policy & Practice Officer, CIH Learn - - PowerPoint PPT Presentation

Learn with us. Improve with us. Influence with us | www.cih.org

Welfare Reform

Sam Lister, Policy & Practice Officer, CIH

Learn with us. Improve with us. Influence with us | www.cih.org

2

Current issues in welfare

• The election
• Welfare spending cap
• The (slow) introduction of universal credit
• Universal credit and housing business models
• Tenant payment
• Rents and work incentives
• Safety net or improving life chances?
• Approach to solving problems

Learn with us. Improve with us. Influence with us | www.cih.org

3

How we approach problems

Learn with us. Improve with us. Influence with us | www.cih.org

4

Cap on welfare spending

• ESA, SPC, DLA (PIP), AA, tax credits, child

benefit, HB (except JSA), maternity pay and universal credit

• cap set at £119.5 billion 2015/16
• Expected spending £113.1

Learn with us. Improve with us. Influence with us | www.cih.org

5

Trends in welfare spending

2 4 6 8 10 12 14 1983-84 1986-87 1989-90 1992-93 1995-96 1998-99 2001-02 2004-05 2007-08 2010-11 2013-14 2016-17 Per cent of GDP Children and working age P ensioners T

• tal

Forecast Source: DWP, HMR C, OBR

Learn with us. Improve with us. Influence with us | www.cih.org

6

Welfare cap spending

£ billion Outturn Forecast

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Welfare cap DWP social security 71.2 71.5 73.3 74.3 75.0 76.0 76.8

• f which:

Incapacity benefits1 13.3 13.3 13.4 13.5 13.7 14.0 14.3 Statutory maternity pay 2.3 2.3 2.4 2.4 2.5 2.6 2.7 Income support (non-incapacity) 2.7 2.6 2.6 2.5 2.6 2.7 2.8 Pension credit 7.4 7.0 6.6 6.5 6.3 6.1 5.9 Winter fuel payments 2.1 2.2 2.1 2.1 2.1 2.1 2.0 Disability living allowance and personal independence payments 13.4 13.9 14.8 14.7 14.1 13.5 13.6 Attendance allowance 5.4 5.4 5.5 5.6 5.7 5.8 6.0 Carer's allowance 1.9 2.1 2.3 2.4 2.6 2.7 2.8 Universal credit2 0.0 0.0 0.0 0.0 0.1 0.5

• 0.2

Housing benefit (not unemployed) 19.9 20.3 21.3 22.1 22.9 23.5 24.2 Other DWP in welfare cap 2.6 2.4 2.4 2.4 2.4 2.5 2.5 Personal tax credits (AME spending) 26.8 27.2 26.8 27.1 29.3 31.7 33.0 Tax free childcare 0.0 0.0 0.0 0.2 0.7 0.8 0.9 NI social security in welfare cap 3.2 3.2 3.2 3.3 3.3 3.3 3.3 Child benefit 12.2 11.6 11.7 11.9 12.1 12.4 12.6 Paternity pay 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Welfare cap in AME 113.5 113.6 115.1 116.9 120.4 124.2 126.7 Personal tax credits (negative tax element) 3.0 2.7 2.7 2.5 1.6 0.3 0.0 Total welfare cap 116.5 116.4 117.8 119.5 122.0 124.6 126.7

Learn with us. Improve with us. Influence with us | www.cih.org

7

Welfare that works

Learn with us. Improve with us. Influence with us | www.cih.org

8

Current benefits & tax credits

100 200 300 400 500 600 Net pay, benefits and tax credits Weekly gross pay Net pay Child benefit Jobseekeer's allowance Working tax credit Child tax credit Housing benefit Localised CTRS

Couple, two children, one earner, rent £75.00, council tax £23.00

Learn with us. Improve with us. Influence with us | www.cih.org

9

Universal credit

£0.00 £100.00 £200.00 £300.00 £400.00 £500.00 £600.00 Net pay and benefits Weekly gross pay Net pay Child benefit Universal credit Localised CTRS

Couple, two children, one earner, rent £75.00, council tax £23.00

Learn with us. Improve with us. Influence with us | www.cih.org

10

Current & UC compared

£0.00 £100.00 £200.00 £300.00 £400.00 £500.00 £600.00 Weekly net earnings & benefits (ex CTR) Gross weekly pay (£) Earnings plus basic benefits (excluding CTRS) HB/WTC/CTC Earnings plus basic benefits (excluding CTRS) UC

Couple, two children, one earner, rent £75.00, council tax £23.00

Learn with us. Improve with us. Influence with us | www.cih.org

11

Escape velocity

Escape velocity: The gross earnings required to escape means tested benefits and tax credits for a given family type and rent

Learn with us. Improve with us. Influence with us | www.cih.org

12

Social sector rents

Rent £75.00 per week Gross weekly income Gross annual income Housing benefit £346 £17,992 Tax credits £623 £32,396 Universal credit £681 £35,412 Couple, two children, single earner 2013/14 tax and benefit rates. Rent £75.00 per week (average social sector rent)

Learn with us. Improve with us. Influence with us | www.cih.org

13

Benefit escape velocities

Rent: £212.26 per week (Outer East London) Gross weekly income Gross annual income Housing benefit £828 £43,030 Tax credits £623 £32,396 Universal credit £1,025 £53,300 Rent: £296.38 per week (Inner North London) Gross weekly income Gross annual income Housing benefit £1,051 £54,652 Tax credits £623 £32,396 Universal credit £1,248 £64,896 Couple, two children, tax and benefit rates 2013, 2 bed LHA rate 2013

Learn with us. Improve with us. Influence with us | www.cih.org

14

Earnings percentiles 2013

Percentile (London) Weekly* annual Lower quartile (25th) £445.62 £23,172 Bottom 40% (40th) £553.17 £28,765 Median (50th) £630.77 £32,800 Top 30% (70th) £825.00 £42,900 Top 20% (80th) £980.48 £50,985

Learn with us. Improve with us. Influence with us | www.cih.org

UC the new rules in detail…

Available from CIH bookshop

Learn with us. Improve with us. Influence with us | www.cih.org

16

Pilots

• Universal credit pathfinder areas
• UC live claims
• Mainly North West (singles, couples)
• Direct payment demonstration projects (DPDP)
• HB payment only (not other elements)
• Run course – evaluation done
• Local authority led pilots
• Test aspects of UC without UC
• Partnership, triage, financial and digital inclusion
• Local support services framework pilots
• 11 just starting
• Two in London

Learn with us. Improve with us. Influence with us | www.cih.org

17

Timetable

• Unknown
• Official position still full roll out by 2017
• Labour Party review (3 months post election)

but still supports UC in principle

• All jobcentre offices in North West 1/1/2015
• Singles only
• Couples also Harrogate, Bath, Rugby, Inverness
• ‘Natural migration’ then block transfer

Learn with us. Improve with us. Influence with us | www.cih.org

18

UC payment – principles

• UC is a surrogate wage
• Paid the wage earner (or jobseeker)
• No separation of housing costs
• Paid monthly in arrears
• No third party (landlord) rights to know

Learn with us. Improve with us. Influence with us | www.cih.org

19

Personal Budgeting support

• DWP strategy for claimants who need support
• Money advice
• Alternative payment arrangements (APAs)

1.

Managed payments ‘switch back’

2.

Payment frequency

3.

Split payments

• Two tiers (one-off, on-going)
• Delivered locally (LSSF)
• Led by DWP districts

Learn with us. Improve with us. Influence with us | www.cih.org

20

APAs

• Principles
• Case by case basis
• Claimant knowledge and consent
• Always a temporary arrangement
• Except…
• DWP is exploring ‘trusted partner’ status
• Arrears trigger (20%-30%?)

Learn with us. Improve with us. Influence with us | www.cih.org

21

DPDP main findings

• Initial shock but returning (almost) to baseline
• Payment patterns are complex (not binary)
• Part payment more common – non payment greater impact
• n arrears
• Vulnerability characteristics remain unclear
• No one has cracked support take-up
• Designing programme longer than expected
• IT systems inadequate to support early intervention
• Data not robust enough to prove it is more resource intensive
• Does change landlord and tenant behaviour and in some cases
• rganisational objectives

Learn with us. Improve with us. Influence with us | www.cih.org

22

Cost of under-banked

• Average London energy bill 2013 (standard payment)
• £591 Electricity
• £772 Gas
• Average London energy bill 2013 (direct debit)
• £551 Electricity
• £715 Gas
• Total annual saving: £97
• Energy efficient homes?
• Direct debit savings fall with rising energy use

Source: Department for Energy and Climate Change

Learn with us. Improve with us. Influence with us | www.cih.org

23

Free banking?

• A basic bank account costs the bank £136 p.a.
• That’s why ‘penalty’ charges are so high
• It is only ‘free’ if you stay in credit/ agreed limit
• What is the cheapest solution?
• Depends on the personal payment behaviour
• Transaction charge or account fee may be cheaper
• Look at total costs and benefits (e.g. bill payment)

Learn with us. Improve with us. Influence with us | www.cih.org

24

Collective switching

How it works

• No obligation registration with intermediary
• Attain critical mass of customers
• Reverse auction

Which? / 38 Degrees

• 287,000 registered, 37,000 switched
• Average saving £223 per year

Manchester Councils

• Ten local councils
• 15,000 signed up in two weeks
• www.facebook.com/gmfairenegy

Learn with us. Improve with us. Influence with us | www.cih.org

25

Affordable credit

• Credit unions as varied as social landlords
• What is their common bond
• Capacity (scale/ speed)
• Quality of management
• Cost and range of products
• At the expensive end of affordable credit 2% per month (26.8%)
• Mainstream credit
• Some 0% deals
• Best credit cards 7-15% APR
• Consider rental exchange

Learn with us. Improve with us. Influence with us | www.cih.org

26

Beware redundancy

New technology

• Fixed or flexible?
• Plastic card or mobile?

Learn with us. Improve with us. Influence with us | www.cih.org

27

Conclusions

• Universal credit is not just about payment
• Your values (build more homes or improve life chances)
• Are your rents really affordable?
• Niche products (rent sensitivity)
• More sophisticated approach to rent collection and customers
• From administration to risk prediction
• Get out of the binary mind-set (good payer, direct debit etc.)
• ‘Vulnerability’ is a poor predictor of risk
• Your data collection and IT systems are inadequate
• Start preparing now
• Landlord preparation strategy is opportunity not a threat