1. 1 Jonathan Bottomer. 07771 844179. jonathan.bottomer@dwp.gsi.gov.uk Welfare Reform and Housing Benefit North London Landlord Branch meeting 17 th October 2012

2. 2 Why change managing rising costs delivering fairness increasing employment This means transforming what we do and how we do it

3. 3 Housing Benefit has already changed 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 30 th 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

4. 4 Summary of other Housing Benefit reforms 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: – 22% of working age Social Rented Sector Housing Benefit claimants in London, with an average loss of £21 compared to 31% and £14 in Great Britain the Benefit Cap will be introduced from April 2013 …and of course introducing Universal Credit

5. 5 Social Rented Sector June 2010 Budget announced size criteria rules to be introduced into 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 their eligible rent of 14% for under occupation by one bedroom and 25% for under occupation by two or more bedrooms the number of bedrooms Housing Benefit will cover will be based on the LHA 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

6. 6 Preparing for Social Rented Sector Size Criteria (1) we have been working closely with local authorities and Housing Associations in developing implementation plans and writing guidance the Chartered Institute of Housing has produced a toolkit, which includes examples of best practise, 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 along with the guidance we have developed products to aid with implementation that will include letters, leaflets and posters designed to draw customer attention to the changes

7. 7 Preparing for Social Rented Sector Size Criteria (2) local authorities need to collect information from social sector landlords about how many bedrooms there are in their properties they are likely to start this process soon and well before the measures take effect from April 2013 local authorities will inform those claimants who are potentially under-occupying their property and ask them to confirm the information they hold local authorities may also write to landlords to notify them of tenants likely to be treated as under-occupying their properties you may then wish to work with these tenants to discuss their options and provide advice and support

8. 8 DCLG social housing policy: adding local flexibility freedom for councils to determine who should qualify to go on their housing waiting list, and to develop local solutions which make best use of limited stock making it easier for existing social housing tenants (including under- occupiers) to move by taking those who are not in housing need out of allocation rules flexibility for landlords to offer fixed term as well as “lifetime” tenancies to new tenants was introduced on 1 April 2012

9. 9 Benefit Cap the benefit cap will be introduced from April 2013 and will apply to the combined income from the main out-of-work benefits, plus Housing Benefit, Child Benefit and Child Tax Credits the benefit cap levels will be: –£500 per week for couples and lone parents –£350 per week for single adults 56,000 households will be affected by the cap in 2013/14 the average benefit reduction is £93 a week per household

10. 10 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 –Industrial Injuries Benefits –Personal Independence Payment –Attendance Allowance –Employment and Support Allowance, if paid with the support component –Armed Forces Compensation Scheme and before 6 April 2005, the War Widow’s/Widower’s pension and war disablement pension claimants who have been in employment for 50 weeks out of 52 weeks or more when they claim benefit will be exempt from the cap for up to 39 weeks

11. 11 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

12. 12 Universal Credit

13. 13 Why do we need Universal Credit? we are simplifying a complex system of multiple benefits: –the current system has over 10,000 pages of guidance for advisors –it is expensive to administer we are making work pay: –more help for low income working families –claimants will keep more of what they earn –improving incentives to increase hours of work –simplified system will make moving to work feel less ‘risky’

14. 14 Payments are paid to different adults in a household and for various periods Universal Credit is a single monthly payment to each household (Though we will retain the ability to pay more frequently or to split payment in exceptional circumstances) Conditionality: some benefit claimants are capable of working but have no obligations to look for work Universal Credit will personalise conditions according to people’s capability and circumstances Work incentives can be very low, benefits are reduced to take account of earnings but different benefits have different rules Universal Credit will ensure that work pays. Financial support will be reduced at a consistent and predictable rate and people will generally keep a higher proportion of their earnings The welfare system has more than 30 benefits each with their own rules and criteria Universal Credit provides a new single system means-tested support for working-age people who are in or out of work How is Universal Credit different? Current System Universal Credit

15. 15 Personal Independence Payment Universal Credit How are we simplifying the system? Child Benefit, Carer’s Allowance (will remain) Income related JSA) Income related ESA) (including SMI) Income Support ) Working Tax Credits Child Tax Credits Housing Benefit Disability Living allowance Current system New system Contributory JSA and ESA (still considering how these will work) Council Tax Support (localised scheme) … will include support for housing and children Pension credit

16. 16 Universal Credit – why a digital service? the service will be digital by default because it is better for claimants, staff and taxpayers. It will be –available –flexible –responsive –informative –integrated –accessible and it will be digital because the future is digital –employers expect digital skills for almost all jobs –mobile devices are more prevalent and powerful –people can save money by accessing online services but we recognise that some claimants will need help to use the online service - other channels will be available for the minority who need them

17. 17 Universal Credit – channel objectives There’s a four year transition period from 2013 to 2017 We don’t expect everyone to switch channels on day 1 50% of contacts that can be digital, should be digital in 2013 80% of contacts that can be digital, should be digital by 2018 For our claimants IT skills are increasingly important: it’s cheaper to buy goods and services online it’s easier to search for work online and move into work We want to help people to make the change

18. 18 What are we doing to prepare for channel shift? We plan to work across government, private sector and voluntary sector boundaries to create, support and encourage opportunities to deliver the digital message. DWP are increasing activities and support to boost take up of online services, e.g.  through Digital Champions,  through providing computer access in Job Centres Private Sector In partnership with other organisations, such as E- Skills Agency, persuading major employers to support and encourage their people to use work facilities to access online services During migration delivering targeted & timed advice and guidance to claimants on why and how to get online Public Sector Digital Deal – getting social housing tenants online using customer contacts to deliver ‘digital interventions’ (e.g. when tax credits are claimed) HMRC are introducing iForms this autumn and improving information services on new website Voluntary Sector collaboration with Go On to extend our reach to a wider range of delivery partners than we can influence on our own working with voluntary sector who help our claimants providing advice, support and resources to claimants and potential claimants

19. 19 Universal Credit – implementation and transition challenge Universal Credit supports people into work and continues support to ensure that work pays. To deliver this we need to: convert 12 million claims to 8 million household accounts create a digital platform that both meets the needs of people who are used to managing their lives online, whilst helping claimants who need extra support to get online ensure the right support for claimants create a system capable of flexibility and continuous improvement

20. 20 Live Innovation Trialling (started in April 2012) to trial components of the end-to-end Universal Credit service proposition in a live environment with real people in real time Model Office (first took place in April 2012) a series of incremental, integrated tests in a ‘controlled’ environment that will be built as the Universal Credit system, processes and support products are developed Direct Payment Demonstration Projects (started June 2012) will test key elements of incorporating housing support into Universal Credit whilst protecting the financial position of social landlords Local Authority-led pilots (to start Autumn 2012 – end September 2013) will test service integration, particularly design of face-to-face service delivery, at local level for improved claimant support and work focus 7 pilot sites selected in England including a partnership, 3 in Scotland and 2 in Wales Pathfinder (planned for April 2013 in Greater Manchester and Cheshire) an early implementation of Universal Credit – to enable us to learn from experience and build confidence Testing before delivery

21. 21 2013 20152016 2017 Pathfinder New claims to UC from jobseekers 2014 “Natural” migrations as a result of changes of circumstances Managed migrations Legacy load 12m 8m6m4.5m2.5m UC load Timeline of Universal Credit Change New claims from in work and remaining out of work claimants

22. 22 Universal Credit – the right support for claimants the new service will be straightforward for many – but some claimants will need support to deal with the changes Financial Products - we are working with the commercial and social banking (e.g. credit unions) to develop bank accounts that have in- built budgeting capability Tailored Support - we are conducting a detailed segmentation of claimant personal budgeting support needs to understand the demand for such support and to help us either build solutions into mainstream support or develop tailored solutions Exceptions - for those who will not be able to manage Universal Credit, even with support, we are developing an exceptions framework Engagement - we have established an external advisory group to help us with this - the Support and Exceptions Working Group, which includes representatives from local authorities, housing and advice organisations

23. 23 Payment of Universal Credit Universal Credit will be paid to claimants who are in work and out of work as most businesses pay monthly, Universal Credit will also be paid monthly claimants will be responsible for managing all household costs, including rent payments to help claimants prepare for Universal Credit, we will test key elements of incorporating housing support into Universal Credit whilst protecting the financial position of social landlords Housing costs for owner-occupiers in Universal Credit will continue to be paid to qualifying lenders direct under the Mortgage Interest Direct scheme Direct Payment Demonstration Projects will run for a year in six local authority areas

24. 24 Direct Payments Demonstration Projects Six local authorities & housing associations are now trialling direct payments of Housing Benefit to selected tenants Project timeline Jun 2012Projects started Jul 2012First direct payments to selected tenants in LAs in England and Wales Jul 2012First bi-monthly Learning Report produced – summary shared on Learning Network Aug 2012First direct payments to selected tenants in Edinburgh Jan 2013‘Learning the Lessons’ report published Jun 2013Project completes Aug / Sep 2013 Final Project evaluation report published

25. 25 Demonstration Projects – indicative early findings (end June) Preparation - engaging with and assessing the needs of tenants has taken longer than anticipated. Landlords do not have access to the information needed to assess tenants’ readiness for direct payment. Role of support partners in the project is crucial. General lack of awareness among tenants of wider benefit reforms. Project areas have managed additional resource demands - but evidence shows possible detrimental impact on areas outside. Developing appropriate safeguards has helped to reassure landlords.

26. 26 Learning network Bi-monthly Learning Reports may be found in Learning Network a Network run jointly by DWP, DCLG and Chartered Institute of Housing and hosted on Chartered Institute of Housing web-site: www.cih.org/directpaymentslearningnetwork Key early findings included the following: Engaging with and assessing the needs of claimants has proved more protracted and more resource intensive that anticipated. Landlords do not have access to information that would enable them to assess their tenants’ readiness for direct payment. There is a general lack of awareness of wider welfare reforms among tenants participating in the projects and the role of support partners in project is crucial Project areas have been able to manage the additional resource demands to date and it is evident that setting in place safeguards. Sheffield Hallam University have been commissioned to evaluate the projects. A Learning The Lessons report will be published in January next year and, following completion of the project next summer, a final project evaluation will be published in the late summer or early autumn of 2013.

27. 27 2013 focus pilots - Twelve pilots will run from autumn 2012 to September 2013 to explore how local expertise can support residents to claim Universal Credit 2013 focus pilots will look at: -encouraging claimants to access online support independently - improving financial independence and managing money - delivering efficiencies and reducing fraud & error; and - reducing homelessness - (some pilots will focus on service issues in rural areas) Post 2015 focus pilots – will look at the longer term role for local authorities in supporting Universal Credit claimants North Dorset Rushcliffe Melton Bath & NES Oxford Lewisham West Lindsey Caerphilly Newport Birmingham North Lanarkshire West Dunbarton Local Authority-led Pilots Oldham Wigan Dumfries & Galloway Edinburgh Wakefield Shropshire Southwark Torfaen Key: LA-led pilots Pathfinder preparation projects Direct Payment Demonstration Projects

28. 28 The Universal Credit Pathfinder Universal Credit will go live in the Greater Manchester and Cheshire area from April 2013, six months before national roll-out in October it will enable DWP to test the Universal Credit system and its IT with local authorities, employers and claimants in a live environment before Universal Credit is rolled out across the country up to 1,500 new claimants are expected to begin receiving Universal Credit each month throughout the Pathfinder. Throughout the initial Pathfinder period up to 9,000 households will claim Universal Credit the Pathfinder will take place in specific postcodes for citizens with particular circumstances. It will be delivered in four local authorities - Oldham, Tameside, Warrington and Wigan - with the involvement of four Jobcentres - Ashton-under-Lyme, Oldham, Warrington and Wigan. The specific postcodes and scope for this activity will be announced shortly

29. 29 Universal Credit and housing Housing Benefit will be: integrated into Universal Credit, over time potentially more broad brush in its approach - with fewer exceptions available to pensioners through modified Pension Credit private sector - will incorporate LHA rates social sector - will use actual rents, subject to under occupation penalty. No further change in short to medium term

30. 30 Universal Credit Pension Age (1) Universal Credit will replace means tested benefits including Housing Benefit, Child Tax Credit and Working Tax Credit resulting in changes for customers who have reached Pension Credit qualifying age (linked to women’s State Pension Age) as pensioners are outside the direct scope of Universal Credit an alternative mechanism is needed to deliver support for rent and for dependent children. This support will be incorporated into Pension Credit, to be known as modified Pension Credit for pension age customers, support for eligible rent will be delivered as an additional Pension Credit component – Housing Credit, which will run alongside both the current Guarantee Credit and Savings Credit components new pension age customers wishing to claim support for eligible rent after October 2014 will need to make a claim to Pension Credit DWP will continue to pay landlords directly for pension age customers if that is the current arrangement, and deal with enquiries

31. 31 Universal Credit Pensions Age (2) Support for children currently people responsible for children, including those over Pension Credit age, may receive support from HMRC for each child through Child Tax Credit What will change… to protect the continuity of support for pensioners, there will be an additional amount for children incorporated into the Guarantee Credit element of Pension Credit. This will be known as Child Addition. There will be 4 rates: for first child, subsequent children, and higher rates for disabled children In Work Support following the abolition of Working Tax Credit, working age customers will be able to access similar support through Universal Credit. There will be no Working Tax Credit replacement within Pension Credit however, pension age customers who do not qualify for Pension Credit but are still entitled to Working Tax Credit will be entitled to Transitional Protection at the point of change, provided their circumstances remain the same

32. 32 Universal Credit Pension Age (3) When the changes take place – key dates No earlier than October 2014 The current go live date for modified Pension Credit (new claims only) This is 12 months after the introduction of Universal Credit By the end of October 2017 All existing claims to Housing Benefit will have been migrated to DWP from local authorities All existing claims to Child Tax Credit/Working Tax Credit will have been migrated to DWP from HMRC

33. 33 Universal Credit Pension Age - (4) Migration almost 1.6 million Housing Benefit and 100,000 Tax Credit cases will need to be migrated the underlying principle of the migration approach will be to ensure continuity of financial support for pension age customers and to minimise the potential for avoidable contact, confusion and anxiety. There will be a comprehensive communications strategy and close collaboration with local authorities and HMRC throughout the planning process and beyond the pension age migration strategy will be compatible with the Universal Credit Programme’s approach for working age customers the existing case migration approach will be based largely upon a “managed”, i.e. planned and controlled, movement of cases. Work is ongoing to fully define the criteria supporting managed migration Channels there will be no change to the way that pension age customers claim modified Pension Credit. Telephony will continue to be the primary channel for new applications and enquiries pension age customers will not use the Universal Credit online claims channel, there is an intention to provide an online channel for Pension Credit at some point in the future

34. 34 IT and data sharing with local authorities What we have achieved set up a Local Authority Data Sharing Programme (LADS); to develop a single, strategic framework for 2-way data sharing with local authorities that supports and promotes DWP’s Welfare Reform agenda successfully passed Gate 0 (the green light to proceed) of the Department’s governance processes received formal commissions from Universal Credit, Modified Pension Credit, Benefit Cap, Personal Independence Payments, Payment Deduction Programme, Local Welfare Reform (the Social Fund) and DCLG (data sharing to support local council tax reduction schemes) to meet their Data Sharing requirements identified and engaged with our Stakeholders and held the first meetings of the Programme Board and Programme Steering Committee engaged with IBM to develop a detailed plan to enable us to build, test and implement solutions Looking forward we are exploring the possibility of sharing some data with registered providers

35. 35 Sharing data with local authorities regulations prescribe a number of welfare services, e.g. Blue Badges, Troubled Families, Residential and Non Residential care, where DWP can supply social security data to local authorities local authorities can share data internally and with other local authorities (including county councils) for certain welfare services purposes in some cases data can be shared with social landlords (to identify and support people affected by the benefit cap and size criteria) local authorities can alert DWP and Housing Benefit teams when a person goes into hospital or residential care, or needs overnight care at home these measures will help to improve delivery of services to customers, ensure charges for care services are calculated more quickly, remove the need to spend time collecting customer consent, and help people to more easily claim the services they are entitled to in the longer term, plans to transfer data electronically will increase efficiency gains for local authorities and DWP circular HB/CTB A5/2012, which is available on the Housing Benefit pages of the DWP website provides guidance

36. 36 How is the Universal Credit Programme engaging with external organisations? Stakeholder Strategy in place engagement at different levels links to appropriate areas within Programmes Includes engagement at: Roundtable Senior Stakeholder Forums events targeted at areas of design local engagement with local stakeholders Touchbase, e-bulletin Housing Sector engagement the Direct Payment Demonstration Projects have been created to explore concerns expressed about paying rent to claimants and how to manage the risk of increased rent arrears we are working with the social housing and voluntary sector to examine their role under Universal Credit and how they can support claimants. We hope to be able to say more about this work in the Autumn

37. 37 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 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

38. 38 Helping tenants Practical get online and get used to using the internet understand the changes - what and how will your tenants be affected provide support for those tenants who may need additional help (e.g. because of learning or literacy difficulties) do your tenants have bank accounts and can they budget well enough to manage their own money? consider putting in place new arrangements for rent collection work with Jobcentre Plus, your local authority and key voluntary organisations to agree upon how tenants (or other claimants) will be routed to the support that they need

39. 39 What should you be doing now? work together - include Jobcentre Plus, local authorities, registered providers, private landlords and third sector partners to prepare for the reforms identify which and how tenants will be affected consider implications for your business planning and future business model plan communications with those affected plan transition – Universal Credit will be phased 2013-2017 support the cultural change: new channels and personal responsibility consider partnership and integration opportunities –perhaps sharing estates

40. 40 Conclusion radical changes to the benefit system move towards Universal Credit over time, with implications for delivery of housing services and costs work in progress on delivery model we will need to do things differently: on-line claims and real-time processing …and so will our citizens Universal Credit in context of broader welfare transformation Welfare Reform alongside some major work to configure broader services especially localised Council Tax support and new fraud services remember Pension Credit will be amended to provide help with eligible rent and dependant children for pensioners Universal Credit some key decisions are needed to help you plan

41. Questions