SLAED Employability Group Welfare Reform: Challenges for Employability Partnerships Andrew Noble and Andrew McGuire Improvement Service Thursday 6 th June 2013

Introduction Welfare Reform- main changes Welfare Reform- Financial impact Welfare Reform Employability and economic development – the evidence base

Welfare Reform- the main changes- timescale 2011 – Benefits uprated in line with CPI rather than RPI – Local Housing Allowance changes 2012 – Child Benefit rates frozen for 3 years – Reduction to 70% childcare costs claimed through tax credits – Contributory ESA limited to 1 year – Lone Parents moved from IS to JSA earlier – Universal Credit introduced – Successor arrangements to CTB and Social Fund introduced – Council Tax Reduction Scheme and Scottish Welfare Fund – New under-occupancy rules in socially rented sector – Benefit Cap introduced – Personal Independence Payment introduced (replacing DLA) – 1% annual uprating of all benefits for 3 years

Welfare Reform- Financial Impact of Welfare Reforms to 2014/15 Benefit AreaNo. h’holds/indivduals affected Estimated loss £m p.a. Incapacity Benefits (1) (3) 144, Tax Credits 372, % uprating (3) n.a.290 Child Benefit 621, DLA (1) (2) 55, Local Housing Allowance 80,00080 Under occupancy 80,00050 Non-dependent reductions 28,00030 Benefit Cap Total1,660

Welfare Reform- Financial Impact of Welfare Reforms to 2014/15 Benefit TypeAverage loss per affected household/ individual (£ p.a) No. Of Households/ Individuals affected per 10,000 Loss per working age adult (£p.a.) Incapacity Benefit3, Tax Credits8101, % Upratingn.a 85 Child Benefit3602,66065 DLA3, Local Housing Allowance 1, Under occupancy Non-Dependant reductions 1, Benefit Cap4,81010<5 Total480

Overall impact of welfare reform on Scotland by 2014/15 by local authority area

Overall financial impact of welfare reform on Scotland by 2014/15 by local authority area

The Evidence base The most up to date baseline data available for work and health related benefits by age, gender and duration of claim by local authority area Labour market activity and inactivity by local authority area Levels of under-employment by local authority area Work Programme performance by local authority area Some assessment of the impact of DWP’s conditionality and sanctions policy Potential approaches to mitigation

Total Number of Job Seeker Allowance Claimants (JSA) by local authority April 2013

Total Number of Income Support Claimants by local authority November 2012

Total number Employment Support Allowance (ESA) claimants by local authority November 2012

Total number of families in receipt of Tax Credits by local authority 2010/11

Number of Housing Benefit claims in Local Authority and the socially rented sector, by local authority, November 2012

Total number of Incapacity Benefit (IB) claimants by Local Authority November 2012

Total Number Incapacity Benefit (IB) and Severe Disablement Allowance claimants by local authority November 2012

Total number of Working Age Disability Living Allowance Claimants by local authority November 2012

Work Programme Referral, Attachments and Job Outcomes (1 st June st July 2012)

Employment rates for Scottish local authority areas 2012 (Scottish Labour Market Survey 2012)

Economic Inactivity rate by Scottish local authority area 2012 (Scottish Labour Market Survey 2012)

Underemployment across Scotland 2012 proportion of workers who are underemployed source- Annual Population survey October 11-Sept. 12

Underemployment- summary Underemployment increasing across all regions of the UK. Between the number of underemployed workers in Scotland increased by 76,000 In 2011 the UK underemployment was high compared to EU Wide variation in underemployment rates across LA areas. Almost half of all underemployed people in Scotland are working part-time in the private sector. Women are more likely to be underemployed than men (women more likely to work part-time). 65% of young males not in full-time education working part-time report themselves as underemployed.

Conditionality for Universal Credit Applicants for Universal Credit are required to sign a Claimant Commitment- a record of the responsibilities the claimant has made in return for receiving Universal Credit Claimant Commitment applies to those in work and receiving UC, who are identified as “could work more”, i.e. Those in part time Low paid employment; the under-employed Expectation that preparing for and getting a job is the “full time focus” of the UC claimant. Claimants not being able to demonstrate this will face a sanction, i.e. cut to their UC. This means that people in employment will seek support to develop their skills, access training/ further education and progress in the labour market as result of their Claimant Commitment- further increasing demand for a broad range of employability services

WR: Challenges for Employability Partnerships (1) Range of challenges for Employability Partnerships arising from WR (e.g. Potential major increase in demand for Employability services; different mix of clients / needs; etc) Resource implications (scale / doing more things / doing different things)? Ensuring appropriate linkages to other relevant services (Money Advice, Welfare Rights, etc – incl emerging LSS) whilst avoiding ‘revolving doors’ WR ‘incentivising work’ is premised on jobs being available. Linkages to demand side / Strengthening integration with wider Economic Development

WR: Challenges for Employability Partnerships (2) Reduced incomes within local economies Scope to influence focus of next round of EU funding Local Govt has major role to play in employability – and also lead role re SOA priorities. Where does potential ‘crisis management’ around WR leave prevention / early intervention agenda? Do Councils / CPPs have genuinely joined-up approach to Econ Outcomes? What more can public sector do re maximising economic impact?

Economic Outcomes Programme Working with Councils / partnerships to implementing key messages of ‘Econ Dev Improvement Guide’ in order to maximise economic impact Access to Guide and further info on EOP via:- Wide range of tailored supports available to:- – Individual Councils / Partnerships – Groups of Councils / partnerships – National initiatives Linkages to all key Econ Dev Agencies via EOP Prog Board But limited resources

Group Discussion Update re where Councils are in context of WR Employability challenges Emerging issues / themes? Are there common areas that would benefit from EOP / WRISP support?