Housing Benefit – A radical rethink on welfare delivery
The Housing Benefit (HB) scheme is complex. Over a number of years the Department for Work and Pensions (DWP) has sought to simplify the scheme ensuring that take up is maximised and the correct level of social assistance is provided, What has evolved is an even greater level of complexity and fragmentation within the entire welfare scheme with claimants having to navigate a myriad of different agencies. They often supply the same information time and time again and bizarrely some people with identical circumstances receive different levels of benefit due to protection schemes where the law has changed. The overriding recommendations in this paper are:
Local Authorities (LAs) with responsibility for HB should be the keystone to providing all benefits at a local level. The HB scheme captures almost all of the information that is needed for other benefits to be calculated, to truly capture it once, and meet the demands and the objectives of the “Tell Us Once” project it should be through this medium. Operating through LAs could yield large savings from closure of duplicated offices and long term structured staff reductions.
A benefit database of all people who claim any benefit should be established to allow cross matching / anti fraud / take up initiatives. All the information held in one secure place, not fragmented and duplicated as it is at present. The current situation leads to confusion and error.
Reintroduction of a revised Verification Framework (VF) consistently applied across all welfare benefits
Data sharing must be true data sharing across all of the agencies and bodies that hold information that is relevant to the welfare state. Her Majesty’s Revenues and Customs (HMRC) must engage with this and should require employers to submit salary information twice yearly rather than annually via electronic upload.
Anti Fraud should be joined up across all benefits and operated at a local level through the local authority. A reward and subsidy scheme should be reintroduced
Removal of all of the different rent assessment schemes and implementation of one Local Housing Allowance (LHA) based scheme. All previous protection to be removed from rent schemes and a lump sum to be awarded along with an appropriate lead in time to allow choices to be made
The Challenges of the Housing Benefit Scheme
Overall the HB scheme is not easy to understand and administer, it is still too complex as is the welfare system as a whole. Customers still do not understand the different rules that are applied and the different agencies that deal with these. This problem must be addressed and resolved.
HB is accessed through the local council with benefit responsibility (District or Boroughs mainly, Unitaries in Scotland and Wales and some in England, not County Councils), there are offices where face to face meetings can be arranged simply and quickly in almost every town. Many LAs have mobile working arrangements to visit customers in their own home, or community premises in order to make this easier. This should be a requirement to ensure that customers are able to make claims and feel comfortable with the process. Hard to reach customers are not going to pick up a phone or use the internet. They must be engaged within their comfort zone and this will be a face to face, compassionate and thorough meeting. The Jobcentre Plus (JC+) and Pension Service (PS) have not got this right. LAs have been watching and learning. The majority now have good outreach policies that have been most successful in targeting the hard to access groups and promoting benefit take up.
The verification framework introduced in the mid 1990’s was an excellent step in securing the system and the robust fraud prevention activity of the LA benefit services has seen the fraud rate reduce year on year. However fraud is always going to be attempted and until there are more effective and joined up approaches to validation of claimants circumstances, fraud will always enter the system.
Some of the decisions to “simplify the gateway” are probably a backward step as the slackening off of some evidence collection will simply allow fraud to enter the system. Whatever the steps, they must be reasonable and effective. Consistency across all welfare schemes and the ability to effectively share the evidence gathered must be implemented. Collect once use many times must be the aim.
The collection and verification of the information on capital creates differentials for pensioners and working age customers. This is an example where standards are different and evidence collection is at best, suspect in some agencies.
How can the Housing Benefit scheme be improved?
1: Easy to Understand
The different agencies responsible for the collation and administration of benefits are simply confusing to the claimant and can result in a lack of ownership in day to day decision making. Liaison and trust has never been good between the customer facing elements of the organisations when presented to the public. LAs are recognised by the public as the delivery vehicle for local services and as a result receive numerous enquiries about state benefits generally. A more simple set of rules are needed which must be consistent across all benefits to ensure effective service delivery. Direct contact points between the agencies and LAs should be available to allow the delivery of a seamless service.
There has been a great success in encouraging pensioners to open bank accounts or Post Office Current Accounts (POCAs). However the sad failing of this account was that HB was excluded as a payment. This decision was illogical and should be reversed.
There are currently six schemes that determine HB if you are a private rental tenant, all dependent on age or where or when HB was claimed.
Pre January 1989 rents (and claim in place before Jan 1996) – not referred to the rent service as the tenancy is governed by the Housing Act 1985 (fair rent / Rent Assessment Committee / agricultural tenancies)
15th January 1989 – 1st Jan 2006 Claims without breaks – refer to rent service and use rent figure subject to vulnerable category / reasonable rent criteria
1st Jan 2006 – 1st October 2007 claims – Local Reference Rent (LRR) plus 50% top up between LRR and the Rent Officer figure (whichever one was lowest as there could be several), subject to an overall twice LRR maximum.
1st October 2007 – Single Room rents for under 25’s introduced set below the LRR levels and 50% top up removed. LRR was the maximum that could be awarded
LHA April 2006 Pilots (and second wave before April; 2008) – higher rent levels and unlimited “top-up”. Difference between eligible LHA and actual rent met it full
LHA April 2008 – general implementation – LHA rents are higher than expected and causing some concern suggesting further reform needed. Cap on “excess” top up award of £15.00
Exemptions apply to allow some claims to be awarded based on pre January 2006 rules (where care and support is in place, and conditions are met for example)
This needs to be rectified; it is unacceptable that persons who have claimed benefit for longer periods or in different administrative areas should receive different rates of HB.
The Single Room Rent (SRR) based on age is discriminatory. Neither a persons housing needs, nor the availability of accommodation, is dictated by age, this barrier should be removed. There are few under 25’s that claim, however where they do they should be supported and helped off the benefits scheme in the same way as other claimants rather than feeling bitter about the scheme and its lack of assistance.
One scheme needs to be established and this should be applied to all customers, some claims may need a lead in time, however this could be applied within one or two years with all transition removed. It is not acceptable to determine that the HB scheme should carry on paying above the going rate simply because the scheme used to be more generous. This is unsustainable, and the argument of “hounding” someone from their home should be put in to perspective, if the property is deemed too expensive the state should not support this above those who manage their budgets to meet their expenses, without state aid. A lump sum scheme and one off payment to take everyone off the old schemes as a gesture could be considered. However there must be no optional element, all claims to be moved to LHA and one common scheme put in place.
LHA is a good scheme in principle. The Government has to accept that the cost of HB will continue to rise (especially in the current economic climate) and as it is not acceptable to refuse assistance to those in the private sector (unless there is an abundance of social sector housing) it is vital that the levels are correct and the policy in this area is consistent with other government departments. By removing all of the transitional schemes and keeping one policy, there will be savings in the overall benefit system.
The “top up” should be abolished, the HB scheme is there to pay a fair rental element, it should not be a “pocket money” provider. There is little evidence that tenants have bargained with landlords, it is simply a matter of luck as to whether the rent is above or below the LHA limit
2 Easy to access
Who should be the Gateway?
A simple benefit scheme with easily understood qualification rules should result in the system being more acceptable to the customer. The LA should act as the frontline agency for the other whole social security system. The LA would not necessarily be the assessing body for all benefits (although they could be) but they could take the responsibility for handling queries with the public for all “back room” processing agencies. This would need to be funded through the benefit administration grant, By taking away the direct customer access to the other agencies this could result in a massive overall saving, and real progress on targeting hard to reach groups. LA’s especially Unitary Council’s have access to a range of data across their services to identify those that could be targeted for welfare benefits, sensitively and comprehensively.
The LA tier to administer the joined up service should be the HB authority (District, Borough and Unitary Authorities) – not the County Council in two tier systems as these bodies are more remote and are not directly involved in mainstream welfare benefits. With the LA taking responsibility this will deliver sharper accountability.
The track record of the HB authorities is evidence that the more localised administrations can rise to the challenge of improving performance and quality in dealing with welfare benefits. Over the past 10 years initiatives, changes and demands have been made of LA benefit services. All these challenges have been met; the notable ones being the Verification Framework, the Performance Framework, inspections, league tables, stringent Performance Indicators and robust auditing processes. This should be contrasted with the continued “efficiency” changes in Job Centre Plus (JC+) with the latest being the change to the LAID input document. This has instantly created delays in issuing these to LA’s therefore increasing the time that customers have to wait for HB to be awarded. Yet again LAs are issuing claim forms to speed the process up, which defeats the object of the “one stop” in work project. The majority of HB delays are caused by waiting for other agencies, it needs to be slicker and one entry point via the LA would address this.
Suggestions to improve the JC+ experience for customers and improve efficiency in the short term:
Customers who sign on and then find work on the whole start work within one month of the job interview / offer. However in some employment situations where checks that have to be carried out (CRB /Financial) this could take some time (2-3 months). In these instances it would be more efficient for the person not to have to attend the “signing on and job search activity” interview. Once a start date is established the customer could be issued a one off “final payment” through to the date they will stop claiming and the case can be closed. Only should the job then fall through would it be necessary to start it up again from the paid up date. This would save unnecessary interview time, processing and payment runs and would further improve the experience for the customer.
Customers should, after their initial interview, be able to “sign on” electronically and list their job search activity, being only required to attend JC+ if they have been unsuccessful in obtaining work at trigger points. This again would reduce unnecessary trips to the JC+, for the majority of people who want to find work and have the internet access. It would free advisors to give more time to those who do need assistance and help in improving skills or work seeking.
The JC+ initial interview could take place at the LA; the JC+ staff could be attached to the LA for this function. This would deliver a “joined up” service under one roof at the heart of the community. This could be co-ordinated by the LA and fed in to the back office of centralised agencies and government departments
Single Claim form
The LA, DWP and HMRC should move forward to a single mandatory claim form. The form should be available in hard copy and electronic format.
The IRRV accepts that electronic intelligent forms are the future and these should be developed for all benefits as a single standard form. The DWP should commission one standard specification regardless of the software supplier that actually provides the form to the LA
3 Easy to Administer
Claim Database / Data Sharing
A claimant database should be available for all welfare benefits. This should be available to all agencies and LAs to ensure they are aware of all benefits that are claimed, the dates and amounts and other factors. If this is introduced fraud and error will be reduced and the claims process will be more efficient.
The DWP are currently working with partners to develop a mapping process which would include a customer database, this should be developed to its fullest potential and made available to all agencies and LAs thus resulting in efficiency and accuracy savings. If all parties can update their information and it is kept up to date it would be an excellent resource. Of course protocols must be developed to deal with the creation, amendment and deletion of records however one database rather than several along with effective sharing of data will cut down queries and error.
The database should not only include details of the benefits awarded, but should flag where possible other entitlements that may be missing and also details of overpayments to assist with tracking and recovery from transient claimants.
Benefit extended periods
A person entering work after a long period on benefit will need a time to adjust; the current one month period is not enough as it takes longer to adjust. The extended payment period should run for 13 weeks after the person starts work, within three months the income will settle down and the emergency tax codes will be replaced. The claimant can use the first three months to pay off other debts, purchase necessary clothing or equipment to assist the return to work. If the return to work is supported, the claimant is more likely to remain employed and not abandon it. Of course it is important that this is not abused and should only be applicable to those that have not been at work for say two years plus.
For those who have had shorter periods of unemployment their position is likely to be better and they are more able to adjust following one a month extended period.
4 Robust to avoid fraud / over claiming
Verification at the point of entry should be mandatory and bound in statute. The old HB scheme had a robust framework for verification that has never been adopted by other agencies. It is absolutely vital that this (or a modern version) is made compulsory and consistently applied across all benefit agencies. For those who have difficulty with accessing local facilities, HB officers can operate in a mobile mode to ensure that a person’s household details are as stated and provide on the spot verification thus reducing the need for the claimant to be parted from valuable personal papers.
There should be no reason to continually supply the same evidence to different agencies. If the LA is enabled to take information to process all means tested benefits this would be collected and verified once. In conjunction with CIS and the claimant database that is mentioned above all existing state benefits could be known and corroborated, leaving only the variables. HMRC records for tax credits and gross / net income details could also be made available allowing current employer records that are submitted to the tax office annually to be verified. If employers could electronically upload salaries and tax data half yearly this data would be even more reliable, assisting with data matching, picking up potential changes and targeting take up and of course reducing fraud and error.
Through more evidence and income being available it should be possible to process accurately very quickly a person’s entitlement. It would reduce a lot of cost through bureaucracy and administrative waste.
Recovery of Overpayments from Partners
Almost all debt is recognised as joint and several in the courts. However HB has the peculiarity that you cannot recover from a partner who may have been equally culpable because they are no longer the partner of the claimant to whom the overpayment was made. You can only do so if you can establish their involvement and make a new decision in order to hold them liable and then recover. This is expensive and slow as the decision could be appealed and if it is an older overpayment it could be difficult to establish the position again. Despite the recent changes in the law and guidance in this area it still needs looking at to bring it in line with the general position of debt and liabilities in other courts and proceedings.
Fraud Administration is an area of work that will benefit from a joined up approach. All benefit areas investigated in one place, with excellent data sharing links between the HMRC, DWP, LAs and all agencies feeding into the “claimant database” will deliver a effective and efficient service. The Institute is not suggesting the creation of a separate central agency but the formulation a body owned by the local authorities and operating locally under a flexible framework. Such a model already exists in the Alicante Region of Spain where a company which is owned by the local authorities delivers local services and re-invests surpluses in the community. As part of the funding package to make this approach work, the fraud subsidy should be reintroduced. It is essential that anti fraud resources are available and appropriate. Removing the direct funding and “reward” scheme has reduced the importance of fraud and over time could reduce effectiveness in detecting “in claim” fraud. The project could be approached on an “invest to save” basis as the Institute has no doubt that such scheme would produce massive dividends for the public purse.
5. Structural Changes
One of the requirements of an easy to understand scheme is that it is perceived as fair. There are various elements in the current scheme that would appear to contradict fairness (and in some instances other policies) and these should be reviewed and reconsidered;
Notional Income from Capital
The current rules require weekly income of £1 for every £250 (or £1 for every £500 for pensioners) over the threshold to be taken in to account. These should be in line with current investment yields and not age related. The calculation of the tariff income has not altered (with exception of pensioners) since 1987, this should be reconsidered. Benefit claimants are unlikely to play the stock market and the likelihood of a return on capital above the threshold of 20% is unlikely.
There is an unfair bias in the system towards net income of former partners through higher income disregards. The disregard in full of maintenance payments has resulted in great disparity affecting a number of claimants. There are situations where some families have income taken in to account in full, and others do not.
For example Household A has an income of £300.00 per week, but pay out £75 per week to a former partner in child support. This family including children are assessed on the full £300.00.
Household B has an income of 375.00 per week but as £75.00 is disregarded income as maintenance received they are assessed as having £300.00 per week and therefore exactly the same amount of Housing benefit as the other family. The family who receive the maintenance are in a better financial position. As second families are quite common and children in those second families are often present, this discrepancy in treatment is a factor in continuing child poverty in the families where the absent parent is meeting their financial responsibility toward their children but the state is favouring the first family over the second.
A partial disregard from both amounts should be awarded to correct this situation.
Non Dependant Deductions:
The principle of a disregard where there are additional adults (non partner) in the household is sound as it reflects that “keep” is paid by the large majority of these people. However the level of the deductions has increased disproportionately over the last few years with the highest being nearly £50.00 per week. In practice this is not reflective of the income that is received by the tenant and can lead to some distressing circumstances. The deductions should be reconsidered and “fixed”, with periodic reviews based on research of the levels that are truly paid. There is no need to disregard these entirely nor to introduce complex bands. Simple “working” and “not working” should be sufficient to apply a reasonable figure
The current system is at odds with the overall national position of pension ages rising. The welfare benefit system has reduced all pensioners to 60 years of age, despite our rising population age and pension ages moving towards 70. Currently a 40 year old will have to work until they are 67 before they will qualify for a pension a rise of 2 years for men and 7 for women, yet the welfare scheme has decided that everyone becomes a pensioner at age 60 for pension credit and applicable amounts. This is an anomaly which must be rectified or the system could collapse. A 60 year old cannot have a much higher living cost than a 59 year old, and as they are expected to carry on working this must be changed. The ages should follow the SRP graduated system, which will not be complicated but will allow the welfare scheme to treat people consistently. As the majority of benefit customers are “pensioners” this could produce significant savings.
The young claimants lower applicable amounts should be scrapped, 18- pension age (as determined above) should be the band, it is wrong to suggest that under 25’s living independently have lower living costs than other 25 year olds.
Claimants and partners should be joint claimants and not need to be swapped around to ensure the best outcome of an applicable amount. This is bureaucratic nonsense as the LA has to go through the effort of changing all records when it should be automatic and based on the whole circumstances.
Phil Adlard, Ed Bowen, Tim Brierley, Barbara Culverhouse, Tracy Crowe, David Graaff, Julie Holden, David Magor, Alistair McNair, Maureen Neave, Helen Robertson, Lee Sirdifield, Kevin Stewart.
The contributors are drawn from the Institute of Revenues Rating and Valuation’s Benefit Faculty Board, the board consists mainly of current benefit practitioners, throughout the Country. A number of them are LGA advisors.