What Does Welfare Reform Mean for East Sussex

What Does Welfare Reform Mean for East Sussex? Presentation to 2012 East Sussex Assembly 5 th July

From Politics to Devil in the Detail • Politically controversial. • Process happening in a particular context. • Key changes across a 9 year period: – ‘Salami slicing’. – Localisation. – 3 key transitions. • Responses, continuing and new.

Policy and Politics I • Partly cuts driven- £ 18 bn cut to help other departmental budgets. • Partly about concerns about inactive or ossified welfare state: – People not being incentivised to work. – Benefits not reflect changes in individual circumstances. – System not reflect changing society. • Will not be able to judge ‘success’ for a long time. • In terms of ‘fairness’, different conceptions and detail/ implementation questions. • Focus within this presentation is on the more clearly visible negative consequences.

Policy and Politics II • Forget about the benefits cap, that was about politics pure and simple. • Forget any simple and solid split between ‘benefit claimants’ and ‘hard working families’. – Many people in work claim means tested benefits or tax credits. – Many people in work claim disability related benefits. – People move in and out of work all the time. – It’s about families, not just individuals. • Protection for pensioners, unless you’re in an age gap relationship.

Context Going into the Reform Process • Ongoing economic issues affecting East Sussex: – 9, 900 people claiming JSA in East Sussex currently, twice the lowest level, though 1, 000 lower than the peak. – Not just about the stock of people out of work, but flow of people in and out of work. – 1900 people per month on average making new claim for JSA each month (Feb 2009 saw 3, 500 new claims). • East Sussex poverty; 19, 000 children live in poverty, 5, 700 in Hastings, 3, 200 in Wealden the most affluent district. • East Sussex ‘Squeezed’: – High employment, low wage economy, jobs may be insecure. – Stagnant wages. – High and differential inflation. – High house prices.

Impact Across the Changes • Reduced income and increased financial stresses and pressure on low income households who are often already struggling. • Pressure on basic household bills: – Rent/ mortgage. – Utilities. • Potential for debt and arrears. • Financial exclusion and potential for false economies within a household.

‘Salami Slicing’ • Series of often seemingly technical and small, but highly significant changes. • Tax credits example of April 2012; increase in number of hours have to work before can claim. • Range of changes to Housing Benefit picked up in presentation following. • Difficult to get at precise local figures, but consequences of tax credit changes will include: – Less encouragement to work. – Reduced income as people unable to increase hours.

Localisation: Key Changes • Social Fund and Council Tax Benefit abolished from April 2013. • Social Fund: – Crisis loans and Community Care Grants to be replaced by locally managed funds. – Budgeting loan to be replaced by ‘payments on account’ system. • Council Tax Benefit: – Locally determined. – Central grant, 10% reduction with requirement to protect older claimants.

Localisation: Consequences • East Sussex and districts working together to do a ‘mini Beveridge’, requiring: – Agreement of rules. – Setting up of system to decide on awards and process payments. – Communication with partners and potential claimants. • Council Tax Benefit replacement raises questions about: – Reduced income for local authorities. – Response to arrears.

Transition 1: Incapacity Benefit to Employment Support Allowance. • New claimants since 2008, transition since 2011, to conclude 2014. • Assess people on IB/ new claimants as fit for work, as needing support to prepare for work, and as unable to work. • Former group receive JSA. Latter two groups receive ESA, paid at higher rate than JSA. • Onto income based (means tested) ESA after one year.

The Impact of ESA • Potential numbers of people affected in East Sussex: – 4, 800 people going from claiming ESA to JSA, losing income as a result. – 1, 400 people likely to make successful appeals, support makes a difference. • Assessments subject to huge criticism, and large numbers of successful appeals: – Tick box system- mental health and fluctuating conditions dealt with poorly. – Straightforward mistakes and ‘horror stories’. • Reductions in income for some people who are long term unemployed who may struggle to find work. • Stress on often vulnerable people. • Potential health consequences.

Transition 2: Disability Living Allowance to Personal Independence Payment • New assessment for claimants in context of 20% cut in overall budget, only to affect people of working age. • Range of changes including: – Reassessment based on points system, and requirement to complete new form as part of transition. – Increased qualifying period. – End of life awards. – Requirement to inform of change of circumstances. • Uncertainty about where cuts will fall.

The Impact of PIP? • Financial loss to East Sussex residents and economy is substantial, as much as £ 19 m. • Numbers of people impacted upwards of 5, 400 people. • ‘Son of’ IB to ESA transition in terms of problems? – How well will the assessment process function? – Particular concerns about people with mental health problems. – Potential for high levels of appeals and burden on advice agencies. • Impact on vulnerable people could be severe. • Potential impact on purchase of care. • Damage ability of disabled people to work?

Transition 3: Universal Credit • Introduction from October 2013 to 2017. • Bringing together of all means tested benefits, (not including CTB) work related benefits, and tax credits. • Housing benefit abolished, includes housing element. • Calculated through range of components analogous to current benefits. • Reduced rate of withdrawal at lower incomes, higher rate of withdrawal at low to middle incomes- lower levels of maximum income for claimants. • Real time communication between HMRC and DWP. • Payment from two weekly to monthly. • Vast majority of applications to be made on line.

What will Universal Credit Mean? • Could mean rates of underclaiming fall, but reliance on online engagement is problematic. • Teething troubles will happen. • Housing Benefit issue picked up by next presentation. • Impact on those at upper end of those claiming tax credits. • Deliberate challenge to financial capability being set by government, learn to budget as those in work. • Overall situation, possibly less money, responsible for more and a longer time frame to manage.

Challenges in Responding. • Advice sector critical role, and likely to be burdened in playing it. • Key themes: – Early intervention through partnership working. – ‘Business’ cases for funding in difficult environment. • Information, to frontline staff and managers, and, critically, to people affected. • Crisis responses to people with urgent needs. • Financial capability, and development of product responses to back that up. • Identifying and bearing witness to the impact. • ‘Pessimism of the intellect, optimism of the will’.