Welfare Reform and The Next Five Years

We simplify the welfare system

Housekeeping

www.policyinpractice.co.uk

1. Audio check 2. Please ask questions3. Finish by 11:304. Webinar recording5. Next steps

Today’s speakers

Paul HowarthWelfare Reform Club

Deven GhelaniPolicy in Practice

About Paul Howarth

• Worked for DWP for 38 years• Most of career on welfare benefits policy

and delivery• Worked with LAs on UC pilots, CTRS and

quality assurance of welfare reform programmes


About Deven Ghelani

• Director of Policy in Practice and the Welfare Reform Club

• Expert on welfare policy, in particular the recent welfare reforms

• Part of the team that developed Universal Credit at the Centre for Social Justice

• Writes on welfare policy, government spending and employment.


About Welfare Reform Club

• Founded by Paul Howarth, Malcolm Gardner and Deven Ghelani in 2012

• Helps local authorities to implement common-sense positive solutions

• Helps citizens to lead independent, secure lives

• Visionary Network

www.welfarereformclub.net

About Policy in Practice

Consultancy

SoftwarePolicy


Today’s Agenda

1. Welfare cuts and their likely impact on your residents

2. Changing behaviour and culture3. Your role as a local authority


The Context£12bn of welfare savings Universal Credit

… and what you can do about it…www.policyinpractice.co.uk

Finding the £12 billion

Paul Howarth - Welfare Reform Club

Contents

• What is the mandate?• Finding the £12bn by 2017/18

• The story so far• Manifesto commitments• Easier options• More difficult options• Really hard options

• Conclusion

What is the mandate?

• Press on with welfare reform• Implement manifesto commitments• Cut the welfare bill by £12bn in two years• DWP want behavioural change rather than salami

slicing• So attack benefit dependency and benefit tourism• Even more emphasis on getting people into work• Roll-out of Universal Credit• But ‘One Nation’ approach may have some moderating

impact

Finding the £12bn – the story so far

• “Easy” pickings already taken• Major cuts in last Parliament - £15bn if exclude

indexing measures (£25.8bn gross) though not all realised in practice

• Welfare spending reducing as a proportion of GDP but still growing in real terms - £220bn in 2015/16

• Not touching state pensions and universal pension benefits (about £95bn) so 10% of working age budget to be found for savings

• About £1.2bn found so far so only £10bn+ to go!

Finding the £12bn – manifesto commitments

• £1.0bn: freeze most working-age benefits in 16–17 and 17–18 – 1.4% real cut under OBR inflation forecasts; affects 11 million families

• £0.1bn: reduce benefits cap from £26k to £23k – 24k families already capped lose another £3k per year; 70k other workless families lose less – evidence from current cap suggests: minority responded by moving into work; very few responded by moving to lower-rent property

• £0.1bn: remove Housing Benefit from 18-21 yr-old JSA claimants – about 20k affected – strengthen work incentives

Finding the £12bn – the ‘easier’ options

• Get more people into work? Good record so far • But looking for cash cuts - employment forecasts already

accounted for• Reduce fraud and error – easy politically but difficult in

practice, and UC savings already accounted for• Benefit tourism – unlikely to save very much in the short-term• Overall welfare cap – sets a limit on overall spending but

doesn’t help find the specific areas to cut• Implement Incapacity Benefit/ESA cuts already announced

but not new savings• Some of these areas may feature in the eventual £12bn story

but if so it won’t be very convincing!

Reducing fraud and error

Benefit tourism

• Benefits already restricted for EU jobseekers• Now trying to reduce the financial incentive for lower-

paid, lower- skilled workers to come to Britain by negotiating:

Four year period before EU migrants can claim tax credits and Child Benefit. Gradual take-on means savings slow to build upEnd receipt of Child Benefit and child tax credit if an EU migrant’s child is living abroadFurther restrictions on jobseekers

• Not likely to achieve a lot in savings over next two years

Reducing the £12bn – more difficult optionsChanging behaviour

• Housing Benefit expenditure still increasing despite cuts (because rents increasing more than inflation and more low paid workers getting HB)

• Remove HB for more young people under 25s? More than just JSA?

• Cut HB by 10% for all? (Tried in 2010, JSA claimants after 12 months, but dropped – savings estimated then at £100m)

• Increase DHP budget – have been a good fallback• Benefit penalties for addicted claimants who refuse

treatment - signalled in the manifesto• £5bn: reducing child element of child tax credit / universal

credit by 30% (back to its real 2003–04 level) – front runner despite impact on families and children

Finding the £12bn – very hard options

• £1½bn: taxing universal disability benefits

• £5bn: abolishing Child Benefit and compensating low-income families through Universal Credit

• But David Cameron/No 10 have made statements and commitments that Child Benefit will not be cut so very awkward politically

Conclusion

• The reductions in welfare spend in last five years were difficult and not all have been realised yet

• We may end up with a narrative about the £12bn which includes some elements which shoudn’t really count

• Most realistic option is cutting tax credits – added bonus of attacking a flagship Labour policy from 2003

• Housing Benefit likely to feature – possibly more localisation, particularly Discretionary Housing Payments

Would you like to see an analysis of welfare impacts,

post budget?


Universal Credit: the story so far

• National Audit Office: A Progress update

• The impact on pockets and prospects in aggregate and at a household level

• What Leeds and Birmingham are doing about it


Universal Credit: progress update 24

Slow and Steady: De-risking timetables

Universal Credit caseload, millions

Universal Credit: progress update 25

Rapid scaling up: The digital service

Timetable for digital development

What do you consider will be your biggest challenge

with welfare reform?


Pockets

• £16 / month • 3.1m people • 2.1m people

• The impact varies by income level and household type

• households gain through higher take-up, and improved work incentives.

Prospects

• 1-2.5m hrs / week• 1.5m 14%• 2.1m 4%

• Middle earners typically see a small fall in incentives

• Low earners and the unemployed see a much greater increase

Places

• Local support services and USDL

• What is your role?

• We are working with Inclusion to evaluate USDL.

• The DWP will begin to share what is working throughout 2015

Universal Credit and anti-poverty strategies


What does this mean for you? and what you can do about it? • Local Authorities face lots of difficult choices, overseeing £12bn of cuts

with reforms aimed at changing behaviour. The combined impact on households is changing, complex and confusing.

• The risk is that households won't get the right support – both financial support and support toward independence.

• Without both, there won't be enough available to go around. This will cost the council through impacts on other services.

• You need to:• explain a complex picture to cabinet • target and tailor support effectively (SHBE)• Have a tangible impact on behaviour


Steve Carey, Leeds City Council

I can’t see whether the people being clobbered by reductions in council tax support, or under-occupation are the same people that have been clobbered by other reforms.

Explain a complex picture to CabinetYou need to understand the cumulative impact of current and future welfare changes…


http://policyinpractice.co.uk/case_study/welfare_reform_impact_assessment_leeds/

# of

households affected by the benefit

cap

# of households affected by

UOC


LHA cap


CTRS

# of households with lower

UC entitlement

# of households with higher

UC entitlement

# of households affected by multiple reforms

No impact 1 reform 2 reforms

3 reforms

4 reforms

AA1 0 0 7 20 9 16 8 21 7 0 0AA4 1 0 59 38 21 25 10 44 25 7 0AA11 1 19 45 99 68 61 47 113 47 6 0AA16 0 0 0 0 0 1 1 0 0 0 0AB1 0 16 25 74 30 46 36 70 34 2 0AB2 2 39 89 224 37 123 109 189 96 2 0AB3 0 31 41 140 38 88 78 128 55 3 0AB4 0 75 166 341 106 190 148 327 163 9 0AB5 3 129 73 336 136 180 150 318 155 14 0AB6 14 266 630 1355 406 899 834 1354 575 45 0AB7 17 629 346 1839 780 1038 822 1636 838 83 0AB8 43 442 1083 2662 1140 1306 912 2119 1346 146 4AB9 51 968 979 3466 1481 1614 1411 3085 1676 137 5

Who has been impacted by

reforms to date?

What will be the impact of

Universal Credit?

Who has been hit by multiple reforms?

The depth of our analysis goes even deeper, to

household level

Explain a complex picture to CabinetDetailed picture of welfare reform at household level


• Universal Credit with full transitional protection would bring the local economy £1.6m each month – an additional £30/month for each working age household on average.

• Of the self-employed, only 15% have earnings above their Minimum Income Floor which means that 85% of self-employed households could be subject to the Minimum Income Floor under UC and see a fall in their income.

• A Benefit Cap of £23k would effectively double the number of capped households

• There are 2,518 18-21 year olds on housing benefit

Some key findings in one large city:


Our approach:Using local data insights effectively

SHBE

Universal Benefit Calculator

See the impact of specific and cumulative reforms at an aggregate and a household level

A detailed impact assessment for Cabinet members that informs target and tailored local welfare support

Any Questions

?


Better Outcomes: A better Council Tax Scheme and operational plan for UC

The work on the likely impact of Universal Credit is forming part of the Council’s action plan in preparing for Universal Credit and is expected to continue to influence the approach we take as UC rolls out.

The council has now approved an innovative Council Tax Support scheme aimed at supporting jobseekers into work. The scheme is based on the analysis of schemes provided by PiP.


VS

Support that leads to savings:Targeted and Tailored Support – letters that engage people


How do you show the impact to the person in a meaningful way?

JSAChild Tax

Credit

ESAHousing Benefit

Working Tax Credit

Income Support

Engage people and change behaviour


https://www.youtube.com/watch?v=E0n3j_Hd6eE

Any Questions?


What we covered today

1. Welfare cuts and their likely impact on your residents

2. Changing behaviour and culture3. Your role as a local authority


Next Steps (1)

We’ll email you:• This webinar recording • Leeds CC case study


Next Steps (2)Please register for our next webinars:

1. How Can Housing Associations Respond to Another Round of Welfare Reforms?Wed 1 July 10:30 to 11:30

2. Policy in Practice software demoThurs 9 July 10:30 to 11:30

Register www.policyinpractice.co.uk/events


Deven [email protected]

@deven_ghelaniwww.policyinpractice.co.uk

Thank you

Paul [email protected]

www.welfarereformclub.net

Welfare Reform and The Next Five Years

Government & Nonprofit

Transcript of Welfare Reform and The Next Five Years