Scottish Social Security Consortium

Minutes of meeting 24 November 2003

Present:
Martin Barnes Child Poverty Action Group
Abigail Bremner Citizens Advice Scotland
Susan Drew Highland Advice and Information Network
Pat Gallagher Age Concern Scotland
Lindsay Isaacs Citizens Advice Scotland
Judith Paterson Child Poverty Action Group in Scotland
Susan Rew One Parent Families Scotland
Derek Sinclair Contact A Family
Angela Toal The Action Group
Jim Pearson Alzheimer's Scotland

Apologies:
Alice Jarvie Help The Aged
Stephanie Millar Update
Craig Mackenzie One Plus

Housing Benefit Pathfinders

Alan Sinclair, Benefits Manager at City of Edinburgh Council, spoke to the group about the Housing Benefit pathfinder that would be taking place in Edinburgh next year.

The launch date for the pathfinder was 9th February 2004, and Edinburgh City had decided to go for a 'big bang' approach. This meant that all private sector HB claimants would be moved onto the new system on that date. This would involve a reassessing all rents in line with the new procedures.

The basics of the pathfinder project was as follows:

• A Local Housing Allowance (LHA), based on average rents in specific areas, would be paid to tenants. Where the claimant rented a property which was more expensive than this allowance, they would have to pay the difference. Where the rent was less than the allowance, the claimant could keep the difference (which would not be counted as income for the purpose of calculating entitlement to other benefits).
  
  
• A claimant's entitlement to LHA would be based on household size (and the area in which they were renting). There would be an entitlement to one bedroom for any adult couple; any other adult aged 16 or over; any two children under 10; any two children of the same sex aged 15 or under; or any other child. In addition, there would be entitlement to further shared rooms on the following basis – one to three in a household would be entitled to one living room; households of four to six would be entitled to two living rooms; and households of seven or more would be entitled to three. All households were entitled to a kitchen and bathroom.
  
  
• The LHA would additionally be calculated on the basis of the averages in a 'Broad Rental Market Area' – there would be four such areas in Edinburgh. Average rents would be calculated and published on a monthly basis and claimants would be entitled to a LHA on the basis of the published rates during the month in which they claimed HB. Broad Rental Market Areas would be defined by postcode, and Rent Officers would be responsible for calculating the monthly LHA rate (in a manner closely based on the formula used to set local reference rents).
  
  
• HB would generally be paid directly to the tenant – except where the tenant is defined as vulnerable by the local authority. Guidance about determining whether someone was vulnerable would be drawn up by the DWP and was likely to include factors such as substance abuse issues, mental health problems and serious illness. In addition, rent would be paid to the landlord where there was a previous history of not paying rent or rent arrears of eight weeks or more. Edinburgh City may be paying rent to landlords for up to six months after the introduction of the new scheme as each case would have to be reconsidered on its merits. Where there was a surplus entitlement (where rent less than the LHA), the difference was required to be paid to tenants.

The following groups would be exempt from the new system:

• Public sector tenants (although the Government intended the scheme to eventually cover this group too). Currently 90% of housing association claimants have HB paid directly to their landlord, and HB accounts for 80% of council rents (a block transfer between departments).
• 'Protected' cases – eg. supported housing provided by charities and voluntary organisations.
• Pre-1989 tenancies
• 'Exceptional' cases – such as caravans and boats, and including bed and breakfast accommodation.
• Cases where a substantial part of the rent is for board and attendance – ie. residential care.

The Government's aims in introducing this new scheme are as follows:

• Fairness – the new scheme would pay the same amount to tenants with similar circumstances (as opposed to the current, rent-based scheme, where tenants in similar circumstances could be paid very different amounts on the basis of the properties they rented).
• Choice – tenants could 'choose' to pay more for a bigger, better property, or could get additional income by renting a smaller, less attractive property.
• Transparency – Published LHAs would mean tenants would know how much HB they would be entitled to in advance. The current system of pre-tenancy determinations was too slow and little used. This was intended to act as a work incentive as well as people would know how much they would get if they moved into work.
• Personal responsibility – by paying HB directly to the claimant, the Government envisaged that people would take more responsibility for budgeting (research showed that, currently, long-term HB recipients did not know how much their rent was and might describe themselves as not paying rent, rather than paying rent but in receipt of HB).
• Simplicity – the new system would not require all claims to be referred to rent officers, so would cut out a stage in the process.

Grainia Long from Shelter Scotland outlined some of the concerns Shelter had with the new proposals. She noted that 43% of Shelter clients reported problems with their Housing Benefit claims and stated that Shelter generally welcomed the pathfinder reforms, especially the fact that it would be more transparent and simpler to administer and understand. However, the organisation had the following concerns:

• Requiring that payment of HB was made directly to tenants was taking away choice rather than increasing it.
• Access to a bank account was a particular problem in Scotland, with 30% of those on the lowest incomes not currently having one. [Alan Sinclair noted that the local authority had had discussions with banks regarding basic bank accounts, which would be the Government's preferred option for tenants as rent could be paid by standing order. HB could be paid into a Post Office card account.The council was very keen to prevent the use of cheque cashing services which charged high fees.]
• Debt issues might create further problems for claimants – especially were HB payments were eaten up by overdrafts or obligations to other creditors.
• Where HB was paid to the earner rather than the carer, it could not be assumed that it would be used for the benefit of the whole household.
• Problems with rent restrictions caused by local reference rents and the single room rent would remain, as would administrative problems caused by the introduction of the Verification Framework.
• Furthermore, HB would still be paid four weeks in arrears and would still be means-tested, leading to an inevitable poverty trap,

Further issues discussed by the group included:

• Existing problems with the private rented sector. Grainia Long noted that there were already well-known problems with the way the private rented sector worked, which were not being addressed in these proposals. The proposals assumed that the private rented sector worked well, with a selection of affordable property available, and that it was a discrete sector. The reality was that the private sector did not operate well and, further, tenants may move in and out of private/public accommodation during the course of their claim.
• There were concerns that the proposals would further discourage private sector landlords from renting to benefits claimants. Alan Sinclair noted that some English pathfinder local authorities were reporting that landlords were issuing notices terminating tenancies in advance of the introduction of the new scheme. This had not been the case in Edinburgh yet, and the council was working closely with landlords to inform them of the plans.
• Housing Benefit was a reserved issue and was being treated as operating entirely separately from issues such as housing policy and homelessness, both of which were devolved and were being tackled under a separate policy agenda.
• Other changes were taking place in relation to HB which would simplify the claims process. Benefit periods had already been abolished for pensioners and would be abolished for working age claimants in April 2004. This meant that moving into work would be treated as a change in circumstances rather than requiring a new claim. Fraud efforts would also be redirected to claimants judged as being of highest risk.
• In relation to vulnerable tenants, there would be a very complicated interaction between different organisations, which may lead to confusion. The new arrangements for supporting people could mean that a tenant's housing provider and support provider could be different organisations with different definitions of vulnerable. Add to this the local authority's definition, which could be different again. Further, there was evidence that housing officers did not see vulnerability in the same terms as eg. advice providers and social workers might.
• Edinburgh City already had problems with backlogs of HB claims due to computer problems earlier in the year. However, as the new system was simpler to administer, Alan Sinclair did not see its introduction as adding to the problem. He noted that IT providers had received significant money from the Government to adapt their systems to the new procedures. Several different IT systems were being tested across the nine pathfinders.

Minutes of the previous meeting

Martin Barnes noted discussions at the last meeting about Fuel Direct and a campaign to simplify application and promote it as an alternative to pre-payment meters. This was something that CPAG may be interested in taking up too.

Abi - I did refer a case to Mike, but I don't know at this point whether there's any chance of him taking it forward. Could we leave it out of the minutes for now?

Information exchange

Derek Sinclair noted that the Inland Revenue had published guidance in relation to recovering overpayments of tax credits. The group commented on the shoddiness of the consultation process, including the fact the draft guidance had been removed from the IR's website. Judith noted that some changes had been made to the final policy, including more information about in-year recovery. The guidance in relation to top-up payments (where recovering in-year overpayments was causing hardship) was unclear. It appeared from the way the guidance was worded that these payments would form part of the amount that could be recovered at the end of the year. There was also no publicity about the availability of these payments and it was unclear how the amount of the payment was calculated.

The group noted in general that the Inland Revenue seemed geared up to dealing with overpayment problems at the end of the year, rather than when they happened. Indeed, it appeared that the IR did not consider the issue of 'official error' unless their miscalculation created a problem which could not be reconciled at the end of the year. The group further raised concerns about 'official error' and the chaos created during the introduction of tax credits, which meant many claimants genuinely did not understand what they should be receiving.

CPAG was seeking a meeting with the Paymaster General to address concerns about tax credit implementation. Martin Barnes noted that the Inland Revenue was the subject of a broader Treasury review which might see it restructured. There may also be problems with the continuation of IT support services, which would have a likely knock-on effect to end-of-year reassessments.

Susan Drew noted that the Water Customer Consultation Panel (the consumer body for the restructured water industry in Scotland) had been examining the issue of water charges. It had recommended to the Scottish Parliament that the existing water relief scheme for low income families was extended in the short term and that, in the longer term, steps had to be taken to address affordability at a UK-wide level. A report had been commissioned to look at affordability of water and sewerage charges which had come up with a 'water poverty' definition akin to fuel poverty. More information was available at www.watercustomer.org.uk.

Jim Pearson noted an issue regarding unequal treatment of capital under Pension Credit. People who received the Guarantee Credit component were passported to full Housing and Council Tax Benefit. However, those who only got the Savings Credit component were subject to normal capital cut-off rules, meaning that if they had more than £16,000 capital, they were liable for full rent. In reality, a minor difference in income of less than a pound could mean that one person got full HB while another was liable for full rent. This was obviously unequal treatment. The matter had also been raised by Perth CAB – who received a response from the minister responsible saying that the Government did not intend to change the current rules because no one was worse off as a result (ie. people will over £16,000 capital would not have been able to claim HB under previous rules either).

There was also an issue round Severe Disablement Allowance and Pension Credit. A number of pensioners may currently be claiming SDA rather than Retirement Pension because it would have made them better off previously. However, SDA does not count as income for the purposes of claiming the Savings Credit element. Therefore these people may now be better off claiming Retirement Pension as any drop in income may be made up by guarantee credit and entitlement will count towards Savings Credit. CAS was currently waiting for a response from the Pension Service on this issue.

Martin Barnes highlighted that the DWP were due to release a report into child poverty. This may set precedents in the way they deal with pensioner poverty and poverty among disabled people. CPAG had been campaigning for an increase in the support given to children of low income families of £5 per week. This would enable the Government to meet its poverty targets. However, they did not expect such an increase to feature in the Chancellor's pre-budget speech. CPAG did expect to see confirmation of plans to establish Child Trust Funds and extend educational allowances to encourage young people to stay on in education.

It was also noted that Danny Philips had now got a job at the Scottish Executive – therefore CPAG in Scotland was looking for a new manager.

Susan Drew noted that Rights Advice Scotland was a new organisation representing welfare rights workers in local authorities. She had attended their launch event and they seemed eager to work in partnership with others in the sector. It was not clear if membership would be limited to those working for local government.

ACTION: It was agreed that Abi Bremner would write to Rights Advice Scotland with an open invitation to attend a Scottish Social Security Consortium meeting to speak to members.

Judith Paterson reported that CPAG in Scotland were in the process of organising their second benefits and poverty conference. The provisional date was Friday 18th June. Ideas for seminar topics included:

• Developments in 'Activities for managing life' – new processes for determining entitlement to DLA
• Tax credits – with the focus on the annual review process, or the migration of Income Support claimants
• Housing Benefit – how to administer HB claims after benefit periods were removed, as there would still be reviews and different fraud procedures

ACTION: It was agreed to get a representative from the Inland Revenue Adjudicator's Office to speak at the next meeting about dealing with tax credit complaints. Abi Bremner and/or Judith Paterson would also do a review of tax credit overpayments.

Date of next meetings

Meeting dates for 2004 were agreed as follows:

Tuesday 17th February in CPAG offices in Glasgow
NOTE DATE CHANGE ABOVE
Thursday 6th May at CAS offices in Edinburgh
Tuesday 28th September at CPAG offices in Glasgow
Monday 22nd November at CAS offices in Edinburgh

All meetings would run from 1pm to approximately 3pm.

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For more information contact:
Judith Paterson
Child Poverty Action Group in Scotland,
Unit 9, Ladywell
94 Duke Street,
Glasgow G4 0UW
0141 552 3303
email jpaterson@cpagscotland.org.uk

Abigail Bremner
Citizens Advice Scotland
Spectrum House
2 Powderhall Road
Edinburgh EH7 4GB
0131 550 1000
email bremnera@cas.org.uk