6 Implementation |
111. In this chapter we look at some of the practical
implementation issues for welfare reform including staffing and
administration funding of new systems by local authorities. We
discuss measures being taken to detect housing fraud under Universal
Credit (UC) as well as the readiness of IT systems and the move
towards claiming benefits digitally. Finally, we examine the main
financial risks to local authorities of the welfare changes.
Funding for administration
112. Some witnesses raised the issue of what
they saw as lack of certainty over funding arrangements. The Government
has provided funding to local authorities in relation to the administration
of individual programmes such as Council Tax Support (CTS) and,
as we have noted, the localised Social Fund provision.
The funding provided to local authorities from DWP for the administration
of benefitsthe Benefit Administration Grantis being
reduced as the result of benefits moving into UC. Councils told
us that there would be an additional overall cost to local authorities,
not covered by these grants, from the need to made several significant
changes at once and provide general support for claimants coping
with the changes. The Association of North East Councils said
that local authorities could be "penalised" through
the loss of the Housing Benefit Administration Grant resulting
from responsibility for housing benefit moving to DWP.
It said that there would be a "residual cost to councils"
of providing advice and support following the separation of CTS
and housing benefit.
Sutton Council expressed concern that funding was being removed
by DWP while demand for housing and council tax benefits were
said that, "despite assurances that funding for 2013-14 would
remain comparable to 2012-13", it had been told that the
DWP administration grant for Sutton would be reduced by £81,000.
The council told us that it found the increasing caseload it was
experiencing and the cut in funding "difficult to reconcile".
113. Newham Council said that the funding provided
to set up and administer local CTB schemes had "only been
sufficient to cover software changes and consultation".
The council was concerned that council officers' time in developing
the schemes had not been taken into account when calculating the
funding level and said that "no clarity has been offered
over the level of funding that will be provided in future years".
Newham Council told us that its administration grant from DWP
had been cut by 10 per cent and gave two examples of "unfunded
administration costs" for local authorities:
- communications between local authorities and
their tenants, and
- the cost of managing appeals where benefits decisions
114. Other councils, including Nottingham City
Council, called for a new administration grant for local authorities
to manage demand,
while Citizens Advice told us that:
As regards advice on UC, the overall funding scenario
is not encouraging as local advice agenciesincluding our
bureauxare heavily dependent on [local authority] funding.
Waverley Borough Council said that, because the Benefit
Administration Grant was allocated annually and no indication
had been given about future grants, there was uncertainty over
funding. It said that it also saw an increased risk of fraud and
error from managing a "declining service with uncertain funding
115. The withdrawal of one element
of benefit administrationfor Housing Benefitfrom
local authorities will not proportionately reduce their administrative
costs. In addition, the level of local authority involvement in
administering the housing element of Universal Credit has not
yet been set out by the Department for Work and Pensions. It therefore
does not make sense to withdraw the Housing Benefit Administration
Grant in its entirety until the actual cost to local authorities
of administering Universal Credit is known. We recommend that
the Department for Work and Pensions provide local authorities
with certainty over the level of Benefit Administration Grant
that they will receive until the end of the Spending Review period.
The level of the grant should accurately reflect the level of
cost to local authorities of developing and administering the
Local authority staff
116. One of the aims of the reforms is to "simplify
the system, making it easier for people to understand, and easier
and cheaper for staff to administer".
The Welfare Reform Club, a group of welfare reform consultants,
pointed out that in order to keep UC simple, it would not be possible
to build in systems to deal with all the different needs of claimants,
and that this would "inevitably" require local authorities
to "provide more discretionary help, with cash-limited budgets,
for those with exceptional and unusual requirements".
117. Concerns have been raised about the capacity
of local authorities and advice charities to fulfil this need
and manage the volume of enquiries, expected by many of our witnesses
to rise significantly as a result of the welfare changes. Citizens
Advice said that, despite its efforts to increase productivity,
without additional funding they would be unable to meet demand
for advice which would create "significant pressures on [local
authorities] for advice and help with the consequences of not
They told us that:
Our experience is that major changes lead to a large
increase in demand for advice in the short to medium term. Given
the scale of the changes, we are expecting an unprecedented increase
in demand for advice.
118. Concerns about the ability of local authorities
and advice organisations to cover the additional demand on their
services as the changes are introduced and beyond, focused on
three areas. First, the availability of staff within local authorities
to handle queries: When housing benefit migrates to UC at DWP,
the staff currently based in local government will have to move.
The second concern was that staff and their local authority employers
were not being given clear information about future employment
prospects during implementation of the reforms and in the period
following implementation. The third concern was that local authority
staff with the experience and skills needed to implement the changes
would respond to a lack of clarity about their job prospects by
leaving before implementation could be completed.
119. In examining these concerns, we kept in
mind the expectation that increased demand for local authority
staff to provide services during the transition period means that
the management of staffing levels in local authorities will be
particularly important. We were told that there was a lack of
clarity for local authority staff about their employment prospects
over the implementation period and beyond because of the migration
of housing benefit, currently administered by local authority
housing departments, into UC, in which the role of local authorities
Blackpool Council told us that:
we have staff who work on housing benefits who know
that their jobs are at risk over the transitional period through
to 2017. They are told that TUPE will not apply; they will not
be able to transfer to equivalent jobs at the DWP. There is a
general lack of clarification.
120. Thanet District Council said that this would
have a negative effect on councils. It told us that because DWP
would not be using TUPE regulations
to transfer staff whose roles would be migrated into UC, councils
would have to "manage potentially substantial redundancy
including the Local Government Association were concerned that
experienced staff would leave in advance of the introduction of
UC as a result of this uncertainty.
Blackpool Council said that:
Local authorities are already seeing a migration
of Housing Benefit staff due to the introduction of Universal
Credit. If this continues and the timetable for Universal Credit
slips, there is the real possibility that authorities will not
have enough resources left to deal with residual work.
Hull City Council said that the lack of clarity about
the future role of local authorities in administering UC had led
to "a large staff turnover as staff feel that the role of
Benefit Assessor has a finite lifespan. This has also made recruitment
to vacant posts problematic".
121. When we asked the Minister what communications
there had been between DWP and local authorities about the consequences
for local authority staffing of the changes, Lord Freud said that,
in preparation for UC, DWP was "putting down the main elements
in some detail on which one can do that kind of detailed planning,
and there is time to do that detailed planning".
He added that "I suspect there will be some re-deployment
by local authorities of their total staff. We don't know the exact
122. Local authority staff as
well as the large numbers of staff of contractors used by local
authorities affected by the changes to welfare need certainty
about whether they will be able to retain their current jobs or
have the opportunity to transfer into a different role. The danger
of leaving staff in the dark about the forthcoming changes is
that some of the most employable of them will decide to leave
before the reforms come into effect. This could put claimants
at risk of receiving a reduced service and local authorities with
the problem of having to find and possibly train temporary staff
to fill the gaps. The Government must as a matter of urgency
set out to local authorities the details of the administrative
changes that they will need to make, including the timetable,
so that they can give their staff and contractors the certainty
that they deserve.
Housing benefit fraud
123. DWP told us that it was "absolutely
committed" to addressing benefit fraud.
We asked witnesses about the adequacy of measures to detect fraud
under new systems. Thanet District Council was concerned that
the UC IT system would not be able to distinguish between genuine
and fraudulent claims. The council said that, as it understood
it, the system would not work from local authority property databases
and so it would not be able to detect automatically, as local
systems did now, when multiple individuals made a housing benefit
claim for the same property.
Lord Freud said that a new fraud detection service, IRIS, would
be built into UC which would have a "similar database"
to that used by local authorities for detecting housing benefit
fraud. He told
us that "the objective is to start matching it up with a
lot of information held in both Government and non-Government
Prisk MP, Minister for Housing at DCLG, added that funding of
£9.5 million would shortly be announced for tackling social
124. As well as ITC systems fraud detection relies
on experienced staff to spot problems. We have already referred
to the Local Government Association's claim that experienced staff
would be likely to leave housing departments before their jobs
disappeared because of uncertainty about their prospects.
Waverley Council also argued that fraud would increase during
the transition period to UC as local authorities made staff redundant
or moved them elsewhere, removing skills and resources from combating
125. We are concerned that during
the transition period before local authorities hand over Housing
Benefit to DWP a reduction in experienced local authority housing
department staff will leave the system more vulnerable to fraud.
The Government should ensure that local authority housing departments
are provided with the administrative funding they need to manage
the transition to Universal Credit and prevent staff leaving prematurely.
126. We welcome assurances from
the Government that the new IT system for Universal Credit (IRIS)
will incorporate local housing data to enable effective housing
benefit fraud detection. However, it is worrying that the system
still seems to be at the development stage. It is incumbent
upon DWP to ensure that its system is ready in time for the changes.
We will monitor the way in which the system is implemented
and its effectiveness as the reforms progress.
Local authorities' IT systems
127. While some functions will pass from local
authorities to DWP, local authorities will take on new responsibilities.
It follows that their ITC systems must be able to adapt and cope
with the new arrangements. Large amounts of information will need
to be exchanged quickly between these systems. The importance
of ITC to the success of the reforms cannot be overstated. We
asked whether local authorities had experienced problems in developing
their IT systems or in working with central IT systems. Several
witnesses pointed out that the implementation process relied on
information-sharing between central and local government and housing
associations. The particular issues identified were the volume
of changes in claimants' information that needed to be processed
on a monthly basis, and compatibility of IT systems between local
authorities and DWP.
128. DWP introduced the Automated Information
Transfers to Local Authority Systems (ATLAS) system in 2011. It
sends claimants' details including changes of address and contact
details to local authorities and will be an essential part of
implementing welfare reforms. The system is designed to allow
information to be transferred efficiently in machine-readable
form making the process much less labour intensive than previously.
There have been problems reported with the operation of this system
as recently as late 2012.
Leeds Council told us that:
Local councils may find themselves overwhelmed by
change notifications coming from DWP as a result of Universal
Credit. This relates more to Council Tax Support and the expectation
is that every change reported under Universal Credit will be sent
through to local councils. Councils are struggling already to
deal with the volume of notifications issued by DWP and this issue
will worsen considerably under Universal Credit.
Cllr Graham Chapman, Deputy Leader of Nottingham
City Council, added that ATLAS was "giving too much information
at once, and a lot of it [...] is information that you do not
really need, but which nevertheless creates a change unless we
deal with it".
Blackpool Council raised concerns about the types of data transfers
due to take place through ATLAS:
The plan to send benefit cap details via ATLAS is
also inadequate as some local authorities already have significant
backlogs in this area which means that there is the real possibility
that cases will not always be picked up in time. It is anticipated
that this will be the same for Universal Credit where STOP notifications
for Universal Credit claimants to end HB are also planned to come
129. We asked Lord Freud whether DWP had anticipated
the need to talk to local authorities about whether their systems
would be compatible before ATLAS was brought in. He said that
there had been "teething problems" with the system when
some information had been sent out in duplicate and that some
authorities had been unable initially to tie up their existing
systems with the machine-readable data from ATLAS.
Lord Freud told us that the ATLAS system was however "a total
godsend for transferring information".
He said that:
70% to 80% of LAs have now automated the bulk of
their ATLAS notifications, so that process has been and is pretty
successful, and we will be looking to work with the remainder
to get them on the automated system.
130. Of the local authorities giving evidence,
only Camden Council said that it had not had any problems with
ATLAS because its existing system was compatible. We asked whether
this was through luck or judgement, and we were told by Camden
Council's Assistant Director of Finance, Lesley Pigott, that:
I would say judgment by picking the system, but luck
that that is the one that has seemed to be able to handle the
131. The ATLAS system is intended to share information
needed for local Council Tax Support (CTS) schemes between DWP
and local systems. This would mean that local authorities should
not have to collect all of the information from claimants of CTS
separately. Some of our witnesses raised concerns that it would
not be ready to perform this function in time for the switch to
local CTS on 1 April. Camden Council told us that:
The promise is there that ATLAS will still pick up
information that we need, so that we can take information from
the Universal Credit and feed it straight through into the council
tax schemes. However, obviously we need to see that, and I think
the fear that local authorities have is that that is not a priority
for DWP. The priority is getting the IT system to work for Universal
Credit, not for it to work for our council tax requirements.
132. Sharing information effectively
through ICT systems will be critical to the implementation of
welfare reform. Some councils have been able to handle data transferred
to them by DWP through ATLAS but this may have been more by luck
than planning. DWP told us that it was confident that ATLAS would
cope. It is less clear that it gave sufficient attention to ensuring
that local authority systems would be compatible with ATLAS and
we recorded a significant level of dissatisfaction from them.
The consequences of ICT system failure would be significant as
large volumes of data will be transferred between DWP and local
authorities. It is therefore of crucial importance that the necessary
ICT systems are integrated and working efficiently in time for
DIGITAL BY DEFAULT
133. The Government committed to a "digital
by default" strategy for service delivery across Government
in the Chancellor's March 2012 Budget statement.
In the context of welfare this would mean claimants moving towards
applying and managing their claims online and so reducing the
volume of claims that local authorities as well as DWP would have
to process manually or handle over the phone. While it is widely
recognised that the move to digital will, in the longer term,
be a cost saving measure, worries were raised about the implementation
of online claims. Local authorities expressed concerns as to whether
they would have the resources to provide support to those who
experienced difficulties or were unable to claim online for local
authority or national benefits.
134. Lord Freud told us that the Government was
keen to promote the move to digital which gave individuals control
of their information because there was a "social imperative"
to move services online adding that: "we are prepared to
put significant resources behind it".
Lord Freud said that people who "really cannot handle the
digital process" would be given support through a telephone
service and, if necessary, face-to-face support.
DCLG told us that "these services will be funded but the
full resource implications will be explored when the details have
been further developed".
Lord Freud explained that DWP wanted to avoid
'locking' people into an alternative system and would encourage
and support them to move to using digital.
135. The Royal National Institute of Blind People
(RNIB) questioned whether the required level of support would
be available in time for the changes. RNIB raised specific concerns
about the ability of people with visual impairments to cope with
It said that:
more needs to be doneand fastto ensure
customers who cannot make an online claim for Universal Credit
are provided with the help they need. It is assumed some of this
help will be made available through or via councils and other
local organisations but we are yet to see much evidence of these
alternative plans being put in place.
136. Moving claims and services
online has the potential to result in reduced costs for both central
government and local authorities in the longer term. However,
savings from the move to digital claims should not be achieved
at the expense of failing to provide transitional funding for
local and central government to provide support to vulnerable
claimants. Whether local authorities or advice charities should
take the lead in offering such services needs to be determined
and the Government should set out what specific funding will be
available within the next five months.
137. Local authorities will be taking on new
areas of responsibility and delivering new schemes as a result
of the changes to welfare some of which will transfer responsibility
for managing cash-limited budgets to local authorities. We have
considered what the overall effects of the changes might be and
what, if any, new financial risks there might be for local authorities.
The National Housing Federation said that:
the cumulative impact of the reforms, including the
changes to budgeting and payment patterns under Universal Credit,
the introduction of the social sector size criteria and benefit
cap, the localisation of the social fund and support for Council
Tax and the limiting of annual increases to most working-age benefits
and tax credits to 1%, remains unknown.
138. Several witnesses pointed out that no overall
assessment had been made of the likely effects of the reforms
in their entirety on local authorities and claimants. The RNIB
called for a "proper cumulative impact assessment of the
Government's welfare reforms; both the impact on disabled people
and the impacts on local authorities".
The Chartered Institute
of Housing said that:
We are concerned that the cumulative effect of under-occupation
measures, council tax benefit reductions and other welfare reform
measures are not being thought through effectively by some [local
authorities] and social landlords. It is not clear to what extent
(if any) guidance is prompting people to join these things together.
139. The Government explained that, as part of
the "New Burdens Doctrine", it "has agreed the
process and timetable for assessing new administrative burdens
on local authorities arising from our welfare reforms".
DCLG told us that:
The Government recognises that local authorities
may incur one-off costs associated with decommissioning housing
benefit services and is working with local authorities to understand
these impacts so that we may meet our obligations under New Burdens
140. Two specific additional financial risks
to local authorities resulting from the changes were identified:
increased pressure to find affordable accommodation if housing
providers reduce their investment or participation in social housing;
and additional costs resulting from having to source affordable
accommodation for families unable to afford their rent. Housing
groups including the National Landlords Association (NLA) warned
that the removal of their ability to request housing benefit payments
to come direct to them would lead to many providers leaving the
social housing sector.
A survey of NLA members operating in the social sector showed
that over 85 per cent would "withdraw from the market"
if the automatic arrears trigger were withdrawn.
The NLA said that
the "cost to local
authorities of finding alternative accommodation from other sources
is likely to be considerable".
141. London Councils told us that they had "serious"
concerns that welfare reforms such as the Benefit Cap and Social
Sector Size Criteria would result in "additional costs in
maintaining or sourcing housing for families who find themselves
unable to afford their rent".
One London Borough Council, they told us, had estimated the cost
of this at £2.5 million for 2013-14.
London Councils said that the Government had indicated that it
would not provide funding for local authorities to deal with any
potential increase in homelessness as a result of the combined
effect changes or to cover the additional cost of "sourcing
accommodation for homeless households".
They told us that:
There has been no indication from government that
work is underway to quantify these additional costs or any consideration
given to funding these additional costs through the New Burdens
142. In this report we have identified a number
of changes and uncertainties, which Welfare Reform throws up for
local authorities, that may add to the overall burden on authorities.
- the impact of Direct Payments to tenants on rent
- the impact of paying the housing element of UC
a month in arrears on landlords' cash flow;
- the arrangements to support the Government's
undertaking to protect the financial viability of housing associations;
- the impact on levels of demand for welfare advice
services and the levels of funding that will be available for
advice and support;
- the impact on the demand for Discretionary Housing
- the need to establish the current level of demand
for the Social Fund;
- the cost of finding affordable accommodation
for claimants affected by the Social Sector Size Criteria;
- the cost of providing advice and support for
claimants having to make their claims online;
- the costs of ensuring compatibility with central
Government ICT systems;
- the level of local authority involvement in administering
the housing element of UC and the level of grant support for administrative
functions that DWP will provide;
- the costs of redeployment and redundancy payments
to local authority staff.
143. We welcome the Government's
assurance that it will assess the total cumulative cost to local
authorities of its reforms. We hope that this assessment will
be comprehensive rather than simply assessing each reform separately
and include an indication of what additional funding would be
available where additional burdens are identified. We have called
in this report for the Government to meet with the Local Government
Association to discuss the effects of specific burdens on local
authorities. These meetings should include discussion about the
overall impact of the changes.
218 Ev w100-w101, para 5.7 [London Borough of Newham],
Ev w95 [The Association of North East Councils] and Ev w89-w90
[London Borough of Sutton] Back
Ev w95 Back
As above Back
Ev w89 Back
As above Back
As above Back
Ev w100-w101, para 5.7 Back
As above Back
Ev w100 para 5.6 Back
Ev 57, para 4.7 Back
Ev 81, para 2.4 Back
Ev w119 Back
Ev 89, para 3 [DCLG] Back
Ev 70, para 11 Back
Ev 81, para 2.4 Back
As above Back
Ev 80, para 2.1 [Citizens Advice], Ev w28-w29 and Ev w30, para
3.3 and 3.7 [Southwark Borough Council], Ev 66 [Blackpool City
Council], Ev w39, para 2 [East Riding of Yorkshire Council] and
Ev w46 28, para 3.3.6 [London Borough of Croydon] Back
Q 110 [Steve Thompson] Back
Transfer of Undertakings (Protection of Employment) Regulations
2006, also known as TUPE. Back
Ev 64 Back
Ev 54, para 2.5 Back
Ev 66; see also Ev 64 [Thanet District Council]. Back
Ev w98 Back
Q 188 Back
Q 185 Back
Ev 95, para 55 Back
Q 110 [Andrew Stevens] Back
Qq 253-54 Back
Q 254 Back
Q 256 Back
Ev 54, para 2.5 Back
Ev w120 para 9 Back
Inside Housing Online, 23 November 2012, www.insidehousing.co.uk/tenancies/dwp-it-system-causes-benefit-data-backlog/6524754.article
Ev w65, para 8a Back
Q 102 Back
Ev 66 Back
Q 243 Back
As above Back
Q 245 Back
Q 105 Back
Q 108 Back
HC Deb, 21 March 2012, col 793 ff Back
Ev w46 [London Borough of Croydon] and Ev w61 [Rochdale Council] Back
Q 240 Back
Qq 241-42 Back
Ev 93, para 38 Back
Q 242 Back
Ev w125, para 3.3.7 Back
Ev w124, para 2.8 Back
Ev 47, para 4.1 Back
Ev w122, para 1.3 [RNIB]; see also Ev 81, para 2.2 [Citizens Advice]
Ev 53 [Local Government Association] and Ev w21, para 4.1 [Core
Cities Group] Back
Ev 49 Back
The New Burdens Doctrine is a measure designed by the Government
to ensure that taxpayers do not face excessive charges as a result
of unjustified new burdens on local government spending. Back
Ev 93, para 35 Back
Ev w2, para16; see also Ev w2, para15 [National Landlords Association],
Ev 46 [National Housing Federation] and Ev 73 [Residential Landlords
Ev w2, para17 Back
Ev w2, para18 Back
Ev w14, para 2.1 Back
Ev w14, para 2.2 Back
Ev w14, para 2.6 Back
Ev w14, para 2.6 Back
See para 21 ff above. Back
See para 41 ff above. Back
See para 33 ff above. Back
See para 112 ff above, Ev w47 [London Borough of Croydon] and
Ev w60 [Rochdale Council] Back
See para 76 ff above. Back
See para 73 ff above, Ev w61 [Rochdale Council], and also Ev w102
[London Borough of Newham]. Back
See para 59 ff above. Back
See para 133 ff above. Back
See para 127 ff above. Back
See para 137 ff above. Back
See para 115 ff above and Ev 64 [Thanet Borough Council]. Back