HC 576 Progress towards the implementation of Universal Credit

Written evidence submitted by Barnardo’s

Introduction

1. Barnardo’s works directly with over 190, 000 children, young people and their families every year. We provide a comprehensive range of services through more than 800 projects across the UK.

2. Barnardo’s has a long history of working with children affected by child poverty and it is an inescapable element of nearly all of our services. We have conducted a number of research projects in recent years on the subject of child poverty. Through this work we are aware that issues with the benefits system, and barriers to entering work, are significant for many parents raising children in poverty.

3. Summary of key points

· Barnardo’s believes the presumption of a predominantly online service must be supported by initiatives which will guarantee easy and convenient access to all. This includes ensuring that Universal Credit is smart phone compatible and that access to the internet is provided in a range of settings such as children’s centres. Telephone and face to face services must remain for those who need them. Monthly payments risk causing hardship for some of the most vulnerable, such as young care leavers, and guidance on this should allow for a wide range of flexibility.

· The requirement under Universal Credit for a bank or Post Office account is an ideal opportunity to ensure that more people become financially included by making it easier to open bank accounts and by extending the facilities of the Post Office Account.

· Barnardo’s is concerned at the findings of the All Party Parliamentary Group on taxation which suggested that Real Time (RTI) is in difficulty and calls on the Government to give this issue urgent consideration.

· In this response we make a number of recommendations relating to the ‘claimant commitment’ sanctions and hardship payments. These include making amendments to the draft Regulations so that individuals can never be expected to attend a job interview when undertaking paid employment; that reasonable travel and location requirements are set (for example, travelling one and hour each way may be impractical for parents working a few hours a day) and that work search requirements are suspended for at least the first six months of taking up a new job. We are concerned that harsher sanctions could impact on work incentives; the proposals relating to hardship payments could plunge families into financial difficulties and risk the welfare of children and we therefore recommend a review of the Regulations relating to these.

· Barnardo’s runs a number of services for disabled children and we have serious concerns that the decision by the Government to cut disability premiums will impact on the ability of parents to afford care for their children.

· With regard to the eligibility and operation of passported benefits, Barnardo’s believes that the Department for Education should take the lead in developing new eligibility criteria for free school meals which helps to make work pay by avoiding ‘cliff-edges’’ provides support for school meals for every child who needs them and contributes to tackling health inequalities.

· Finally, Barnardo’s strongly urges that the there is timely and effective impact monitoring which has a specific focus on the effect of the new regime around sanctions and hardship payments; the impact of the benefit cap; the introduction of the housing size criteria and the effects of the changes to the Social Fund.

The proposed arrangements for claims and payments and the provision of support and advice for claimants

4. The proposed mechanisms for claiming and paying Universal Credit represent a major change for those receiving in and out of work benefits. Given the problems which many claimants have had with the current tax credit system, including problems with form filling, needing to constantly update details, and issues with over and under payments we believe that making the system simpler and linking it to real time earnings data could benefit many claimants.

5. However, Universal Credit will impact on claimants in many different situations. While many claimants will be in work, receiving their wage on a monthly basis and familiar with using online systems, there will be others for whom this new system will represent a significant change. It is essential that the necessary support mechanisms are therefore in place to assist the most vulnerable.

6. In relation to the presumption of a predominantly online service, Barnardo’s is of the view that this represents a significant challenge for Government. Currently only 19.6% of Jobseekers Allowance (JSA) claims are submitted online [1] . While many claimants suggest they would welcome the ability to manage their benefit payments online, the lack of accessibility to online services for many of the poorest in society represents significant issues - figures show that almost a quarter of households have no internet access, and the rate of internet use decreases in line with income [2] .

7. Barnardo’s believe that the presumption of online claiming needs to be supported by policy initiatives which will guarantee easy and convenient access to online services for all, such initiatives include:

· The Universal Credit website must be smart phone compatible. For growing numbers of people this is the primary means of accessing the internet and 27% of adults now own one [3]

· The Government should consider ways to provide free and easy internet access in a range of services which Universal Credit claimants are most likely to use, such as Job Centre Plus offices, supported housing providers, GP surgeries, health centres and children’s centres. The latter are particularly important given the demands the new system will place on parents to provide information on their childcare costs.

8. In addition, it is important that the presumption of online claiming does not mean that those who need support either through a telephone service or face to face struggle to get this or are given a second class service. Those who need the telephone service are likely to be some of the most vulnerable claimants – including those with serious disabilities and those who do not speak English as a first language. The draft Regulations make it clear that online claiming will be the default unless claims fall "within a class of case for which the Secretary of State accepts telephone claims or where he is otherwise willing to do so." We consider that there is a strong case for defining telephone claims broadly and for allowing hybrid cases where the initial claim is done online, but where updates such as information on childcare costs can be provided by telephone or text message. The Government should also consider using text message or telephone reminders to inform claimants if they need to take action with regard to their Universal Credit claim. Electronic messages sent through the online claiming system will frequently not be read by those who do not have regular internet access.

9. The introduction of monthly payments is another initiative which, while sensible for some, risks causing hardship to some of the most vulnerable claimants who struggle to manage their money. Barnardo’s provides a number of services to vulnerable 16 to 24 year olds – particularly care leavers. Such young people have often had chaotic lives and can have very limited budgeting skills. The draft Regulations state that claimants will be able to apply for a temporary payment exception, for example to be paid fortnightly. We believe that in practice guidance on this exception should allow for a wide interpretation and emphasise that the exemption may continue for some time, while an individual is given the support to achieve the necessary budgeting skills to manage monthly payments.

10. Everyone will need to have a bank account or Post Office account under the Universal Credit regime, yet despite progress those on low incomes are much less likely to have a bank account than those with higher incomes. For example, around one in ten households with an income between £100 and £200 per week do not have a bank account (excluding Post Office Card Account) compared to only around one in 50 with incomes between £500 and £600 per week [4] . Barnardo’s report – A Vicious Cycle [5] set out proposals to help families struggling with debt gain access to mainstream finances. We believe Universal Credit offers the ideal opportunity to ensure that more people become financially included by making is easier for people to open bank accounts and by extending the facilities of the Post Office Card Account.

Progress with developing the necessary IT systems to administer Universal Credit

11. Barnardo’s is concerned at the findings of the All Party Parliamentary Group on Taxation in July this year, which suggested that Real Time Information (RTI) is in difficulty and highlighted two major concerns. The first of these is that although HMRC has been working closely with the payroll software industry, the companies involved may not have time to fully develop the necessary products and the second is that employers will not be ready. The APPTG's stakeholder research found there was a lack of awareness of RTI in the HR departments of SMEs and large organizations - only 34% of respondents having heard of it.

12. Barnardo’s would urge the Government to give full consideration to the recommendations of the APPTG to ensure the effective implementation of RTI. We are also concerned that the current regulations and guidance do not provide any provision on what happens if there is a system failure, or if an employer fails to input the required data and claimants Universal Credit payment is effected as a result.

The proposed arrangement s for the "claimant commitment" sanctions and hardship payments.

13. The draft regulations provide some flexibility on the requirements a claimant will be asked to meet to be awarded their Universal Credit payment. For example they do not set out how often a claimant should attend interviews. This flexibility is welcome, particularly as Universal Credit will apply to in work claimants. The provisions relating to in-work conditionality will particularly affect parents, who may often find it easier to enter the labour market for only a few hours a week to begin with and to gradually increase their hours, as their children become older and childcare needs reduce.

14. However, we are concerned that given the extension of a "claimant commitment" to a much wider group of individuals the regulations do not go far enough to recognise the specific circumstances of individuals, particularly what is reasonable to expect of those who already work even if part time. We would particularly argue that the conditionality regime should be relatively "light touch" for those who are in paid employment. The ultimate aim should be to enable an individual to develop and progress in work, gaining experience and training where appropriate. Skilled part time work or part time employment with training may be more beneficial for an individual’s long term career prospects and earning potential than longer hours in an unskilled job. Barnardo’s would urge that the claimant commitment recognises the benefits of allowing individuals to develop their career, rather than constantly requiring them to work more hours, even if this means moving to jobs which offer less security and career prospects longer term.

15. Particular changes which Barnardo’s believe should be made to the current regulations on the claimant commitment include:

· Amending regulation 87(5) to provide a specific exemption that an individual can never be expected to attend a job interview at a time when they are also expected to be undertaking paid employment. The current regulations assume an individual will always be able to negotiate time off with 48 hours notice, yet this is not always the case

· Amending regulation 88(3) to provide that the cost and feasibility of travel will be taken into consideration when setting reasonable location requirements. Currently the regulations suggest that a claimant may be expected to travel an hour and half each way to work, which may be impractical for working parents working a few hours and with childcare commitments.

· Amending regulation 90 to provide that an individual’s work search requirements are suspended at least for the first six months of taking up a new job. Currently there is no provision that allows an individual to settle into a new part-time job before requiring them to look for another "better" job.

16. Universal Credit also brings in significantly more severe sanctions for those who do not comply with the requirements of the claimant commitment. Under the new regime individuals who do not comply are likely to lose their benefits for a much longer period and will find claiming assistance for hardship much more difficult. While we understand the desire on the part of the Government to ensure that those claiming Universal Credit have a genuine incentive to comply with the regime, Barnardo’s is of the view that it is important that sanctions do not operate in a way which is counter productive, causing individuals to disengage and be lost completely from the system.

17. We are particularly concerned about the following provisions:

· Plans that an individual could still have their Universal Credit payments (including awards for childcare) sanctioned for up to six months after they have moved into paid work, as a result of a previous failure. Allowing in work benefits as well as out of work benefits to be reduced due to sanctions could affect work incentives.

· Plans to introduce two penalties for low level sanctions meaning that an individual will suffer a sanction for both the period of time it takes them to comply with the conditions and for a further 7 day period. Given these sanctions are likely to be applied to the most vulnerable and hard to reach groups, a system which works instantly to award engagement is likely to be far more effective in encouraging individuals back into the system.

18. Universal Credit also makes it significantly more difficult for individuals who have been sanctioned to be provided with hardship payments. We have two main concerns with the new regime:

· To receive hardship payments claimants must "have complied with all the work –related requirements that they were required to comply with in the compliance period". This effectively introduces conditionality into the hardship regime. Hardship payments ought to operate as a safety net to prevent families from entering destitution – imposing conditions on families could seriously risk the welfare of children.

· The provisions for some hardship payments to be recoverable. By definition, hardship payments are paid to families who are struggling, and who may well find themselves in debt as a result of reduced benefit payments – reducing their benefit payments still further as they repay the hardship payments risks plunging families into further financial difficulties.

Changes in the income entitlement of disabled people under Universal Credit

19. Barnardo’s runs a number of services which support disabled families and their children and we are aware of the significant costs which raising a disabled child can put on families. We therefore share the concerns of many in the disabled sector regarding the decision to cut the disabled premiums which will be given to families with disabled children under Universal Credit. The DWP have previously announced that the amount of support for disabled children other than those on the high rate care component of DLA, or those who are severely visually impaired, will be substantially reduced (the maximum rate is to be cut by £28 per week) as a result of the introduction of Universal Credit. Many families with disabled children are deeply concerned about the impact of this change on their ability to afford care for their children.

Eligibility for and operation of passported benefits.

20. Barnardo’s is concerned that no effective solution has yet been proposed on how free school meals will work within the Universal Credit structure. Free school meals can be worth a great deal financially to a family (our calculations suggests that the benefits are worth about £386 a year per child [1] ). Meetings with officials have indicated that current thinking is that a simple income threshold will be introduced meaning that families who earn below the threshold will get the full entitlement and those earning less will get nothing. This will effectively create a "cliff edge" in relation to benefit entitlements and will introduce a work disincentive in a system specifically designed to avoid them.

21. We believe that the Department for Education should take the lead and ensure that the development of new eligibility criteria leads to a system which will:

· Help make work pay by avoiding steep "cliff-edges", where exceeding a certain income point would result in a loss of all of the benefit which means that the household loses money as a result of earning more.

· Provide support for school meals to every child who needs it – all children who live in poverty should get a FSM including 16 to 18 year olds who attend further education colleges rather than school six forms. [2]

· Be simple for families to understand and for schools and Government to administer.

· Contribute to tackling health inequalities by improving the health of the poorest fastest, as set out in the Government’s public health white paper, Healthy Lives, Healthy People.

22. In order to realise these principles, we suggest that the Government consider aligning the structure of support for school meals to closely reflect the structure of Universal Credit. This will enable support to be withdrawn in a way which ensures the preservation of work incentives. The system would be designed to ensure that the money could only be spent on school meals, and not be given as cash to parents – this could be done by, for example, inputting a cash value in the Universal Credit and having the meal provided by the school or through the use of pre-payment cards.

Impact monitoring

23. Barnardo’s would urge the G overnment to develop plans from the outset to ensure that the impact of Universal Credit is effectively monitored. In particular, impact monitoring must examine those elements of the regime which could produce serious hardship for families and young people. T he Government has said that U niversal Credit will dec r ease child poverty by 350 ,000 [3] but this will not happen if many families do not receive the level of benefit anticipated because they are subject to long period of sanctions or because they are pay ing back hardship payments.

24. Impact monitoring should include a specific focus on the following policies:

· The effects of the new regime for sanctions and hardship payments, particularly the possibility that a family may lose a significant part of their benefit for up to three years (or longer if they claim hardship payments during this time and subsequently need to repay them)

· The effect of both the benefit cap and the introduction of housing size criteria into claims for social housing, both of which could impact on the ability of families to afford housing which meets their needs.

· The effects of the decision to transfer two elements of the Social Fund, the community care grants and crisis loan budgets to local authorities and devolved administrations. We are concerned that replacement services may not provide the level of support that families require.

17 August 2012


[1] DWP (2012) Proportion of new claims to Jobseeker’s Allowance submitted online http://www.dwp.gov.uk/docs/jsa-claims-online.pdf

[2] Office of National Statistics (2012) Internet Access Quarterly Update, 2012 Q1 , 16 May 2012

[3] OFCOM (August 2011) Communications Market Report: UK http://stakeholders.ofcom.org.uk/binaries/research/cmr/cmr11/UK_CMR_2011_FINAL.pdf

[3]

[4] DWP (2010) Family Resources Survey. DWP, London .

[5] Barnardo’s (December, 2011) A Vicious Cycle: The heavy burden of credit on low income families

[1] £1.98 per school meal x 5 days a week x 39 weeks in a school year = £386.10

[1]

[2] http://www.barnardos.org.uk/stayingthecourse.pdf

[3] Department for Work and Pensions (October 2011) Impact Assessment on Universal credit

[3] http://www.dwp.gov.uk/docs/universal-credit-wr2011-ia.pdf

Prepared 7th September 2012