HC 576 Progress towards the implementation of Universal Credit

Written evidence submitted by Centrepoint

Summary

· While Centrepoint welcomes the increased simplicity and more transparent taper that Universal Credit will bring, we are very concerned about the impact that some of the measures could have on vulnerable people.

· We therefore welcome the Committee’s focus on this issue, as we believe that there remain significant questions about how Universal Credit will be implemented to ensure that the most vulnerable do not lose out.

· For example, there is no mention in the draft regulations of how supported accommodation will be treated under Universal Credit. We understand that DWP is still working on this policy area, but we believe it is vital that clarification on this issue is provided urgently given the extent of the impact on vulnerable groups.

· Centrepoint is extremely concerned about plans to pay the housing element of Universal Credit to claimants rather than the landlord in most instances. While we understand that vulnerable claimants will be exempted, there is still a lack of detail on which groups will receive an exemption. It is vital that the criteria used are sufficiently broad to catch all those that need additional support, and that these are published in good time to help the sector prepare.

· We are concerned that the clauses of draft regulations on sanctions allow too much flexibility for the government to change the policy intent at a later date. Ministers have stated that they do not plan to sanction the housing element of Universal Credit, but the way the regulations are currently drafted leaves them open to raise sanctions in future uprating exercises to a level where it would impact on their housing element.

Introduction

1. Centrepoint is the leading national charity working with homeless young people aged 16 to 25. We are a registered social housing provider, a charity enterprise and a company limited by guarantee. Established 40 years ago, we provide accommodation and support to help homeless young people get their lives back on track.

2. Centrepoint welcomes the Committee’s inquiry into Universal Credit, as there remain a number of significant questions following the publication of the draft regulations about how the system will work for the most vulnerable.

3. We strongly support the core principles of Universal Credit, including the simplification of the benefits system and the more transparent and gradual withdrawal of benefits when a claimant moves into work. We are, however, extremely concerned that the draft regulations do not include sufficient safeguards to prevent the most vulnerable from losing out.

The proposed arrangements for claims and payments

Direct payments

4. Centrepoint is extremely concerned about the impact that paying the housing element of Universal Credit to tenants could have on our clients. Many young people will simply not be able to manage this responsibility and will subsequently build up arrears and risk being evicted and becoming homeless. We therefore welcome DWP’s commitment to continuing direct payment to landlord for the most vulnerable, but we are very concerned about the lack of detail available on what factors will be considered in determining vulnerability.

5. Centrepoint is concerned by the concept of a screening process, as set out in the explanatory notes to the draft regulations. It suggests that young people will need to pass a tick box test before their wider vulnerabilities are considered.  Depending on what categories are used in this screening process, this could lead to young people’s claims bring rejected before even being assessed by a human decision maker.

6. As the DWP has indicated that there will be no blanket exemption and direct payments will be decided on a case-by-case basis, Centrepoint will need to do an individual direct payment application for every young person who comes into our services. This will lead to an additional administrative burden that will be extremely difficult to meet at a time of tightening budgets and increased demand.

7. Given the serious concerns raised above, Centrepoint would like to see an automatic exemption for supported housing tenants. At the very least, being a supported housing tenant should be included as a factor accruing a high number of points in both the screening and human decision maker criteria.

8. Even if we are able to secure an exemption for supported housing tenants, we fear that young people will be vulnerable to arrears and eviction when they move on from our services. We therefore believe that young people should be entitled to direct payments to their landlord for at least a year after they leave supported housing to help them manage the transition and give them a better chance to avoiding repeat homelessness.

Monthly payments

9. Centrepoint strongly supports the principle of encouraging young people to develop better budgeting skills, and provides intensive financial capability support to young people to take responsibility for their own finances. We are very concerned however that paying all young people their benefits monthly could cause severe hardship towards the end of the month as many young people will simply not be able to effectively budget their money across the period. This is likely to be a particular problem for young people who have no experience of independent living or managing their own money. Many young people will be able to develop these skills over time but will need a grace period to help do so.

10. In the same way as direct payments, Centrepoint would therefore like to see supported housing tenants exempted from monthly payments. This will give them a chance to develop better budgeting skills over the period of their stay.

Direct deductions

11. Centrepoint welcomes plans to continue to allow rent arrears payments to be directly deducted from benefits claims in order to protect claimants from eviction. It is essential, however, to ensure that young people still have the ability to meet their basic costs after any deductions are made. We fear that the suggested threshold of 40% of standard allowance is too high for young people as they are on a lower rate of standard allowance. Based on current benefit rates, they would only be left with £33.75 for food, utilities and all other costs after a 40% deduction had been applied. This is unlikely to be sustainable and could lead to severe hardship.

12. We also understand that it will no longer be possible for young people to request that their personal service charges be deducted directly from their benefits and sent to Centrepoint. This is very concerning for those with complex needs. While Centrepoint works closely with young people to help them develop budgeting skills, some will simply not be able to handle this when they first arrive. Direct deductions can therefore provide an important stepping stone to help them pay their service charge until they have developed the necessary skills to pay this themselves. If they fail to pay this, they will quickly build up arrears that will make it much harder for them to find move-on housing as even social housing providers often refuse to let to people with arrears. Direct deduction of service charges is only available where the young person is recognised to be vulnerable so does not undermine the concept of encouraging responsibility among the wider claimant population. But for those involved it will be very significant, with many as 65% of residents in some services on direct deductions. Centrepoint would therefore like a similar discretionary system to be available under Universal Credit to protect the most vulnerable.

Backdating of claims

13. Many young people at Centrepoint rely on backdating when they run into unforeseen problems with their claims. Backdating can provide a useful lifeline to help young people pay off arrears that they have accrued during a period of transition or crisis. This is particularly important in emergency services where young people often do not have the necessary information and identification to make a claim when they first arrive. For example, it can take time for services to support young people to get a copy of their birth certificate. Limiting young people’s ability to backdate, except in very distinct circumstances, could make it harder for young people to access emergency accommodation in the future if services do not think that they will be able to make a prompt claim and pay the rent.

14. Centrepoint would therefore like to see the limitations on circumstances removed from backdating rules. Claimants can only claim for a period that they are entitled to support for, so it is fair that they should be able to recoup the money for this time. If this is not possible, there should at least be scope to backdate in other circumstances if it can be demonstrated that the claimant is vulnerable. We also believe that there should be discretion to backdate by more than a month in certain circumstances.

Advocates’ access to claim information

15. We would like confirmation from DWP that support services such as Centrepoint will be able to get rights to receive copies of benefit notification letters or access young people’s online accounts so that we can continue to advocate on their behalf. We currently have good relationships with local housing benefit offices that liaise with us about our clients’ claims and this is crucial in helping us support them to manage their tenancies.

16. It would be illegal for us to use a young people’s own sign in details without them present, and unfortunately the chaotic nature of some young people’s support needs mean that it is simply not possible to get them to manage their own claim. Third party notifications and advocacy access to online accounts will therefore be vital to aid services to support vulnerable clients.

The proposed arrangements for sanctions and hardship payments

Sanctions

17. Centrepoint is concerned about the way that the section of the regulations about sanctions is drafted. Lord Freud has stated that it is not his policy intention to sanction claimant’s housing element, but the regulations appear to leave it open to do so in the future. The explanatory notes state that the maximum sanction will be 100% of an individual’s standard allowance (which excludes the housing element), but the regulations provide figures for how much will be deducted from the ‘award’. These figures can then be uprated later, theoretically to more than the standard allowance, and thus encroach on the housing element.

18. To prevent this, Centrepoint would like to see the wording of the regulations amended to more closely match the stated policy intention. We believe that the regulations should state that sanctions will never exceed 100% of an individual’s standard allowance.

Hardship payments

19. It is very concerning that claimants will only be able to access hardship payments if they are complying with Jobcentre requirements as the most vulnerable may not be able to meet these conditions and could therefore be left completely destitute. Centrepoint would therefore like to see safeguards in place so that the most vulnerable claimants can be exempted from these requirements.

Impact monitoring

20. Centrepoint welcomes the Committee’s focus on impact monitoring as it will be vital for DWP to assess how Universal Credit affects claimants’ ability to meet their basic costs, and in particular how it affects the most vulnerable. Below, we set out groups that we believe need to be particularly carefully monitored.

Supported housing tenants

21. Supported housing accommodates some of the most vulnerable groups in the country. However, the regulations give no detail about how supported accommodation will be treated under Universal Credit. This is very concerning as we do not feel that the vulnerabilities of supported housing tenants are properly reflected in the current draft.

22. We understand from DWP that supported housing tenants’ claims will be treated differently to some extent but this is not set out in the regulations. To ensure that an appropriate system is put in place for supported housing, we would like to see this set out in the next draft. Alternatively, if this will be set out in separate regulations, we would like details of when this will happen. The uncertainty is very damaging for the sector as it hinders our planning for the introduction of Universal Credit, and of how we can best support our clients under the new system.

23. We would be particularly concerned if supported accommodation was subject to the very limited list of eligible service charges included in the regulations. Following a consultation last year, we understand that DWP has still not made any final decisions about the future of supported accommodation housing benefit rules. However there is no detail in the regulations stating that supported housing will be treated differently under Universal Credit. We must therefore work under the assumption that, as a registered social housing provider, the regulations on service charges will apply to us. If this was the case, this would seriously impact on our financial ability to safely accommodate the homeless young people we support as the stated list of eligible services does not include many of the costs involved in operating supported accommodation services for vulnerable groups.

NEET 16 and 17 year olds living at home

24. We are very concerned that the current draft of the regulations do not include provision for young people who are living at home and are not in education, employment or training (NEET), meaning they will not be entitled to anything under Universal Credit. Their parents will not receive a child element for them if they are NEET, and they will not be entitled to benefits in their own right if they are not estranged. Some of these young people will have additional needs or be facing crises that make it impossible for them to engage with education, work or training. At present they are able to claim JSA hardship payments if they can demonstrate that they are destitute. Not giving them recourse to any benefits will cause severe hardship for those whose parents are not able to support them, because 16 and 17 year olds will not be entitled to hardship payments under the new system. It is crucial that the regulations are amended to give this group resource to some support, either through their parents or directly, to ensure they can meet basic costs such as food. The numbers of young people involved is very small – there are currently only around 4000 16/17s on JSA hardship payments and many of these will be estranged meaning the number affected will be even lower. Securing support for this group will therefore not represent a large expenditure but will be crucial to the welfare of the individuals involved.

Young people over 21 living at home (n on-dependent deductions )

25. While Centrepoint recognises the need to simplify benefit rules, we believe that the proposal to flat-rate non-dependent deductions puts a disproportionate burden on the poorest. The existing progressive system recognises the relative ability of different individuals to commit to the household’s housing costs. For many, the flat rate of £65 per month is a cost that they simply will be unable to meet after other basic costs such as food and travel are taken into account.

26. We welcome the fact that under 21s will be exempted from the charges, but we are very concerned about the impact that this could have on 21 to 25 year olds who are living at home. This policy lies in stark contrast to other messages from the Government about the importance of young people staying at home for longer. We fear that this measure could lead to an increase in youth homelessness in the long-term but making it harder for low-income young people to remain in the family home. Requiring adult children to commit such a high proportion of their income to the family’s housing costs – a cost which some will fail to pay – is likely to put increased strain on family relationships, and could push difficult relationships to breaking point.

27. We would therefore like to see this flat-rate system removed from the regulations and replaced with a progressive system in line with the current non-dependent deduction rules.

Conclusion

28. While Centrepoint supports the simplification of the benefits system that Universal Credit will create, this must not come at the price of harming the most vulnerable. Centrepoint is fully committed to supporting young people to become financially capable and independent, but our experience shows that this is often not possible for young people when they first enter homelessness services. If proper safeguards are not put in place this could therefore lead to large numbers of young people building up significant arrears. Particularly in light of significant cuts to our funding in other areas and the potential scale of the cost, these are debts that we will simply not be able to write off. These arrears are therefore likely to act as a yolk round young people’s necks for many years to come, making it hard for them to find independent accommodation and significantly increasing their chances of repeat homelessness.

17 August 2012

Prepared 7th September 2012