HC 576 Progress towards the implementation of Universal Credit
Written evidence submitted by Northern Ireland Welfare Reform Group
1. About the Welfare Reform Group
The Welfare Reform Group is an umbrella grouping of organisations that campaign for positive changes to policy, service provision and legislation for those in receipt of social security while also providing advice and support to other advice giving organisations and disadvantaged persons in their capacity as individual members of the Group.
The Group supports an equality and human rights-based approach to the provision of social security which demonstrates an understanding of and focus on the needs and choices of all in receipt of benefits. In this paper we outline the significant equality issues likely to be presented by implementation of the draft Bill in Northern Ireland.
This response has been prepared by the following organisations:
Action for Children
Belfast Unemployed Resource Centre
Citizens Advice NI
Council for the Homeless NI
Housing Rights Service
Irish Congress of Trade Unions
Law Centre NI
Causeway Women’s Aid
Women’s Resource and Development Agency
The NI Welfare Reform Group welcomes the opportunity to comment on the progress towards implementation of Universal Credit. This response addresses some UK-wide matters arising from the introduction of Universal Credit and also focuses on specific Northern Ireland issues.
The NI Welfare Reform Group welcomes the principles of Universal Credit to simplify the benefit system and to make work pay. We remain unconvinced, however, that the introduction of Universal Credit and the additional changes under Welfare Reform Act 2012 will in effect protect the most vulnerable within society.
We are concerned that the level of benefit remains to be set at this late stage in the policy and legislative process. Unquestionably, the base levels must be viewed in tandem with the £18 billion of savings already announced from 2010 and the intention to making further substantial savings from 2015/2016 onwards.
We provide further insight into our thoughts below.
Northern Ireland Circumstances
Northern Ireland presents particular circumstances with regards to welfare reform and arrangements to move people into employment. Crucially there are specific Northern Ireland issues that need to be examined , including the lack of a childcare strategy and infrastructure, a higher extent of health problems in particular mental health problems, proportionately larger numbers of benefit claimants in receipt of Incapacity Benefit, Employment and Support Allowance and Disability Living Allowance , the projected longer time of economic recovery and that Northern Ireland is the only part of the United Kingdom with a land border with another EU member state . As a result co-ordination of social security systems for cross-border workers is essential and classification of Universal Credit for European Law purpose is particularly important. While the Department for Social Development is unlikely to move away from the major welfare reform proposals, it is possible that a different approach may be taken to conditionality, contracting out of the employment programme and a number of the other initiatives contained within the Welfare Reform Act 2012.
The NI Welfare Reform Group is concerned about the over reliance on on-line claiming which could leave claimants bereft of benefit if the system were to break down, as has occurred in the past with large scale Government IT projects . The use of ‘real time data’ for employees and the amalgamation of benefits for adults, children and housing costs heightens the risk of destitution should a failure occur. We are concerned that there is no provision in the draft regulations for situations where the system breaks down.
In addition, the proposed system assumes a certain level of IT literacy whereby claimants should be able to initiate and manage their Universal Credit claims, which ignores the fact that many vulnerable people who will be utilizing the system may not have the capability to do so. A claim made online is not instigated until the form is fully completed and submitted. This process may be complicated further by the need to submit additional evidence with the application. In order to safeguard this process, the DWP computer system for recording communication and providing notifications must be clear and provide for system failures, human error and problems with software.
Moreover, the Continuous Household Bulletin found that only 71% of adults in Northern Ireland had access to the internet in 2010/11, while this fell further to 66% of adults with access to the internet at home.  Figures also show significant differences between the socio-economic status of head of households .  The most recent UK wide report in relation to internet access is the Internet Access Quarterly Update 2011.  This report found that internet use is linked to various socio-economic and demographic characteristics, such as age, disability and location. Groups of adults who were more likely to have never used the Internet included people over 65, people who have been widowed and people with a disability. The region where people were least likely to have used the Internet was Northern Ireland, where 28.6 per cent had never done so.
It is of particular concern to the NI Welfare Reform Group that Universal Credit will be paid as a single payment to a nominated person in the household. It is estimated that in 80% of cases the nominated person will be the man for most claiming families  . This proposal will impact on women’s economic autonomy. Furthermore, substantial evidence exists demonstrating that particularly in low income households money spent via the purse is spent on children’s needs compared to money spent from the wallet.  For women who live with domestic violence and abuse, reduced economic autonomy is a further barrier in trying to remove themselves (and children) from unhealthy and dangerous relationships. We strongly contend that Universal Credit should therefore be paid to the main carer in the family. Another solution would be to allow split payments between joint claimants so that payments for children could go to the main carer, usually the mother, and payments for housing costs to the person principally responsible for the rent and liable for debts accrued (where there is a joint tenancy).
We are also concerned that Universal Credit incentivises work for the primary worker (more likely to be a man) in workless households and in many circumstances weakens the work incentive for the second earner (more likely to be a woman). 
We understand that options for the future treatment of the rates element of Housing Benefit are still being considered by the Northern Ireland Executive Sub-committee on Welfare Reform. We hope, however, that a decision will be made in the near future in order to clarify details of the replacement scheme. We are also awaiting the outcome to the call for evidence by the Department for Work and Pensions on Supporting Mortgage Interest (which closed on 27 February 2012) but which is expected to confirm that the maximum amount of Universal Credit will include an amount for housing costs, including mortgage interest.
Universal Credit Awards
As we understand, a lone parent under 25 will receive the same standard allowance as a single claimant without children. We believe that this constitutes a significant cut for lone parents and their children which will have a detrimental impact on their income. At present lone parents aged 18 or over receive the same personal allowance as single claimants without children aged 25 or over.
We do not support the rationale for giving a lower disregard to claimants with U niversal Credit housing costs. Having minimum and maximum disregards will only add complexit y to the calculation of U niversal Credit despite the aim of simplification . Lower disregards for those with the h ousing element may also act a s disincentive for those claimants to work. Furthermore, w ill a claimant’s earnings disregards be upgraded during a dispute about eligibility for housing costs and will a recoverable overpayment arise if housing costs are restored? We believe further clarification is needed in this regard.
Abolition of the Severe Disability Premium.
The NI Welfare Reform Group is strongly opposed to the Government’s decision to reduce eligibility for Personal Independence Payment (PIP) by 20%. Reductions of this size will compromise the dignity and independence of disabled people and those with long-term conditions who are able to live independently. In addition to clear implications for disability poverty, the extent of these reductions will undermine disabled people’s quality of life and the Government’s objectives to promote independent living. Furthermore, migration from Incapacity Benefit to Employment and Support Allowance and stricter conditionality under PIP will result in disabled persons moving into areas of the social security system which they have not previously been present. We would, therefore, welcome sensitizing of the operation system and enhanced staff training as to the difficulties that persons with disabilities might have understanding and navigating the system.
The NI Welfare Reform Group is concerned at the proposal to abolish the severe disability premium (SDP) and the enhanced disability premium under Universal Credit. Disability premiums recognise the extra cost associated with a disability. The severe disability premium is currently worth £58 per week, while the disability element of Working Tax Credit is worth about £54 per week. Together with the introduction of PIP of which 500,000 less people will qualify, these changes will impact on many disabled claimants in contradiction of the government’s stated aim of protecting the most vulnerable.
Young carers looking after disabled lone parents will also lose under with these new measures. The payment of SDP to lone parents where there is no non-dependant in the household helps to address the current unfairness that children and students are not entitled to receive any Carer’s Allowance for looking after a disabled person. We believe that the SDP should be replicated within Universal Credit , in order to ensure that those households in which disabled people have no other adult to look after them are able to receive support towards the additional costs that this creates. We are concerned that the transitional protection provided will not sustain sufficient long term safeguard.
The Welfare Reform Act 2012 also repl aces the disability element of Child Tax C redit with a ‘disability addition’ for children. While we welcome the change for severely disabled children to receive a slight increase from current rates , the majority of children with disabilities could end up receiving less than half of their current r ates under Universal Credit.  A Contact a Family Report  in 2012 found that 41% of parent carers responding to their survey in Northern Ireland had taken out a loan to help with expenses and 54% had fallen behind with bill or mortgage payments.
Introduction of a capital limit for in work claimants
Despite combining both the Tax Credit and Income Support systems, Universal Credit will use the capital rules for Income Support, meaning that households with savings in excess of £16,000 will lose all entitlement to support. This will render it difficult for many working families to save, e.g. for a deposit for a house. The capital rules will also penalise savers who are currently entitled to substantial tax credit awards, such as working parents with substantial childcare costs. It is likely that older working age claimants are most likely to be affected by this change and that it runs counter to the government’s desire to encourage saving for retirement.
Parents of disabled children often struggle to find affordable childcare which is suitable for their children’s needs. Whilst Universal Credit will include a childcare costs element, we believe that Universal Credit should include a higher disabled children’s childcare element to recognize the additional costs of childcare for disabled children.
The NI Welfare Reform Group is concerned by the proposal for the housing element of Universal Credit to be paid directly to tenants. Unlike in GB, In Northern Ireland direct payments for Housing Benefit to landlords are made in the majority of cases and we would support the continuance of this method. Direct payments to landlords are crucial for the viability of many social housing schemes, and where there are rent arrears in private and social tenancies.
While we welcome the commitment in the explanatory notes of the draft regulations to continuing direct payment to landlords for the most vulnerable, we are concerned about the lack of detail available on what factors will be considered in determining vulnerability. DWP has indicated there will not be blanket exemption and that direct payments will be decided on a case-by-case basis. Will this include those assisted through Supporting People? We would welcome further clarification on this matter.
While the NI Welfare Reform Group supports the principle of financial capability and developing budgeting skills, we are concerned that claimants will experience difficulties budgeting on a monthly basis. We note the government’s rationale for the move to monthly payment to reflect the typical payment periods of earnings for working households. This, however, is not the case for a substantial number of families on lower incomes who are often paid weekly or fortnightly. Stretching low income budgets over four weeks could exacerbate budgeting problems and potentially lead to increased debt levels amongst those who are financially vulnerable. Benefit recipients are often financially excluded from access to mainstream financial services and affordable credit which also precludes the reality of people’s lives regarding budgeting options. This could cause them to become more exposed to other lenders.
Furthermore, monthly payments could also disempower many women and remove safeguards that payments for children and housing costs are used for purpose, where one partner in a couple acts irresponsibly. We would welcome more detailed provision in the regulations for variance from default monthly payments to the household, rather than reliance on the discretion of decision-makers.
The Consumer Council for Northern Ireland published a study in 2007 which reported that people in Northern Ireland have lower levels of financial capability than consumers elsewhere in the UK.  Yet, currently there is no financial inclusion and capability strategy in Northern Ireland and this will require commitment from the Northern Ireland Executive in order to resource initiatives which aim to raise financial capability levels in the region.
Conditionality & Sanctions
The Welfare Reform Act 2012 reduce s the point at which single parents will be requ ired to seek work still further to when their youngest child reaches their fifth birthday. We are very concerned that compelling single parents to seek and take up any job, as soon as their child enters school will actually limit their long-term career prospects and ability to increase their income through work; in particular because the opportunities for skills development once on Jobseekers A llowance are quite restricted.
Northern Ireland lacks developed childcare infrastructure in place to facilitate the large-scale movement to work as envisaged by DWP. The significant progress made over the past fifteen years in Britain has not been mirrored in Northern Ireland. Unlike in England Wales, where the Child Care Act 2006 imposes a statutory duty on local authorities to identify and meet childcare needs, Northern Ireland has no corresponding childcare legislation and there is no statutory obligation on local or public authorities to provide high quality and affordable childcare and still no agreed childcare strategy or even a Department with a lead responsibility on this issue. The barrier this places on parents’ ability to enter the workplace cannot be underestimated. Much of the welfare reform proposals for both lone parents and working age couples are underpinned by the assumption of sufficient readily accessible and affordable childcare. Universal Credit will fail to get the targeted people into work in Northern Ireland if these barriers to the workplace are not effectively broken down.
The Work Programme was launched in Great Britain in June 2011 and has faced multiple challenges, for example, with concerns over sanctions for young people who leave a ‘voluntary placement’ early. The Department for Employment and Learning’s new employment programme Steps2 Success was published on 23rd July and is currently out for consultation, with any equivalent not expected to happen until at least October 2013. A recent report published has worryingly found it ‘feasible but very tight’ for the new Northern Ireland Employment Programme to start at the same time as Universal Credit. 
In addition, we anticipate that there will be a substantial number of appeals against sanctions and loss of income forcing many to obtain advice, evidence and representation from advice organizations or other professionals. At present advice services are under exceptional pressures as a result of the welfare reform changes and this will undoubtedly continue during the parliamentary passage of the Northern Ireland Welfare Reform Bill. This is all happening at a time when the voluntary and community sector is experiencing funding cuts. We are concerned that the voluntary and community advice sector will not have the capacity or resources to provide claimants with advice due to the large caseload.
The NI Welfare Reform Group believed that the development and introduction of Universal Credit was an opportune time in which to improve resources for carers that was not wholly utilised.
We welcome the Government’s decision to replicate the carer premium in the means-tested Universal Credit; with a ‘carer element’ for recipients with ‘regular and substantial caring responsibilities’. In addition, we welcome the decision to enable Universal Credit claimants to qualify for the carer element without having to make a claim for Carer’s Allowance. For carers who would be entitled to the carer element, but not for Carer’s Allowance, this will remove the confusing bureaucratic necessity of applying for a benefit they are not entitled to receive in order to gain access to other support which they are entitled to receive.
We are disappointed, however, that under Universal Credit, claimants will only be able to receive either the LCW/LCWRA element or the carer element which is overly restrictive. This means that claimants will either not be entitled to recognition of their disability or of their caring responsibilities. The fact that a claimant has LCW or LCWRA does not necessarily preclude their regular and substantial caring responsibilities. In fact, analysis of the 2001 census shows that people caring 50 or more hours per week in Northern Ireland are twice as likely to suffer from poor health as non-carers (20 % against 9%). In addition, those providing 50 hours or more care per week are more than twice as likely to be ‘permanently sick or disabled’ as those not caring (11% against 5%).
In particular, carer’s incomes could be significantly affected by the carer/LCW elements being exclusive and the loss of the severe disability premium which will not be replicated in Universal Credit
The monthly reporting requirement of income and expenditure is unnecessarily onerous and does not recognize the way many small self employed businesses work. As the Minimum Income Floor will be introduced after 12 months and the Start Up period can only be availed of once, these too will also create undue barriers to pursuing self employment as many small businesses take more than 12 months to become fully viable. Moreover, an initial business failure should not automatically preclude a grace period before the MIF applies again.
The NI Welfare Reform Group welcomes the inclusion of young people who are estranged from their parents as a group entitled to Universal Credit. As a vulnerable group the provision of support is vital to ensure their transition into adulthood.
We are concerned, however, that clarification is required about the conditionality and sanctions that will be applied to these groups of 16 and 17 year olds. Under the current Income Support rules young people are required to do 12 hours per week of further education but there is no detail in the explanatory notes of what it will be under Universal Credit. We would welcome further clarification on this matter.
We believe that the rights of children have been overlooked and will be severely compromised by the provision of the Welfare Reform Act 2012. It is estimated that there will be a substantial increase in the number of vulnerable families with children between 2010 and 2015 a s a result of the changes in tax and benefits, spending cuts and the ongoing effe cts of the economic downturn. R esearch estimates that the incidence of several vulnerabilities will increase by 120,000 more worklessness fa milies, 100,000 more families li ving on a low income, 25,000 more families in material deprivation and 40,000 more families living in poor quality or overcrowded housing .  Furthermore, i n a recent report by the Northern Ireland Children Commissioner, it was predicted that at least 6,500 children i n Northern Ireland alone would be affected by the benefit cap. 
The NI Welfare Reform Group welcomes the opportunity to respond to this consultation. We trust you will find our comments helpful. If there is any further way in which we could contribute to this process we would welcome the opportunity to do so.
23 August 2012
 See http://www.csu.nisra.gov.uk/First%20Release%20Statement%201011.pdf
 Internet Access Quarterly Update 2011, Q1, Office for National Statistics, May 2011
 Warburton Brown (2011) ‘ Should Mum Get the Credit?’ available at http://www.social-policy.org.uk/lincoln2011/Warburton-Borwn%20P5.pdf
 See for example, Goode , J., Callender, C. and Lister R (1998) Purse or Wallet? Gender inequalities and income distribution within families on benefits , London : Policy Studies Institute
 Mike Brewer, James Browne &Wenchao Jin., Universal Credit: A Preliminary Analysis Institute for Fiscal Studies
 Joint Briefing: Report and Third Reading of the Welfare reform Bill June 2011. Available at http://www.cpag.org.uk/cro/Briefings/CPAG_JointWRBriefing_0611.pdf
 Counting the Cost, The Financial Reality for families with disabled children in Northern Ireland, Contact A Family, 2012
 The Consumer Council for Northern Ireland (2007): Managing Money - How Does Northern Ireland add up: http://www.consumercouncil.org.uk/filestore/documents/Financial_Capability_06.09.07.pdf
 Centre for Economic and Social Inclusion 'A new employment programme for Northern Ireland - Feasibility study'
 Howard Reed., In the Eye of the Storm: Britain’s forgotten Children and Families A research Report for Action for Children, The Children’s Society and NSPCC pg 9
 Northern Ireland Children’s Commissioner. , Goreitti Horgan and Marina Monleith A Childs Rights Impact Assessment of the Impact of Welfare Reform on Children in Northern Ireland . Please see http://www.niccy.org/uploaded_docs/2012/Publications/CRIA%20Welfare%20Reform%20FINAL.pdf