Welfare Reform A Situation Analysis David Magor OBE IRRV Chief Executive Institute of Revenues Rating and Valuation
The Biggest Reform of Social Security in 60 Years
The Enabling Power
The Second Act is in Place
WELFARE REFORM • Reforming the welfare system - to make it fairer, more affordable and better able to tackle poverty, worklessness and welfare dependency • DEFICIT REDUCTION LOCALISATION • Government’s top • Coalition principles of priority. increasing freedom and • Taxpayers were paying sharing responsibility by almost £120 million a day localising power and (£43 billion a year) in funding. debt interest - more than • De-ringfencing of funding, council tax, stamp duty abolition of top-down targets and inheritance tax and inspection regime combined last year
Welfare Reform - The Wider Picture • The most fundamental reform of the social security system for 60 years • A continuing deficit target • A further £10bn • Under 25’s • Financial support for the family • So far it includes the following: • Housing Benefit changes • Universal Credit • Personal Independence Payment, ESA changes and specialist disability support • Benefit cap • Social Fund changes • State Pension age changes • Single Fraud Investigation Service • Council Tax Reduction Schemes
The Changes Current system New system Income related JSA Income related ESA Universal Credit Income Support (including SMI) Working Tax Credits Child Tax Credits Housing Benefit Personal Independence Payment Disability Living allowance … will include support for housing and Pension credit children Child Benefit, Carer’s Allowance (will remain) Council Tax Reduction and Rate Support ( schemes being considered) Contributory JSA and ESA (DWP still considering how these will work)
Universal Credit Programme • Migration is being diluted • Recapping the scheme – A reduction in complexity via a new single system for means-tested support, for; – Working age people, in or out of work – Support for housing, children and childcare costs – Additions for disabled people and carers – Requires a change in cultural attitudes to work and claiming benefit – To use new online channels - ‘digital by default’ – Monthly household payments – Access to a bank account and personal budgeting
Migration - Three different types of Universal Credit claim • New Universal Credit Claim – where legacy benefits are closed to new entrants • Natural Migration – where a change of circumstance no longer results in a new legacy award, but a migration of the entire household entitlement to Universal Credit • Managed Migration – where DWP initiates the transfer of an entire household from legacy benefits to one Universal Credit entitlement – 75% of claims in the first 4 years will be as a result of migration
Natural Migration • Natural Migration is triggered by one of a number of changes of circumstances, based on employment status or family criteria, e.g. – Move from out of work, to in work over x hours (JSA or IS to WTC) – Household becomes responsible for a child for the first time (New claim to CTC) – Ceased full time education (JSA to IS) • The Natural Migration claimant journey starts with the legacy benefit being notified of an eligible change • Migration uses the new claim process
A three phased migration strategy Phase 3 - prioritising on safe closure of HB teams in the final Phase 2 - managed migration begins; national (geographic) stages of migration approach targeting those who will benefit most from UC ~8m ~5m ~600k Oct 2017 ~End 2015 April 2014 as of September 2012 Phase 1 - phased launch of Universal Credit. All new claims to the current benefits and credits will be phased out by the end of April 2014.
Managed Migration Design An in-bound telephone service Use of multiple channels to supporting claimant’s Managed The Management & Control capability deliver agreed Customer Migration journey, limiting the enables flexible volume management, Journeys impact on legacy areas bespoke MI, and protection of vulnerable cases. Legacy Claimant Internet, Phone Management and Control Initial claimant Letter, E-Mail, communications, Letter Phone, Face claimant preparation to Face Claimant Makes and protection of Trigger Claimant UC Claim (using vulnerable cases Select Cases Communications UC Core improves UC success Circa 3 months processes) rate UC Claim Not made within Timescales Legacy Claim Close Requested Small Amount of Legacy Information Provided to UC Legacy Systems Extracting in-scope claimants from legacy and then ultimately Providing information to UC Core that the claimant might not know or willingly provide. Validation and ‘fraud and error checks’ performed, and TP calculated closing all of these cases, all in scope claims will be closed.
Real Time Information
RTI, The Opening Salvo
The Beginning of RTI
Tom Harvey – works full time Payment Bank extract instruction hash, send to to bank HMRC Tom Harvey, 26, full time HMRC compare to RTI RTI to HMRC HMRC match record Employer runs monthly payroll Update taxpayer record
Tom Harvey earnings reduced and claims UC Payment Bank extract instruction hash, send to to bank HMRC Tom Harvey, 26, full time HMRC compare to RTI RTI to HMRC HMRC match record Employer runs Department monthly for Work and payroll If UC Update claim, Pensions taxpayer send to record DWP
Tom Harvey, second job Bank extract Payment hash, send to instruction HMRC to bank Employer 1 runs payroll RTI to HMRC, HMRC shows amt compare paid & hours to RTI worked RTI to HMRC, HMRC new starter; match record amt paid & Employer 2 hrs worked completes new starter; adds Tom Department As UC Update to payroll; claimed, Pays Tom taxpayer for Work and runs payroll data to DWP record by cheque Pensions
DWP Direct Payment Demonstration Projects Emerging Learning and Findings
Early days a DWP View It’s early days on the projects – first payments to tenants were made in July 2012 So, these are very much emerging learning and findings And, we have committed to ensuring that we will learn throughout the projects • We had a two day workshop in early September with the project areas which enabled the projects to share their early findings on what went well and not so well so far • We will communicate our learning within DWP and with key stakeholders There is an understanding that most of you will be interested in the amount of arrears in the projects so far. We are putting out a press release for the areas in October to provide an overview including the arrears picture In the meantime, we want to share with you some of the other things that we’ve been learning about. Many of them will not be a surprise.
Finding: Support Assessment Matrix What: The Support Assessment Matrix – used to determine whether a tenant can go straight onto DP with no support, straight on with some support, or needs support for a while before DP – needs to be supplemented with local knowledge and insight. Who applicable to: Pathfinder/other live running; Universal Credit policy development and supporting regulations; Social landlords, Local Authorities and Support Agencies What is being done as a result: One of the outcomes from the September Design Review was the change to the support and exception process used by DPDP. This process will be monitored over the project lifecycle. The UC design area responsible for this are also working closely with DWP and the 6 project areas.
Finding: Communicating with Tenants What: Tenants did not always respond to letters, though they responded better to letters from their landlord than from Local Authorities and to letters in coloured envelopes (by 42% in Shropshire). Some of the areas have had good results with sending text messages – though, this requires having tenants mobile phone details. Overall findings show that there is a need to adapt the contact method depending on the demographic /geographic characteristics of the individual area. Who applicable to: Universal Credit policy development and supporting regulations; Social Landlords and Local Authorities What is being done to communicate this finding: It was captured in the outputs from the Design Review and will be disseminated wider within DWP to inform other testing (for example the LA led pilots) and ultimately the roll out of Universal Credit
Finding: Tenants’ issues are often complex What: Tenants can often have complex and multiple issues – e.g. they are unemployed, have literacy problems and drug problems, The assessment process for direct payments has uncovered the need for other services (especially social services) to become involved. Who applicable to: Universal Credit policy development and supporting regulations; Social Landlords; Social Services; Local Authorities and other Support Agencies What is being done to communicate this finding: This was captured in the outputs from the Design Review and is being disseminated to the Support and Exceptions team in DWP to inform Universal Credit and also to the Personal Budgeting team in DWP.
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