2013 10 Welfare Benefits

Friday 1 November 2013

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Savings from the bedroom tax likely to be ‘substantially lower’ than projected

New research from the University of York’s Centre for Housing Policy published on 14 October 2013 highlights 'serious shortcomings' in the DWP model used to project savings of 480m in 2013/1204. The research shows that real data available from housing organisations since 1 April 2013 does not match some of the key assumptions about claimant behaviour underlying the DWP’s model. The research suggests that three of the Department's four key assumptions should be re-examined, given that:

  • if real data is used, and taking into account regional variations in impact, the total savings the DWP’s model predicts reduces by £160m (33%);
  • real data suggests more variation in potential outcomes - for example some movers may end up with higher rents and higher total housing benefit costs because of the increasing numbers of housing association homes let at ‘Affordable Rents’ which are close to market levels - and therefore reductions in savings of up to £186m (39%) appear possible; and
  • the DWP model does not contain all of the main factors likely to influence the level of housing benefit savings from the policy, for example expenditure on discretionary housing payments and the additional costs of fitting aids and adaptations in new homes for disabled tenants who chose to move.

The research - ‘Testing DWP's assessment of the impact of the social rented sector size criterion on housing benefit costs and other factors’ can be downloaded from the University of York's Centre for Housing Policy - Click here.

UK government has failed to provide evidence of ‘benefit tourism’, says EU Commission

On 14 October 2013, the EU Commission published a study showing that

  • jobless EU migrants make up less than five per cent of those claiming social security benefits in most EU countries;
  • the majority of currently non-active EU citizens who move have previously worked in their current country of residence (64%);
  • non-active EU mobile citizens represent a very small share of the total population in each Member State and between 0.7% and 1.0% of the overall EU population.

The study also found little evidence in the literature and stakeholder consultations to suggest that the main motivation of EU citizens to migrate and reside in a different Member State is benefit-related as opposed to work or family-related.

The study - A fact finding analysis on the impact on the Member States' social security systems of the entitlements of non-active intra-EU migrants to special non-contributory cash benefits and healthcare granted on the basis of residence’ can be downloaded from the European Commission's DG for Employment, Social Affairs & Inclusion website - Click here.

Speaking to the BBC, Jonathan Todd, a spokesman for the Employment Commissioner said that the Commission had been asking the UK government to provide evidence of 'benefit tourism' for about three years and that, if the government could show that there was a widespread problem, then the Commission would look at EU rules again. However, in response, Prime Minister David Cameron's official spokesman said -

'There is an issue around access to the welfare system, around fairness as well as a cost issue. We don't think the current system is working, that is why we are looking at changes across the board'

For further information see Benefit tourism claims: European Commission urges UK to provide evidence is available on the BBC website, Click here

See also Benefit tourism – the facts by Jonathan Portes is on the Guardian website. Click here

Trussell Trust reports threefold increase in number of people receiving emergency food

On 16 October, 2013 the Trussell Trust reported a threefold increase in the number of people receiving emergency food. Figures released by the Trussell Trust show that 355,985 people received a minimum of three days’ emergency food from Trust foodbanks between April - September 2013, compared to 113,264 between April and September 2012. In addition, the Trust says that many people on low-incomes are being impacted by the implementation of April’s welfare reforms, with 65,177 people (19 per cent) being referred to Trussell Trust foodbanks due to benefit changes - including the bedroom tax, sanctioning and confusion caused by localisation of the Social Fund - between April and September 2013, compared to almost 14,897 (14 per cent) in same period last year, and 117,442 people (35 per cent) being referred due to benefit delay, compared to 35,597 (33 per cent) last year. As a result, the Trust is calling for an official inquiry into food poverty in the UK and the consequent rise in foodbank usage.

However, the BBC reports the DWP as saying in response that there is -

'... no robust evidence that welfare reforms are linked to the increase in use of foodbanks.'

See Tripling in foodbank usage sparks Trussell Trust to call for an inquiry on the Trussell Trust website – Click here

See also Numbers relying on food banks triple in a year on BBC News - Click here

How the DWP should deal with overpayment debts from bankrupt debtors

On 18 October 2013 the DWP issued new guidance to local authority housing benefit staff in relation to the impact of the Supreme Court's judgment in Re: Nortel Companies & Ors, [2013] UKSC 52, [2013] 3 WLR 504 (Click here) on how it deals with overpayment debts from bankrupt debtors. In HB General Information Bulletin G10/2013, the DWP advises:

'DWP had previously held the view that a benefit overpayment (including housing benefit or council tax benefit) does not become a fixed liability until such time as the decision maker has made a determination that the overpayment, or part of it, is recoverable under social security legislation.

This was confirmed in 2005 in the case of (R) Steele v Birmingham City Council and the Secretary of State for Work and Pensions. (Click here) You can refer to previous bulletins HB/CTB U1/2011, HB/CTB U6/2011, and HB/CTB U1/2012.

However, a recent case Nortel (2013) has overturned the judgment in the Steele case.

When a debtor is discharged from bankruptcy (or Sequestration in Scotland) then any non-fraud debts, where the end date of the overpayment is before the date of the bankruptcy or sequestration order, must be written off. This must take effect immediately.

For HB General Information Bulletin G10/2013 Click here.

Benefit cap struggling to meet its aims, Chartered Institute for Housing (CIH) research shows

In research published on 23 October 2013 on the impact of the benefit cap, the CIH conclude that the cap is 'far from achieving' its aims of saving taxpayers' money and moving people into work.

Setting out the findings from research into the initial impact of the cap in Haringey - one of four London boroughs that piloted the benefit cap from 15 April 2013 - CIH says that only 10 per cent of households affected in were able to find work to avoid seeing their benefits cut, and that, of the 747 households affected, losses ranged from 15p to £374.50 per week, with larger families experiencing the highest loss.

In addition, the research showed that - of the claimants affected -

  • 51 per cent lost between £50 and £199 per week;
  • 11 per cent increased their hours sufficiently to avoid the cap; and
  • 50 per cent claimed discretionary housing payments (DHPs).

The CIH also says that in-depth interviews were carried out with a number of claimants and advisers which showed that –

  • there is very little evidence of tenants being able to negotiate reduced rents with landlords as a result of the cap;
  • the payment of DHPs, which have allowed many claimants to cover rent shortfalls and stay in their homes, is unsustainable in the long term because the scale of the claims will exceed council budgets.

Commenting on the findings, Leader of Haringey Council Claire Kober said that the research shows that the benefit cap has failed in its main objectives and that -

'... while the government may be making some savings, the real costs are just being passed to local councils already under enormous financial pressure.'

The report Experiences and effects of the benefit cap in Haringey is available from the CIH website – Click here.

See also Benefit cap 'not encouraging work or saving money' on the BBC News website – Click here

64 per cent rise in Citizens Advice Bureaux clients with problems related to JSA sanctions

In a press release issued on 25 October 2013, Citizens Advice highlights that, in the period from July to September 2013, bureaux gave advice on 3,895 issues related to JSA sanctions as compared to 2,381 in the same period last year.

Commenting on the rise, Citizens Advice Chief Executive Gillian Guy said -

“Too often the sanctions regime is excessively harsh and badly implemented. Every detail of the support system should be geared towards getting those that can work back into a job. A minimum four week sanction for even the smallest mistake can move people further and further away from the job market. It cannot be right that we have a system of support for jobseekers which actually docks their support for attending a job interview. Ministers must urgently address the glaring problems in this system.”'

The press release - New figures from Citizens Advice show 'appalling human cost' of sanctionsis available on the Citizens Advice website – Click here

Number of council households affected by bedroom tax with rent arrears rises by 59 per cent

On 28 October 2013, joint research by three housing bodes representing over 1.3m council households - National Federation of ALMOs, Association of Retained Council Housing and Councils with ALMOs Group – considerd the number of council households affected by the ‘bedroom tax’.

Key findings from the research include –

  • the number of households affected by the under-occupancy charge and in arrears rose on average by 59 per cent;
  • on average only 2 per cent of tenants affected by the bedroom tax have moved to alternative social housing;
  • on average 13 per cent of those affected by the penalty have registered on the transfer list but not moved as yet;
  • the majority (60 per cent on average) have chosen to try to pay and stay but many ALMOs and councils report that these households are already getting into arrears; and
  • overall 8 per cent of households affected by the penalty are in receipt of discretionary housing payments as at the end of June 2013 but these have been awarded for set time periods of between three and six months.

The report, Welfare Reform Survey- Summary of responses October 2013, is available from almos.org.uk – Click here.

Cases

In IJ v Secretary of State for Work and Pensions (SF) [2013] UKUT 302 (AAC) (Judge Rowland) the claimant had allegedly sent a letter to the DWP stating ‘I wish to apply for income support’ (IS). The DWP had no record of its receipt. The claimant was in receipt of incapacity benefit which was subsequently converted into an award of contributory employment and support allowance (ESA), later topped by an award of income-related ESA. The claimant’s representative wrote to the DWP twenty months after the claimant’s original letter asking for an ex gratia payment on the basis that the DWP had failed to action the claimant’s letter. The DWP refused the application and the claimant’s new claim for IS (on the basis that he was in receipt of ESA). The claimant appealed to try to secure IS for the period prior to his award of ESA.

The Upper Tribunal said that it is a condition of entitlement to IS that a claim is made (section 1(1) Social Security Administration Act 1992). Regulation 4(1A) of the Social Security (Claims and Payments) Regulations 1987 requires a claim for IS to be made on an approved form, otherwise it is ‘defective’ (regulation 4(9) refers). Regulation 6(1A) (prior to references to telephone claims being inserted) provided that the date of claim is the date a properly completed claim is received, or the date a notification of intention to claim or a defective claim is received, if a properly completed claim is received within a month of that date. Accordingly, the claimant’s letter, if received, was either a notification of intention to claim or a defective claim, but this did not assist the claimant as a properly completed claim had not been received within a month. Click here for judgment.

In R (Reilly and another) v Secretary of State for Work and Pensions [2013] UKSC 68, (Neuberger, Mance, Clarke, Sumption and Toulson), the Supreme Court held that the regulations creating back-to-work schemes were unlawful and dismissed the argument that the requirement to work or lose benefit breached claimants' human rights under article 4 of the ECHR that ‘no one shall be required to perform forced or compulsory labour’. Click here for judgment.

In R (Clulow) v Independent Review Service & Anor [2013] EWHC 3241 (Admin) (Timothy Brennan QC, Sitting as a Deputy Judge of the High Court), the High Court considered whether refusal to award community care grant (CCG) to the claimant in receipt of contribution based ESA breached her human rights. The DWP had decided not to award a CCG to the claimant on the grounds that, under Direction 25(1) of the Social Fund Directions, she was not in receipt of a qualifying benefit, as she was in receipt of contributory-based Employment and Support Allowance (‘CBESA’) instead of income related ESA (‘IRESA’). The DWP's decision was upheld by the Independent Review Service and the claimant then applied for judicial review of that decision on the grounds that the refusal to award a CCG amounted to unjustified discrimination against her under Article 14 of ECHR. The Court held that:

(i) The claimant had a proprietary right to the CBESA which she received because she was entitled to it as of right. But there was no interference with that right. The fact that she was refused CCG had nothing to do with her enjoyment of her proprietary right in CBESA';

(ii) Whilst the claimant was treated differently from a hypothetical comparator who was not entitled to CBESA but who was in receipt of a qualifying benefit - there was nothing odd about this difference of treatment, because each of the four qualifying benefits listed in Direction 25(1), including IRESA, was a means-tested benefit:

'Being in receipt of one of those means-tested benefits is necessary, but not sufficient, to qualify for consideration for a grant. Everyone who does so qualify will already have been means-tested and found to have very limited means. Any given grant will be a single non-recurring payment, award of which might rationally be thought not to justify extensive means-testing. It is therefore not arbitrary or objectionable that entitlement to a means-tested benefit is itself the gateway which gives access to eligibility for consideration for the grant.'(para 23)

Deputy Judge Brennan also dismissed the claimant's alternative case that she was discriminated against on the grounds of 'other status' for the purposes of Article 14 –

'In my judgment the treatment of the claimant simply reflected her work record and the extent of her contributions for national insurance purposes. It had no, or no sufficient, element of personal characteristic in the sense which is relevant to the concept of 'other status' for the purpose of Article 14. There was in my judgment no relevant discrimination on the grounds of 'other status'.(para 30)

The Deputy Judge goes on to say that had he concluded that there was any relevant discrimination for the purposes of Article 14 he would nonetheless have held that it was justified. Click here for judgment.

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