irrv welfare reform and benefits seminar: the reality of the social impact of welfare reform

Deven GhelaniPolicy in Practice

IRRV WELFARE REFORM AND BENEFITS SEMINAR:The Reality of the Social Impact of Welfare Reform

2 February 2016

www.policyinpractice.co.uk

Agenda

1. Introduction2. Universal Credit – Past, Present and Future3. Welfare Reforms – Past, Present and Future4. Our approach: Local data + our software5. Preliminary findings 6. Recommendations What can local authorities do to

improve outcomes for residents7. Next Steps

We make the welfare system simple to understand, so that people can make the decisions that are right for them

Policy in Practice

POLICYNational impact

CONSULTANCYLocal impact

SOFTWAREIndividual

impact

www.policyinpractice.co.ukwww.policyinpractice.co.uk

“I can’t see whether the people being clobbered by reductions in council tax support, or under-occupation are the

same people that have been clobbered by other reforms.”

Steve Carey, Leeds City Council

Challenge: Leeds City Council

The combined impact on households is typically

complex, confusing and changing

Focus on Universal Credit

Universal Credit: the policy

55% Generous work allowances

65% Generous work allowances

65% Limited work allowances

How Universal Credit works

What is the Social Impact of Welfare Reform?

Do you know the impact that welfare reform is having on

each of your residents?

“We wanted to ensure a proactive approach to this next round of welfare reforms. This meant having a

strong analysis of the impact and scale of impact of these reforms on our residents, in order to target

activity effectively. The Policy in Practice analysis has provided us with this and given us a strong basis on which to plan our partnership and Council activity.”

Ian Duke, LB Hounslow

Challenge: Hounslow

Our approach

A person centred Welfare Reform Impact

Assessment

data + software = actionable insights

“We wanted to ensure a proactive approach to this next round of welfare reforms. This meant

having a strong analysis of the impact and scale of impact of these reforms on our residents, in order to target activity effectively. The Policy in Practice analysis has provided us with this and given us a strong basis on which to plan our partnership and

Council activity.” Ian Duke, LB Hounslow

Policy in Practice’s approach

Your Housing Benefit data

Our Universal Benefit Calculator

A detailed impact assessment - who is impacted and how?

1. Use local data and insights to inform better decision making

2. See the impact of specific and cumulative reforms at an aggregate and household level

3. Inform targeted and tailored local welfare support

Rich data for each householdHousehold details Under-Occupation Local Housing

AllowanceCouncil Tax Support

• Reference number• Household Type• Tenure• Economic status• Earnings• Savings

• Under occupied (y/n)• Under occupied (£)

• LHA cap (y/n)• LHA cap (amount £)

• Not protected (y/n)• Not protected (amount £)

Benefit Cap at £26k

Benefit Cap at £23k

Pay to StayLHA cap on RSLs

Income

• Could get WTC (y/n)• Receiving DLA (y/n)• Benefit cap 26k (y/n)• Amount (£)

• Could get WTC (y/n)• Receiving DLA (y/n)• Benefit cap 20k (y/n)• Amount (£)

• Reduced (y/n)• Reduced amount (£)

• Earnings below NMW(y/n)• Better off in work (£)• Free school meal eligibility

Universal Credit Support Cumulative Impact

Barriers to work

• Needs protection (y/n)• Needs protection (£)• In work conditionality (y/n)• Min income floor (y/n)

• DHP (£/no)• CTRS (£/no)

• Income Reduction 2015 (£)

• Impact 2015 (no/l/m/h)• Income Reduction 2016

(£)• Impact 2016 (no/l/m/h)

• Disability (0/1/2)• Caring responsibilities

(0/2)• Parenting

responsibilities(0/1/2)• Barriers to work

(low/medium/high)

Rich data for each household

The impact of the benefit cap

The Benefit Cap at £26,000:

UK, nationwide levelNumber of households affected nationwide:

< 1,000 1,000 - 3,000 3,000 - 6,000 6,000-12,000 > 12,000

Wales, East, E Mids, YorkshireSW, W Mids, NE, Scotland SE, NWnoneLondon

Number of households affected nationwide:

nonenoneWalesSW, E Mids, NE, ScotlandLondon, SE, East, W Mids, NW, Yorkshire

< 1,000 1,000 - 3,000 3,000 - 6,000 6,000-12,000 > 12,000

The Benefit Cap at £20,000 UK,

£23,000 London

Hounslow, borough levelNumber of households affected within the borough:

One wardTwo wardsFour wards Seven wardsFour wards

0 - 15 16 - 35 36 - 45 46 - 55 56+

Hounslow, local authority level

Number of households affected within each neighbourhood (LSOA) within a ward:

One LSOAOne LSOAThree LSOATwo LSOA

0 1 - 56 - 9 9 - 12

Hounslow, street levelIndividual households can be identified within a ward, at street level

From national to household level

UK (Ben Cap) UK (Cumulative) Ward

Neighbourhood Street

The impact of Welfare Reforms

Preliminary findings paint a stark picture

34% of low income working age households in Hounslow are in work

26%In work

Not in work, carer

Not in work, disabled

Not in work, lone parent

Not in work, other

£13.27

£17.05

At £26,000 At £23,000

The Summer Budget will increase the impact

of welfare reform on residentsA lower benefit cap will see a greater reduction in household income

Specific reforms have different impacts

Housing reforms in Hounslow

1. Pay to Stay: 12 households in the social rented sector earn more than £40,000 pa. From 2017 they must pay rent at market rates. (NB, SHBE unlikely to show households on higher incomes)

2. Removal of Housing Benefit for those 18-21 not in work under UC: 223 households at risk of losing housing support

3. LHA cap for social tenants: 586 in social rented sector paying rent above LHA, average shortfall of £192 p/mth. Most are under 35 and “under-occupying”

4. 1% cut in social rents

= Risk of higher rent arrears, and revenue streams for Housing Associations and Council HRA’s under pressure

Universal Credit

UC entitlment is higher

No change in enti-tlment

Transitional Pro-tection needed to avoid lowe enti-tlment under UC

Universal Credit reforms in Hounslow

1. Reduced work allowance: 80% of households in Hounslow that will be entitled to Universal Credit will face a lower work allowance

2. Conditionality: 5,582 households are in work and will be subject to conditionality because their earnings are below the required threshold

3. The minimum income floor affects most self-employed people• 79% of self-employed households report earnings

below the Minimum Income Floor in Hounslow

4. Transitional protection: in 2016 8,554 households in Hounslow in need of TP, for a total of £30.1 million

UC in 2020 in Hounslow:

National Living Wage and Tax Allowance

• Higher living wage (£9 p/h) and higher personal tax allowance only partially mitigate the impact of the transition to Universal Credit

• Transitional protection ensures people are not worse off at the point of transition, but changes in relationship status or large changes in earnings may mean this is lost

How to improve the social impact of welfare reforms

1. Identify exemptions2. Target support3. Co-ordinate with partners4. Identify cashable savings

At £26,000 At £23,000

Identify ExemptionsA lower Benefit Cap will affect 5x as many householdsCheck exemptions on specific households, eg:

• Households in receipt of ESA may be in the support group

• Children in receipt of DLA

• Households in receipt of carers allowance

• They or their partner may be in work, and eligible for tax credits

Help them to avoid the cap before it hits.

Target support: Barriers to work

Target employment support based on distance from the labour market

Target intensive outreach support to those households most heavily impacted

In order to make best use of support resources, and ensure financial support is available to the most vulnerable

Target Support: Benefit Cap

£0-20 £21-40 £41-60 £61-80 £81-100 £101-150 £151-200 £201 +

51 5134 35

16 2813 3

166 168

£26,000 (current) £23,000 (from April 2016)

Take proactive stepsSupport those most severely impacted by a lower benefit cap with focused intensive outreach

Co-ordinate with partners:

Better off / Worse off and economic status

In work Not in work, carer

Not in work, disabled

Not in work, lone parent

Not in work, other

UC higher No change TP needed

Loss of tax credits

Lower severe disability premium

Some people are better off

Cashable savings:

£1.1m in additional income for schools in Hounslow

Pupil Premium and Universal Free School Meals in Hounslow

• 3,400 households have children eligible for free school meals.• 1,623 households have children of the ages of 5 - 7, who would

qualify for Universal Infant Free School Meals. • 850 of these households have an older sibling, and are therefore

likely to be claiming for means-tested free school meals. • This leaves 770 households that could be targeted to increase

take-up.

£1.1m was estimated to be lost to schools in the borough through the Pupil Premium, as a result of fewer families applying for means tested FSM due to the Universal Entitlement offer.

Recommendation: Hounslow can use this analysis to investigate and increase the FSM take-up rates of these households

How are others using this information?

Client testimonials

• They’re making better strategic and operational decisions

• They’re getting the right support, to the right people, at the right time

• policyinpractice.co.uk/london

Proactive steps now can mitigate the impact of

reforms

Questions?

3 Core Deliverables

1. Household level data set with flags of each welfare reform, and the amount impacted

2. Core report assessing the impact of current and future welfare reforms in your council

3. Presentation of findings in person to your council

Next steps

Visit www.policyinpractice.co.uk/london to:

1. Download this slide deck2. Request a sample impact assessment report for our

Welfare Reform Impact Analysis 3. Find out more about our software engine

Thank you

Deven Ghelanideven@policyinpractice.co.uk

07863 560677@deven_ghelani

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