Welfare Reform - Edinburgh Council

Aug 28, 2014 - The DWP has recognised that the creation of the Single Fraud Investigation Service will create a range of burdens and a small amount of funding has been identified to address these pressures. The Council and the DWP are developing a programme of work to support customers to prepare for Universal ...
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Finance and Resources Committee 10.00am, Thursday 28 August 2014

Welfare Reform - Update

Item number

6.9

Report number Executive/routine Wards All

Executive summary At the end of June 2014 the Scottish Welfare Fund spend for Crisis Grants was 26% of the total budget and the spend for Community Care Grants was 19%. At the end of June 2014 the Council had committed to spend 84% of the Discretionary Housing Payment allocated budget. Spend on these funds continue to be monitored monthly. Recent figures show that the number of tenants affected by Under Occupancy who are in arrears has reduced from a high of 2,602 to 1,708. The DWP has recognised that the creation of the Single Fraud Investigation Service will create a range of burdens and a small amount of funding has been identified to address these pressures. The Council and the DWP are developing a programme of work to support customers to prepare for Universal Credit. This will be a joint approach which will include key partners and stakeholders. The Council continues to promote alternatives to payday loans and is actively engaged in a range of Welfare Reform activities.

Links Coalition pledges Council outcomes Single Outcome Agreement

SO2

Report Welfare Reform – Update Recommendations 1.1

It is recommended that the Finance and Resources Committee notes: 1.1.1 the ongoing actions relating to Welfare Reform; and 1.1.2 the next update will be reported to Committee on 30 October 2014.

Background 2.1

The Corporate Policy and Strategy Committee recommended on 6 August 2013 to refer bi-monthly updates on Welfare Reform to the Finance and Resources Committee. The last update was considered on 5 June 2014.

Main report Scottish Welfare Fund (SWF) – Crisis Grants and Community Care Grants 3.1

The SWF budget for 2014/15 is £2,187,628, of which £445,000 has been allocated to the Crisis Grant fund and £1,732,628 to the Community Care Grant.

3.2

The Crisis Grant fund for 2014/15 is:  

3.3

£455,000 £122,464.42 spend to 30 June 2014 (26% of the total fund)

The Community Care Grant fund for 2014/15 is:  

£2,127,628 (this includes £395,000, the confirmed carry forward for 2013/14) £409,058.21 spend to 30 June 2014 (19% of the total fund)

3.4

The Scottish Government has published Crisis Grant and Community Care Grant performance for all Scottish Authorities. The Council’s combined performance was 6% for April 2014 and 14% for May, this is slightly below the the Scottish average of 8% and 17% respectively. The 2014/15 spend profile for each fund is included in Appendix 1.

3.5

Administration funding for the SWF is currently capped nationally and the Council continues to experience service pressures as a result of increased service demands and referrals. The current level of funding is unlikely to sustain existing service provisions. This will be highlighted in the Council’s response to the Welfare Funds (Scotland) Bill – call for written evidence. Appendix 2 outlines the areas the Council’s submission will address.

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Discretionary Housing Payments (DHP) 3.6

At 30 June 2014 the Council’s DHP 2014/15 financial position is:  £3,833,120 total fund  £1,124, 358.77 spend (29% of fund)  £2,084,645.35 committed to 31 March 2015 (a further 55% of the fund)

3.7

In overall terms the Council has committed to spend 84% of the allocated budget. Appendix 3 outlines the Council’s DHP spend profile at 30 June 2014.

3.8

The Scottish Government requested and was granted the power to lift the DHP cap in Scotland. As a result discussions are currently ongoing between COSLA and the Scottish Government to agree the allocation of an additional £15m funding to fully mitigate the impact of under occupancy in 2014/15.

3.9

In light of this decision the Council is now in a position to award DHP to all tenants who are under occupying their properties in Edinburgh during 2014/15.

3.10 While an automatic DHP award is not permissible, the application process for tenants under occupying has been significantly simplified. At this point no application is required for tenants whose shortfall in rent is solely due to the under occupancy regulations. Attempts are being made to contact up to 2,000 affected tenants to allow the awards to be progressed. The new DHP policy was approved by the Corporate Policy and Strategy committee on 5 August 2014. 3.11 Until the Scottish Government confirms the allocation of the additional DHP funding the Council is not in a position to confirm if the current DHP budget will be sufficient to address backdating to April 2013. The issue of backdating was addressed in a report to the Corporate Policy and Strategy on 5 August 2014. This highlighted that an additional £1.8 million is required to address backdating pressures in 2013/14. The Council, through COSLA, continue to press for early confirmation of the allocated funding. Council Tax Reduction Scheme (CTRS) 3.12 The Council’s CTRS funding for 2014/15 is estimated at approximately £27.5m. This budget will be confirmed later in the year. At June 2014 the annual projection for the fund was 97% which remains within funding tolerances. 3.13 The Scottish Government has published caseload and expenditure statistics for 2013/14, the first year of the CTRS in Scotland. In overall terms Edinburgh had the third highest caseload in Scotland with 7% of CTRS claims and the second highest expenditure with £27.69m. Council Tenants and Housing Services – Under Occupation (UO) 3.14 Housing Benefit UO restrictions initially resulted in a significant number of affected tenants falling into arrears in 2013/14. There is evidence that the additional advice and support provided by staff in Neighbourhood Offices and the Welfare Reform Team is paying off and by the end of May 2014 the number

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of affected tenants in arrears had reduced to 1,708, from a high of 2,602 in August 2013. 3.15 Benchmarking information recently released by the Scottish Housing Best Value Network benchmarking club shows that local authorities throughout Scotland are facing the same challenges as Edinburgh in collecting rent arrears. Single Fraud Investigation Service (SFIS) 3.16 SFIS is the new national body that will bring together welfare benefit fraud investigation currently undertaken by DWP, councils and HMRC. This new body will see Council Housing Benefit fraud staff transfer to the DWP. 3.17 The implementation date for the Council is 1 November 2014 and meetings between the DWP’s and the Council’s HR teams are ongoing to ensure that staff are properly supported during the transition to the new service. 3.18 In conjunction with this activity the Council is also progressing with the creation of an internal fraud team that will investigate potential fraudulent activities that fall out with the scope of the SFIS, for example CTRS fraud. 3.19 The DWP has now proposed to realign the Scotland wide SFIS new burdens funding from the original £400k in each of 2014/15 and 2015/16 to £600k in 2014/15 and £200k in 2015/16. COSLA continues to consult with Scottish Government and the DWP in relation to this phasing and more generally on the funding levels which are considered to be insufficient. Universal Credit (UC) and Local Support Services Framework (LSSF) 3.20 At the Scottish Government’s Local Government and Regeneration Committee on 28 May 2014 Highland Council provided an update on their experience in relation to UC in Scotland. It was noted that the number of applicants processed was low and until the caseload increases in both scope and complexity, it will be difficult to properly assess the impact upon council services. Edinburgh will continue to monitor progress in this area. 3.21 The DWP are funding 6 pilot areas throughout the UK to test different aspects of LSSF and only one pilot area in Scotland has been funded. 3.22 Edinburgh submitted a joint bid with the DWP Jobcentre Plus but this was unsuccessful. It is still the Council’s intention to support customers to prepare for UC and a programme of work is being developed. This will include establishing:   

skills and work experience; basic digital skills; and personal budgeting skills.

3.23 This will be a joint approach and will include various Council services, DWP Jobcentre Plus, Registered Social Landlords, Advice Agencies, voluntary organisations and Work Programme Providers.

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Measures of success 4.1

The success of the programme will continue to be measured through:  

reductions in forecast loss of income; and customer satisfaction with advice and advocacy services relating to benefit changes, including increased benefit take up and minimises losses by ensuring people get their full entitlement under the new arrangements

Financial impact 5.1

The increase in numbers of people experiencing hardship has led to increased demand for services across the Council and also partner advice agencies. There is a risk to Council income, particularly in relation to rent arrears, changes to subsidy levels for temporary accommodation and service charges. Known risks include: 

  



Loss of rental income to the Housing Revenue Account (HRA) arising from Housing Benefit under Occupation reforms and Direct Payment under Universal Credit. Scottish Welfare Fund and Discretionary Housing Payment budget will be insufficient to meet demand longer term. The spend on Council Tax Reduction Scheme exceeds the available funding. Reduced DWP Administration Subsidy due to the abolition of Council Tax Benefit, the phasing out of Housing Benefit and Central Government budget savings. Increased demand on advice and advocacy both for the Council and Third Sector advice agencies.

Risk, policy, compliance and governance impact 6.1

The financial risk to the Council as well as the risk to the Council’s reputation is being monitored regularly. Actions taken to assess and mitigate these risks and ensure effective governance include:     

bimonthly update to Corporate Policy and Strategy and Finance and Resources Committees; annual update to Risk, Governance and Best Value Committee; dedicated teams introduced to provide support and assistance; quarterly meetings with Elected Members, Council Officers and External Partners; and a strategic approach and action plan for delivering Social Security in Edinburgh (A strategic response to Welfare Reform in Edinburgh).

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Equalities impact 7.1

The UK Government has prepared Equalities and Human Rights assessments for the welfare reform proposals. The Council will undertake an EHRIA when necessary for any of its proposals.

Sustainability impact 8.1

Welfare Reform is expected to have general implications for environmental and sustainability outcomes, for example in relation to fuel poverty and financial exclusion.

Consultation and engagement 9.1

Council officials continue to engage with the UK and Scottish Governments, directly and through COSLA, with the DWP, the Third Sector, the NHS and other partners. The Council is also engaging with citizens, both in and out of work, who rely on benefit income and tax credits. The Council continues to participate in a number of groups with the DWP looking at the impacts of Welfare Reform, namely Local Authority Transition Working Group (LATWG), Practitioners Operational Group (POG), as well as COSLA’s Welfare Reform Local Authority Representative Group.

Background reading / external references Recent reports to committee: Welfare Reform – update – Corporate Policy and Strategy Committee, 5 August 2014 Welfare Reform – update – Finance and Resources Committee, 5 June 2014 Welfare Reform – update – Corporate Policy and Strategy Committee, 13 May 2014 Welfare Reform – update – Finance and Resources Committee, 20 March 2014 Welfare Reform – update – Corporate Policy and Strategy Committee, 25 February 2014 Welfare Reform – governance – Governance, Risk and Best Value Committee, 30 January 2014

Alastair D Maclean Director of Corporate Governance Contact: Neil Jamieson – Depute Head of Customer Services E-mail: [email protected] | Tel: 0131 469 6150

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Eileen McHale – Welfare Reform Team Manager E-mail: [email protected] | Tel: 0131 529 7667

Links Coalition pledges Council outcomes Single Outcome Agreement Appendices

SO2 – Edinburgh’s citizens experience improved health and wellbeing, with reduced inequalities in health Appendix 1 – The Scottish Welfare Fund Spend Appendix 2 – Welfare Funds (Scotland) Bill – call for written evidence Appendix 3 – Discretionary Housing Payment Spend

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Appendix 1 Scottish Welfare Fund (June 2014)

Thousands

Community Care Grant Allocation 2014/15 2000 1800 1600 1400 1200 1000 800 600 400 200 0 Apr-14 May-14 Jun-14

Budget in c provsional carry forward £2.128m

Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

CCG 2014/15 Spend to date

2014/15 projected spend

Total fund 2014/15

CCG 2013/14 Spend

Crisis Grant Allocation 2014/15 600

Thousands

500 400 300 200 100 0 Apr-14 May-14 Jun-14

Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

2014/15 Spend to date

2014/15 projected spend

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Total fund

2013/14 spend

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Appendix 2

Welfare Funds (Scotland) Bill - call for written evidence Consultation – Finance Committee 1. Did you take part in any consultation exercise preceding the Bill and, if so, did you comment on the financial assumptions made? - The Council did respond to the consultation exercise but did not comment on financial assumptions made 2. If applicable, do you believe your comments on the financial assumptions have been accurately reflected in the FM? - Not applicable. 3.

Did you have sufficient time to contribute to the consultation exercise? - Yes

Costs 4. If the Bill has any financial implications for your organisation, do you believe that they have been accurately reflected in the FM? If not, please provide details. – The Council is of the opinion that the current level of administration funding provided by the Scottish Government is not sufficient to provide the service level processing times required for community care (15 days) and crisis grants (2 days). Since the commencement of the Welfare Fund on 1 April 2013 the following have occurred all of which have increased the number of applications to the fund: awareness of the fund has increased, a number of changes have been made to the guidance all of which have led to increased demand, the numbers of customers who have had their benefit sanctioned has increased leading to more applications to the fund. The Council believes that the administration funding requires to be increased by 20% to ensure the provision of good customer service. 5. Do you consider that the estimated costs and savings set out in the FM are reasonable and accurate? – The Council is of the opinion that the level of grant funding is reasonable and accurate but that the level of administration funding is not due to the reasons detailed at 4 above. 6. If applicable, are you content that your organisation can meet any financial costs that it might incur as a result of the Bill? If not, how do you think these costs should be met? – The Council is of the opinion, as stated at 4 above, that the level of administration funding is not sufficient to provide the level of service required. Given that the fund is a new burden to Local Authorities the Council is of the opinion that these additional administration costs should be met by the Scottish Government. Alternatively, the Scottish Government should allow Local Authorities to move funding from the grant fund to the administration fund to ensure good customer service is delivered. 7. Does the FM accurately reflect the margins of uncertainty associated with the Bill’s estimated costs and with the timescales over which they would be expected to arise? – The Council is of the opinion that the margin of uncertainty is reflected within the FM. Wider Issues 8. Do you believe that the FM reasonably captures any costs associated with the Bill? If not, which other costs might be incurred and by whom? –

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The Council is of the opinion that the FM does not capture all costs associated with the Bill. The following costs are not included: publicity for changes to guidance (both as a result of the Bill and any future changes), IT/software costs. In addition the Bill does not include any provisions for dealing with Fraud. Dealing with Fraud could involve a visiting programme on a percentage of claims to establish that there was a requirement for the goods. Currently it is assumed the Local Authority will meet these costs. The Council is of the opinion that these costs should be met by Scottish Government 9. Do you believe that there may be future costs associated with the Bill, for example through subordinate legislation? If so, is it possible to quantify these costs? The Council is unable to determine or quantify any possible future costs at this time.

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Stage 1 consideration of the Welfare Funds (Scotland) Bill Welfare Committee invites all interested individuals and organisations to submit written evidence on the Bill and its likely impact. To help inform your response, you may wish to refer to the Welfare Funds (Scotland) Bill and the Draft Regulations which are available on the Scottish Government’s website at the following link: http://www.scotland.gov.uk/Topics/People/welfarereform/scottishwelfarefund/welfarefundsbill/dr aftregs The Committee welcomes views on all of the Bill’s proposals. In particular, the Committee would like submissions to address the following questions: General 1. Are you in favour of the Bill and its provisions? Do you think the Bill fully achieves the Scottish Government’s aim of providing assistance for short term need and community care? – Yes to both. The City of Edinburgh Council is of the opinion that the Scottish Welfare Fund has been very successful in providing assistance for short term and community care. Given that the current scheme is included in the provisions of the Bill the continued success of the fund is assured. 2. The interim SWF scheme has already been running for two years. Do you feel that the Bill has suitably taken on the learning from this time? – There have been a number of changes to the scheme which reflect learning from this time, these have in the main reflected recommendations made by Local Authorities. However, City of Edinburgh Council is of the opinion that a number of other changes could be included. These suggestions are detailed at 3. below. 3. Is there anything else that you feel should be included in the Bill? - The Bill does not include a provision for dealing with Fraud. Whilst financial penalties are unlikely to be appropriate for this customer group a form of sanction could be introduced where fraud is proven. Fraud may occur where a false declaration of need is made or the customer attempts to sell goods provided. In these cases no further claim could be considered for a period of time as prescribed in the Bill. The Bill should also clarify the position regarding removal costs or alternatively remove them from the Bill and advise that they should be dealt with through Discretionary Housing Payments. 4. Will the Bill and its provisions have a particular impact on equalities groups? – Given the Bill reflects the current welfare fund scheme it is unlikely the enactment of the Bill will have a significant new impact on equalities groups. Administration of Welfare Funds 5. Do you agree with the proposal that local authorities have the option to outsource the provision of the fund to a third party or jointly administer the fund across local authority boundaries? What are the benefits or drawbacks to this approach? Yes the Council agrees with this proposal. The benefits are that this would help support smaller local authorities achieve adequate processing and delivery times which may not be achievable because of the lack of resilience eg sickness, holidays, within a small team. Also unit costs could be lees by administering across local authority boundaries. The drawbacks include: the dilution of local knowledge, conflicting staff priorities and potential issues around the setting of

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staffing levels. These drawbacks could be addressed by a lead authority having an SLA agreement with the other participating authorities. Review of decisions and the SPSO 6. What are your views on the proposed internal local authority review process? – The Council agrees that the process allows for another opportunity to review a case, taking into account any new evidence to ensure that the correct decision was made according to the guidelines contained within the Bill. Do you agree that the SPSO is the appropriate body to conduct secondary reviews? – No, the Council is of the opinion that the opportunity to introduce local knowledge into the review process will be lost. Also, it is likely that the time to set up and undertake the review will increase leading to a potentially unacceptable delay for a vulnerable client group. In addition, the cost of undertaking an SPSO review is likely to be higher given that local authorities are currently undertaking reviews from within current resources. Further provision - regulations 8. What are your views on the level of detail that will be contained within the regulations? Is there any aspect which you feel would benefit from being on the face of the Bill? The Council is of the opinion that the level of detail reflects the requirements of the fund. As stated at 3. above the Council is of the opinion that Fraud has not been addressed within the Bill. Financial Memorandum 9. Do you think that the costs attributed to the running of the fund and the set-up of the SPSO to administer secondary reviews are realistic and proportionate? – The Council is of the opinion that costs attributed to the grant fund are realistic and proportionate. The Council is of the opinion that the current level of administration funding provided by the Scottish Government is not sufficient to provide the service level processing times required for community care (15 days) and crisis grants (2 days). Since the commencement of the Welfare Fund on 1 April 2013 the following have occurred all of which have increased the number of applications to the fund: awareness of the fund has increased, a number of changes have been made to the guidance all of which have led to increased demand, the numbers of customers who have had their benefit sanctioned has increased leading to more applications to the fund. The Council believes that the administration funding requires to be increased by 20% to ensure the provision of good customer service. Alternatively, the Scottish Government should allow Local Authorities to move funding from the grant fund to the administration fund to ensure good customer service is delivered. Other provisions 10. Do you have any comments on any other provisions contained in the Bill that you wish to raise with the Committee? – The Council is of the opinion that a clearer definition of what constitutes low income should be included within the Bill, e.g. should this be stated as the same income level as a person on out of work state benefits.

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Appendix 3 Discretionary Housing payment 2014/15 DHP Fund Allocation 2014/15

Current Budget £3.83m

4,000,000

3,500,000

3,000,000

2,500,000

Spend to Date

Committed

2,084,645

2,000,000 1,927,293

1,500,000 1,737,945

1,000,000 1,124,359

500,000 677,097 332,292

0 April 2014

May 2014

June 2014

July 2014

August 2014

September 2014

October 2014

Finance and Resources Committee – 28 August 2014

November December 2014 2014

January 2015

February March 2015 2015

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