11 May, 2012

Local government insiders have described the government’s welfare reforms as a “time bomb” for local government, and in recent weeks you may have heard a whispered countdown.

There was news that London councils were preparing to move people on their housing lists to houses many miles away because the cap on housing benefit will be insufficient to meet the rent demands of private sector landlords.

The Department for Work & Pensions also published details of what it wants from councils wishing to pilot face-to-face support work for benefit claimants moving to the new Universal Credit, including a challenging timetable and ducking the question of how or whether local government would be involved or funded in the long term.

Finally, county council chief executives revealed they are in talks with district colleagues to try and agree how to distribute the 10% cut in council tax support in less than a year’s time.

Tick Tock, Tick Tock…

The key welfare reform changes for local government are the localisation of council tax benefit (CTB) and the introduction of Universal Credit (UC) – replacing housing benefit, income support, jobseekers allowance and other benefits – and the fuse on both are short with localised CTB starting in April 2013 and UC six months later in October.

In the case of UC there are up to 12 pilots, and councils wishing to take part must apply before 18 May, with work completed and assessed by September 2013, a month before the national rollout for new claimants.

For CTB, the Department for Communities & Local Government is set to publish regulations before the summer recess, after which councils will have to work hard and fast to design a scheme which can be in place by 31 January 2013 or end up running a default scheme akin to the existing national scheme and paying for the 10% cut from existing budgets.

In that six month window, billing authorities and precepting authorities need to agree a scheme which is affordable and politically acceptable to all, as LGC reported this week. IT suppliers also need to design the computer system and affected groups will need to be properly consulted or, as LGC reported last month, risk legal challenge.

That notional six-month window, already packed with activity, shrinks even further if councils want to make sure this financially sensitive decision is made before councils start embarking on budget planning in late Autumn.

…Boom

If that race against the clock is completed, there remain facets of the welfare reform package which could blow up in local government’s face. They can loosely be broken down into technical, political and financial.

The Technical: There are real concerns the computer systems won’t be ready in time, a concern expressed months ago by CTB suppliers and this week by local government people close to the UC project. If the CTB computer systems aren’t ready, this will leave councils no choice but to operate the default scheme akin to the national scheme, including the 10% cut. If the UC computer system is not ready, or perhaps more importantly suffers technical problems, council contact centres could be inundated with concerned claimants unable to make sense of the DWP’s preferred online and telephone support system.

Predictions that UC is set to become the new Child Support Agency or NHS IT system may well prove wrong, but even if all runs smoothly councils are expecting to receive an influx of queries from claimants, not least because UC includes housing benefit, previously administered by local government. The DWP’s target is for 80% of UC claimants to access the benefit online, but this optimistic target has been greeted with incredulity by many who argue that UC claimants are the people most unlikely to be online.

The Political: Councils are facing a very tough decision over CTB. DCLG’s soon to be published regulations are widely expected to protect existing pensioners’ CTB status, very probably also ‘vulnerable’ groups, and perhaps even the single persons discount. If councils decide to pass the funding cut on, it will be to a much smaller group of people, that cut that will be much larger than 10% and it will hit many low paid workers – the very people that the UC welfare reforms are designed to help back into work.

Add to this the government’s insistence that CTB is no longer a ‘benefit’, but a ‘discount’. There are some groups – pensioners for example – who would not apply for a benefit, but would if it were a discount. So, claimants will rise – as they also will if unemployment continues to rise – at a time when funding for this discount is falling. Which brings us neatly to the money.

The Financial: As well as uncertainty about how many CTB claims local government will have to honour and a lack of clarity about how many UC claimants will need face to face help, there is also uncertainty about how local government will be funded for both benefits.

CTB funding has switched from Annual Management Expenditure (AME, or ‘more spent if it’s needed’) when it was paid to DWP to become a Departmental Expenditure Limit (DEL, or ‘that’s your lot’) for local government. It has already been cut by 10% for 2013, but the fear is that it will be cut further in future years, at a time when claimant numbers may rise. DCLG is also yet to carry out a New Burden assessment which will calculate the cost of CTB localisation to local government, although it did provide £30m for councils in the Budget.

Funding for local government’s work on UC is even less clear. DWP has refused to do a New Burdens assessment for the local government UC pilots, insisting it is a “voluntary” piece of work and it is tight-lipped about what happens after the pilots, as LGC reported this month. Some in local government believe the DWP is acting “in good faith” but engaged in a battle with the Treasury. Others are not so confident and think DWP is operating on a “naïve belief” that local government can cover the costs from its existing revenue and benefit resources “until we get to a point where no one requires any help because they are all doing it digitally”.

Whether the bomb goes off or is defused safely, and whether DWP decides councils have a UC role in the long-term or not, councils going to be at the heart of this because they are the local face of government. And it is going to be an interesting – and very challenging – couple of years.

http://www.lgcplus.com/topics/