Housing benefit: progress at last?
The problems of the housing benefit scheme have often been examined but rarely tackled effectively. Geoff Fimister reports on a new study which could help to generate some real progress.

The IRRV Inquiry
Making the system work
Finance
Structure
The future

Housing costs are an important part of the poverty equation. The consequences of arrears can be very serious, so the need to meet such liabilities is generally a high-priority commitment in the family budget. This is why poverty is frequently defined in terms of the disposable income remaining after housing costs.

In Britain, which has relatively low levels of basic benefits, rent is in theory met in full, through housing benefit (HB), where income is at or below the income support level. A similar system applies in respect of local taxes, through council tax benefit (CTB). Owner-occupiers can receive some support with mortgage costs through the income support or jobseeker’s allowance schemes, as long as they are not in full-time work.

Increasingly, though, HB does not meet the full rent payable, even for the poorest tenants. Especially in the private rented sector, growing numbers of claimants are affected by HB restrictions which leave them well below the income support level after rent has been paid. Nor is this failure to keep tenants out of poverty the only problem: there are also widespread administrative difficulties, as a complex and ever-changing system is too often subject to error and delay in its day-to-day operation.

A complex and ever-changing system is too often subject to error and delay in its day-to-day operation

Problems with the structure and administration of HB are very far from new. Nor has there been any shortage of reviews of the scheme over the years. The Conservatives revised it several times, but their preoccupation with restricting public spending made matters worse rather than better. The new Labour Government in 1997 set up a review of HB designed to dovetail with its parallel scrutiny of housing policy, eventually producing a housing Green Paper in April 2000 which contained only a few pages on HB, largely reporting that work was in progress and would continue. The Social Security Select Committee, the Audit Commission, the Better Regulation Task Force and various academics and voluntary organisations have all had their say from time to time, before and since the Green Paper.

Some organisations, CPAG among them, have called in the past for administration of HB to pass to central government, more in the hope than the conviction that operational problems might reduce. This, though, promises considerable upheaval for very uncertain gain – not really what claimants need. More recently, CPAG has pressed for every effort to be made to render current arrangements effective, before risking something more drastic.

The IRRV Inquiry
The Institute of Revenues, Rating and Valuation (IRRV) is, among other things, the professional body representing local government benefit administrators. One might expect it to be defensive in the circumstances. However, with a remit to promote good practice as well as a growing interest in poverty and social inclusion issues, the Institute became impatient with the lack of progress in tackling the problems outlined above and in October 2000 set up its own Committee of Inquiry into the HB and CTB schemes. The Committee asked me to act as a consultant to the project and to draft the report of its findings and recommendations.

The Inquiry used a number of different methods, including a questionnaire survey of local authority benefit services, an invitation to a variety of organisations to submit evidence, plus national and regional workshops and consultative meetings with benefit administrators, the local authority associations, voluntary organisations, registered social landlords, private landlords, private sector software companies and service providers, recruitment agencies, the Department for Work and Pensions (DWP) and the Benefit Fraud Inspectorate. The findings of various earlier reviews were also re-examined.

Given that there had been so many previous investigations, official and otherwise, what was different about the IRRV exercise?

The Institute launched its report – and its 133 recommendations – at its annual conference in Bournemouth in October 2001.[footnote 1] Speaking at the conference, Malcolm Wicks, Minister for Work and Pensions, welcomed the report and made announcements concerning several of the recommendations while civil servants indicated that around 50 in total were under active consideration. The Minister, writing in the housing press shortly afterwards, commented that the recommendations made ‘fascinating reading, not least because they reflect the views of those directly involved with administering the benefit’.[footnote 2]

In my view, this is indeed the Inquiry’s particular strength. Its recommendations on structural matters, such as needs allowances, high rents, non-dependant deductions and treatment of young people, address important problems, but nevertheless cover territory which is very familiar to the poverty and housing lobbies. It is in its particular insights into operational problems and how they should be tackled, in order to make a real difference on the ground, that this report really adds to our understanding.

There is insufficient space here to go into the report’s findings and recommendations in detail. The ground covered, though, includes: how these schemes are managed; how guidance and documentation need to be changed; the potential of information technology and e-government; how the ever-changing rules must not be allowed to sabotage effective administration; recruitment, retention and training of staff; how performance can be improved; the issues around private sector involvement; the issues around incentives to work; how the system is and should be financed; how to keep out fraud; how to make sure entitlements are claimed; how aspects of these schemes can cause hardship; and the contribution which an effective benefits service can make to anti-poverty and social inclusion strategies and to the quality of life.

Making the system work
Some local authorities provide an excellent service, others are abysmal and an entire continuum of performance ranges between these extremes. Why is this? The Inquiry concludes that there is no simple answer, but rather a number of factors, some or all of which could be at work where performance is inadequate. Poor standards can be the result of management failings, but the overall problem is a lot more complicated, involving issues around the differential impact of the scheme’s complexity and rapid rate of change, perhaps reflecting varying caseload characteristics; and/or the operation of the subsidy system; and/or the interaction of subsidy shortfalls with an authority’s overall financial position; and/or current or historical problems with computer systems; and/or a lack of political priority within the local authority.

This last point is indeed the subject of the Inquiry’s first recommendation: that, in order to ensure that benefits are afforded a sufficiently high profile, there should always be a portfolio-holding elected member with benefits as a substantial part of his or her brief.

Many commentators have pointed to the impact of rapid change on a very complex system as a main cause of administrative disruption. Benefit administrators feel strongly about this: when asked in the IRRV questionnaire survey whether a reduction in the number of changes would help service delivery, 97 per cent of the 151 respondents said that it would. The striking point regarding this last figure is not even the massive consensus; it is the fact that this statistic will register not a flicker of surprise among readers with any knowledge of the realities of benefit administration.

The report recommends that there should be a predictable cycle, with two change dates: one linked to the April upratings and one other, with exceptions made only in cases of genuine urgency. This would require a cultural change, not only within the DWP, but also within departments that make demands upon it, notably the Treasury. Change should also entail adequate and sufficiently early consultation, with local authority and other affected interests and with software suppliers. The Minister has responded to these concerns to at least some extent, proposing in his Bournemouth speech to set up a system to vet changes to the regulations for their administrative impact.

A continuing process of change, even if the rate of mutation can be slowed down, will still have important implications for administrative and computer systems, documentation, information to the public and training of staff. Hitherto, the change process has stumbled ahead with little regard for the impact on what should be a finely balanced set of interdependent components of the overall system.

Legislation and guidance is in need of consolidation, simplification and clearer expression

The Inquiry report argues that legislation and guidance is in need of consolidation, simplification and clearer expression, following which it should be made available electronically and kept up to date. The DWP should also sponsor the development of standard model forms and leaflets, available nationally and electronically. Local authorities should be able to customise such material to suit local circumstances: a rigid national format should not be imposed. Changes to the scheme should always be accompanied by amended leaflets, guidance and other documentation, available promptly and electronically. Model documentation should be written in plain English. Locally-produced material should be tested in this respect by systematically seeking feedback on drafts from service users. Leaflets and other documentation should be made available in appropriate minority languages, in the light of the local composition of minority ethnic communities. The local availability and accessibility of resources for translation and interpretation should be kept under review.

Linked to the process of change, there should also be an effective system of training. The report argues that the DWP should fund a national training scheme, regionally delivered and backed up with interactive online training. A realistic margin for in-service training and staff turnover should be included in estimates of staffing requirements and reflected in cost projections. The Minister announced in Bournemouth that he would open up talks with interested parties to discuss the future of training in local authority benefit delivery.

The report explores information technology in some detail. Among other things, it recommends that there should be a study of software requirements for HB and CTB. The outcome of this study should be a model specification. In-house systems could be measured against the model. Software suppliers would be able to apply to have their product accredited on a star rating system. One or no stars would mean unsuitable for the purpose; five stars would be outstanding. This would assist local authorities with their purchasing decisions, prevent duplication of effort and drive up the quality of software.

Among various recommendations for dealing with backlogs of work is another proposal which the Minister accepted in his Bournemouth speech: that, subject to a percentage quality check, local authorities will be allowed to delegate determinations where, for example, they are using private contractor or agency staff, thus removing double-handling and consequent delay.

The IRRV report links fraud and take-up as two aspects of the need to secure entitlement. Effective measures to prevent and detect fraud are essential, but they should not be so onerous as to distort and delay mainstream administration (as has too often been the case in the implementation of the ‘verification framework’). Take-up initiatives should also be undertaken regularly, on a local and national basis, an element of administration subsidy being earmarked locally for this purpose. Guidance on take-up methodology should be developed, in consultation with those local authorities which have substantial experience in this area.

Finance
The finance of these schemes, both for administration and for benefit costs, raises a number of important questions. Obviously, it has to be adequate, but there are many other questions around how it is structured. Transparency is an issue: as long as it is not clear what proportion of the cost of a decent service is being provided by central government, it will not be possible to measure and address the shortfall. The Inquiry seeks to mow the long grass here, recommending that the DWP should commission research on the expected cost per benefit claim for different types of authority and caseload structure, including staff-to-claimant ratios, to facilitate meaningful comparisons around funding and staffing levels. The Department should then state what percentage of this cost it would expect to fund via administration subsidy.

Structure
Among the report’s recommendations relating to the structure of the scheme are the following:

• The DWP should institute a review of the needs allowances (‘applicable amounts’) linked to a wider investigation of minimum income standards and the adequacy of benefit rates.
  
  
• It is important to minimise hardship caused by benefit shortfalls and to avoid concentrating poor people in poor housing. Therefore, until such a time as reforms to housing supply have delivered a genuine choice of affordable and decent housing, there should be no introduction of ‘shopping incentives’ (percentage HB restrictions, combined with modest flat-rate payments, designed to encourage claimants to ‘shop around’). Meanwhile, there should be a fundamental review of the purpose, structure and operation of the existing system of restrictions on rents eligible for HB.
  
  
• Young people should be assessed on the basis of the adult needs allowances at age 18. There is a strong case for such a change in all the means-tested benefits, but especially as regards HB and CTB where, by definition, there can be no question of the claimant’s being a non-householder living with parents. The new ‘younger person’s rent’ should be thoroughly monitored and its effects researched. If it continues to exhibit the problems of the single room rent (hardship, homelessness, restriction of labour mobility and the deterrent effect on landlords) then it should be abandoned and young people’s benefit assessed on the basis of the mainstream scheme.
  
  
• Non-dependant deductions (reductions of benefit to reflect assumed contributions from, for example, grown-up children or elderly relatives) should be abolished. Failing this, their excessive levels and complex structure should be addressed.

The IRRV Inquiry did not explore in detail the position of owner-occupiers on low incomes, but the report notes in passing that the case for extending HB to mortgage costs seems very strong in the context of high levels of owner-occupation, a continuing problem of low pay and increasing labour market flexibility with its insecure employment patterns. The Committee also supported the idea of building a housing element into the new employment and pension tax credits, provided that HB remained available for those whose housing costs exceeded the housing credit, noting that this could provide a means to extend help to low-income owner-occupiers in work.

CPAG would not necessarily endorse all of the IRRV’s proposals. For example, in the interests of administrative streamlining, the Committee argues that all landlords with three or more properties should be entitled to receive direct payments of benefit. (As a condition of this, they would be required to accept electronic payment if the authority so requested; and registered social landlords would be entitled to receive such payments on a weekly basis). CPAG, however, would take the view that the choice should normally lie with the claimant. Similarly, in order to speed up the full award, the Committee argues against mandatory interim payments, whereas CPAG would, on the contrary, see these as requiring strengthening. On the whole, though, the poverty and housing lobbies would endorse the majority of these recommendations, pointing as they do towards an improved service and more adequate benefits.

The future
I would hope that at least the following three outcomes might flow from the current debate around HB:

Firstly, a completely different culture as regards the management of change, locally and nationally. Claimants should not have to put up with the consequences of excessive change at short notice, with all the attendant administrative disruption. Nor, given current information technology, is there any excuse for out-of-date guidance, documentation and publicity material. Nor should authorities lack the staffing margins to permit access to adequate in-service training.

Secondly, a better understanding that deficient housing benefits can mean severe reductions in disposable incomes after housing costs, causing hardship and debt. The IRRV report recommends that the DWP should identify and state explicitly the effects of scheme changes on claimants’ disposable incomes after rent and council tax, precisely so that adverse implications should not be ducked or lost in a cloud of complexity.

Thirdly, a recognition that some key problems ake matters for housing policy and will not be solved through the benefit system. The problem of high rents in relation to low incomes needs to be addressed by policies designed to achieve a satisfactory supply of adequate and affordable housing. The Government’s commitment to ‘quality and choice – a decent home for all’ [footnote 3] is very welcome. This is an achievable objective which should remain at the forefront of housing policy. Ever more ingenious methods of restricting tenants’ HB will perpetuate hardship in the absence of such a housing market.

These are not just technical matters, but important issues which should concern us all.

Geoff Fimister is a part-time research officer with CPAG and a freelance consultant on benefit policy issues

Footnotes
1. D Magor (chair) and G Fimister (ed), Report of the IRRV Committee of Inquiry into the Operation and Structure of Housing Benefit and Council Tax Benefit in England, Scotland and Wales, IRRV, October 2001. For free summary and/or how to obtain the full report, contact Janet Alexander at the IRRV. Tel: 020 7691 8993 [back to text]
2.M Wicks MP, 'Turning a Benefit', Housing Today, 25 October 2001 [back to text]
3.Quality and Choice: a decent home for all, Housing Green Ppaer, DETR/DSS, April 2000 [back to text]

Poverty 111, Winter 2002