Scottish Social Security Consortium

Minutes of meeting 16 February 2005

Present:
Abigail Bremner   Citizens Advice Scotland
Susan Drew   Highland Advice and Information Network
Maureen McIntosh   One Parent Families Scotland
Craig McKenzie   One Plus
Janette Middlemas   Shelter
Lee Oliver  Child Poverty Action Group in Scotland
Judith Paterson   Child Poverty Action Group in Scotland
Susan Rew   One Parent Families Scotland
Derek Sinclair  Contact a Family
Amanda Toal   The Action Group
Steven Wilson   Drumchapel Law and Money Advice Centre

Gary Rodgers Housing Support Division, DWP

Housing Benefit Reforms

Gary Rodgers spoke to the group about recent and up-coming changes to housing benefit (HB) legislation.

Regulations 68, 69 and 70
Gary highlighted that work was currently being undertaken on the Housing Benefit regulations to deal with the recent changes to HB. The changes were causing significant problems to local authorities:

• There was no provision the deal with change of address within the local authority area – previously such a change had ended a claim. (Right now, local authorities were being advised to use Reg 68 (1) as their authority).
• Cessation of entitlement provisions were scattered throughout the legislation and were inconsistent
• Rent liability in Reg 69 does not link effectively to the change of circumstances provisions in Reg 68. This is complicated by factors in relation to the calculations from weekly to monthly rent.
• The eligible rent calculation in Reg 69 does not work properly – this is especially an issue in relation to the proposed introduction of the local housing allowance.

Gary noted that two circulars had been issued to try to help local authority staff deal with the provisions at present. These were A17/2004 and A31/2004. It was acknowledged that these did not deal with the problems effectively, but their intention was to shore up the system until more comprehensive changes could be made. It was also noted that the inconsistencies highlighted above had, for the greater part, always existed in the regulations. However, the changes created by the abolition of benefits periods had pushed them over into being unworkable.

The proposed reforms would look at the following issues.

• Changes of circumstance on the basis of change of address or change of rent amount – what should the effective date be. The local authorities favoured the first day of the following benefit week (Monday) after the change was notified as this would fit in with existing provisions (as well as their software). The other option was to make the change effective from the date it occurred. Changes of circumstance relating to other issues are effective from the first day of the following benefit week, in line with current procedures.
• Making additional provision for the making of daily payments of HB eg. for temporary and hostel accommodation.
• Simplifying the calculation of entitlement in relation to monthly rent liability – the proposal is to multiply monthly figure by 12 and divide by 52 to get the commensurate weekly entitlement.

The DWP intended to consult on these proposals further with local authorities. The aim was to lay regulations in October 2005 with an April 2006 start date. This would require the regulations to be available for consideration by the Social Security Advisory Committee for their July/August meeting.

Group members highlighted concerns about making the effective date for changes of circumstances the Monday following the notification of the change. Contrary to what local authorities had claimed, group members did not think this system (which is the current system) was well understood by claimants. It was felt that claimants would have a much better understanding of a system in which the change was effective immediately – as was the case with other benefits such as income support.

Members also highlighted significant problems with the current next Monday effective date – eg. people in Women’s Aid and other hostels who became liable for rent from the date they moved in rather than the following Monday; and young homeless people, who may move into accommodation as soon as it was offered, only to find that HB would not cover their rent until the following Monday. Lee Oliver noted that local authorities used to manage this problem by advising tenants to move on a Monday: however, as people increasingly moved between the private and social sectors, this was no longer possible to co-ordinate. In the end, it was felt that a system of not making the effective date the date of actual change led people to accrue rent arrears unintentionally.

It was also noted that that the current system of making four-weekly payments of HB to cover monthly rent liability was causing hardship to tenants. In some cases, claimants paid the shortfall each month (to make their four-weekly HB payment up to the actual amount owed for a month’s rent) yet the extra payment (13 four-weekly payments versus 12 monthly payments) also went to the landlord – giving them a significant profit overall.

Gary noted the points raised, which he would use to challenge the local authorities’ views on the issue.

Changes from April 2005
Additionally, the following changes would be coming online from April 2005.

• Non-dependant deductions – for those 65 and over, any change which would result in an increased non-dependant deduction (NDD) will trigger a 26-week concessionary period before the change affects their HB entitlement. This will deal with previous problems caused because the 26-week concessionary period only covered changes in income which led to a reduction in benefit entitlement (rather than changes in status which affected the NDD and therefore led to a reduction in benefit entitlement too).
• Pension credit – there will be no NDDs for those in receipt of pension credit (including the savings credit only).
• Bail hostels – Those who are unable to get a place in a bail hostel and are therefore in alternative accommodation will be able to claim HB in relation to their home for 52 weeks. This would clear up an anomaly which meant that those who could not be placed in a bail hostel because of lack of availability did not qualify for HB payments.
• Child tax credit/child benefit – these will be ignored when calculating income for pensioners in relation to HB.
• Children with capital/income – children’s capital/income will be ignored for the purposes of entitlement to HB for working age claimants (this brings them in line with pensioner claimants)
• Deferred state pension – Deferred state pension will not be considered to be notional income for the purposes of HB.
• Calculation of weekly income from a tax credit award – local authorities will be able to use the instalment rate notified in their award letter from the Inland Revenue to calculate weekly income for the purposes of HB. It was felt by Government that this was clearer for claimants (as they could better understand their entitlements when moving into work) and provided a clear date (the date on the award notice) for any change of circumstances. The following examples were given to show how this would work:
  – Four-weekly tax credit award paid on Tue 26th April would be treated as paid for the period of Wed 30th March to Tue 26th April
  – A weekly payment on Tue 26th April would count for the period Wed 20th April to Tue 26th April
  – A fortnightly payment on Tue 26th April would count for the period Wed 20th April to Tue 3rd May (note that this is apparently in line with Inland Revenue payment cycles)
  – Notices of a daily award of working tax credit to be paid by an employer will be counted as income from the date of the notification.

Further changes in the pipeline
The following changes were intended to be in place for April 2006:

• Other payments – charitable, voluntary and working age payments are to be ignored as income for working age HB claimants.
• Lump sums from deferred pensions – Lump sums paid as a result of deferring the state pension will be disregarded (to deal with provisions to allow such sums to be paid to those who delay drawing their pensions).

Group members expressed concern at the proposals for calculating income from tax credits for the purposes of HB. It was felt that this would not effectively deal with arrears payments (which should be treated as capital and ignored for 12 months) or situations where tax credits have been overpaid meaning that there was additional entitlement to backdated HB. If TCs were paid in a four-weekly cycle rather than monthly, which created confusion to claimants trying to work on the basis of a monthly income.

Gary apologised for the fact that he was not able to answer any questions on tax credits and HB, but stated that he would pass any issues raised onto his colleague Bernard Mitton. He also noted that a HB circular was being issued to cover ‘prior receipt’ of tax credits.

It was agreed that the group would return to the issue of tax credits and housing benefit at our next meeting.

Minutes of last meeting and matters arising

Child maintenance bonus/child maintenance premium The DWP was not able to clarify the effects of a move to child tax credit on the above. The group’s view was that you would only move to qualifying for the child maintenance premium (£10 disregard on maintenance payments) if you were assessed under Child Support Agency ‘new’ rules (or started getting maintenance payments on/after March 03). Note that those getting voluntary maintenance payments from Feb 2004 can also qualify. Thus a move from income support to income support and child tax credit would not affect entitlement to a child maintenance premium.

However, people may still be better off moving to child tax credit even where they lose income support entitlement as maintenance is not considered as income for calculating the credit. Claimants can request to be transferred to child tax credit themselves.

Back to work credit – The DWP had also agreed to clarify whether Back to work credit was considered as income for the purposes of working tax credit (which would therefore wipe out any gains in receiving it). Abi had clarified that it was not considered as income (Tax Credits (Definition and Calculation of Income) Regulations 2002 (SI no. 2006) Reg 4 (4) Table 1, para 14A).

Letters regarding Jobcentre Plus cutbacks – A letter had been sent on behalf of the group to Kevin Doran, Head of Jobcentre Plus in Scotland, outlining our concerns regarding changes to Jobcentre Plus services. It had also been copied to MPs. Mr Doran had responded in detail, including specific recognition of the burden placed on consortium member organisations when services failed. Copies of both the initial letter to Jobcentre Plus and the response had been circulated previously to group members. Only a few MPs had responded, including Brian Donohoe (Cunninghame South), Mark Lazarowicz (Edinburgh North and Leith) and Jim Sheridan (West Renfrewshire).

Susan Drew reported that in Highland the Liberal Democrat MP had taken matters forward following a letter from herself on behalf of Highland Advice and Information Network. One positive result of the network’s involvement in this had been closer liaison with Jobcentre Plus in the area. HAIN were now consulted at an early stage and information on planned changes was shared with them.

It was noted that concerns about liaison arrangements falling by the wayside had been raised by group members in previous meetings. Abi reported that the experiences of Citizens Advice Bureaux had been mixed, with good arrangements in place in some areas but no liaison at all in others.

ACTION: It was agreed that this issue would be raised at the next DWP liaison meeting attended by Citizens Advice Scotland and CPAG in Scotland, where we would request details of a customer liaison contact for each Jobcentre Plus district.

Information exchange – tax credits update

Lee Oliver updated the group on tax credits developments.

• Overpayments – Advisers were often unable to get beyond the first tier of the complaints process, meaning that their complaints appeared to get ‘lost’ in the system. Lee suggested dealing with this by setting time limits in letters and then proceeding to the next stage of the process on the basis that the complaint had not been resolved satisfactorily. He noted that Code of Practice 26 sets time limits to deal with things at various stages, so this could be used to get an appropriate time – eg. ‘if I have not received a response within 3 months, I will proceed to the next stage/adjudicator’. It was also important to give the Inland Revenue all the information they needed to make a decision so that there was no excuse for to-ing and fro-ing or failing to resolve the matter timeously. Lee noted that it is also possible to complain to the Board of the Inland Revenue (rather than just the Director of Tax Credits) and this may be a way of getting things to move forward.
• Offset – The Inland Revenue did not appear to be offsetting overpayments on the basis of underlying entitlement – eg. in a cohabitation situation, the IR was deciding when a claim as a single person should have stopped and treating anything beyond that as an overpayment; they were not offsetting any entitlement which may still exist. Indeed, the IR would only backdate entitlement for a maximum of three months. This was resulting in some very large overpayments. It was suggested that lone parent organisations should write to the Inland Revenue highlighting the off-set issue.
• Co-habitation – The IR was using a very narrow, financial definition of co-habitation. This was contrary to a Commissioner’s decision on the issue which they should be following.
• Childcare – There had also been some problems around childcare payments. In some areas, the Working For Families initiative was providing additional subsidies for childcare payments in order to smooth the transition into work – ie. the claimant was claiming 70% of costs through working tax credit and the Working For Families initiative was providing a further 30%. However, working tax credit could only subsidise 70% of actual childcare costs, which here amounted to only 70% of the 70% the claimant was actually liable for.
• Penalties – These were now coming in and rightsnet had posted some examples. It was noted that lone parents were often the worst affected as they may build up a large overpayment due to co-habiting, get a penalty and then see their new partner do a runner on the basis of the situation, leaving them unable to repay. It was also noted that in penalty situations, advisers have to be aware of the need to appeal four times – in relation to the overpayment, the interest on the overpayment, the penalty and the interest on the penalty.

Susan Drew reported that HAIN had dealt with two successful appeal hearings. In one, no presenting officer turned up despite an undertaking that they would, and this clearly played to the favour of the appellant. Lee noted that the IR tries to settle any appeal in advance of registering it with The Appeals Service. They have paper and telephone contact with the client rather than the adviser. They will write to the client with their offer, which the client then has 30 days to respond or the appeal lapses, but many clients do not realise that they have to take it further at this stage.

Judith also highlighted that the IR was acting as a gatekeeper in relation to the challenges it received by deciding independently whether they were complaints or appeals. She noted that advisers should be very clear in their initial letter that they wanted to appeal the decision. Lee noted that the IR seems to have internal procedures for deciding which category to allocate challenges to.

Derek raised an issue about the disabled person’s element. The IR’s practice appears to be to backdate this to the date of a successful DLA claim. However, technically, they can only backdate for three months unless they have been informed that a claim is pending at the time the DLA claim was lodged. Since this is only to the benefit of clients, no one is complaining.

Angela raised an issue about incapacity benefit backdating. This used to be offset against any income support claimed during the backdating period. However, where entitlement floats a claimant off income support, it is now creating overpayments in relation to child tax credit. It was suggested that it was perhaps better not to request a backdate.

Information exchange – pre-budget report

Judith highlighted the following in relation to the pre-budget report:

• Pathways to work In Scotland, this is being piloted in Renfrewshire, Inverclyde, Argyll and Bute, with Glasgow due to come on stream in October and Lanarkshire and East Dumbarton in April 2006. Previously the requirements had only applied to incapacity benefit claimants who signed on after the start date (with others able to request to take part on a voluntary basis). However, it will now be mandatory for all claimants after October 2001.
  – The initiative also involves guidance to GPs about getting people back to work (with placing employment advisers in doctor’s surgeries suggested in the report).
  – In Jobcentre Plus areas, incapacity benefit claimants have to complete an ‘action plan’ when making their claim. They also have to complete an action plan in relation to a move to permitted work.
  – Permitted work is to be extended to encompass options for more severely disabled people. It will also be extended to 52 weeks (rather than 26 week chunks) – however an action plan will have to be completed at 26 weeks.
  
• Local housing allowance – this is to be rolled out to further pilot areas in April 2005, with a national roll out for the private sector by March 2008.
  
• Working tax credit – the childcare element will increase from April to £175 for one child (currently £135) to £300 (currently £200) for two or more children. In April 2006, the childcare element will be able to meet 80% (currently 70%) of childcare costs. Derek also noted that, where there is a large family or complex disabilities, it is possible to get the childcare element at incomes above £58,000.
  
• Asset-based welfare – there were a number of pre-budget measures to encourage savings, including a larger pilot for the ‘savings gateway’ (allows savings to be matched by the Government) and the introduction of the child trust fund in April. Judith noted that this could be viewed as a worrying trend towards the privatisation of welfare – if people had sufficient savings/insurance then it wouldn’t be necessary to have a social security system. This moves provision away from the state and into the hands of insurance companies.

Information exchange – general

Susan Drew highlighted that the DLA Advisory Board had been issuing updates to the Disability Handbook which were not made public going back to 2002. These are now available from the website. She also highlighted problems for nationals of the eight European Union accession states as their access to benefits was restricted (they had to have been registered as working for 12 months). HAIN had dealt with the case of a terminally ill woman and had been successful in getting DLA and carer’s allowance paid.

The case of Hockenjos vs. Secretary of State for Social Security [2004 EWCA Civ 1749 (21/12/04)] was also highlighted. The issue here was shared care of children and unfairness for men with joint care as women are more likely to be in receipt of the qualifying benefits. The judgement introduced the concept of ‘substantial minority carers’ and held that the father should be able to claim jobseeker’s allowance amounts for children (in addition to the amounts claimed by their mother). The provisions linking receipt of amounts for children to child benefit or the ‘main residence’. Judith highlighted that there were still major limitations to the judgement – not least that jobseeker’s allowance no longer contained child elements in relation to new claimants. However, CPAG were looking at the judgement in relation to housing benefit, council tax benefit and child tax credit. The group commented that the main issue was child benefit as so many other benefits were dependent on it.

Topics for future meetings

Topics suggested were:

• Incapacity benefit reform – the group suggesting highlighted the Disability Action Scotland campaign and suggested asking them to speak.
• The Partnership Act and how this would affect benefits for same sex couples.
• Housing benefit and tax credits – to be followed up from today’s meeting.
• CPAG’s free school meals campaign

AOB

There was no other business.

Date of next meetings

The dates for the year are as follows:

• Tuesday 10th May, 1pm-3.30pm, CAS offices in Edinburgh
• Thursday 29th September, 1pm-3.30pm, CPAG offices in Glasgow
• Monday 21st November, 1pm-3.30pm, CAS offices in Edinburgh

Back to the Scottish Social Security Consortium main page

For more information contact:
Judith Paterson
Child Poverty Action Group in Scotland,
Unit 9, Ladywell
94 Duke Street,
Glasgow G4 0UW
0141 552 3303
email jpaterson@cpagscotland.org.uk

Abigail Bremner
Citizens Advice Scotland
Spectrum House
2 Powderhall Road
Edinburgh EH7 4GB
0131 550 1000
email bremnera@cas.org.uk