Agenda item

Karl Battersby, Strategic Director of Environment and Development Services, gave the following powerpoint presentation on the key changes and impact on Rotherham of the Welfare Reform:-

National Context

-        Welfare Reform Act 2012

-        Savings of £18 billion by 2015

-        Improve work incentives by ‘making work pay’

-        Reduce welfare dependency

-        Universal Credit aims to reduce the complexity of the benefits system and move to an online system

-        Further savings of £3.7 billion announced in Autumn statement (by reducing rate at which benefits increase)

Benefit Changes

-        January 2012: Local Housing Allowance – sharing assumed up to age 35, Housing Benefit cuts for 25-34 year olds

-        April 2012 – Couples need to work 24 hours per week to receive Working Tax Credit (up from 16 hours)

-        May 2012 – Lone parents with child 5+ to seek work/ESA

-        May 2012 – Contributory ESA limited to 1 year, tougher tests expected to reduce long term sick claimants

-        January 2013 – Localised Council Tax Benefit – 10% cut but pensioners protected = 17% cut for working age

-        April 2013 – Weekly benefit cap of £500 per family

-        April, 2013 – Housing Benefit size criteria applied to social housing – “bedroom tax”

-        April 2013 – Crisis Loans and Community Care Grant replaced by local authority support schemes

-        June 2013 – Disability Living Allowance (DLA) to transfer to Personal Independence Payment (PIP) by 2016

-        October 2013 – Universal Credit to phase in by 2017

Financial Impact

-        Calculable (estimated) direct loss to Rotherham economy in low DWP benefit income of approximately £27.5m by 2015 (£13.5M in 2014/15)

-        Move from DLA to PIP could cost around £15M

-        Incapacity Benefit and SDA claimants transferring to ESA and means tests could see a loss of approximately £10.5M

-        Headline figure does not include cuts to Housing Benefit or the Council Tax Benefit reduction of £2M+

Social Challenges

-        Struggling economy – not enough jobs for all workless to be “incentivised” back to work

-        643 children affected by benefits cap

-        Disproportionate impact in most deprived areas – widening inequalities

-        Vulnerable people likely to be hardest hit

-        Community and social cohesion: potential increase in crime, domestic violence, relationship breakdown, ethnic tensions etc.

-        Health – more people with stress/anxiety/depression

Economic and Housing Impacts

-        Reduced spending power

-        Increases in:-

Personal debt

Use of high cost credit – doorstep lending

Rent arrears and evictions

Multi-occupied accommodation

Cost of rent and Council Tax collection

Potential for migration from higher rent areas

Key Risks

-        Need to implement local support schemes quickly, but with reduced funding available

-        Benefit cap and other reductions – will hit struggling families and vulnerable people; possible rise in homelessness, child poverty

-        Indirect budget pressures from reduced collection rates (Council Tax and rents) and increased demand for services

-        Public perceptions and awareness – unprepared for changes; Council to blame!

-        Wider social impact – need a co-ordinated, partnership approach, aligned to other initiative

Current Activity

-        Consultation completed on Local Council Tax Support Scheme and outline Model agreed for local Welfare provision

-        Extensive awareness raising campaign including leaflet distribution and staff roadshows

-        Support routes identified for families likely to be affected by the benefit cap

-        Housing Income Team working with tenants to help them avoid rent difficulties

The Council had established a multi-agency task group in 2012 to help devise and implement the local partnership response to Welfare Reform with the initial focus on awareness raising amongst local people and front line workers.  In September, a strategic steering group was formed, chaired by the Leader, to develop an action plan identifying the main issues and set out mitigating action.

The risks and related mitigating actions were summarised in the report submitted.  A task and finish approach, with clear lead officer responsibility, was being taken to deliver the actions identified.  An overarching action plan would be overseen by the strategic steering group with further reporting to Cabinet on a periodic basis.

Discussion ensued on the presentation and report with the following issues raised/highlighted:-

o       It was estimated 8,000 Rotherham residents had received Crisis Loans (£80-90 each application) and Community Care Grant (£500)

o       Universal Credit would be paid monthly in arrears which would be an issue for some recipients to manage

o       There would be a big impact on Housing Benefit and Council Tax collection rates

o       Extensive awareness raising had taken place but the general feeling was that members of the public did not really know about the forthcoming changes

o       The perception was that it would only affect those who did not work and in receipt of benefits when in fact it would affect some who did work

o       Research had shown that a substantial proportion of income would be lost to the local economy due to the benefit changes

o       The benefit gap had to be applied through Housing Benefit so it would be perceived as the work of the Council

Resolved:-  (1)  That the report be noted.

(2)  That the approach taken so far be supported.

(3)  That a further report be submitted in March, 2013, on the work of the Welfare Reform Working Group and the take up of the Festive Food Scheme.