Agenda item

Rose Doran (Senior Adviser) introduced the update and explained why the LGA had commissioned the Learning and Work Institute (LWI) and Policy in Practice to undertake research on the local impacts of welfare reform, including the introduction of Universal Credit, which would inform LGA lobbying on the issue going forward.

Members noted that there had been no substantial changes to the proposed welfare reforms following the change in government over summer 2016.  Changes to the welfare system would be designed to realise savings of £12 billion, and this would be delivered primarily through the roll out of Universal Credit. Councils were concerned that they should be able to continue to support claimants to respond positively to the reforms, through increased employment, or reducing outgoings through housing choices.

Tony Wilson (LWI) and Deven Ghelani (Policy in Practice) then presented their interim research findings on the local impacts of welfare reform to the Board. This included early findings from their recent data analysis, a review of 28 welfare reform studies, development of options, and how findings would be tested.

Members noted that 9.1m households in Great Britain were receiving either tax credits, DWP benefits or Housing Benefit, and of those receiving these benefits 7m were of working age. 45% of working age households were in work, and of those 53% had children. 40% of working age households were ins social rent, 29% in private rent, and 31% were not receiving Housing Benefit.

Welfare reform impact assessment had been undertaken for a range of local authorities. These assessments were complex as different areas and different households were impacted by different reforms, but large sample of low income households had been studied. For forthcoming welfare reform, 4 or 5 times as many households would be impacted than previous reforms brought in by the Coalition Government. Of these some would be positively impacted and some would be negatively impacted.

Households facing the hardest impact would include those not receiving Housing Benefit (mainly those on Job Seeks Allowance), large families, households in work (especially full-time work), households out of work due to disability, and households with high barriers to work, i.e. those where more than half face two or more barriers to work. If you are a higher earner, and an owner-occupier, you are likely to be more negatively impacted, although the private rented sector would be hardest hit, and would continue to be.

In the discussion which followed the following points were raised by Members:

·         Members suggested that further case studies would be useful to fully understand the impact of forthcoming welfare reforms. LWI and Policy in Practice were currently developing case studies to describe typical households.

·         Members raised concern that the people who would be hardest hit by the reforms were those in work and not on housing benefit. It was explained that owner-occupiers would be impacted by how mortgages were impacted. Those in social housing would be affected less than those in the private rented sector.

·         In response to a question it was confirmed that it was difficult to quantify what behavioural changes would result in the biggest positive impact for residents. There was no behavioural employment evaluation of the benefit cap, and there was not a great deal of behavioural response on the employment side. Housing was complex, but research had been undertaken to see how far change was driven by the market.

·         Regarding the impact of factors such as the UK’s exit from the European Union, it was currently too early to tell if welfare figures would be impacted by a potential economic downturn or increase in employment as a result. Predictions for 2020 onwards would be reworked accordingly.

·         Members raised concern that people with mortgages and on Job Seekers Allowance would be negatively impacted by welfare reforms. It was explained that councils should look at how services could be delivered in different ways in different areas, and options could be trailed to ensure different types of households were receiving appropriate levels of support.

·         In response to a question on council tax collection rates, it was highlighted that councils could potentially see a decrease in collection rate from those who had been negatively impacted.

·         As reforms progressed, councils would have to look at how they engaged with the private rental sector. This was already a significant issue, but if councils were unable to build more council housing they would have to look more closely at private rents.

·         It was agreed that councils were the best drivers for reform, and were proven to reduce costs and get people back into work. There was a case that services such as Job Centre Plus could be delivered better locally than through the DWP.

Decision

The Resources Board noted the updates provided in the report and presentation.

Actions

Officers to progress work following Members’ steer and report back to the Board at a  future meeting.

Slides of the presentation to be circulated following the meeting.