Social Security Committee

Meeting date: Thursday, September 7, 2017

Official Report 481KB pdf

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Subordinate Legislation

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Universal Credit (Claims and Payments) (Scotland) Regulations 2017 (SSI 2017/227)

Agenda item 5 is on subordinate legislation. Members have a briefing note. Members will wish to note that although it had been expected that the Scottish statutory instrument would be considered by the Delegated Powers and Law Reform Committee at its meeting this week, it will not be considered by that committee until next week’s meeting, which means that we will look at it first. After the evidence session, we will decide where we will go with it once the DPLR committee has looked at it.

I welcome the witnesses. John Dickie is director of the Child Poverty Action Group in Scotland, Jeremy Hewer is policy adviser for the Scottish Federation of Housing Associations, Michael McClements is policy manager for the Convention of Scottish Local Authorities, and Emma Shields is business services manager for customer and business services at Renfrewshire Council.

The SSI is quite big and covers a number of areas—two of which in particular pertain to the social security bill. Having read the previous and current submissions, I think that it is pretty fair to say that when the draft regulations were first published, you all had concerns about whether they did what they were meant to do. To what extent have your concerns been overcome in the revised set of regulations? Who wants to start? Do not all fight among yourselves. We will start with Jeremy Hewer, then work along the row from him.

Our primary concern with the regulations was that there seemed to be more of a restriction than was originally set out in the consultation document. The original consultation document talked about all claimants in universal credit full service areas having access to these flexibilities. When the statutory instrument was laid, we noticed that that had been restricted to new claimants only. That is a concern. Obviously at some point there will need to be further regulations to enable those who are not able to take up those flexibilities at the moment to do so. We would appreciate having a specific date for when that might happen.

There is also the parallel concern that housing associations will need to know which tenants are able to take up the flexibilities and which tenants are not. The challenge will be getting that information from the Department for Work and Pensions. Information sharing has always been a stumbling block in relation to universal credit.

Because of how the payments are made, there is a concern that associations cannot distinguish between what might be termed a technical arrear and what is a genuine arrear. The payment schedules are four weekly: you get the month’s payment but it has to have been paid whenever the DWP is issuing its four-weekly statement. There will be times when somebody will appear to be about three months in arrears rather than just a month or two months in arrears. It is important to be able to distinguish when that has happened.

The additional challenge of universal credit is that individuals might have assessment dates on any day of the month, and there is a need to track that and support people through the process. I have been involved in universal credit policy since 2013—I was employed on a year’s contract in 2013 and I am still here—but for somebody who is coming in and who needs support from universal credit, it can be challenging to navigate the maze.

As you said, convener, we had quite serious concerns about the draft regulations, particularly in that the policy intent was to give universal credit claimants in Scotland the right to choose twice-monthly or direct payments of universal credit, whereas the draft regulations provided only a right to request those. The regulations that we have now still frame it as a right to request, but there is clarity in that the regulations set out that the secretary of state “must agree” to such a request unless it would be unreasonable to agree. The key challenge now is to get clarification and transparency on the circumstances in which it would be seen as unreasonable to grant a request for twice monthly or direct payments of universal credit.

Another concern in our response on the draft regulations was about the lack of any process for reviewing decisions or to appeal a decision if a request is turned down. As far as I am aware, we still do not have any information on that. There is a commitment from the Scottish Government to work with the DWP to come up with a process for reviewing decisions, but we have not seen that yet, so that is an outstanding concern.

The wider outstanding issues of concern about the regulations are about how they will be operationalised. Again, we do not yet have information on how they will work in practice—I am sure that we will discuss that in more detail later. For example, there are questions about how people will know that they have the right to request twice-weekly or direct payments, when claimants will be informed, what information and support they will be provided with to be able to make an informed choice, and who will actually provide that support and information.

We welcome the amendments that have been made to the draft regulations and we welcome the flexibilities overall. Similarly to John Dickie, our main concern was about whether people will have the right to appeal, and it has absolutely been clarified that they will not, because it is not possible. However, we would like a bit more clarity on what the reasons for refusal could be. In relation to how the system will operate, although I appreciate that that is not laid out in regulations, we are keen to see operational guidance or operational procedures for administering the system. That is critical.

COSLA welcomes the amendments that have been made to the draft regulations. We recognise that there are difficulties in going as far as a right to appeal, because universal credit is a reserved benefit. However, as has been said, it would be helpful to have more information on what would happen in those circumstances and whether people would have any right to redress. We also welcome some of the updated language on rent and service charges.

Our concerns are more about how the system will operate in practice, particularly bearing in mind the current complexity for local authorities and landlords in dealing with universal credit. There are a lot of additional burdens, and changes to business processes are having to be made. We also recognise that the process is quite complex for claimants. Because they will be able to make choices, it is important that they are given good-quality information that they can understand on the implications of those choices. The information that people get needs to be consistent.

Our main concerns are about the operation and how the flexibilities will bed down in practice. We want local authorities to be able to input into some of the discussions on that.

10:45  

Thank you. You mentioned the flexibilities. We have a note that mentions how they will work in practice. The letter to me and the committee from the Minister for Social Security says that the matter will be discussed on 14 September, which is next Thursday, at the joint ministerial working group on welfare. We will follow that up, but I wanted to let you know that it will be discussed next week, so we hope that we will get a wee bit more clarity or have some light shed on it.

I am very much in favour of the flexibilities. Universal credit is rightly a reserved benefit, but it is also right that there be flexibilities in Scotland to tailor its delivery more specifically to Scottish needs. However, that flexibility comes at a price. All the time, committee members hear pleas from all kinds of people to make the system simpler. Building devolution and flexibilities into an already complicated system cannot but make it even more complicated.

What sense do the witnesses have of how many further flexibilities are likely to be built into universal credit in Scotland over the coming months? There has been a lot of talk about split payments, for example. Are the organisations that the witnesses represent in favour of split payments, which would enable universal credit payments to go to individuals within households rather than just to households? Do they have any sense of when the Scottish Government might introduce such proposals?

The Child Poverty Action Group has deep concerns about the way that universal credit is paid to a single person within a household. It can reinforce some of the power imbalances that exist within households, particularly along gender lines, in which control of money can be a major factor in undermining people’s wellbeing, particularly children’s wellbeing, so the idea of splitting payments as a default or of having the choice to split payments is welcome.

There is a challenge about how we would do that in a way that reflects the different make-up of universal credit and the way that it reflects individuals’ caring responsibilities, health circumstances and earnings. Last Friday, for example, along with Scottish Government officials, we hosted a gathering to try to consider how to split payments in a way that would address some of the concerns about single payments but would also make sense and not create unintended consequences. A 50:50 split might mean that one partner controls 50 per cent of the claim although more than 50 per cent of the claim is meant to be for the other partner’s needs and the children’s needs.

There are complexities in the matter and we are still feeding in our perspective on that and understanding how the system might work. One suggestion that we have come up with to address some of the concerns about single payments is that, in households with children, the default payment could be to the main carer—the person in receipt of child benefit. That would ensure that money goes primarily to women who have care of children. Although that is not a split payment, it is a way of trying to address the same issue.

There are complications with the proposal and we are feeding into discussions on it. As I understand it, it will be towards the end of the year before we expect to see what the Scottish Government’s approach to split payments might be.

So we expect a Scottish Government consultation on split payments later on this year, do we?

From recent conversations, I think that we expect something towards the end of the year, but I am not sure exactly what. I would need to clarify that.

That is helpful. Thank you.

A concern that we have is that, although there is a facility in the existing universal credit regulations for split payments to be made, we understand that there have not been any in the 500,000-odd universal credit claims. There is an added complication. Although we tend to look at the most extreme example—of someone having a full universal credit entitlement—that is obviously not always the case. There are some people who have only a small award because they are in work. How do you split it in those circumstances? It will be challenging. Given that it is a household payment, it surprises me that the DWP does not stipulate that the bank account into which the money goes should be easily accessed by both parties. There is no stipulation that it has to be a joint bank account.

COSLA would support the opportunity of having a split payment. We support the principle because there are circumstances in which a split payment would be completely appropriate and be a choice that people would want to exercise. As Jeremy Hewer mentioned, in the present operation of universal credit there is no experience of anyone getting a split payment, so we want it to be thought through quite carefully.

I, too, was at the session last week. Something that emerged quite strongly from a number of the groups was the idea that the housing element should be secured and that perhaps it should be a managed payment to the landlord in the event of a split payment. Otherwise, there is a danger that there will be unintended consequences and that the rent will not paid because of whatever is going on in a household.

Split payments certainly need to be thought through and perhaps there should be some piloting before they are introduced, given that there has been no experience of them. We have had experience of alternative payments, in relation to payments to landlords and more frequent payments, but there is no experience of split payments. Although we support the principle, in practice it needs to be worked through quite carefully.

I agree with that. We recognise that there are circumstances where split payments may well be appropriate, but you would want to ensure that the policy intention brought about the right outcome and did not add additional difficulties for claimants as a result of the process being too complex, particularly in what could be quite sensitive situations.

I was a little surprised to see that existing universal credit claimants would not be able to claim the flexibilities. Were you surprised by that?

I was not surprised because, from a practical point of view, the flexibilities are reliant on the full service coming in—the fully digitised service with all the bells and whistles and the online journal. The live service that was rolled out across the country has a digital face, in that applicants have to make an online claim, which initially was quite a long and arduous process—you could not save your application and come back to it, so you had to make the claim in one session. However, that is the only digital aspect of the existing service. Somebody in the DWP described the rest of the process as “old school”. It is still very clerical. It would not have been a practical proposition to extend the flexibilities to those in the live service. We accepted that they would be available only in the full service. If the Government insists on the accelerated roll-out—about which we have grave concerns—the plan is that it will be completed in Glasgow in September 2018.

There are a lot of concerns. One is that the full service is still under constant development and has yet to be proven. As I said, the stumbling block for us is the lack of information and feedback that landlords get. In essence, they are flying blind on rent income management. There is the worry that, with Brexit and the requirement of Government to develop IT systems to cope with it, the people who are developing universal credit will be pulled off it and the things that we want to see will be delayed.

An example is the landlord portal, which is being heralded as an extremely useful tool. If the full functionality is provided, it will be a very useful tool but, in its present pilot state, it is just doing what the DWP needs it to do, which is all to do with rent verification. If the DWP cannot develop it further to give us the feedback that we need in order to identify that somebody has a flexible or alternative payment arrangement, that the DWP has taken the money from their latest payment and that it will in due course arrive in the housing association’s bank account, we will be in an enormously difficult situation. At present with alternative payment arrangements, it can take up to four or five weeks from the money being taken from the tenant to that money arriving in the housing association’s bank account, and that is only the start of the story. The housing association gets a lump payment, but it needs to get the schedule that says which tenants it covers, how much is for tenant A, how much is for tenant B, and so forth. At the moment, housing associations are having to rely on a paper schedule for that information, which arrives a further week after the payment has gone in. That makes the reconciling of accounts arduous.

With the full service, the number of cases is going up because there are no gateway criteria, and that is putting enormous stress on housing association staff. In addition—I am sorry to go into such detail—there seems to have been a glitch with the electronic transfer of schedules that we were hoping for, because housing associations need to have a secure email system and the only secure email system that is available to housing associations seems to be incompatible with the electronic transfer of data. Therefore, it is a bit of a nightmare.

Thank you for that frank response.

It is not clear to us why existing claimants in existing full-service areas would not have the ability to request such flexibilities. I understand that the Scottish Government is in discussions with the DWP about that. It is not clear to us why, under the regulations that will come in from 4 October, existing UC claimants in existing full-service areas cannot access those flexibilities. We could get further information from the Government on where those discussions with the DWP are at and at what point it expects to be able to provide the same flexibilities to existing claimants that it will provide to new claimants from 4 October.

I have a specific question for Emma Shields. In its submission, Renfrewshire Council raises a concern about claimants requesting fortnightly payments but only getting half the amount after waiting for six weeks. Do you have concerns about claimants being properly supported when it comes to making decisions about the flexibilities that are appropriate for them so that they do not find themselves in financial difficulty?

As I said, we welcome the flexibilities. The point that we were trying to make in our submission is that we want claimants to be able to make informed choices. It might well be the case that it is right for individuals to receive more frequent payments, but we want them to be able to make an informed choice about that and to understand what it will mean in practical terms for their first payment. It could well be the case that a longer wait will be okay for them and that, by budgeting accordingly, they will be able to manage, but they might need additional budgeting support to get them through the initial period, in which they will get 50 per cent of their monthly award, in order to achieve the end result of more frequent payments. We were concerned that that might have unintended consequences and might put unintended pressures on resources such as the Scottish welfare fund. Someone who has chosen to receive more frequent payments in the belief that, in the medium term, that will be suitable for them might well face a shortfall in their income in the short term and might have to seek additional support elsewhere. We would strongly urge that they get support to make that decision and to understand the pros and cons of the more frequent payment option.

11:00  

There are a couple of supplementary questions.

I come back to Jeremy Hewer’s point about direct payments to landlords and the concern that landlords might not be notified if a tenant decides to stop direct payments. There could be an issue there. Will you expand on that? If I was a tenant who was not in receipt of any benefits and simply paid a direct debit straight to a landlord, I could easily choose to cancel that direct debit and build up arrears. I do not see any difference between that and a tenant who is in receipt of universal credit deciding to stop direct payments, for whatever reason.

We have got no issues about choice. If a tenant says that they want all the universal credit to come to them and that they will be responsible for paying the landlord, that is their choice—that is fine. The tenant may opt for the flexibilities and say that they want the money to go direct to the landlord, but our argument is that, unless the DWP says that it has taken the money from the tenant’s universal credit award that it will be paying to the landlord, the landlord will be in the dark. Has the tenant decided not to pay the rent or is the rent somewhere in the pipeline of the DWP bureaucracy?

The concern is compounded by the fact that the DWP’s four-weekly payment schedule is out of sync with the payments to the tenant. The tenant gets their universal credit award and the money is deducted from their award for their rent, but the money goes into what the DWP calls the bucket of funds that is paid out every four weeks. It is about reconciling the account. I can show the committee what happens in an ideal circumstance and you would see that, because there are 13 four-weekly payments, it means that there will not be a corresponding monthly payment for one of those payments. It is about knowing when that is going to take place.

That is when the system is working well, but there are often delays to the award that the landlord may not know about. There may be changes of circumstances. That is the worry. We support the idea of the universal credit flexibilities—the principle is great—but it is the application that we are quite concerned about.

I want to clarify something that Jeremy Hewer said. You talked about the application of the flexibilities to those who claimed UC before 4 October 2017. Is it your understanding that that is not being taken forward at the moment purely for practical, technical and administrative reasons to do with DWP data and processes and so on?

Yes. It is about plugging the necessary routines into the system. There are concerns, though. I think that South Lanarkshire is due to go live on 4 October, which means that anyone who makes a claim on 1, 2 or 3 October—or before then, in September or whenever—will not have access to those flexibilities. As the number of cases builds up, the issue is whether landlords can distinguish between those who can get the flexibilities and those who cannot. Hopefully, they will be able to do so because they will get a notification in terms of the rent verification that somebody has made a universal credit claim and they should know that, if someone has made a universal credit claim, that person will have had access to the flexibilities.

However, this is happening in the hurly-burly of administering hundreds of claims. It should be remembered that 60 per cent of housing association tenants rely on housing benefit or the housing costs element of universal credit at the moment and of those 60 per cent, about two thirds will be of working age. Overall, about 40 per cent of housing association tenants will be on universal credit.

Tenants will have the flexibilities, but how universal credit is paid means that they are likely to be at least a month in arrears. If you are an association with about 3,500 properties and the average rent is something like £350 a month, potentially between £500,000 and £1 million extra in arrears could be showing, some of which would be false but some of which would be genuine.

Pauline McNeill has a supplementary.

Yes. There are still quite a lot of problems to resolve, and 4 October is not that far away. However, presumably landlords would welcome the fact that tenants will get the choice—

Yes.

—because tenants would make the choice to make sure that their rent is paid, first and foremost. I presume that that would be key for them. Given all the difficulties, I just wanted to check whether it would be welcomed by landlords.

Absolutely. The principle is fine. Our concern is around the practicalities—the process behind it. What is a very well-intentioned measure may be undermined by what we would consider to be poor processes. The DWP would probably defend them and say that it is all about data protection and so on, but I think that, ultimately, it is against the interests of the individual for the information not to be shared.

I know that John Dickie wants to come in, but we have about three minutes left and I know that Michael McClements wants to comment on the COSLA issue as well. Also, Jeremy Balfour has a question. Jeremy, do you want to come in with your question?

Yes. It is on Jeremy Hewer’s response to Alison Johnstone’s question about people who already get universal credit and who will not have the choice. How do you envisage their being able to get that choice in the longer term? Will they have to reapply? We talked about the move from DLA to PIP, and it could be very time consuming to fill out all the forms again. Have you given any thought to how, in the longer term—sometime next year—we can transfer people who already get universal credit to give them that flexibility?

The ball will be in the DWP’s court because it does managed migrations. For example, folk in the East Lothian area—folk in areas that were live service—have been invited to go over to the full service. That it involves a reapplication—they had to fill in the form and get the online journal. We would consider doing that.

What we are looking for and what we would appreciate is a date for when regulations will be laid in Parliament to gather up those who do not have access to the flexibilities.

I know that George Adam has a supplementary. I will let him in once other members of the panel have answered Jeremy Balfour’s question—succinctly, I hope.

There is a wider issue around how little information we have at the moment on how this will work in practice for those who are covered by the regulations, never mind those who are not yet covered.

With less than a month to go, we need clarity on the circumstances in which it would be reasonable not to grant a request for the flexibilities; on who will inform claimants of the flexibilities that are available to them; on how that information will be communicated; on the point in the claims process at which it would be communicated; and on the respective roles of the DWP, the Scottish Government and local authorities in ensuring that people have the information that they need in order to make an informed choice. We are close to the system going live but we do not have transparency and clarity about how it will work. As an organisation that provides second-tier advice and support to front-line advisers, we do not have that and claimants do not have it, but we need it. We also need a clear assurance from Government that the operational systems are in place to deliver the flexibilities at the point when the regulations come into force.

I do not have much to add to what John Dickie has said.

On the point about other people having access to the flexibilities, it is COSLA’s understanding, based on information from the Scottish Government, that the intention is that the system will spread out to existing claimants. We can understand why it has started with new claimants, because there is an added complexity in relation to people who are already on universal credit. For example, they might already have alternative payment arrangements in place—there might be a managed payment to a landlord or whatever. It is not clear to us how the process would operate if someone were to opt to have some of the flexibilities. For example, would the managed payment to a landlord remain in place?

The other thing to consider is that the DWP has a hierarchy with regard to which of the alternative payment arrangements is put in place, starting with the housing element being paid to the landlord. It is not quite clear how that hierarchy interplays with choice. That needs to be thought through a lot more, and the guidance needs to be worked out. We hope to engage in discussions with the Scottish Government around some of those more detailed issues.

George Adam would like to ask a supplementary question. Please be brief, George, as we are over time.

I will speak very quickly then.

John Dickie articulated well the complexity of the situation, and I think that Jeremy Hewer said it best when he said that the systems are created to do what the DWP needs them to do. That compounds the problems. The system is set up for a four-weekly period, as has been said. However, is it not the case that, at the moment, the Scottish Government is paying for the right to have the flexibility and to get the process sorted, even though it has already been agreed by just about everyone that the DWP should have ensured that universal credit offered that degree of flexibility initially anyway? The Scottish Government and the rest of us are all trying to fix an issue that is probably the result of the approach that has been taken by the DWP and central Government. Is that not a part of the complexity behind the issues that are arising? John Dickie talks about how little we know about what the process will be, even though we have only a month before the system goes live. Are the issues that I have set out causing us the difficulties?

I ask for quick answers—the witnesses could just say yes or no, or say that they do not know.

Again, it is a technical issue. The only way that you can make things work practically is through the full service, and the Scottish Government is being asked to pay. If the Westminster Government scratches its head and says, “You know, having flexible payments is probably a pretty good idea, so we will introduce them throughout the UK and, hey, a system for that has already been developed so we don’t have to worry about paying for it,” the Scottish Government might feel justifiably aggrieved.

Does John Dickie want to comment? You could just say yes or no.

We need to continue to focus on fixing some of the fundamental problems with universal credit at a UK level. Another point is that having devolved elements introduces an additional level of complexity, which makes it more important than ever that the UK Government and the Scottish Government work together to get the systems in place well in advance of changes being made, so that there is no doubt around what is happening and clear information is in place for claimants at the point when changes come into play. At a previous meeting, we discussed those joint working relationships between the Governments, but this seems to be another example of a situation in which, although it is late in the day, we who are out in the world do not really know what the system will look like, which means that it is difficult for us to advise those who will be advising claimants, or for claimants, to know directly what the actual position will be come 4 October.

As I said, I absolutely welcome the flexibilities, but I accept that the process adds complexity. We are eager to see operational guidance around how the system will work. Where possible, we would like to input to the process, via COSLA, to ensure that the outcome that is intended—which is a good one—is achieved, particularly for claimants, and that those claimants are not made to go through a more cumbersome and complex process.

Michael McClements has the last word.

We support the flexibilities, although we recognise that they perhaps might not go as far in what they are able to achieve as people thought that they might when the suggestion was first made.

One of the issues is that we have a reserved benefit that is designed in a certain way. There is a particular issue around the way in which the assessment period has to work because of the way in which universal credit has been set up. Verifying the rent and getting information about people’s earnings requires time. The system is not very flexible in the way in which it has been built up.

There is a particular difficulty around the choice that people have to make because they will have to wait at least six weeks for their first payment—or possibly more, because payments are not always made on time—and then they might receive only half a monthly payment. It is important that the information that is given to people makes clear what the choices are and what the implications of some of those choices are.

This has been an interesting session and I thank our witnesses for attending. Once the report from the Delegated Powers and Law Reform Committee is available, the SSI will be brought back to this committee and we can either note it or agree to take further action at that point.

We now move into private session.

11:17 Meeting continued in private until 11:32.