Welfare Reform Committee

Meeting date: Tuesday, November 19, 2013

Official Report 515KB pdf

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Discretionary Housing Payments

Our second item of business is an evidence-taking session on discretionary housing payments. I welcome to the meeting Annette Finnan, head of area services (housing), South Lanarkshire Council; Cliff Dryburgh, benefits manager, City of Edinburgh Council; Susan Donald, benefits manager, Aberdeenshire Council; and Lorna Campbell, service manager revenues and benefits, Dumfries and Galloway Council.

I invite each of the panel members to make a short opening statement on the issues in their respective areas, after which I will open up the discussion to questions from members. I believe that Annette Finnan will begin.

First of all, I thank the committee for inviting South Lanarkshire Council to this morning’s meeting. Members have already received our written submission.

Just to give members some context, I point out that South Lanarkshire Council is the fifth largest council in Scotland and has just under 25,000 tenants, more than 60 per cent of whom receive either full or partial housing benefit. Since the introduction of the welfare reform changes in April, DHPs have played a significant role in South Lanarkshire in supporting tenants who face financial hardship as a result of the social sector size criteria restrictions. Around 5,000 of our tenants—approximately 4,000 council tenants and 1,000 RSL tenants—have been affected, and this year South Lanarkshire Council has experienced a significant rise in the number of DHP applications from 396 at the same point last year to more than 2,000, an increase of more than 400 per cent. With the Scottish Government’s additional funding, we are now better placed to meet the level of demand, although I must emphasise that our DHP budget of just over £1.2 million does not meet the housing benefit shortfall.

To take account of the changes being introduced as part of the welfare reform programme, South Lanarkshire Council introduced from 1 April a revised DHP policy that has been widely publicised and promoted to encourage claims from tenants and those who support them. The council’s policy is flexible, makes awards of between three and 12 months and targets priority groups, including tenants living in significantly adapted properties, customers with disabilities and people with serious health issues. So far 1,076 successful awards have been made, the majority—nearly 80 per cent—of which are to claimants who have been affected by the underoccupancy rules. More than 900 of those households have been assisted in applying for DHP by the council’s specialist benefits are changing team, which we established at the beginning of the year and which is providing a wide and varied range of support and advice to tenants affected by the welfare reform changes.

Although we have been highly proactive and have made good progress on identifying and assisting tenants in need, the current arrangements for the scheme’s administration and the additional supports provided have created additional work and incurred additional costs for the council.

Following the announcement of additional funding, which has allowed the council to top up its DHP budget to the maximum level, we have made further revisions to our qualifying criteria to assist tenants who are struggling to pay the underoccupancy charge. However, we still have a large number of tenants who require support; 2,688 of the 3,868 council tenants currently affected by the underoccupancy changes owe rent arrears and the arrears of 1,639 of those tenants relate solely to the underoccupancy charge. Through DHPs, we can reduce the impact of those arrears, although I note that the DHP award will not address the long-term and continuing needs of many customers with significant prevailing health issues.

To date, the council has committed almost half of its DHP budget—more than £560,000—and we will continue to work to ensure effective targeting of the additional DHP funding to those most in need of help and to achieve maximum budget spend by the end of the financial year. Locally, however, it is too early to assess how DHPs are mitigating the impact of welfare reform and their role in preventing arrears.

As Professor Kenneth Gibb’s recent research on the bedroom tax has highlighted, DHPs are playing a significant role in assisting tenants who face financial hardship and in managing arrears; however, one of our key concerns is the uncertainty around the continuity of this funding. Although the Scottish Government has pledged funding for 2014-15, we still await the Department for Work and Pensions’ announcement of next year’s budget and of whether local authorities will be able to carry their budgets forward. As a result, we are aiming to spend all of our budget by the end of the year.

Securing the continuation of DHP at similar funding levels, especially for the next year, will be critical in helping us and other councils to respond to the challenges of underoccupation and to mitigate not only the impact on households but the business impacts on the council.

11:00

I thank the committee for inviting Dumfries and Galloway Council to give evidence.

In April this year, the DWP allocation of DHP to Dumfries and Galloway was £232,000, and the council took a local decision to top that up by a further £262,000. The administration of DHP in Dumfries and Galloway sat within the benefits team but, at that point, we decided to have a discretionary spend team, dealing also with the Scottish welfare fund, to concentrate on the administration of both discretionary budgets.

At the time, we did some estimates of the impact of welfare reform in Dumfries and Galloway. That incorporated size criteria restrictions and the impact of the benefit cap, increased non-dependant deductions and the change to the local housing allowance. We estimated that the impact on our tenants in the region would be around £1.1 million, so our DHP fund would not meet the overall demand.

Our procedures at the time were primarily based on an income-and-expenditure assessment of any tenant who applied to the fund: where the expenditure was more than the income, there was an automatic award; if it was less than the income, we took priority cases, concentrating on people with disabilities in properties that were larger than their determined needs required, kinship carers, fosterers and single-parent families where there was joint care of children in homes.

With the announcement of the increased funding from the DWP in July—Dumfries and Galloway was fortunate enough to have a rural uplift of £488,000—and then the Scottish Government announcement of £970,000, the DHP fund for the area has been substantially increased. That has meant that we have twice revised our DHP policy and procedures for size criteria. We originally estimated a shortfall of £900,000 given the number of people impacted in Dumfries and Galloway. The fund means that we can now potentially meet the full need due to size criteria in Dumfries and Galloway.

We have also relaxed the financial assessments quite considerably and, for some, have removed them. That, in turn, has allowed us to relax the application process. Initially, someone had to fill in a four-page application form with a variety of questions and a full income assessment. We have been able to remove the financial assessment for those affected by the size criteria, specifically in the disabled categories, thereby making the application easier. In many cases, there is a tenant phone application, which has increased uptake.

The demand on DHP has certainly been quite considerable. We have seen an increase in applications of around 900 per cent. At this time last year, the average was 30 to 40 applications to the fund; this month alone, there have been more than 500 applications.

Dumfries and Galloway Council is a stock transfer authority, so we do not have our own housing stock. We have therefore worked closely with our RSLs in the area in developing our procedures and contacting tenants. We very much take a joint approach in contacting tenants and encouraging uptake of the DHP.

To date, we have spent over £500,000 of our allocation. That is just over 34 per cent of our allocation to the end of the year that has been committed.

Our area is quite rural, and there is quite a demand on the fund from people who are experiencing higher food and fuel bills and higher travel costs. Welfare reform is having a significant impact, but there is also increased demand because of the increased expense for households.

More than 50 per cent of the people who are impacted by the size criteria have been awarded DHP so far. We are also looking at other internal procedures to sit alongside DHP. A number of applicants may already have a housing benefit overpayment or a shortfall because of other areas of their housing benefit, with the means test. We are reviewing those areas. In the case of overpayments, for example, we will review the level of overpayment or recovery rate. If it is appropriate due to financial circumstances, we may write off an overpayment rather than apply DHP, or do both, if circumstances warrant that.

Like Annette Finnan’s council, we are keen to say to tenants that although we have quite a significant fund for this year, it is a sticking plaster and there is no guarantee of what DWP funding there will be or how much Scottish Government funding will be provided come next April. We are working with tenants locally on their underlying debt or fuel poverty issues, to try to improve their situations.

I thank the committee for inviting Aberdeenshire Council to give evidence.

At the start of 2013, our discretionary housing payment budget was expected to be £401,738, of which the council contributed £241,043. That budget was less than half the estimated reduction in housing benefit that would arise from the introduction of the size criteria in the social rented sector and the benefit cap.

The council therefore revised its discretionary housing payment policy, and colleagues from housing and social work were involved in drawing up the revised policy. We aimed to prioritise people who would be at risk of homelessness, the disabled, and foster and kinship carers, as well as people who were already experiencing financial difficulties, as evidenced by rent arrears. Given the limited nature of the budget, decision makers initially awarded 25, 50, 80 or 100 per cent of the shortfall, depending on the applicant’s circumstances.

At the end of July, the UK Government announced revised discretionary housing payment funding, which increased our DHP budget to £1,487,063, of which £892,238 would have been expected to come from the council’s budget. The Scottish Government has since allocated £883,262 to Aberdeenshire Council, to enable us to make that contribution.

As a result of the increased budget, the DHP policy was revised, and awards are now for 80 or 100 per cent of the shortfall, depending on the applicant’s circumstances. The revised policy includes provision for an additional four-week extended payment of housing benefit where the claimant has moved into work and would otherwise see a reduction in their housing benefit. That will help applicants to adjust to and sustain employment, particularly if they have travel costs.

By the end of October, Aberdeenshire Council had received 809 applications for discretionary housing payments, which represents an increase of 458 per cent on the previous year. So far, we have made 712 awards and have incurred expenditure of £252,901. We have established that 805 of the households that are affected by the size criteria and 15 of the households that are affected by the benefit cap have not yet applied for discretionary housing payments, so we are running a take-up campaign, to encourage households to access DHP. To date, 309 households have been contacted, around 30 per cent of which have submitted an application. The households who have not responded will be contacted by phone and an application will be taken online.

We are working hard across a range of services to do all that we can do to encourage people to access DHP, but we are very mindful that we have a discretionary pot of money and that there is absolutely no guarantee that we will have such a level of funding as we go forward. In light of the shift to universal credit in a number of months’ time, we are focusing on helping customers adjust to the fact that they will have some kind of rent liability at the end of the process—hence our decision to award 80 per cent of the shortfall in the majority of cases.

Thank you for inviting City of Edinburgh Council to give evidence.

For 2013-14, the council aligned DHP policy with the DWP contribution of £1.4 million. In other words, there was no top-up. We provided for a lot of categories in which DHP might be paid, because the policy was very much tailored to the lower contribution. That spend had been monitored very strictly until around the end of September. By that point, we had paid out or committed approximately £800,000 of the £1.4 million. Our refusal rate at that time was around 35 per cent, and it was felt that, in 95 per cent of those cases, the refusal had been given because people could afford to bridge the gap.

Following the announcement of additional funding, the council’s budget was topped up to £3.555 million. Right there and then, the council allowed delegated powers to alter the policy, ahead of a revised policy going to committee on 5 November. That meant that a number of the “maybe” awards that had been made under the previous policy were now moved into the “will pay” category to maximise the award of DHP. In addition, we relaxed the income and expenditure rules significantly.

Having started from a lower base without the top-up, we have now spent a third of our £3.555 million and we are taking action to spend the remainder of the money by the end of the financial year; that is the key point. We have just finished looking at revising the 2,500 awards that we made up to the end of September in line with the new policy, and we are contacting individually the 2,500 tenants who did not apply—in other words, those who were affected by underoccupancy but did not apply for DHP. We have sent them a letter with an application and a pre-paid envelope, and our housing officers are contacting them or knocking on their door to actively encourage them to apply for DHP. As I said, we hope that everybody will apply, and that will determine whether we can spend the £3.555 million by the end of year.

I reflect my colleagues’ concerns about funding issues and their impact on people’s willingness to change in line with welfare reform. In April this year we set up a dedicated team to deal with DHP, in order to ensure fairness and uniformity of decision making. It was a team of four at the time and I have had to increase it to 10 to deal with the review of the existing awards and in anticipation of the doubling of the number of awards between now and the end of the financial year.

I thank all four of you for your contributions. It is clear from them all, and especially from the paper that South Lanarkshire Council produced, which was very helpful, that there is a huge disparity between the availability of and demand for DHP. Not all local authorities found the resources to top up to the maximum at the outset. Some—or all, I think—have now been given the additional funds that the Scottish Government found.

Can you explain why, given that you were all aware of the demand, it was not felt possible to top up to the maximum at the outset?

In South Lanarkshire, no decision was made at the outset to top up to the maximum. It was decided and agreed that we would have a monitoring brief on the level of demand, which continued during the summer months as applications increased. At that point, the council was able to consider whether we should top up, and we were about to top up through our committee approval group with additional finance for that purpose when we received additional funding from the Scottish Government. We had already taken steps to increase resources for encouraging tenants to apply for DHP and for processing applications.

We had made provision to process an increased number of applications, but we had not topped up the budget because we were waiting to see what the demand was going to be.

11:15

The situation was similar in Dumfries and Galloway Council in that we had committed to top up the DHP budget by £262,000, which was not the full top-up allocation. I would not say that we had a pot of money, but we had money set aside to deal with the impacts of welfare reform and a considerable amount of that was put into advice services in preparation for the overall impacts going forward. The £262,000 was committed to DHP with a view to our monitoring it going forward, and it is reviewed on a monthly basis by a council committee that looks at the current spend rate. That was prior to the full top-up being made available to us in October.

If you had already found a percentage of the money to top up from your own resources and the Scottish Government then provided the amount that would allow the maximum top-up, did the money that you had already allocated stay in that area or has it been dissipated out into wider council budgets?

We are currently working on a report on that. Because the money from the Scottish Government has taken us up to our limit, we cannot use what the council originally set aside to top up the budget further. However, it will remain within the welfare reform remit and we are looking at using some of that money to support the discretionary spend team. As colleagues have said, the administrative burden of all the extra funding has been considerable, so we are considering using some of the money to bolster that team. We will also have dedicated money advice officers who will visit applicants and look at the issues behind their applications.

I was not singling out Dumfries and Galloway Council with my question. I will ask about the administrative costs, but first I wonder whether anybody else can answer my question. Where has the money that was already available gone now that the Scottish Government has made funding available? I know of at least one local authority that topped up the DHP budget to its maximum and had an additional housing support fund because it knew that the demand was going to be great. Although, technically, the DHP budget can be increased only by 150 per cent, other local authorities found that 150 per cent and a bit more. Is it likely that your local authorities will do the same?

Very early in the budget process, the City of Edinburgh Council took the decision not to top up but, as one of my colleagues here said, to wait and see what the demand was and to monitor it rigidly on a monthly basis. Ahead of the Scottish Government’s announcement, there was a lot of discussion about whether or not to top up, but it did not happen.

In June, Aberdeenshire Council took the decision to top up the budget to its full allocation of £241,043. The council set out clearly, from 1 April, that it was always its intention to ask for that money, but we wanted to see what the demand was going to be.

That is fine. I just wanted to get an idea of the thinking behind the original decisions on topping up.

That brings me to my second question. You have talked about the increase in demand or the increase in the number of people who are affected, which has required the criteria to be changed in some cases and has increased the amount of payments. How much has that cost local authorities in additional administration, and has that impacted on your ability to get money to those people who require support?

We have a dedicated benefits are changing tenant liaison team that consists of 10 members of staff, most of whom worked in the housing field and are working proactively to encourage tenants to apply. That is resource intensive because it involves face-to-face visits and going out to see tenants in all parts of South Lanarkshire. It involves dealing with applicants on the phone as well as making assessments of their financial situations and levels of hardship before making applications for them or assisting them to make them.

We do not have a backlog of DHP applications, but the 400 per cent increase has led to an increased administrative burden on the benefits part of our service, and we have increased by four the number of staff who merely process applications and put the benefit into applicants’ benefit accounts.

There has also been increased administration in monitoring not only the level of uptake of DHP but the impact on rent arrears. That is resource intensive as well.

We have also provided additional permanent and temporary money matters advice staff, who run the gamut from giving money and budgeting advice, encouraging tenants to apply for assistance from DHP or the Scottish welfare fund to handling the admin process of placing the DHP into applicants’ and tenants’ rent accounts.

Cliff, you mentioned that you had already added a member of staff. Are you likely to consider that again? Is the demand increasing?

As I said, we formed a dedicated team of four in April but, to get over the initial increase, I drafted people in from my benefits processing teams to ensure that we did not end up with a big backlog. Once we got past that hump in April or May, those processing people went back.

When the additional funding was awarded, there was no way that we could cope with mainline benefits processing and the amount of DHP, so we used some of the additional Scottish Government funding for additional staff and increased our DHP staff by two and a half times to deal with the new hump of the additional awards. We will have to see how that goes.

Is it pretty much the same picture with other authorities?

We appointed slightly more officers to administer the Scottish welfare fund than was required with the idea of having the same group of staff administer the DHP. In addition, we reprioritised workload for the existing benefits staff. We do not have a backlog of discretionary housing payments as such but, given the fact that we are in the middle of the take-up campaign, we expect another increase in the number of applications. We will, perhaps, provide opportunities for staff to work extra hours to pick that up.

I thank the witnesses for their evidence. A number of them have mentioned the importance of the future funding levels for DHP. Annette Finnan, I think, spoke about the importance of trying to secure the same level of funding as we have just now. The Scottish Government has committed to that, subject to the Parliament’s approval of its budget. However, my understanding is that the DWP was always planning to squeeze the amount of money going forward. Are local authorities in direct dialogue with the DWP? If so, what is it telling them about its plans?

Colleagues from South Lanarkshire Council who are in dialogue with the DWP are not able to give me and the housing service an indication of exactly when it will make its announcement. However, my understanding is that it aims to squeeze the funding, and a 10 per cent reduction has been mooted. I do not know whether that is accurate, but it is what I have heard. I hope that that will not transpire.

There are other challenges relating to not only whatever percentage cut might be made and the impact that that would have on the funding from Scottish Government but the differences that resulted from the formula that was used to calculate DHP across Scotland. Different local authorities were awarded different levels of DHP. In South Lanarkshire Council, we have benefited from being able to use the entirety of the historical DHP award that we have been given. That has had an impact on our award this year, but it certainly does not cover the demand from those who experience a shortfall in housing benefit.

I will come back to demand, because you provide some fairly stark figures on that. Are the other local authorities aware of any dialogue with the DWP? If so, does what they have heard tally with what Annette Finnan said?

I can only echo what my colleague said. We are not aware of any figures. Historically, if a council spends up to its DWP contribution, it tends to get the same again, which is perhaps a strange way to allocate funding.

Are we expecting DWP to stick to that approach this time, given what it has said about its intentions to squeeze funding?

I do not know whether it will take 10 per cent off and allocate the remainder on the basis of what has been spent. We have not been told.

I hear the point that you are making.

I am not aware of any discussions. I fully expect that it will be December or January before there is an announcement.

The witnesses should feel free to say that they cannot possibly answer this question, but are they hopeful about future DHP funding levels? What is their expectation?

Aberdeenshire Council spent £20,602 on DHP last year; we are working hard to ensure that we spend at least the DWP allocation this year.

I presume that every local authority will do that if that is how the funding has been allocated historically, but I also presume that the DWP will not fund on the basis of previous allocations if its intention is to squeeze hard. Feel free to say that you are unable to answer my question if you do not feel that you can, but are you hopeful that the DWP will not squeeze discretionary housing payment funding?

DHP is supposed to be a temporary measure while people change their circumstances—whether they can do so is a completely separate argument, but their circumstances may change if they gain employment, downsize, get a lodger in or whatever. I would have thought that the backdrop is that change is expected and therefore the same amount of DHP would not be needed in the future. That is what I take from the situation, but we await the announcement.

We have probably explored that issue as usefully as it can be.

South Lanarkshire Council’s submission is very helpful. It says:

“As at 8 November 2013, South Lanarkshire Council had received 2,081 applications for DHP, of which 1,918 have been processed. This compares to only 396 applications received for the same period last year representing an increase of 425%.”

I thought that that was an astronomical figure until Lorna Campbell said that Dumfries and Galloway Council has experienced a 900% increase.

I ask Lorna Campbell whether she is surprised by that stark increase. I also ask the other local authorities to pass on their experiences.

I am not surprised by the level of demand. Last year’s DHP allocation was £75,000, which we spent. Given demand relating to the size criteria, we anticipated that we would be inundated with applications. As of last week, we have just over 2,500 applications.

My next question is for Susan Donald. You may not have the figure to hand, but what is the percentage increase in demand in Aberdeenshire?

We have had a 458 per cent increase in applications, from 145 to 809. The increase was anticipated; perhaps what was not anticipated is the fact that a significant number of those affected by the size criteria have still not applied for DHP despite an extensive campaign to communicate its availability, which included training for those who support vulnerable households.

Notwithstanding that, you experienced a 458 per cent increase.

Yes.

Does Cliff Dryburgh have any figures?

The application rate increase is just over 500 per cent. As I said, the key point is that 50 per cent of those affected have yet to apply, although not as a result of lack of contact. I mentioned that we have sent out individual applications with pre-paid envelopes, and I am told by my housing colleagues that all sorts of contact is being made. We have even tried to divide the 2,500 cases that we have left across the housing officer case load, so that housing officers can knock on people’s doors, although quite often people are not in. A large effort has been made to get people to engage; whether they do will be key to whether we spend the money by the end of the year.

This is my final question. I noted from South Lanarkshire Council’s paper that despite the huge increase in the number of applications, the success rate is fairly stable. It is down slightly, but not that much, from 80 per cent for the 396 applications received last year to 76.5 per cent for the 1,918 applications that have been processed up to 8 November this year. Notwithstanding the huge increase in the number of applications, is the success rate fairly stable from last year to this year in other local authorities?

11:30

Aberdeenshire’s success rate is a lot higher this year. In 2012-13, 53 of the 145 applications were successful; this year, out of the 761 that were processed by the end of October, 712 were successful.

Dumfries and Galloway’s figures are pretty similar. At the start of the year, we were probably looking at a 50 per cent success rate, but with the increased funding we are now looking at an 85 or 90 per cent success rate.

We had a 65 per cent success rate, but just looking at October on its own, we now have an 80 per cent success rate, and I expect that to rise to at least 90 per cent.

So the success rate is higher in other local authorities. That is useful. Thank you.

I have a quick question to follow up on one of Jamie Hepburn’s questions. Annette Finnan said that a significant number of people have not engaged, and others have said the same for other areas. Are those people all in arrears?

From South Lanarkshire’s point of view, no. A substantial number of tenants who have had their housing benefit reduced because of the underoccupancy charge are in arrears but have not engaged. We are focusing on that group of tenants and targeting them. However, there are also tenants who have not engaged who are making the payments. That is the unknown—we do not know what hardship those tenants are in and whether they would qualify for some assistance.

We are seeing through DHP and payments that a quarter of our affected tenants have nil arrears. One of the difficulties is separating out the figures, but those people are not coming forward for help. Also, a significant proportion of those who are in arrears have still not engaged. In September, we had a look at South Lanarkshire tenants who owe in excess of £200 more than the underoccupancy deduction and found that only 15 per cent of those tenants had engaged with us in terms of getting assistance. We are focusing on all our affected tenants, but we are specifically trying to reach some of the harder-to-reach tenants who are struggling financially and are in arrears.

Is that the general situation for all councils? I think that Cliff Dryburgh mentioned that 50 per cent had not engaged.

Fifty per cent across all sectors who have been affected by the underoccupancy charge have not applied for DHP. They are already the target of our big push, which will continue in the coming months.

That relates to what we were talking about with the Scottish Housing Regulator, which is that it is very difficult to get any qualitative information for a period of only three months. We will get it only as time goes on and we see the effects build up.

It was clear from the SHR’s report that housing stock availability was local authorities’ most commonly selected challenge. I know from meeting Lorna Campbell previously that there is a particular issue in Dumfries and Galloway with one-bedroom properties. Even if people are willing to move and can be helped to move, it is impossible for them to move because the stock is just not there. How much impact does that have in Dumfries and Galloway? How much discretionary housing payment is used in such scenarios?

RSLs in our area have a significant lack of one-bedroom properties. When someone applies for DHP, one of the big issues is that there is no opportunity to move.

Of our DHP spend, 80 per cent goes to people who are affected by the size criteria, but I cannot hone that down further to say whether the issue is size criteria because someone cannot move. There are a variety of reasons.

Is that an issue in other places? I am thinking about one-bedroom properties in particular.

In South Lanarkshire, one-bedroom properties make up only 25 per cent of our stock. The percentage turnover has been slightly higher in the past three years—there has been turnover of between 33 and 36 per cent of one-bedroom properties. However, that in no way equates to the number of tenants who are affected by the underoccupancy charge and who, if they wanted to, would not be able to downsize, not only because of availability but because of location.

On the drivers for folk to want to move, there are bigger pulls on them to stay where they are and try to cope with making the payments than to apply to downsize.

We have introduced a letting initiative to give priority to anyone affected by the changes who wishes to downsize, but we have not been inundated with applicants who wish to make that change. We are able, in a small way, to facilitate that change. Given that property turnover is not necessarily of the house type or in the areas that applicants are looking for, the volume of turnover is not helping the issue.

We have similar problems in Aberdeenshire. As we are a large rural authority, there is a shortage of one-bedroom properties, which is the size of property that most households that are affected by the size criteria would look for. The majority of our DHP applications are down to the size criteria but I, too, cannot not say within that whether that relates to people who would not move. In the engagement exercise that we did in the run-up to the introduction of the size criteria, most households indicated that they did not want to move. Rather than move out of the community, they felt that they would either be able to cope with the shortfall or revisit their household budgets.

Edinburgh is in the same position. Close to 90 per cent of DHP applications relate to underoccupancy.

During the course of welfare reform, we have heard a lot from ministers in Westminster that they are trying to make the system fairer—which many would dispute—and cut down on bureaucracy in the benefits system. However, today all of you have described quite a large increase in administration staff—whom I would not class as bureaucrats—to help you to deal with the onslaught that you obviously face. I know that it is early days, but do you know yet the additional cost of that increase in administration staff? If possible, could you give us an idea how much that will cost you over a year?

Some of the duties of the additional staff that we have engaged relate to encouraging the uptake of DHP. We have an additional 10 staff in our benefits are changing team, which has cost us almost £300,000. We have also appointed an additional four members of staff to the DHP processing team, which has cost more than £100,000. Our money matters advice service, which, as I said, sits within social work services, has recruited additional staff, two of whom are permanent and about 10 or 12 of whom are temporary. We have a variety of sources of funding for that. I do not know the cost of that but given the numbers involved, it is certainly significant.

On top of that, although we have not recruited additional staff for this, staff are working additional hours in an effort to engage with tenants not only on applications for DHP, but to provide them with wider advice and to engage with them on their rent arrears and their rent accounts. Staff are working additional hours to do that, which we are having to fund.

In your excellent submission, you say that you monitor the DHP situation every week. Is South Lanarkshire Council committed to monitoring the additional staffing cost that the change in policy has cost it?

As far as the additional burden is concerned, the costs that I have outlined are the visible costs of new, additional staff. Thus far, we have not looked at the additional hours that people are working. When we are asked to comment on the additional burden, whether by the committee or by COSLA, we will have to guesstimate the amount of additional resource that we are allocating to that. At the corporate level, South Lanarkshire Council is trying to look at the full cost of the additional burden. That exercise is on-going.

We have five extra full-time members of staff who are working on discretionary housing payments. We know that that has a cost of £140,000. By the time we add in the cost of having to make contact with and write to tenants and the cost of the extra administration, the figure will probably come in at around £250,000. Because that sits with a specialised discretionary budget team that had a specific budget at the start of the year, we should know by the end of the year how much it has cost Dumfries and Galloway Council to administer the extra fund.

We have not taken on a large number of additional staff to administer discretionary housing payments. That work has always been part and parcel of the existing benefit officers’ role. We have tended to reprioritise our work and to look at some of our systems and processes to free up resources. In particular, we have looked at the cross-service working that we do with a view to removing elements of duplication, so that housing visitors have a discussion about DHP when they go out, and ensuring that we share information with various services to allow us to take a much more holistic approach to the customer.

I can only answer specifically on the area of benefits processing. I mentioned the six additional staff, whose cost comes to around £150,000. However, as the authorities of my colleagues have done, we have pulled in people who deal with the Scottish welfare fund to sift and review cases. Other benefits processing staff have been used to deal with peaks in demand. I mentioned housing officers and the push to engage with people. Use is being made of citizens advice services, too. I do not think that the City of Edinburgh Council has a complete picture of the additional cost at the moment.

Again, this sounds like the shunting of costs by Westminster on to local authorities and the Scottish Parliament.

An issue that has resonated throughout the meeting is the amount of co-operation that benefits staff and housing officers are involved in. As Cliff Dryburgh mentioned, citizens advice services are involved in that, too. What pressures are on your staff at the moment? We hear a lot about the pressures that are on folk who are affected by the welfare reforms, but sometimes we do not take due cognisance of the position of staff, who, through no fault of their own, are having to pick up the pieces. What is morale like in your offices? What additional help are you providing to help them through what are difficult circumstances for them to deal with?

11:45

Across the breadth of our service, in housing and benefits, we have seen an increase in the workload and in the flexibility and resilience that are required from staff as we have seen a number of changes in legislation and other areas in which we expected changes to have happened by now. We expected that universal credit would have been introduced, but that has been delayed.

There has also been a shift in the amount of money that we have had available and how we approach engaging with tenants who we thought would have engaged with us more readily. As I said, that has resulted in staff having to be more resilient and having to put in that effort.

We have also had to look at more training and support for staff. Our benefits are changing team is formed essentially of housing officers, including some staff who were following benefits. That cross-fertilisation of knowledge and experience of benefit and welfare awareness for housing officers, along with the work on money advice, debt advice and looking at fuel costs as part of the holistic approach that they are having to take, has meant that we have had to train and develop staff as we have gone on. That has had to happen both before and since April because of the shifting position.

There is no doubt that welfare reform is impacting on us. We are halfway through the year and still facing big challenges in engaging with the remainder of the people who have not applied for DHP and who have not yet spoken to us or contacted us.

There is also the challenge caused by the increase in rent arrears and that income not being available to the council. Staff are aware of that, and it must have an impact on them.

You talked about resilience. We can all be resilient for a while, particularly if we can see a light at the end of the tunnel, but, when they cannot see that light, it often has an effect on folk.

From what I have heard from other places, I am concerned about the impact that reforms are having on folks who are having to deal with folk who are losing benefit and, in some cases, are in a real state. I just wonder whether, at some stage in the future, you will be looking at how you can put in place coping mechanisms so that you do not end up with unfit staff who have been majorly affected by the change.

We are certainly providing additional training, development and support to our staff to enable them to deal with the challenges that welfare reform brings. Many in our team who are managing to engage with tenants are getting a great sense of their ability to deliver change and help. It is a matter of encouraging staff to continue with what they are doing and to share that with others and to encourage them to apply—not to be afraid to approach the council.

Staff get a great sense of satisfaction out of being able to make a difference to those who they are helping, but I certainly take on board the point that we need to continue to support staff who are doing something slightly different from this time last year in delivering both a housing service and a benefits service.

Our front-line staff and housing benefit administration staff are really feeling the pressure of the changes. Historically, benefit staff are used to change because there is constant change in the benefits world. However, the level of change this year has been unprecedented. They have to take that on board, as well as the fact that they might not have a future in housing benefit. It therefore has been quite difficult for staff on the front line.

Dumfries and Galloway Council is quite fortunate that a lot of staff who are working in benefits have been there for a long time. They are very experienced and they have taken the changes on board and continued to deliver a good service. However, we can see every day how difficult it is for staff: they have concerns for their own futures, and they are dealing with tenants and customers who are in very difficult situations. The Scottish welfare fund team and the DHP team are having to deal with difficult customers and situations every day, and they find it hard.

We have put procedures in place with our human resources teams for dealing with occupational therapy referrals to support any staff who are finding the situation difficult. We monitor maximising attendance and any sickness levels to ensure that, if staff are feeling the pressure, they have a route out of it. We are very conscious of the situation.

I reiterate what Annette Finnan and Lorna Campbell said. We have put in place training and development programmes for staff related to welfare reform. The wider welfare reform programme is a source of anxiety for staff, who also have to deal with the increased workload and pace of change.

We have worked closely with human resources colleagues to look at ways in which we can support staff through our employer assistance scheme. We are making sure that we have mechanisms in place to spot the early warning signs and make staff aware of the scheme, so that they can be referred on to it if necessary.

Over the years, benefits staff have been very used to change, so it is perhaps easy to underestimate how big a change this might be and how it might affect them. However, they are committed to delivering the best service that they can and to delivering the best information to the customer that they can. It is important that we put things in place to allow them to do that, so that they can get that sense of satisfaction from their job.

I echo what my colleagues are saying. I am sure that, probably not longer than a year ago, we all expected that we would not have new housing benefit claims anymore. The timetable keeps shifting, which makes it difficult.

Most of us would agree that it takes a minimum of six to nine months to train somebody in benefits. On the back of that, the DWP expects us to be very accurate when we award benefits. If we are not accurate, there are big financial penalties. There are quite a lot of conflicting pressures.

The shifting timetable makes it difficult to plan. If I cannot get people up to speed, and turnover is higher, it has a big impact on staff. Benefits that people thought were disappearing are now not. How do we bridge that gap? It is not an easy time.

In its written submission, South Lanarkshire Council said:

“As a result of the additional funding recently provided by the Scottish Government, a review of the hardship test has been carried out and the qualifying criteria reduced. Applications which were refused due to the customer not meeting the criteria within the original hardship test are currently being reviewed and DHP will be awarded on the basis of the revised test.”

From our discussions this morning I understand that that is the case across the board. My concern relates to what happens next. Jamie Hepburn asked about looking to the future and the anticipated DWP funding reductions. If such reductions are made, there will be concomitant reductions in what the Scottish Government can do, in terms of the applicable Westminster legislation.

Good work is taking place with the relaxed restrictions, and your staff are working with the new revised guidelines and looking at previous cases. What planning is going into a scenario in which all that has to change again because of a reduced budget?

You have already taken excellent steps to be flexible and adapt to funding that has become available. However, all the signs are that the DWP and the UK Government will reduce funding, which in turn will lead to a reduction in funding that can be added by the Scottish Government. Where will that leave the good work that is currently being done, in which thresholds have been reduced and more people qualify? What planning is taking place?

You have only just introduced those changes, but it is a fast-moving scene, so what thought is being given to what might have to be done in the next year or so?

We are planning to revise our discretionary housing payment policy. We keep a close eye on whether it is achieving what we want it to do.

By awarding 80 per cent of the shortfall, we built in the ability to reduce that percentage if necessary. At the start, when we thought we had a lot less money to spend, our range of awards was anything from 25 to 100 per cent, to take account of the fact that at that time we thought that we were going to have to make a small pot of money stretch as far as it possibly could.

We will adopt that same process should we find that the budgets are cut next time around. The decision to do that might not be particularly palatable, but the aim is to offer as much assistance as we can to the greatest range of households affected.

Before the other witnesses come in on that—if they wish to do so—I point out that universal credit, which is still apparently in the pipeline, could only compound the impact of any reduction by the DWP in the availability of DHP.

I can reflect a similar position in Edinburgh, where we started off with the baseline budget and the DWP contribution. At that point, we had put in six-month reviews, in which we tried to educate or guide people to change what they spent some of their money on, particularly as far as luxuries were concerned.

In our policy today, we still reserve the right to advise a claimant to reduce expenditure if we think that it is unreasonably high. That can be a difficult subject to broach on discussion, but our approach is similar to what Susan Donald has said: in the realisation that we did not have DHP funding at the previous level, the policy would change back to using shorter review periods and would focus more closely on income and expenditure accounts.

The situation in Dumfries and Galloway is similar to what my two colleagues have described. We would revert back to what our policy was at the start of the year, depending on the level of funding. That is the key for us: it is a matter of waiting for the announcements of how much funding is available, and then we will devise our policy in a suitable way.

Similarly to what Cliff Dryburgh has said about income and expenditure, we will consider some expenditures that are deemed to be on luxury items—or it might be perceived that something could be done about some expenditures. As Cliff said, that is not an easy conversation to have with anyone. It is quite invasive, and it is not particularly palatable for staff or for the client.

I echo what colleagues have said. Our policy approach has already been revised twice this calendar year. Further revisions will no doubt have to be made if the funding levels are reduced—revisions not only to what tests and criteria we apply but also to the length of the award that we are able to give against each grouping.

Is there any suggestion of flexibility coming down the line as regards the application by the DWP of its rules and guidance? Is there a suggestion that there will be any flexibility with respect to the application of the rules, the definitions or the carry-forward rules? Have any representations been made in that respect to give local authorities some greater discretion, at least, in what they do? You might not be aware of any such representations having been made.

No, we are not aware of anything.

I wish to follow up a line of questioning that has already been pursued by my colleagues regarding who does not receive the awards. You have clearly identified the priorities that you have given to people with disabilities, people who have had housing adaptations, people who are near retirement and others. If up to 50 per cent of those who might qualify are not coming forward at all, is that a cross-section of all those who qualify, or do those who are not coming forward have certain characteristics? I think, Mr Dryburgh, that you said that you wrote to 2,500 people. Having identified those 2,500, are you able to describe them in any way? Do they have any particular characterisation?

No. We are able to identify only those who are affected by underoccupancy and who have not applied. That is what we are aiming at. There is no specific breakdown.

The witnesses from the other authorities are indicating the same. I think that the DWP asks for monitoring information now. I understand that it was asking for information to be sent back in October. Does it ask for any information, even anecdotal, on those who are not applying?

No. It asked for information only on the awards.

12:00

Right. We can estimate the number of people who are not applying, but we do not know any more about the unmet need.

To what extent are awards time limited? They were designed to be transitional payments, and I gather that you award DHP for six weeks, three months, six months or longer. A picture seems to be emerging of you making awards and then renewing them. Is that what is happening? Have awards of DHP been ended? In other words, has anyone had an award for six months and then that was it?

In Aberdeenshire, the maximum period for an award is 12 months. At the end of the period we would review the situation and consider whether it was appropriate to continue with the award. An award might be for a shorter period. For example, if someone was about to move to a smaller property, to which no size-criteria reduction would apply, in a month or six weeks’ time, the award would last for a month or six weeks and then stop.

We tend to find that we have a high turnover. People’s circumstances change—that is an effect of Aberdeenshire’s economic buoyancy. Such issues might affect an award when they are taken into account.

What about other areas?

In South Lanarkshire, most of the awards in April were for three or six months. At the end of each period, we review the circumstances and make a re-award if they have remained the same or worsened. Many applicants who were awarded payments for three months have now received payments for six months; likewise, people who were awarded six months of DHP will receive 12 months.

What will happen after 12 months?

We will have to reassess our applicants on the basis of the criteria that are set to reflect next year’s revised budget.

Do you have the discretion to award DHP again—for three, six or 12 months—if someone has already had 12 months of payments?

Yes. We can award DHP for a longer period. However, I think that most authorities will award DHP to the end of the financial year and wait to see what funding will be available in the next year. We do not want to make a commitment to a tenant that we might not be in a financial position to meet, given that we do not know what our funding will be. Dumfries and Galloway Council—like most authorities, I think—will make a maximum award of 12 months up to 31 March and not beyond, until we know what our funding arrangements will be.

What is your thinking? On what basis are you making awards? You have put a lot of effort into identifying people in need and making awards. Do you expect those people to have adjusted or to have found smaller accommodation by the end of the award period, or is the problem being deferred or postponed?

Much will depend on individual circumstances. For some tenants, we know that their circumstances will not change and that potentially we will re-award DHP. In other cases, tenants might have the opportunity to change their circumstances, by gaining employment, moving or resolving a debt issue. There can be a variety of reasons for making a short-term or longer-term award.

I understand that. I was thinking more about local authorities’ policy. Are you planning on the basis that most, some or a minority of people will no longer qualify for awards?

I can speak only for Dumfries and Galloway but at this point everything depends on the funding arrangements. We know that a certain group of people will potentially need an extension to their DHP next year; the question is whether we will be in a financial position to make the award. We must await announcements on funding before we can decide how many awards we can automatically carry forward.

Is that the case for all local authorities? You are working on a basis of how much money you have to allocate, rather than how many people will have moved off.

Yes.

Very much so. As I said, we started with the minimum DWP contribution, so we had quite rigid financial restrictions and short review periods. That has changed for the moment, but we are waiting to hear what funding there will be in 2014-15.

There are no other questions, so I thank all the witnesses for their evidence. Like the deputy convener, when I saw the paper from South Lanarkshire Council I was gobsmacked by the increase that it indicated. However, the further evidence that we have heard this morning has shown the changes that are taking place at local authority level and that the demand on discretionary housing payments is becoming astronomical. I wonder how widely that is known. The local authorities are spending more on bureaucracy to administer the huge increases in demand. There is also the pressure on local authority staff because of the additional work. We must ensure that we ask questions around that.

I hope that the committee will agree that we should write to Iain Duncan Smith to ensure that he is aware of the evidence on the impacts that has been presented to the committee this morning and to ask him to respond to that. Is that agreed?

Members indicated agreement.

We can also ask him what the budget will be for next year.

We should ensure that we ask that question on behalf of our local authorities so that they can do a bit of planning and look forward to having more clarity on the issue.

The witnesses’ evidence has been very helpful to the committee, so I thank them very much for that. I suspend the meeting for a couple of minutes before we consider the next agenda item.

12:06 Meeting suspended.

12:08 On resuming—