Written evidence from the London Borough of Tower Hamlets (LCW0059)

Executive Summary:

• Tower Hamlets council currently provides a comprehensive local welfare safety net, including discretionary housing payments, crisis & support grants and a council tax benefit scheme.
• This financial support works alongside a range of additional support services, including employment and skills support.
• The need for the support provided is clear and evidenced especially to ensure low income, unemployed and large families are able to stay living in the borough.
• The council has, continued to absorb the significant funding reductions made by government to these services.
• However their ongoing provision is at risk due to a further reduction in government funding for discretionary housing payments and enduring uncertainty surrounding the government’s ongoing funding of Local Welfare Provision (Crisis & Support Grants). This is coupled with the overall funding reductions being made by central governments such as RSG, public health grant etc. which limits the Council’s ability to use its own resources to continue these services.
• For 2014/15 the Council paid in excess of £1m in Local Welfare Provision and in excess of £3.2m in Discretionary Housing Payments.

1. Introduction:

1.1. The purpose of this submission is to provide the Committee with an understanding of the approach Tower Hamlets Council and its partners has taken to developing a Local Welfare Safety Net; this has been achieved to date through the provision of three key schemes.  The first is the localised Council Tax Replacement (Benefit) Scheme, which is one of the few in the country to provide the same level of support to residents as the previous national scheme.  The second is the council’s Crisis & Support Grants scheme, which continues to provide direct financial payments to residents in need.  Finally, the council’s Discretionary Housing Payments scheme which has received additional council funding to help protect vulnerable households.

1.2. Our approach has been highly commended by the Joseph Rowntree Foundation, the Child Poverty Action Group and Zacharias 2000 reports.

1.3. Despite the success of these schemes, their ongoing provision is under review and at risk. This is both due to the specific uncertainty surrounding the Government’s ongoing funding of Local Welfare Provision crisis and support grants and due to general reductions to the council’s grant funding. The Council needs to find an estimated £63m in savings over the next three years. This will be subject to further revision following the Chancellor’s Autumn Statement on 25th November 2015.

2. The Tower Hamlets Approach to Welfare Reform:

2.1. In response to the range of changes to the welfare system, the council established the Welfare Reform Task Group in 2012. The Task Group has engaged a wide range of partners. Over fifteen organisations, including housing providers, Job Centre Plus, advice agencies, health providers and third sector support services regularly attend and support its work.

2.2. This partnership has taken a leading role in developing the elements of the local welfare safety net. The Task Group has been responsible for:

• Communicating with, and preparing, affected residents
• Monitoring the impact of the reforms through indicator measures and qualitative research projects
• Delivering Financial Support schemes
• Co-ordinating Employment and Skills Support for residents’ most affected, often delivered through co-location and partnership working. Including an integrated employment support project specifically for benefit capped residents in receipt of DHP.
• Developing Resilience Support, including digital inclusion and money management skills.

2.3. With regards to the specific financial support elements of the local welfare safety net, the partnership approach has been vital for the efficient and effective design and delivery of the schemes. When developing the Crisis and Support grants scheme, the Council service developing the scheme was able to discuss the process design and criteria directly with advice and support agencies which often support residents in making their claim. When the scheme needed to change, this was again discussed at the Task Group, ensuring advice agencies could provide accurate information to residents who wished to apply.

2.4. Evolving the Council’s Discretionary Housing Payments policy, to encourage employment and down-sizing, was also enabled through close partnership working within the Task Group. This is discussed in further detail below.

3. Council Tax (Benefit) Replacement Scheme:

3.1. In April 2013, the Government localised the provision of Council Tax Benefit and reduced the funding by 10% per Local Authority, which equated to a £2.7m loss for Tower Hamlets in 2013/14.

3.2. Tower Hamlets is one of the few Councils (45 out of 326) to continue to absorb the governments’ funding cut to provide the level of support available under the former Council Tax Benefit system.[1] It was also one of the fifty-eight councils which qualified for transitional funding in April 2013.

3.3. Had the council decided to pass on the reduction to those of working age in receipt of Council Tax Benefit, the estimated average annual financial cost to those on full Council Tax Benefit would have been £157.90 per year or £3.03 per week (16,160 residents). The estimated average annual cost to those on Partial Council Tax Benefit would have been £264.09 per year or £5.07 per week (8,801 residents). [2]
 

3.4. The council made the decision to continue to offer the existing level of Council Tax support, both due to a concern about the cumulative impact of a range of welfare reforms on the incomes of the Borough’s poorest residents, and also due to practical considerations regarding the likely collection rate and expense of enforcement. By mirroring the existing scheme, administration costs were also kept to a minimum. This approach was praised by the Joseph Rowntree Foundation[3] and in a joint Child Poverty Action Group and Zacharias 2000[4] report.

3.5. The full Cabinet paper for the decision can be found here: http://moderngov.towerhamlets.gov.uk/documents/s36034/10.4%20Council%20Tax%20Support%20Scheme.pdf

3.6. The scheme is continuing in this financial year and for 2016/17, however beyond that date the Council may not be able to continue to provide a scheme which fully subsidises the Government’s funding reduction. Members will need to decide whether or not to continue with the current scheme and if not to decide whether to apply deductions across the board in respect of working age residents or to protect certain groups e.g. disabled people. The proviso being that if funding is finite, the cost of protecting some residents will only be achievable through further cuts in entitlement to other groups of residents.

4. Discretionary Housing payments (DHP):

4.1. The council’s approach has been to protect its most vulnerable households by using the maximum DHP allocation from the national provision provided by Central Government and to supplement, where financially possible the Government’s allocation using Council funds.

4.2. Whilst central Government increased DHP allocations immediately following the first set of welfare reforms in 2012, the allocations have reduced each year. The table below shows the total DHP spend by year since 2012 and the amount of Government and council funding allocation.  The figures shown for 2015/16 show the current annual DHP allocation.

4.3. The council adopted this approach, due to the specific conditions within Tower Hamlets. The high, but decreasing, levels of unemployment in the Borough coupled with increasing private sector rents has resulted in large numbers of households facing rent shortfalls and in need of DHP. Demand is already greater than the current funding allocation, especially as the additional funding made available by the Council, in previous budget rounds, is now all allocated. The reduced Benefit Cap will create an even greater level of demand on the service (currently the borough has 600 capped families; this is set to rise to 1,800 capped families with the Government’s proposals to lower the cap from £26k to £23k).

4.4. The majority of DHP spend is on families impacted by the Benefit Cap. This mostly affects vulnerable households in the private rented sector and in temporary accommodation, but also includes some families in social rented properties.

4.5. The following provides the breakdown from June 2015:

4.6. In addition DHP supports residents impacted by the ‘bedroom tax’ (which affects over 2,000 families in Tower Hamlets).

4.7. Historically, the main purpose of the DHP policy was to prevent homelessness, through bridging rent gaps. Due to an aspiration to reduce long term reliance on DHP (due to future funding uncertainty) the Benefits Service has moved towards using DHP funding as a tool to promote behavioural change around employment and housing.

4.8. To enable this approach, the Benefits Service asks those requesting DHP to provide proof that they are seeking employment (if impacted by the benefit cap) or looking to downsize (if impacted by the ‘bedroom tax’). These circumstances are considered together with all other information on the claim or available to us, and each claim is considered on its own merits.

4.9. Alongside this more targeted approach, the council has developed specific employment support for residents impacted by the Benefit Cap and in receipt of DHP. This project approach co-ordinates the employment support being delivered and ensures each family is directly and individually supported towards employment or employment related skills training.

4.10.                   However this approach is not without risk. This approach may also mean that those in secure accommodation (including council and RP housing) impacted by the new Benefit Cap or “bedroom tax” could be refused DHP funding if they do not provide evidence of employment or down-sizing activity. This could result in increasing arrears and evictions. Any rise in homelessness places pressure on the Council’s Housing Options service to find appropriate accommodation. This will inevitably be more expensive temporary accommodation, probably out of the borough. It is also likely that any void properties created by an eviction would (under new government requirements) be transitioned into “affordable rent” properties, reducing their affordability for any family which moves in.

4.11.                   The Council is therefore refreshing its DHP policy to try to reduce dependency, whilst supporting residents to maintain secure tenancies. This is against a backdrop of a shrinking DHP budget and a demand which is set to increase drastically once the benefit cap is lowered to £23k (£20k outside of London).

5. Conclusions and Recommendations:

5.1 The Council urges the Government to maintain funding for DHP and LWP at the very least for a further year to enable a full and detailed impact analysis of the further proposed welfare reforms, in particular the proposed Tax Credits changes and reductions to the Benefit Cap.  

November 2015