Executive summary

      The geographical mix within rural areas can result in individuals experiencing extreme poverty living alongside households of considerable affluence. Poverty and deprivation are frequently connected as cause and effect of social exclusion and social injustice.

      The Scottish Government’s 2018 annual report on the UK Government’s reforms of the welfare system and the effects of these reforms on people in Scotland concluded “….. We estimate that the welfare reform policies of successive UK governments since 2010 mean that welfare spending in Scotland in 2020/21 will be £3.7 billion lower than had they not been introduced.”

      Advice and information (A&I) services are proven to be a critical approach in alleviating poverty. In 2017, the Council undertook a wide ranging review of debt advice and related services in Highland. Whilst the Council has a legal duty to provide certain advice and information services for local residents. The review recognised advice and information services do not choose their customers; the fact that they are required to service them and their diverse requirements is another factor driving the need for customer-focused service delivery models.

      In the 6 month period April 18 to September 2018 the foodbanks in Highland provided 1,168 emergency food parcels which supported 1,989 people including 550 children. This represented a12.4% overall increase and a 19.8% increase in the number of children requiring support compared to the same period in 2017.

      Overall, 17,590 customers received support from council-funded advice and information services during 2017/18.  This compares to 15,248 customers during 2016/17 and represents a significant increase (15.4%) year on year in customers engaging with advice providers for assistance with welfare and debt problems.

      The Council's Welfare Support Team undertakes benefit checks, completes all relevant application forms and submits appeals for clients. The Team also attends tribunals with their clients and secured around £6m of entitlements for customers during 2017/18. This welfare support services automatically identify all entitlements due and support clients to take-up their full entitlements.

      Based on the evidence this Council has presented in this report it is difficult to demonstrate what if any progress has been made in addressing the cause and effect of poverty and deprivation within the UK.  Tackling the endemic issues cannot be resolved purely through welfare state provision.

      This submission demonstrates that the current welfare system is still failing some of the people it is intended to protect.  There are a number of measures set out in this submission that could be implemented to strengthen the outcomes of the welfare system and in doing so, drive down poverty and improve the social and economic outcomes for society.

1.

How should hardship and chronic deprivation be measured?

1.1

Deprivation encompasses a wide and diverse range of changing characteristics including income, employment, health, education, skills and training, access to services, crime and housing which together demonstrate the overall consequences of multiple deprivations. The effects of these indicators have a significant influence on the ability of residents to be able to participate in society due to a lack of financial resources. Therefore, poverty and deprivation are frequently connected as cause and effect of social exclusion and social injustice.

1.2

Definitions set the standards by which we determine whether the characteristics of deprivation and hardship in society are acceptable or not and are fundamental for determining questions of fairness. From these definitions follow all actions to help those who are poverty stricken and socially excluded. Direct measures of poverty that look at deprivation and living standards are regularly undertaken by governments, institutions and charities using recognised methods and methodologies. For example, you will already be aware the Index of Multiple Deprivation (IMD) is the official measure of relative deprivation in England. In Scotland, the Scottish Index of Multiple Deprivation (SIMD) is used.

1.3

However, there are potential implications in relying on the SIMD to identify deprivation within Scotland. For example poverty within rural areas is often invisible. The geographical mix within rural areas can result in individuals experiencing extreme poverty living alongside households of considerable affluence. These pressures, although less conspicuous than areas of concentrated multiple deprivation, have considerable effects on the population but yet there is little recognition given to spatially dispersed deprivation and poverty while the current focus is on concentrated and therefore urban deprivation and poverty.

1.4

Consequently, whilst the main characteristics of deprivation are highlighted in paragraph 1.1 it is important to recognise contributors of hardship will include costs associated with rural living, childcare, fuel and length of time someone is facing these issues.

2.

What do we know about chronic deprivation and hardship in the UK?

2.1

In modern day society it is apparent the impact of hardship and deprivation are no longer restricted to those on welfare benefits or low incomes. As described in paragraph 1, deprivation is multi-dimensional and this is evident within the Highland Council area. Whilst Highland has many of the expected causes and consequences of poverty associated with urban settings, the rural dimension introduces further pressures.

2.2

Poverty in rural areas may be as a consequence of the lack of access to resources, shortage of suitable housing, fuel poverty and rural isolation. The costs of living are generally higher within rural areas, whereas wages and incomes are on the whole lower. People are often restricted to these areas and are tied to these higher costs of living due to an inability to access adequate transport to reach cheaper market sources.

2.3

The Highland community is diverse. Over recent years there has been considerable growth within urban areas around the Inner Moray Firth, a housing boom across the area and a low level of unemployment. However this growth masks the difficulties and problems faced by rural communities. Centralisation of services in urban centres poses difficulties for rural communities in terms of accessibility, increasing dependence and can lead to the decline of local services, for example the ongoing rationalisation of bank branches across Scotland. There is also little doubt that the general problems associated with poverty are compounded when combined with the issue of isolation

2.5

Rural deprivation is often difficult to identify and define. Rural communities can appear affluent and thriving, yet pockets of poverty are often hidden behind these successful exteriors and spread throughout the area. Poverty in rural areas is not clustered but spread often over considerable distances. This has considerable implications when trying to quantify deprivation and deliver welfare services within affordability.

2.6

Poverty and deprivation are regularly associated with urban situations, with less recognition of rural experiences. Many families in rural areas will run a car at the expense of other essential requirements in order to access education, employment and essential services. In addition, food and fuel are often more expensive within rural areas. Issues such as increased travel costs to access employment and services, low pay which is often linked to seasonal employment and the historical low take up of benefits all compound the issues of poverty within rural areas across Highland. 

3.

Is it changing? How?

3.1

It is important to recognise that households experience poverty in different ways and to various degrees over their lifecycle with poorer households experiencing worse outcomes with regard to physical and mental health, educational attainment and employment prospects. Thus emphasising the links between deprivation, poverty, social exclusion and social injustice.

3.2

In December 2018, the Joseph Rowntree Foundation published its annual report on UK poverty. The report examines how UK poverty rates have changed in society over the last few years, as well as over the longer term.

This research reveals that: 

• Child poverty has been rising since 2011/12; 
• 4.1 million children are living in poverty, a rise of 500,000 in the last five years; 
• Four million workers are living in poverty –a rise of more than half a million over five years; and 
• In-work poverty has been rising even faster than employment, driven almost entirely by increasing poverty among working parents. 

The full report can be found: https://www.jrf.org.uk/report/uk-poverty-2018

3.3

The causes of in-work poverty are not solely related to benefit top ups. In-work poverty has been on the rise in Scotland before the introduction of Universal Credit. The Scottish Government’s publication entitled Poverty and Income Inequality in Scotland: 2015/16 presents annual estimates of the percentage and number of people, children, working age adults and pensioners living in low income households in Scotland. The report highlights:

“Although much lower income households are now in employment this is not guarding them against poverty. In-work poverty has shown a long term rising trend since 2009/10. This is explained by changes in the employment market with many low income households working part-time. For working families who also receive benefit income, especially families with children, increases in earnings were balanced against withdrawal of benefit income, combined with a one per cent cap on benefit up-rating.”

“While employment remains the best route out of poverty, it is not always a protection against poverty. Increases in in-work poverty in recent years reflect the move into employment and reductions in the number of workless households in Scotland. However many low income households have moved into part-time employment meaning households remain in poverty.”

3.4

The Scottish Government’s 2018 annual report on the UK Government’s reforms of the welfare system and the effects of these reforms on people in Scotland concluded:

“Since 2010, the UK Government has enacted a range of welfare reforms that have significantly reduced the generosity of the UK welfare system. We estimate that the welfare reform policies of successive UK governments since 2010 mean that welfare spending in Scotland in 2020/21 will be £3.7 billion lower than had they not been introduced. Within its limited powers, the Scottish Government has taken action to reduce the impact of welfare reforms; however the substantial welfare cuts will continue to have an effect and make Scotland’s child poverty targets more challenging.”

The full report can be found https://www.gov.scot/Publications/2018/10/9064

3.5

Society recognises reducing deprivation and poverty goes well beyond social justice. While it takes its greatest toll on individuals and families, the consequences also result in increased health care costs, lower educational levels, high rates of crime and lower economic output. In Scotland part of this recognition has been the introduction of the Child Poverty (Scotland) Act 2017 received Royal Assent. The legislation means that in the financial year starting in April 2030, the Scottish Government has a statutory obligation to have  achieved:

• Less than 10% of children living in households that are in relative poverty - currently 22%
• Less than 5% of children living in households that are in absolute poverty - currently 21%
• Less than 5% of children living in households that combine low income and material deprivation - currently 12%
• Less than 5% of children living in households that are persistent poverty

The bill places duties on the Scottish Government, local authorities and health boards to report annually on what they are doing to reduce child poverty, and provides for the establishment of a Poverty and Inequality Commission. D

The first Child Poverty Delivery Plan due under the Child Poverty (Scotland) Act 2017. Outlining action for the period 2018-22 can be found: https://www.gov.scot/publications/child-chance-tackling-child-poverty-delivery-plan-2018-22/

4.

Why do some households fall into poverty and deprivation?

4.1

Peter Townsend described poverty as:

Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the types of diet, participate in the activities, and have the living conditions and amenities which are customary, or at least widely encouraged or approved, in the societies to which they belong. Their resources are so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary patterns, customs and activities. (1979)

4.2

These day’s perceptions of living standards differs greatly from what parents or grandparents believed the minimum standards of living should reflect. Some items, for example a washing machines or telephone are now common place compared to 1970’s or 1980’s. In a similar fashion the number of people who believe such items are a necessity in today’s era has also risen substantially. Modern day lifestyles now dictate home computers, mobile phones and internet access, are now often considered as essential.

4.3

It has been evidenced poorer households will experience worse outcomes with regard to physical and mental health, educational attainment and employment prospects. These factors will ultimately exacerbate the social costs which are felt hardest by the families and communities who live in poverty and are more likely to rely on public services.

4.4

It is important to recognise that households experience poverty in different ways and to various degrees over their lifecycle. Families experiencing poverty have fewer financial or other resources, for example skills or social networks to access in times of crisis. This constrains viable options and exacerbates the impact of changes when they occur. It can also lead to greater inequality of access to services that require payment whether upfront or otherwise, for example access to leisure activities.

4.5

This is particularly important at times of welfare reform and the current climate of major changes to welfare policies for example, against a backdrop of alleviating poverty for Highland residents within the context of reducing Local Government financial settlements, as evidence for example in the recent Audit Scotland report on local government finance.

4.6

This report highlighted Scottish Government revenue funding to Councils reduced in 2017/18, in real terms, by 2.3 per cent. Furthermore Councils are also protecting some services materially more than others, resulting in unprotected services including welfare and advice and information services experiencing disproportionate funding reductions.

The Audit Scotland report can be found:

http://www.audit-scotland.gov.uk/report/local-government-in-scotland-financial-overview-201718

4.7

The most significant welfare reform has been the introduction of Universal Credit which the committee will be aware from its ongoing inquiry has indiscriminately created significant challenges for both in-work and out of work claimants, as well as service providers including local authorities, social landlords and advice organisations and charities.

4.8

The most recent statistics show in Highland approximately 15,844 claimants have completed the Universal Credit (UC) claim process and accepted their Claimant Commitment. 10,082 claimants are still claiming of which approximately 4,048 (40%) are in some form of employment.

4.9

The Council and various other organisations have regularly evidenced the increase in rent arrears as a result of Universal Credit. The average rent arrears for council tenants in receipt of Universal Credit at October 2018 were £711 compared with £770 at October 2017. While this level of reduction is welcome, tenants currently in receipt of Universal Credit have average rent arrears that are 3.5 times higher than tenants in receipt of full or partial Housing Benefit.

4.10

This level of debt from rent arrears, and the impact on mental health, can in itself have a detrimental impact on relationships within families through the pressure associated with such financial challenges causing emotional problems for parents and children alike. Additionally, those starting or continuing work and striving to perform to the required standards and expectations of their employer may struggle through the stress and anxiety of their financial circumstances.

4.11

Financial capability including the ability to understand and undertake positive financial decisions in life requires more than reduced taper rates or work incentives albeit they are extremely important levers aimed at addressing low incomes. There are many factors, including but not limited to finance that will influence a decision to move into work or take on more hours. Approved childcare provision can be extremely pressurised in some locations and transport links often do not support travel to child care and then to work needs within a working day. 

4.12

Engaging those who are out of work or on low incomes in managing their money and taking financial decisions is a vital step to giving them the skills and confidence needed to cope financially whilst in work and life in general. Positive financial decision making is a key life skill that needs nurtured over a period of time.

4.13

The Department for Work and Pensions statistics for 2015/16 estimate up to £12.4 billion of means-tested benefits were left unclaimed by some of Britain’s poorest families who are eligible to claim; this includes pension credit (PC), jobseekers allowance (JSA) and employment and support allowance (ESA). HM Revenue & Customs estimated take-up rates for tax credits for 2014-15 estimates £2.3 billion of child tax credit and £3 billion of working tax credit went unclaimed by 640,000 families and 1.2m families in the UK respectively.

4.14

The failure to claim benefits is as a result of a number of social and economic circumstances, administrative structures, and complex eligibility rules which reflect the persistent relevance of a range of well-known explanatory factors that continue to shape the claiming process and that are associated with unclaimed benefit entitlement.

4.15

Experience within the Council has demonstrated the most significant of these factors relates to the level and accuracy of knowledge about an entitlement and its eligibility rules, linked with the perceived monetary award of the benefit net against claiming and maintaining entitlement.

4.16

Advice and information (A&I) services are proven to be a critical approach in alleviating poverty. In 2017, the Council undertook a wide ranging review of debt advice and related services in Highland. Whilst the Council has a legal duty to provide certain advice and information services for local residents. The review recognised advice and information services do not choose their customers; the fact that they are required to service them and their diverse requirements is another factor driving the need for customer-focused service delivery models.

4.17

Through a collective approach with A&I providers, the Council’s experience, skills and assets have been effectively utilised to support claimants during their transition to the new ‘culture’ of Universal Credit. The Council’s aim is to improve claimants’ financial resilience; health and wellbeing; independent living; housing sustainment; and continued employment.

Full details of the Councils review of debt advice and related services can be found at item 18 in the following link:

https://www.highland.gov.uk/meetings/meeting/3888/care_learning_and_housing_committee_formerly_the_people_committee

5.

What factors best explain the reported increases in indicators of deprivation like homelessness, rough sleeping and increased food bank use? 

5.1

Since 2012/13 the Highland Council has seen homeless applications at a relatively stable level of over 1,000 per year.  There was a decrease in applications from 1041 in 2016/17 to 1038 in 2017/18.

The age categories of homeless applicants have remained relatively stable since 2012/13. The single biggest group of homeless applicants are in the 26 – 59 years of age category and have accounted for around 60% of applicants on an annual basis. This compares to around 4% of applicants for the 16 - 17 years of age category, and 6% for each of the 18 – 25 years and the 60+ years categories.

The gender mix of homeless presentations has been fairly stable since 2012/13 with the average proportion being around 45% female and 55% male.

Arrears / Mortgage Defaults were cited as the main reason for homelessness in 113 cases during 2017/18.  This equates to 10.5% of the 1038 cases.

5.2

The main factors that applicants identify themselves as having contributed to their homelessness are:

On average around 10% of people who present as homeless report having slept rough at some point in the last 3 months prior to presentation and around 5% on the night before presenting.

5.3

Number of Homeless Presentations 2017/18

The table below shows the number of Homeless Presentations during 2017/18 for each Highland Council Area:-

5.4

Number of Households in Temporary Accommodation

There are also different pressures in different areas in relation to temporary accommodation. The table below shows the current number of cases in temporary accommodation by area:-

5.5

The Trussell Trust is the UK’s largest foodbank network with over 420 foodbanks operating out of more than 1,200 centres across the UK. Between 1st April 2017 and 31st March 2018, The Trussell Trust’s foodbank network distributed 1,332,952 three day emergency food supplies to people in crisis, a 13% increase on the previous year. 484,026 of these went to children. This is a higher increase than the previous financial year, where foodbank use was up by 6%.

5.6

The Trussell Trust has been monitoring the roll-out of Universal Credit, it is not the only benefit people at foodbanks are experiencing issues with, but it is a significant factor in many areas. The Trussell Trust has released a series of reports exploring the impact of the rollout and design of Universal Credit on claimants and foodbanks.

One such report examines the impact of Universal Credit on foodbank use. Full details can be found:

https://www.trusselltrust.org/wp-content/uploads/sites/2/2018/10/The-next-stage-of-Universal-Credit-Report-Final.pdf

5.7

A key finding from the report highlighted when Universal Credit goes live in an area, there is a demonstrable increase in demand in local Trussell Trust foodbanks. In Highland Full Service went live in Inverness Jobcentre in June 2016 and in the other 5 Jobcentres in July 2017, similar increases were experienced.

6.

What about the local variations in these markers of deprivation?

6.1

6.2

Currently over 550 households are in temporary accommodation in Highland. The average time households spend in temporary accommodation is 9 months for families and 11 months for single people /couples without children. This waiting time increases to 12 and 18 months for the Inverness City area.

6.3

Under the Homeless Persons (Unsuitable Accommodation) (Scotland) Order 2004 (amended 2007) bed and breakfast type accommodation (i.e. with shared facilities) is only be used in exceptional circumstances when temporarily housing families with children or pregnant women. There is a cap of one week on its use unless there are exceptional circumstances. Order breaches are reported quarterly. There have been no breaches reported in Highland since 2016.

6.4

One of the main challenges for Highland Council in producing and delivering a Rapid Rehousing Transition Plan is the concentration of homelessness pressure in Inverness. In 2017-18 out of 1,038 homeless applications in Highland 396 (38%) were to Inverness. Each of these households was seeking permanent housing in Inverness. National modelling on Rapid Rehousing has been at the Local Authority level, assuming that homelessness pressure in one location can be addressed by increasing the proportion of housing allocations to homeless households in other areas where there is less homelessness pressure. Given the geography and in some cases the pattern of specialist service provision in Highland there are constraints on this approach.

6.5

Preventing and responding to homelessness has a significant impact on individuals and communities. The Council’s overall strategy for homelessness aims to tackle current health and other inequalities. Although case numbers are concentrated in Inverness, the Council recognises that there are different challenges in rural communities.

6.6

Highland Foodbank is part of the Trussell Trust’s UK-wide foodbank network and has 10 projects throughout the Highland Council area.

6.7

In 2017/18 the foodbanks in Highland provided 2,367 emergency food parcels which supported 3,846 people including 973 children. This represented a 10.6% increase overall compared to 2016/17 when 2,172 emergency food parcels were issued which supported 3,477 people including 864 children. In this period the number of children requiring support increased by 12.6%

6.8

In the 6 month period April 18 to September 2018 the foodbanks in Highland provided 1,168 emergency food parcels which supported 1,989 people including 550 children. This represented a 12.4% increase overall compared to the same 6 month period last year i.e. April 2017 to September 2017 when 1,077 emergency food parcels were issued which supported 1,769 people including 459 children. In this period the number of children requiring support increased by a substantial 19.8%

6.9

In addition to foodbank usage in Highland, the Council has awarded a Crisis Grant under the Scottish Welfare Fund wholly or partly for Food 2,553 times with a value of £150k in the 12 month period to 30-th November 2018.

6.10

In Highland, the Money+ project is jointly funded by the Highland Council and the European Social Funds Poverty and Social Inclusion 2014-2020 programme. This Project works with families in Highland with young children who are in Nursery or Primary Schools in identified areas of deprivation.  The project engages through school and nursery settings and other community links such as Health Visitors, Childcare Managers and parent led groups to provide money management and financial inclusion advice to parents and carers. 

6.11

The Council is currently learning from the delivery of the Hunger+ Project which has been successfully delivered in Glasgow with a view to developing a similar project in Highland. The initiative was part of Glasgow City Council’s ongoing work to tackle food poverty and inequality, which is exacerbated during school holiday periods where parents - some of whom will benefit from free meals during the school term - worry about being able to feed their children.

7.

Do Jobcentre Plus procedures and benefit delays play a role?

7.1

Delays in assessing DWP benefit claims can have devastating effects on claimants. This is particularly true in the case of means tested benefits where those entitled will by definition have very little or no income. This can lead to serious consequences in terms of problems with rent arrears and potential homelessness.

7.2

Feedback from local advice agencies highlight some common barriers are still a regular occurrence when customers apply for benefits, these include:

• the complexity of forms – both online and paper based;
• lack of access to on-line provision due to poor digital services including broadband deficiencies;
• the quality of written communications from the DWP asking for additional information;
• the need to repeat or send identical information when it has gone missing at a Benefit Delivery Centre;
• the lack of data sharing and challenges presented by explicit consent for Universal Credit claimants.

The impact of the above barriers means delays and errors exist in the payment of benefits to claimants.

7.3

Organisations can, in some instances, not fully recognise the invisible costs to households in crisis when errors or delays exist for those households that are entitled to benefit payments. A delay or reduced amount in a benefit payment may seem very little to some, but to many vulnerable recipients it means the difference between eating and not.

7.4

The impact of delayed or incorrect benefit payments can be detrimental to a claimant’s physical or mental health. Other wider implications include a potential increase in crime. Claimants in desperate situations may turn to illegal activities such as begging or stealing to help make ends meet. There may also be an increase in substance or alcohol misuse.

7.5

Highland advice and support Services have all reported an increased demand for their services. Although the impact is not solely from benefit delays and errors and can be attributed to the wider welfare reform measures all of which is having a detrimental impact on some households in Highland.

7.6

Overall, 17,590 customers received support from council-funded advice and information services during 2017/18.  This compares to 15,248 customers during 2016/17 and represents a significant increase (15.4%) year on year in customers engaging with advice providers for assistance with welfare and debt problems.

7.7

The Highland Council’s Revenues and Customer Services section recently became the 2018 Institute or Revenues, Ratings and Valuations (IRRV) Scottish and UK Benefits and Welfare Reform Team of the Year award in recognition of the dynamic and customer-focused model, which provides local services at the point of need and single access to council entitlements.

7.8

The impressive performance translates into tangible outcomes for local people in a manner that improves their financial and overall wellbeing including increasing benefit take-up by over £6million for customers, and delivering service cost savings in excess of £1.3million. According to figures reported by Scottish Government, Council Tax Reduction take-up comparing June 18 to June 16 (when Universal Credit Full Service first went live in Highland) shows that other than Aberdeen City, Highland Council is the only Council in Scotland to report an increase. Nationally, the position is a 3.4% reduction.

7.9

The Council has introduced a high quality, accessible, customer-centric model, creating a generic gateway to all council entitlements, whilst also reducing cost and generating additional income. In tandem with a modern digital first agenda, the model is complemented by a strong commitment to localism, retaining the traditional contact channels and offering the customer choice.

7.10

The new delivery model has improved service for customers, whilst also contributing over £1million to the council’s savings target and generating additional income of over £2.14million.

7.11

A single application to any Council administered benefit provides a customer ‘health check’, ensuring they receive all they are entitled to. Personal budgeting and home visits are also included. Welfare advice given to customers has seen a consistent increase in the financial benefit to customers, with 2017/18 seeing a financial gain of over £6million.

8.

What role does Universal Credit play in in relation to deprivation, or could it play in tackling it?

8.1

This committee called for evidence for a Universal Credit update in January 2017. The Council’s Head of Revenues and Customer Services submitted a corporate response on behalf of Highland Council detailing evidence of the impact of Universal Credit within Highland. This can be viewed with the submitted responses including the Highland Council’s at the following link: http://www.parliament.uk/business/committees/committees-a-z/commons-select/work-and-pensions-committee/inquiries/parliament-2015/universal-credit-progress-16-17/publications/

8.2

Further written submissions were also requested by this committee on Universal Credit, drawing on points raised during an evidence session in November 2017. This evidence informed the Committee on their rolling programme of work on UC and included Free School Meals and pass-ported benefits, work incentives, universal support and childcare support

8.3

The Head of Revenues and Customer Services submitted a corporate response to this request on behalf of Highland Council detailing evidence of the impact of Universal Credit within Highland.  This can be viewed with the submitted responses including the Highland Council’s at the following link:

http://www.parliament.uk/business/committees/committees-a-z/commons-select/work-and-pensions-committee/inquiries/parliament-2017/inquiry/publications/

8.4

In May 2018, the Head of Revenues and Customer Services was invited to give evidence to the committee’s in relation to understanding how effectively Universal Support alleviates difficulties experienced by claimants, and to feed into the DWP’s considerations on how Universal Support might be improved or extended. The report following this session was published in October 2018: 

https://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news-parliament-2017/universal-credit-17-19/

8.5

In June 2018, the Scottish Parliament Social Security Committee launched an inquiry into social security and in-work poverty. The Committee requested written submissions into the potential impact of Universal Credit on in-work poverty. The inquiry also includes consideration of recent research on trends in low wages and in-work poverty and indications of increasing financial need in working households including, for example, increased use of food banks.

8.6

A corporate response to this request was submitted by the Head of Revenues and Customer Services on behalf of Highland Council detailing evidence of the impact of Universal Credit and in-work poverty within Highland.  This can be viewed with the submitted responses including the Highland Council’s at the following link:

http://www.parliament.scot/parliamentarybusiness/CurrentCommittees/109240.aspx

9.

Is our welfare safety net working to prevent people falling into deprivation?

9.1

The Welfare Reform Act 2012 was enacted by the UK Parliament on 8 March 2012. The Department for Work and Pensions ( DWP) stated that these reforms were aiming to:

• make the benefit system fairer and more affordable;
• reduce poverty, worklessness and welfare dependency; and
• reduce levels of fraud and error. 

9.2

From the various research publications produced by a variety of organisations looking at the effect of tax, welfare, social security and public spending has on poverty and deprivation, the evidence would appear to show that the UK’s welfare safety net is not preventing people following into deprivation.

9.3

In November 2018, the United Nations Special Rapporteur on extreme poverty and human rights ended a two-week fact-finding mission to the UK with a stinging declaration on levels of child poverty in Britain.

9.4

Citing figures, from the Institute for Fiscal Studies and the Joseph Rowntree Foundation the report drew attention to approximately 14 million people, a fifth of the population, live in poverty and 1.5 million are destitute, being unable to afford basic essentials and highlighted predictions that child poverty could rise by 7 percentage points between 2015 and 2022, possibly up to a rate of 40%.

9.5

In addition, in March 2018, the Equality and Human Rights Commission released their final cumulative impact assessment, which highlighted how much individuals and households are expected to gain or lose, and how many adults and children will fall below an adequate standard of living, as a result of recent changes to taxes and social security.

9.6

The report, looked at the impact reforms from 2010 to 2018 will have on various groups across society in 2021 to 2022 and suggests children will be hit the hardest as:

• an extra 1.5 million will be in poverty
• the child poverty rate for those in lone parent households will increase from 37% to over 62%
• households with three or more children will see particularly large losses of around £5,600

The report also found:

• households with at least one disabled adult and a disabled child will lose over £6,500 a year, over 13% of their annual income
• lone parents will lose an average of £5,250 a year, almost one-fifth of their annual income

9.7

The negative impacts are largely driven by changes to the benefit system, in particular the freeze in working-age benefit rates, changes to disability benefits, and reductions in Universal Credit rates.

The full report can be found:

https://www.equalityhumanrights.com/en/publication-download/cumulative-impact-tax-and-welfare-reforms

9.8

Also, in July 2018, the University of Liverpool published Deprivation change in Britain - a study of census data, which found that Glasgow tops the list of the most deprived areas over the period 1971 – 2011 but deprivation in urban areas remains consistently high, and is spreading further out.

9.9

Whilst there were large increases in deprivation in all urban areas, the study also noted a strong trend of deprivation spreading from urban areas to the fringes of these areas, and an increase in the urban-rural divide in deprivation.

The report highlights:

“These findings show just how persistent deprivation is, and they also show how concentrations of deprivation in urban areas are actually growing.”

Details of the report can be found:

https://www.liverpool.ac.uk/media/livacuk/centreforspatialdemographics/documents/PopChange2_DeprivationChange.pdf

9.10

To some extent, the Scottish Government has tried to mitigate some impacts of welfare reforms, in 2018/19, it is estimated that over £125 million will be spent in Scotland on policies to limit the effects of benefit changes and support people on low incomes. These policies include full mitigation of the Social Sector Size Criteria, the Scottish Welfare Fund and additional funding of advice services, e.g. the financial health check service provided by Citizens Advice Bureaux.

10.

If not, how could it better do so?

10.1

Financial capability

Further viable options need to be developed and delivered to address the ’bigger picture’ society is currently faced with in terms of financial inclusion. Balancing policies which prioritise economies of scale whilst tailoring services to meet the requirements of big inner cities will inevitably vary greatly to meeting the needs of individuals within sparsely populated rural areas.  Although this is not a new challenge, it continues to be a source of contention.

10.2

Engaging those who are out of work, or on low incomes, to manage their money and take financial decisions is a vital step to giving them the skills and confidence needed to cope financially whilst in work and life in general. Positive financial decision making is a key life skill that needs nurtured over a period of time rather than being designed in a manner that only provides beneficiaries with a one-off opportunity to gain such valuable skills.

10.3

Research from the Money Advice Service on levels of financial capability among Scotland’s children revealed that thousands are seriously unprepared to manage their money in later life. The results showed that for 16-17 year olds across Scotland – those about to leave full-time education – 31% do not have a current account and, of those that do, a quarter (26%) have no experience of putting money into it. Furthermore, a worrying 55% are unable to read a pay slip.

10.4

Engaging young people in managing their money from a young age is a vital step to giving them the skills and confidence needed to cope financially in later life. Schools have a vital role to play in this – over 90% of young people who received financial education in schools said they found it useful, though less than half (46%) of those surveyed said they’d actually received financial education.

10.5

Pass-ported-benefits

Entitlement to pass-ported benefits both in ‘legacy’ benefits and the Universal Credit system are withdrawn as earnings increase. This can create a ‘cliff-edge’ for many and may lead some to question whether they are better off in or out of work.

10.6

For many households experiencing either in or out of work poverty, Free School Meals are the only hot nutritious meal that a child may eat in a day.  A report published in November 2018 by campaign group End Child Poverty showed almost one in five children in the Highlands are living in poverty. The report highlighted the overall percentage of children living in poverty after housing costs in the Highland Council area is 19.1% with variations at ward level ranging from 12% (Inverness Millburn) to 31.2% (Inverness Central).

10.7

Maximising benefit take-up through automation

The Highland Council undertakes several steps to maximise take-up of entitlements through automation and to set out any barriers that currently exist. Wherever possible, the Council aims to make automatic awards as this improves customers' experiences (ease of application and speed of payment) and makes for more efficient administration and governance from the Council's perspective. The following paragraphs highlight the key areas where assessments and payments are either automatic and/or involve automation.

10.8

Benefit Cap: Once notified by DWP that the benefit cap is to be applied for individual housing benefit claimants, the Council automatically awards Discretionary Housing Payments (DHPs).

Barriers to automation: DWP does not however notify Councils about details of claimants who are in receipt of Universal Credit and impacted by the benefit cap. As a result, there are potentially individuals within this category who meet the DHP criteria and may therefore be missing out on these discretionary payments. To mitigate this potential negative impact, the Council regularly reminds local Jobcentre colleagues and Registered Social Landlords of this barrier and the potential for DHP payments to be made.

Suggested improvement: DWP has announced they are seeking to share customers' social security data with private energy companies to mitigate fuel poverty. In the same way, if DWP can find a solution to share data with local authorities relating to Universal Credit claimants impacted by the benefit cap then that would enable DHPs to be put into payment and thereby help mitigate financial hardship. This is particularly important as the benefit cap tends to impact on larger families and therefore increases the risk of child poverty.

10.9

Apply Once (Online single application form for 10 Council-administered entitlements): The Council has developed an online application form that requires a customer to supply their details and supporting evidence only once, and the Council will automatically put into payment all entitlements that are eligible to receive.

Barriers to automation: The Council has the requisite in-house skills in welfare, customer services and IT to develop this online facility and to maintain it on an ongoing basis. As a consequence, barriers to automation were resolved in-house, e.g. careful consideration of the customer declaration to support valid data sharing.

10.10

Discretionary Housing Payments

A more recent development, the administration and payment of Discretionary Housing Payments are now automated for the full range of circumstances that are eligible for such payments including but not limited to mitigating the social sector size criteria, the benefit cap and Universal Credit claimants residing in temporary accommodation.

Barriers to automation: did not prevail to any great extent within this development. Data sharing was closely examined and changes identified, all of which are within the Council's control, including a rewording of the claimant's declaration on application forms. It is helpful that DHP guidance permits each local authority to design the application form to be used locally for this purpose as this flexibility supports the Head of Revenues & Customer Service's strategy to minimise the number of application forms for Council-administered entitlements.

10.11

Free School Meals and School Clothing Grants

In Scotland, local authorities determine the amount of school clothing grant per eligible school pupil in any given financial year. The Council recognises the school clothing grant is a lifeline for many low income households in Highland to ensure their children have adequate clothing to attend school. The Council has provided a similar level of funding (£331k) for 2018/19 as provided in previous years, this combined with the Scottish Government’s contribution (£195k) takes the schemes overall total to £526,000 for this financial year. Eligibility criteria for clothing grants is the same as that used for Free School Meals for P4-S6 pupils and so a single application form is used for both purposes to maximise take-up. In Scotland, school meals for P1-3 pupils are provided on a universal basis with no means-testing applied.

10.12

Applicants in receipt of Housing Benefit/Council Tax Reduction, who are receiving a benefit listed in the eligibility criteria, do not need to re-apply for school meal and clothing grant payments each academic year. The Service Delivery Team will automatically make these awards from year to year without intervention by eligible parents/carers. While assessing applications for other entitlements, the Service Delivery Team identify potential entitlements to free school meals and clothing grant and take steps to put these grants into place for customers.

Barriers to automation: Universal Credit Full Service assessment periods mean that claimants have to wait a number of weeks until DWP decide their UC claim.  Implementation of Universal Credit in Highland therefore introduced a new challenge as school meals cannot be backdated once the UC applicant receives their DWP decision. A pragmatic approach has therefore been adopted in Highland to automatically award free school meals for an initial period of 8 weeks to applicants who are awaiting DWP decisions. Once confirmation of UC is received, awards are made on an ongoing basis until such time that there is a relevant change in circumstances.

10.13

Universal Credit- Local Council Tax Reduction notifications

Members of the Committee may be aware that for the purposes of Council Tax Reduction, DWP notifies the local authority when the claimant initially claims UC. The claimant must provide specific consent to DWP for data share to take place for this purpose. This notification is known as an LCTR. The Highland Council's policy is to treat the LCTR as a claim for Council Tax Reduction thus avoiding the claimant from having to complete an unnecessary and avoidable application form.  Where further information is required we contact the customer of course but the key is that a claim is considered as having been made. Such an approach protects individual claimants through reduced council tax bills and safeguards the overall take-up of CTR in Highland. Some other local authorities within the UK have adopted Highland Council's UC LCTR policy.

Barriers to automation: DWP's current process relies upon specific claimant consent for CTR purposes. There is therefore a risk that claimants don't fully understand the consequences of withholding consent and for whatever reason, don't follow through with a separate LCTR application form.

Suggested improvement: if DWP were to automatically data share with local authorities for the purposes of CTR at the initial stage of a Universal Credit claim, without the need for additional consent, then claimants' CTR entitlements will be safeguarded and local authorities would not need to take additional steps to maximise take-up.

10.14

Various steps are being undertaken to ensure ongoing compliance with data protection requirements. This includes reviewing declarations and privacy statements used on application forms and published on the Council's website for example.

Barriers to automation: while a positive approach is taken to data protection/sharing where it is within the Council’s control, external factors limit sharing of data across tiers of government. Naturally, it is up to each system owner within each organisation to ensure appropriate security controls are in place for their users. Such external factors can limit the Council's ability to offer digital solutions for customers and to automate benefit take-up.

10.15

Welfare Support Services

The Council's Welfare Support Team undertakes benefit checks, completes all relevant application forms and submits appeals for clients. The Team also attends tribunals with their clients and secured around £6m of entitlements for customers during 2017/18. The Council also contracts Inverness, Badenoch and Strathspey Citizens Advice Bureau to deliver a Highland-wide advice service (welfare, housing, debt). Both of these welfare support services automatically identify all entitlements due and support clients to take-up their full entitlements.

10.16

Opportunities

There are opportunities for governments to mitigate hardship and inequalities to improve the overall wellbeing of the population through positive action on the following suggested improvements:

1. Governments regularly report the value of under-claimed benefits and the prevalence of poverty and inequalities within society. This has value in terms of raising awareness and general targeting of support. However, to effect a positive societal change and to individually support those who are potentially missing out, Governments could take steps to securely share such details with local authorities, at individual household level. It is often the case that the most vulnerable members of society as those who do not take up their full entitlements and are therefore disproportionately impacted by the current limits of sharing such rich data.

Child poverty is a good example of this. While Council's now have a duty to reduce child poverty and child poverty data is available at Council Ward level, significantly more positive outcomes could be achieved for children, households and society as a whole if household level data relating to child poverty were shared with local authorities. It is well understood that maximising household's income will help to lift families out of poverty and such sharing of rich data would achieve such positive outcomes.

2. Adopting a secure single application process, similar to the Council's Apply Once online application form, would maximise take-up of entitlements for individual applicants as they would be automatically assessed rather than having to be aware of the availability of such entitlements. A single application forms removes the need for claimants to complete multiple forms making the application process easier and accessible for customers.

11.

What progress has been made on addressing the issues identified in the Committee’s 2016 Report, (described above / link)?

11.1

Based on the evidence this Council has presented in this report it is difficult to demonstrate what if any progress has been made in addressing the cause and effect of poverty and deprivation within the UK.  Tackling the endemic issues cannot be resolved purely through welfare state provision.

11.2

Whilst a welfare system is essential to support and improve the lives of the poorest, a coherent strategy which includes interlinked approaches to health, housing, education, employment and welfare advice services are essential. Simply reforming the social security system without addressing the fundamental issues in modern day society can never achieve any government aspirations to reduce poverty and deprivation rates.

11.3

Austerity has acted as a catalyst for essentially rethinking how local services are designed and delivered through significant transformation. The need to find short-term solutions to deliver balanced budgets is getting in the way of developing new approaches, building joined-up approaches and investing in the preventative activity necessary to deliver savings over the longer term.

11.4

In addition, central government welfare reforms are placing additional pressures on already overstretched local authority services, simply transferring the onus of responsibility without providing funding to adequately resource the service delivery only intensifies the burdens experienced locally

11.5

There is an urgent need to explore new sustainable models for service delivery that improve customer experience and outcomes through enhanced service levels, whilst recognising a one-size fits approach does not work i.e. the inner city/rural dynamic.

12.

What are the remaining weaknesses, how should these now be addressed?

Data sharing

12.1

The Department for Work and Pensions does not publish statistics down to local authority level for the majority of benefits. The lack of performance metrics that is fully transparent and easily accessible makes it difficult to determine the effectiveness of specific benefits and the ability of support agencies to target localities where the take-up has been proven to be low.

12.2

As highlighted in paragraph 4.13 of this report, every year the amount of unclaimed benefits in the UK is published and regularly runs into billions of pounds. More often than not it is those who desperately need these benefits who are the ones who have missed out claiming for a variety of reasons.

12.3

Despite publicity campaigns and the best efforts of local authorities the amount of unclaimed benefits has a significant impact on deprivation and poverty in everyday society. This council would suggest a radical review of strategy is essential, starting with the sharing of data with local authorities to ensure those claiming benefits are also automatically awarded any additional qualifying or pass-ported benefits or at the very least a reduced application process.

12.4

In Highland, the Council’s wealth of experience with administering benefits and entitlements has demonstrated that to rely on a system that requires new applications act as barrier, disincentives applicants and ultimately reduces take-up. Thus, the principle of a system that relies on a new application is at least high risk if not flawed. The alternative to a new application is to have a system more akin to a review thereby removing the need for the customer to submit avoidable applications.

12.5

In modern society individuals and households are juggling their responsibilities with families and work which can be physically and mentally demanding without the need to also complete unnecessary application forms. During 2017/18, the Council’s Welfare Support Team increased the take-up of benefits and entitlements by £6m. One of the key components to income maximisation is a simplified process: relying on a new application runs contrary to that. Through the Councils own knowledge of benefit delivery, minimising the number of application processes delivers efficiencies in terms of costs and processing times.

Explicit consent

12.6

It has been well documented the arrangements for Universal Credit Full Service (UCFS) are different to those in place for existing DWP benefits (which relied on a model of implicit consent - allows advisers to help claimants without needing to have written consent). It is evidently clear that the use of explicit consent for data sharing purposes in UCFS has caused significant issues for local authorities, advice agencies and landlords when supporting vulnerable customers and has regularly exacerbated the plethora of issues faced by the claimant.

12.7

In March 2017, the then Secretary for State for Work and Pensions Damian Green MP announced in a written statement to Parliament that implicit consent would be re-introduced for MPs

“This means any correspondence – letter, email, or telephone enquiries – from MPs on behalf of a constituent relating to Universal Credit will be answered directly, without a requirement to seek explicit consent from their constituent. This will ensure consistency and clarity for MP offices, no matter what benefit the enquiry is about.”

12.8

Whilst giving evidence on the benefit cap to this committee on 21 November 2018, Family Support, Child Maintenance and Housing Minister Justin Tomlinson said that the introduction of implicit consent under universal credit is 'a real priority' for the DWP.

'…… It is fair to say if I meet with housing associations, social landlords and various different groups their number one ask is, 'If we only had access to identify people, we have additional support that we can do'. I do not think anybody would disagree with that. We need to get implicit consent. I would, as quickly as possible….”

12.9

Highland has had two and half years of experience of Universal Credit Full Service and the challenges presented by explicit consent. Therefore this Council would suggest an injection of pace is urgently needed to ensure implicit consent becomes a reality to enable all agencies concerned in supporting vulnerable claimants to be pro-active as opposed to re-active when offering support.

Adequate funding of local authorities to delivered commissioned services for DWP

12.10

The Council worked with the Convention of Scottish Local Authorities in evidencing the additional administration costs for local authorities arising from Universal Credit for 2016/17.

12.11

This detailed information was presented to the Director General of the Universal Credit Programme in 2017. In March 2018 those councils with Universal Credit Full Service pre-October 2017 received a one-off, without prejudice, payment from the Department for Work and Pensions. Whilst the payment was appreciated, in Highland, it was equivalent to approximately 35% of the £297k additional costs incurred.

12.12

This Council undertook similar work with Convention of Scottish Local Authorities for the 9 months period April to December 2017. This has established additional costs for Highland of £280k. This information was submitted to the Department for Work and Pensions by the Convention of Scottish Local Authorities in May 2018. Full details can be found:

Universal Credit Full Service cost impacts on Scotland’s Local Authorities

12.13

Local authorities have seen material and disproportionate reductions in their funding compared with the reductions in Housing Benefit workloads arising from the roll out of Universal Credit Full Service.

12.14

This Council is the lead Scottish local authority working with the Convention of Scottish Local Authorities and other UK organisations, such as Local Authority Association in collaboration with the Department of Work and Pensions to review the distribution formulae for the overall funding.

12.15

What is apparent is that the reductions in the overall Housing Benefit quantum, whether it is through reductions from HM Treasury or the incorrect planning assumptions arising from Universal Credit, mean that local authorities are funding elements of Housing Benefit which is a commissioned service for the Department for Work and Pensions.

12.16

Since 2013/14 the Council has delivered significant efficiencies in the benefits process and is delivering processing times that are the best in Scotland.  This is despite a £725k reduction in funding (nearly 50%) in Housing Benefit administration grant. This means that Department for Work and Pensions are now only funding about 60% of service costs with the balance having to be met by the Council.

Better communication by DWP which constructively engages stakeholder opinion – one size doesn’t fit all

12.17

A letter sent by the Director General for Universal Credit to the Council’s Chief Executives on 1 October 2018 was received after the Minister’s announcement at the Conservative Party conference.

12.18

Whilst senior officers within this Council respect the protocols and processes that are in place prior for such announcements, there were ample occasions where the Director General and his team could have discussed concerns and opportunities with local authorities and the Convention for Scottish Local Authorities (CoSLA). It was therefore very disappointing that such dialogue did not occur.

12.19

While this Council has always acknowledged that Universal Credit works for some, mainly those on stable incomes, it is surely time for the Department for Work and Pensions to acknowledge that the system is failing many households across the country. Remedial action is urgently required to address the array of persistent problems that exist with the Universal Credit system.

12.20

In Highland, delivery of Universal Support services is currently successfully undertaken by the Council's Welfare Support Team. This is being achieved in a number of ways including effective collaboration with local Jobcentre staff at an operational level, co­ location arrangements between the Council and local Jobcentres, and a strong strategic focus on doing what is right for the people of the Highlands.

12.21

Since Universal Credit was first implemented in Inverness Job Centre in 2013, a positive and effective partnership has been developed between local Jobcentre colleagues and the Council. It is therefore very disappointing that the Director General chose not to engage with this Council to seek feedback from an effective delivery partner on this proposal/change which would have focused on the essential measures that would genuinely support customers.

12.22

The Department for Work and Pensions has reported that there have been negative comments from some about Universal Support services; this is not an accurate assessment of the situation in Highland. The Universal Support service delivery model in Highland is preventative and is founded on the strong working relationship between key officers in the Council and members of the local jobcentre senior management team and their work coaches.

12.23

Such relationships create a positive environment in which to move forward in a direction that consistently aims to enhance customers’ outcomes and experiences.  Examples of such shared local outcomes for claimants include:

• Financial resilience; health and wellbeing; independent living; housing sustainment; social interactions; and continued employment.

12.24

It is evident that Universal Support must be accessible to all customers regardless of location. The localism agenda is also threaded throughout the Council’s Programme.  It holds the potential to enable greater support in local communities for customers in order to meet their needs.

12.25

Two jobcentres in Highland deliver their full range of services from newly developed Council offices in Wick and Fort William involving DWP’s full staffing complements in each of these areas being based in Council premises.  This epitomises the radical reform that can be achieved by such powerful partnerships with the shared aim of putting the customer at the heart of decision making and design of public services.

12.26

The above model has enabled asset management and cost reductions for both organisations at the same time as balancing policies which prioritise economies of scale whilst tailoring services to meet the requirements of sparsely populated rural areas with residents with diverse needs. The combined impacts of remoteness, sparsity, travel distances and changing demographic trends (in particular an ageing population) in increasing the vulnerability of some people to debt and financial exclusion and in under claiming benefits has been mitigated to some extent by the robust partnership working approach for the greater good of the people in Highland.

12.27

The impact of any future managed migration of Universal Credit must also not underestimate the impact on Universal Services; particularly for those in receipt of Employment and Support Allowance. A successful model for our customers should have been built upon; not removed.

DWP communication letters – benefit decisions

12.28

Effective communication is essential to ensure that claimants understand the decisions made by the DWP and to exercise their rights to challenge and appeal such decisions.

12.29

Currently, DWP’s benefit decision letters are often a barrier to maximising incomes and paying the correct amount, to the correct people, at the correct time.  There is therefore real scope to improve the current standards of decision notices designed by the DWP.

12.30

Improved communication would better protect claimants and would be a step in the right direction to ensuring the welfare system works the very people it is intended to support.

Summary

12.31

This submission demonstrates that the current welfare system is still failing some of the people it is intended to protect.  There are a number of measures set out in this submission that could be implemented to strengthen the outcomes of the welfare system and in doing so, drive down poverty and improve the social and economic outcomes for society.