EAST AYRSHIRE COUNCIL CABINET: WEDNESDAY 13 MARCH 2013 WELFARE REFORM UPDATE ON IMPLEMENTATION ARRANGEMENTS

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1 EAST AYRSHIRE COUNCIL CABINET: WEDNESDAY 13 MARCH 2013 WELFARE REFORM UPDATE ON IMPLEMENTATION ARRANGEMENTS Report by the Executive Director of Finance and Corporate Support 1. PURPOSE OF THE REPORT 1.1 The purpose of this report is to provide an update to Cabinet on the implementation of Welfare Reform, including arrangements for the operation of the Scottish Welfare Fund which comes into effect on 1 April BACKGROUND 2.1 Members may recall that, at its meeting on 7 November 2012, Cabinet considered a report that provided an update on the implementation of Welfare Reform proposals. In addition, a seminar for Elected Members was held on Wednesday 30 January 2013 which included a presentation from the Welfare Reform Manager of the Department of Work and Pensions on the full range of Welfare Reforms. 2.2 Both the report to Cabinet and the seminar for Elected Members included information on the Scottish Welfare Fund and this report now provides an update on progress towards implementation. 2.3 Members will also be aware that the Welfare Reform agenda remains fluid with updates and developments reported on an almost daily basis. 3. SCOTTISH WELFARE FUND 3.1 From 1 April 2013, the Scottish Welfare Fund replaces the Discretionary Social Fund and the Department for Work and Pensions (DWP) will transfer funding for Crisis Support Grants (CSG s) for living expenses and Community Care Grants (CCG s), to the Scottish Government in order that it might provide local welfare assistance in their place. 3.2 The Scottish Welfare Fund is intended to offer grants or in kind support for two purposes: To provide a safety net in a disaster or emergency, when there is an immediate threat to health or safety Crisis Support Grants (CSG s) To enable independent living or continued independent living, preventing the need for institutional care Community Care Grants (CCG s)

2 3.3 Funding for this will be allocated to Local Authorities according to an agreed formula that has been developed in discussion with COSLA. The money will be ring-fenced for spending on Crisis Support Grants (CSG s) and Community Care Grants (CCG s). 3.4 It is not intended that CSG s and CCG s should duplicate other provision. Consideration will be required on how the grants fit with existing social work services, housing services, support provided by registered social landlords and other provision to ensure complementarity. 3.5 The scheme will be run as a national scheme within Scotland and will pay grants and not loans, as was the case under the Social Fund scheme which was administered by the DWP. Payment may be in either cash or support in kind, including goods or travel warrants. 3.6 The Scottish Government has now advised each local authority of the funding allocations for the new Scottish Welfare Fund. Based on indicative figures for applications previously made to the DWP from East Ayrshire residents, the Council has been allocated a total 0.926m for CCG ( 0.651m) and CSG ( 0.275m) payments. In addition, the Council will receive funding of 0.059m for initial set-up costs incurred in 2012/13, and administration costs for 2013/14 of 0.142m. These are set out in more detail in the financial implications section below. 4. IMPLEMENTATION AND OPERATIONAL ARRANGEMENTS 4.1 The proposed implementation and operational arrangements for the Scottish Welfare Fund within East Ayrshire are based on guidance issued by the Scottish Government under Section 21 of the Local Government in Scotland Act 2003 in relation to the Power to Advance Wellbeing. 4.2 The Scottish Government has agreed with COSLA that Local Authorities will take on delivery of the Scottish Welfare Fund on an interim basis from 1 April 2013 for a period of two years. It is intended that, in the longer term, permanent arrangements will be set out in primary legislation. 4.3 As the Scottish Welfare Fund is a discretionary scheme, the guidance is intended to provide a framework for local authorities to promote consistency in decision making, alongside a nationally developed application form and training materials. 4.4 It is proposed that most applications submitted under the Scottish Welfare Fund will be dealt with over the telephone in discussion with the claimants with the forms being completed by officers using an online application. Applicants will also be able to apply directly online through the Council s website. Existing ICT infrastructure and telephony will be adapted to accommodate these new arrangements.

3 4.5 An appeals and second tier review process by officers will be available to unsuccessful claimants. Information provided by the DWP for 2010/11 gives an indication of the anticipated demand for the service. In 2010/11 approximately 7,500 applications were made to the former Social Fund with approximately 5,000 of those applications being approved. 4.6 It is proposed that, initially, the telephone service will only be provided during normal office hours. Specific arrangements will require to be put in place over periods of extended closure such as Christmas to maintain service delivery. This position will be kept under review throughout implementation after 1 April However, it is noted that for 2010/11, only 27 payments were made for referrals received by the DWP out-with standard office hours. The total value of these payments was 904 ( average payment per application) compared against the associated administration costs of 4,437 ( average administration cost per payment). 4.7 A key function of the new arrangements will also be to provide signposting services for claimants to other Council services or external agencies (e.g. DWP or CAB) for advice on other benefit entitlements and to ensure individuals are able to maximise the support available to them. Eligibility 4.8 Applicants for crisis support or community care grants must meet certain basic criteria. They should stay in or be moving to East Ayrshire and be entitled to a qualifying benefit: Income Support; Income based jobseeker s allowance; Income related employment and support allowance; Savings pension credit; or Guaranteed pension credit. 4.9 The purpose of crisis and community care grants is detailed at section 3.2, with grants being made available to people who have no alternative means of paying for what they need A crisis grant applicant or their partner should have no savings or capital or indeed other sources of help that could be used (e.g. authorised overdraft, credit union loan). A grant is for one-off needs rather than on-going expenses. The number of crisis grants made to an individual will be limited to three in a rolling 12 month period, with a minimum break of 28 days between applications (unless there has been a change in circumstances) A community care grant will not be awarded where the applicant or their partner has savings over 700 (non pension age) or over 1,200 (above pension age) Specific exclusions apply to a range of needs which include: Health, dental, optical treatment (free on NHS with qualifying benefit entitlement);

4 Education and training including uniforms and travel; Legal fees (incl court fees and travelling costs to court); Rent in advance; Holidays; Debts (including those due to the Council); Funeral costs The guidance anticipates the following categories as being likely applicants to the SWF (although not an exhaustive list): Disabled people, People with mental health problems, Unemployed people, Older people, Care leavers, Homeless people, Ex offenders, and Carers Applications for Crisis Support Grants can be made for living expenses or for essential items following a disaster. Awards may be made in cash or in kind. Some examples of living expenses, in terms of specific items and services are: Food; Essential heating costs; Nappies, toiletries Travel costs; Costs for accommodation in a hostel Applications for Community Care Grants are generally for items, and awards may be in cash or in kind. Some examples of items for which an award might be made are: Furniture; Household equipment (white goods, bed, bedding, clothing); Travel costs; Removal expenses; Storage charges; Installation charges for cookers and washing machines; Connection charges for gas and electricity It is for the Council to determine what support will be given and the amount of any grant, with the aim of achieving best value for money. There is local discretion on the type of support that can be offered. Applicants can be offered money or another form of support, for example, travel vouchers, fuel cards, pre-paid cards, retail vouchers, furniture or white goods Should the assessment process in terms of eligibility and grant conditions, confirm a payment can be awarded, the next stage is to assess the priority of the application (high, medium or low), taking into account the applicant s vulnerability and the severity and urgency of the application.

5 4.18 The Council has only a finite amount of ring fenced funding available and spend against this will also require to be prioritised. Financial management arrangements will be put in place to allocate the total funding pot over the financial year, to ensure a stream of funds will be available each month. There will be no facility to spend more than the monthly allocation; this matches existing DWP expenditure control arrangements. Availability of funds will therefore be matched to the prioritisation of applications. It is expected that initially only high priority applications will pay out, until a better understanding of payment profiles and trends can be established. This will be reviewed on a monthly basis Officers are continuing to explore the most convenient, secure and costeffective method for providing support and are in discussion with a number of third parties to utilise their network of local service provision Training for officers on a train-the-trainer basis was provided nationally by the Scottish Government (delivered by Shelter) during February This will enable officers from the Revenue and Benefits section to be fully conversant with the new arrangements by the effective date of 1 April Information Technology systems are required to manage the scheme with applications and outcomes recorded. Access is required to a number of ancillary systems both within the Council and the DWP. Work has advanced recently to ensure appropriate access can be granted to the DWP s Customer Information System (CIS) from 1 April for all SWF decision makers. The Council s Revenues and Benefits system was upgraded in early March to allow SWF applications to be administered through our existing systems. The costs of this will be met by the set-up funding being provided as outlined at section As the Scottish Welfare Fund is a national scheme, some of the communication and publicity regarding the new arrangements will be coordinated nationally by the Scottish Government. In supplement to this, the Council, in association with North and South Ayrshire Councils, is also developing an awareness raising publicity campaign relating to the wider welfare reforms programme, including specific reference to the introduction of the Scottish Welfare Fund as appropriate. 5. ACCESS TO LOANS 5.1 The impact of welfare reform is anticipated to be extremely tough, with up to an estimated 16m of benefits lost in the East Ayrshire area. 5.2 One anticipated consequence of this is an increase in the number of people seeking to access credit or loans. While traditional lenders such as banks are unlikely to offer these facilities, there is an ever-growing market in pay day loan type lenders in this area.

6 5.3 The Council has taken the proactive step of banning access to pay day loan company websites from any Council computer, including those in libraries and learning centres. 5.4 Information has recently been received from the Scottish Illegal Money Lending Unit (SIMLU) hosted by Glasgow City Council, Trading Standards. They state that: Illegal lenders operating in Scotland tend to be community based, and are most common in areas that suffer from high levels of multiple deprivation. The information provided by SIMLU suggests five known illegal lenders operating in the East Ayrshire area. While pay day loans typically have interest rates of around 2000% (APR), illegal money lenders rates would convert to an APR of several million %. 6. IMPACT ON HOUSING SERVICES 6.1 Welfare Reform presents significant risks to the delivery of housing services and homelessness functions. In particular, the measures to introduce a cap on benefit payments received by households, the reduction of housing benefit to tenants deemed to be under occupying their accommodation, and the introduction of Universal Credit is expected to impact negatively on the Council s capacity for housing investment. 6.2 Each measure gives rise to the danger that the Council s rental income stream will be reduced, with the potential loss of income such that it could severely compromise the Council s ability to invest both in new housing and in necessary repairs and improvements to the Council housing stock in East Ayrshire. 6.3 Particular concerns also arise from the introduction of the under occupancy measures from April 2013 followed by the introduction of direct monthly payments of Universal Credit from 2014/15 onwards. 6.4 In order to help mitigate these risks and protect the Council s rental income stream, and following the example of other authority areas, it is proposed to recruit additional staffing resources to local neighbourhood housing teams. These new, and additional, resources would comprise initially of four Housing Officer posts funded by the Housing Revenue Account with the potential of a further two posts being added subject to service requirements. 6.5 These new employees would be based locally and, together with the existing resource within the neighbourhood housing teams, would adopt a proactive approach to minimise the increase in bad debt expected to arise as a result of the Welfare Reform changes, with a particular focus on early intervention to prevent households from falling into serious debt as a result initially of under occupancy. 6.6 All Housing Officers will provide assistance with debt management, access to other services including DWP, and signposting to the Citizens Advice Bureau

7 and other advice agencies, as appropriate, using mobile working systems to help bridge the digital divide for a number of tenants and their families. 6.7 There is an acknowledged risk that the Welfare Reform measures will lead to an increase in homelessness, which will present an additional burden to the General Fund. However, this additional investment from the Housing Revenue Account as outlined above is intended to help improve overall rates of tenancy sustainment, particularly amongst those households provided with accommodation following a period of homelessness, as well as contributing to ongoing efforts to reduce unnecessary void rent loss and the added expenditure linked to void repairs. 7. FINANCIAL IMPLICATIONS 7.1 In respect of the Scottish Welfare Fund, the Scottish Government has agreed to allocate to local authorities the funding being transferred from the DWP that is currently being spent in Scotland on CCG s and CSG s. Scottish Ministers have also agreed to top-up the grant funding being transferred from DWP by a further 9.2m. 7.2 The Council s allocation, in addition to the grant funding, includes money for initial set-up and administration costs. Indicative administration costs for 2014/15 have also been identified. The total funding allocation for East Ayrshire Council is noted below: 2012/ / /15 Set Up Costs 59, Community Care - 650,528 Not yet advised Grants Crisis Support - 274,974 Not yet advised Grants Administration - 141, ,710 costs (indicative) 7.3 The annual costs associated with the additional housing officers detailed at section 6.4 are estimated at 130,592, and there is provision for these costs in the Housing Revenue Account budget from 2013/ Members will also recall that Council agreed on 13 December 2012 to establish a Welfare Reform Fund of 0.500m. Plans are being developed to establish how best to utilise elements of this funding to ensure that individuals and communities have access to support and advice as the reforms are implemented. 7.5 The reduction in housing benefit for adults who are in receipt of community care services will lead to reduced income for non-residential social work services. This arises as the detriment will be a legitimate housing cost and therefore deducted from the persons weekly finances available to contribute towards the cost of their care.

8 8. COMMUNICATIONS 8.1 A communications strategy has been developed at a number of different levels, with a range of approaches being utilised. 8.2 The Scottish Government are undertaking a series of national communications campaigns particularly around the Scottish Welfare Fund, and these will shortly become highly visible. 8.3 We are working closely with North and South Ayrshire Councils on a number of local campaigns. A common design and message has been developed and will be used across Ayrshire. This will include bus advertising on key routes, West Sound radio adverts, newspaper adverts and a range of Council literature. This will include a short information leaflet in every council tax notice, a more detailed leaflet available in Council and partner offices, informational videos on the website and You Tube, and range of information on our website. 8.4 Our own employees will also be impacted by welfare reform, whether in relation to the services we provide, or indeed as a recipient of one of the benefits being changed. A number of information sessions have been delivered, with additional sessions continuing to be organised to ensure demand can be met. Payslip notices and an article in the forthcoming e- Words will also highlight the changes and issues these present. 8.5 It has been reported previously that briefing notes will be issued at key times to ensure Elected Members are aware of issues likely to affect constituents. The first of these notes highlighted the issues of under occupancy and our initial response in terms of writing to all those impacted. The next note will be issued shortly and will concentrate on the Scottish Welfare Fund and in particular the operational arrangements around this. 8.6 Communications will remain a key element of our response to welfare reform and the strategy will continue to evolve as implementation of the reforms progresses. 9. COMMUNITY PLAN / POLICY IMPLICATIONS 9.1 On 7 November 2012, Cabinet was advised of the development of the East Ayrshire Financial Inclusion Strategy. This work has since progressed on a multi-agency basis via the Financial Inclusion Group, with representatives from statutory and voluntary organisations, including the DWP. The draft strategy sets out the national and local context for the provision of financial inclusion services; the challenges being faced through the welfare reform changes; an overview of current need and demand; an outline of current resources; our key priorities for 2013/2017 and our action plan for progressing this work. The draft strategy will shortly be presented to Cabinet, and approval will also be sought from the Community Planning Partnership Board.

9 9.2 Key actions at this stage include: Development of single points of contact to streamline service provision and maximise impact; Establishment of referral pathways and protocols being out in place between agencies; Provision of income maximisation and expenditure minimisation advice to mitigate the impact of the reforms; Support for claimants to attend appeals and tribunals as appropriate; Delivery of benefits and financial awareness training across partners; Engagement with credit unions to develop money management and budgeting skills. 10. HUMAN RESOURCE IMPLICATIONS 10.1 By assuming responsibility for the administration of the Scottish Welfare Fund, the Council requires to establish a small team of employees within the existing management structures of the Revenues and Benefits section of Finance. This team will consist of four Administration Assistants (Grade 5) and one Administration Officer (Grade 7) and will be based at the Opera House, Kilmarnock. These posts are entirely separate from the additional housing officers noted at section 6.4, and were approved under the delegated authority of the Head of Human Resources and the Executive Director of Finance and Corporate Support Recruitment for these posts is well advanced with a view to the team being in place by mid-march 2013 to enable training to be completed in advance of the new arrangements being operational on 1 April Funding for the new posts is contained within the allocation received from the Scottish Government and, accordingly, there is no impact on existing budgets Recruitment of the proposed additional housing officer staff as detailed at section 6.4 will be in accordance with the Councils recruitment and selection procedures. 11. LEGAL AND RISK IMPLICATIONS 11.1 There are no identified legal implications arising from this report The Scottish Welfare Fund is a new service that the Council is being asked to deliver. It is in response to a national agenda and will deal with some of the most vulnerable people in our communities. Demand for the new service is difficult to project especially within the wider context of the welfare reforms that will shortly be implemented. Resources will require to be closely managed to deliver the service within the available funds provided by the

10 Scottish Government, in order to avoid any additional financial liabilities falling to the Council As reported previously there is a risk that the Council s rental income stream will be reduced, with the potential loss of income such that it could compromise the Council s ability to invest both in new housing and in the necessary repairs and improvements aligned to meeting the 2015 Scottish Quality Housing Standard requirements. 12. RECOMMENDATIONS 12.1 It is recommended that Cabinet: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Notes the proposed arrangements for the implementation and operation of the Scottish Welfare Fund with effect from 1 April 2013; Notes the funding allocation received from the Scottish Government for SWF; Notes the proposed staffing arrangements for the operation and administration of the Scottish Welfare Fund; Notes the blocking of all pay day loan websites from Council computers; Approve the creation of four additional housing officers within local neighbourhood housing teams; Notes the communications position; Agrees to continue to receive further updates of Welfare Reforms and note that a separate report on progress against the Welfare Reform programme will be submitted to the Governance and Scrutiny Committee in March 2013, and Otherwise notes the contents of the report Alex McPhee Executive Director of Finance and Corporate Support 24 February 2013 LIST OF BACKGROUND PAPERS

11 1. Letter dated 31 January 2013 from the Scottish Government, Housing, Regeneration and Welfare Directorate confirming the Council s funding allocation. 2. Scottish Welfare Fund Guidance (February 2013) Any person wishing further information should contact Craig McArthur, Head of Finance (Telephone ) IMPLEMENTATION OFFICER: Craig McArthur, Head of Finance