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Current Challenges and the Future Direction of Social Security Reform

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Westminster Insight’s timely Welfare Reform Forum explored how to process the huge upsurge in claims, improving advice for those dealing with immediate cash flow problems, changing assessment processes to safeguard claimants, identifying people falling through gaps in the system and supporting the most vulnerable people financially affected by the pandemic.

Zoe's keynote address covered:
- The implications of the Government’s response to COVID 19 on the social security system
- Improving system design, delivery, flexibility and speed to support people in times of crisis
- Ensuring the social security system can weather the longer-term effects of the crisis
- Creating a person-centred, holistic and supportive social security system

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Current Challenges and the Future Direction of Social Security Reform

  1. 1. Policy in Practice Zoe Charlesworth Current Challenges and the Future Direction of Social Security Reform Monday 23 November
  2. 2. www.policyinpractice.co.uk policy software analytics Give the best support you can to help people on their way
  3. 3. www.policyinpractice.co.uk A team of professionals with extensive knowledge of the welfare system. We’re passionate about making social policy work We help over 100 local authorities use their household level data to identify vulnerable households, target support and track their interventions Our benefit calculator engages over 10,000 people each day. We identify the steps people can take to increase their income, lower their costs and build their financial resilience Policy in Practice: What we do
  4. 4. Today’s speaker www.policyinpractice.co.uk Zoe Charlesworth Director of Policy and Operations Zoe has worked in the field of welfare benefits for over 20 years and has a comprehensive knowledge of benefit policy and regulation. She has practical experience and policy knowledge of council tax support schemes including administrative processes, drivers of scheme design, award calculation, and service delivery. Zoe has an extensive understanding of regulation and practice of both legacy benefits and Universal Credit. She has previously been a Benefit Manager and a Revenues and Benefit Manager with responsibility for council tax support and benefit delivery, at three local authorities. She understands the business of local government and the role of local delivery of support through her work in local authorities, the Association of District Councils, and the Local Government Association. Zoe has published numerous articles on welfare benefits and has spoken extensively on the impact of welfare policy and the impact of Universal Credit on localised council tax support.
  5. 5. Agenda www.policyinpractice.co.uk Current Challenges and the Future Direction of Social Security Reform ● The implications of the Government’s response to COVID 19 on the social security system ● Improving system design, delivery, flexibility and speed to support people in times of crisis ● Ensuring the social security system can weather the longer-term effects of the crisis ● Creating a person-centred, holistic and supportive social security system
  6. 6. Challenges pre-covid www.policyinpractice.co.uk ● Migration to Universal Credit resulting in parallel systems with unequal support ● Austerity measures were embedded in the system - reduced overall benefit spend - two child limit - benefit cap - restrictions on housing support ● Little public appetite for a more generous benefits system ● Historically low benefit rates ● Low levels of household savings ● Greater reliance on discretionary support (food banks, DHPs, local welfare assistance) Sources: ONS, OBR, DWP, Citizens Advice
  7. 7. Historically low benefit levels www.policyinpractice.co.uk Benefit levels have been reducing as a proportion of earnings for 40 years. 1979 - 20% of mean earnings 2019 - 9% of mean earnings But different rules for Pensioners (triple-lock), Disability benefits (CPI), child benefits (CPI) (Source: DWP Abstract of benefit rates
  8. 8. Low levels of financial resilience: many unprepared for income shock www.policyinpractice.co.uk At the start of 2020: ● 10% of households in the UK had no savings ● 30% of households had less than £600 savings ● Average household financial debt rose 9% to £9,400 in 2019 ● 44% of those in debt found it burdensome ● 41% of households don’t have enough savings to live for a month without income Sources: Global Banking and Finance, Gov.uk, Money Advice Service, ONS
  9. 9. Impact of Covid www.policyinpractice.co.uk ● 5.7m in receipt of Universal Credit (September 2020) - a 90% increase ● 2.7m people were unemployed and looking for work, 117% increase since March 2020 (August 2020) ● 7.5 m furloughed workers (August 2020) ● 800,000 job losses since Feb 2020 (latest estimate of 2m by April 2021) Increase in debt ● 6 million adults across the UK have fallen behind on at least one bill during the pandemic ● 2.8 million households have missed a council tax payment Sources: ONS, OBR, DWP, Citizens Advice
  10. 10. The Government response www.policyinpractice.co.uk ● Coronavirus Job Retention Scheme (furlough scheme) ○ Up to 80% of wages (up to £2,500) until the end of March 2021 ○ Must be on PAYE payroll on 30 October 2020. Ex-employees on the payroll on 23 Sept 2020 can be re-employed and furloughed ● Self employed grant is to be extended ○ 3 months from Nov 2020 to Jan 2021 with a further grant from Feb - April ○ 80% of trading profits (up to £2500/month) ● MIF suspension extended to end April 2021 ● Further grants for businesses ● Payment holidays (up to a total of 6 months) ● Eviction protections ● Benefit increases; LHA to 30 percentile, MIF suspension, £20 uplift ● £170m to councils to provide Christmas support with bills
  11. 11. But many people fall through the gaps www.policyinpractice.co.uk ● Employed and self-employed not eligible for support schemes ● Households not eligible for UC ○ partner’s income ○ over £16,000 capital ○ No Recourse to Public Funds ○ students ● Those that do not benefit from Covid benefit uplift ○ legacy benefits and should not move ○ benefit capped
  12. 12. More uncertainty on its way www.policyinpractice.co.uk Forthcoming changes ● 10% of furloughed workers likely to be made redundant (OBR); with second lock-down this may increase ● Emergency benefit increases to end in April 2021 ● Brexit
  13. 13. Implications - parallel welfare benefit systems www.policyinpractice.co.uk
  14. 14. Implications - demographics of benefit claimants are changing www.policyinpractice.co.uk ● Younger (46% +8%) ● Higher proportion of BAME (8% +2%) ● Higher proportion of males (49% + 6%) ● More private tenants (30% +5%) and owners (29% +4%) ● Lower proportion living with illness/disability (38% - 29%) ● More middle class (Social grade AB 26% + 11%) Source: Who are the new COVID-19 cohort of benefit claimants? Welfare at a (Social) Distance Rapid Report #2, Salford University ● PIP analysis of local authority data show households that joined since April 20 contained a higher proportion of single people (+ 1-2%), lower proportion in work (-18%),
  15. 15. Implications - the rise of the second safety net www.policyinpractice.co.uk The welfare support system has its own welfare support system Welfare benefits are insufficient for many households Risk factors for low financial resilience: ● Tenant ● Children ● Previous debt Foodbanks project a 150% rise in 2020/21 (Source: HoC briefing Nov 20)
  16. 16. Implications - the need for targeted holistic support www.policyinpractice.co.uk ● Identifying those in high social or economic risk as a result of COVID-19, now and in the future ● Giving accurate advice within a changing welfare context ● Targeting support to those most in need Local authorities can use their data to help with this
  17. 17. Who are your vulnerable groups? www.policyinpractice.co.uk
  18. 18. www.policyinpractice.co.uk
  19. 19. www.policyinpractice.co.uk Identify Engage Track People who need your support the most Your residents with targeted support The impact of policy and effectiveness of interventions
  20. 20. www.policyinpractice.co.uk Maximise income and financial resilience ● E.g. self employed household would be better off on UC but not if MIF is reinstated. ● Ensure the claimant is receiving all the benefit to which they are eligible
  21. 21. Weathering longer-term effects of the crisis www.policyinpractice.co.uk ● The increased generosity of the welfare system to be maintained after April ● The savings limit in Universal Credit to be suspended for next twelve months, and reassessed thereafter, particularly in relation to the self-employed ● MIF suspension to be maintained after 2021 ● Increase the benefit cap at least to CJRS levels ● Suspension of conditionality ● Suspension of the two child limit ● Sharing more data to allow councils to support their residents BUT the Government will be budgeting carefully - they have indicated that they plan to recoup some of the Covid spending
  22. 22. An opportunity to make real longer term change... www.policyinpractice.co.uk ● Changes to introduce greater flexibility into Universal Credit, e.g. ○ backdating up to a month under reasonable circumstances, ○ Explicit consent ○ Separation of payments from the assessment of the monthly award, ○ Real time responsiveness and flexibility to changes in personal circumstances ● Greater partnership with councils and advice agencies ○ Sharing data ○ Financial support to councils to provide holistic support ● The opportunity to examine levels of disability & housing support ● The opportunity to revisit the inclusion of austerity measures and benefit levels - public opinion is changing ○ This is a political decision - what is the benefits system for?
  23. 23. An opportunity to make real longer term change... www.policyinpractice.co.uk
  24. 24. www.policyinpractice.co.uk Questions and discussion
  25. 25. Thank you www.policyinpractice.co.uk Zoe Charlesworth Director of Policy and Operations zoe@policyinpractice.co.uk @ZoeCharleswort1 hello@policyinpractice.co.uk www.policyinpractice.co.uk @policy_practice 0330 088 9242

Westminster Insight’s timely Welfare Reform Forum explored how to process the huge upsurge in claims, improving advice for those dealing with immediate cash flow problems, changing assessment processes to safeguard claimants, identifying people falling through gaps in the system and supporting the most vulnerable people financially affected by the pandemic. Zoe's keynote address covered: - The implications of the Government’s response to COVID 19 on the social security system - Improving system design, delivery, flexibility and speed to support people in times of crisis - Ensuring the social security system can weather the longer-term effects of the crisis - Creating a person-centred, holistic and supportive social security system

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