Local authorities, the custodians of the Housing Benefit scheme, have been largely frozen-out of the new Universal Credit, reports Jim Arnold.

The White Paper rules out local authorities from the core administration of the Universal Credit.

To be cost-effective, the Universal Credit needs to be run by a highly-automated, centralised process. The DWP already has large regional delivery centres and call centres at the Jobcentre Plus. Local authorities, by contrast, are 407 separate entities.

Although it’s true that some councils could have run Housing Benefit better, it is economics, rather than incompetence, that has taken local authorities out of the reckoning.

Will any of the local authority staff who currently run Housing Benefits be saved? Are there any crumbs of work left behind for them by the White Paper?

Well, the answer is “yes”, but not enough crumbs to protect many of the jobs. The days of “Housing Benefits” often being the largest department at the Town Hall will soon be behind us.

Even Housing Benefit for pensioners, which was always going to be left outside of the Universal Credit, has been taken away from local authorities. It has been given to the Pension Service to run alongside the Pension Credit scheme.

So, what’s left for local authorities?

1. The new Council Tax benefit scheme. Even before the publication of the White Paper, the Government had conceded that it just couldn’t find a good way to fit Council Tax Benefit into the Universal Credit. But the new Council Tax benefit won’t be the same as the old Council Tax Benefit. Councils will be told to make local rules, to make the scheme 10% cheaper. This discretion may allow councils to make the scheme simpler. And simpler = less staff needed. It might be able to be administered by the Council Tax staff, rather than having to retain specialist benefits staff to run it. Furthermore, councils will be expected to get their information from the DWP’s information gathering process, rather than to bother the customer with its own forms and enquiries. So new Council Tax benefit will be a streamlined and staff-lite.

2. Parts of the Social Fund will be delegated to local authorities, the White Paper tells us. These will be Community Care Grants and Crisis Loans.

3. Local authorities may be able to help in the labour market functions of the Universal Credit. They may be able to forge partnerships with local Jobcentres and voluntary organisations, to find work placements, etc.

4. Housing Benefit for specialist areas of social housing, such as supported accommodation and temporary accommodation, may stay outside of the Universal Credit, suggests the White Paper.

These areas together may represent about 5% - 10% of the current Housing Benefit caseload. But what the White Paper is doing is suggesting this possibility, rather than promising this work to the councils. If this work was to stay with the councils, it would be a major blow to the Universal Credit.

Temporary accommodation is a significant and expensive sector and to leave it’s housing costs free from the vigour of Universal Credit would represent a failure of policy objectives.

Customers in temporary accommodation would (presumably) get some of their money from Universal Credit, and their housing costs from the council: exactly the kind of complexity the Universal Credit was designed to get rid of.

By leaving these branches of social housing out of Universal Credit, a precedent is set. If a special case has been made for these branches, why not for the rest of social housing? Without the steady stream of housing benefit, many housing associations, ALMOs and council house departments will become non-viable, they will argue. How, then, would they build the 150,000 new homes we need?

So, in all, four areas of work left behind by the White Paper for local authorities to do. Three quite small, but the fourth of variable size, depending on what the Government decides. The way “number 4” above is resolved will be critical to the future shape of the country’s welfare system. If social housing is left out of Universal Credit, Universal Credit starts to look like a crumbly, piecemeal and expensive failure. But if the Government keeps it in, the local authorities will have to say “goodbye” to their Housing Benefit staff. With the Welfare Reform Bill due before Parliament early next year, the Government has only about 3 months to ponder this big decision.

J. Arnold 18/11/10