Agenda item

Cllr Hayhurst in the Chair

8a.1  Ian Williams, Group Director Finance and Resources, updated the Panel on the impact of Universal Credit (UC) in Hackney.  The attached paper highlighted a number of issues with the roll-out of Universal Credit:

·  Key risks and how council is responding;

·  Opportunities;

·  Headline data and how it’s impacted on local residents.

8a.2  As the housing benefit element of UC would be paid direct to claimants alongside other welfare support, the accrual of rent arrears and personal financial hardship was a significant risk to the local claimants and to the Council.  In response, the Council had made a number of provisions within the Housing Revenue Account to support the transition to UC.

8a.3  There were a number of risks for UC in respect of the support provided to vulnerable client.  The UC application process required claimants to identify their vulnerability (e.g. substance misuse, gambling addiction, mental health) which if omitted, appropriate safeguards and support may not be put in place (e.g. Alternative Payment Arrangement).  In addition the operation of a centralised application and assessment UC process presented a number of risks in providing effective support to vulnerable clients:

·  The needs of claimants might not be effectively communicated from DWP to local services;

·  The Council would not be able to effectively signpost claimants to local services.

8a.4  It was important to note that as more claimants move to UC, the Housing Benefit caseload held by the Council would fall, and as a result, the caseload funding received by the Council from central government would reduce commensurately.  Further still, the Panel noted that no additional funding would be made available for the Council to support UC related initiatives.

8a.5  It was noted that the roll-out of UC offered might offer benefit to some claimants in that this benefit offered greater flexibility existing benefits.  It was noted that the level of entitlement under UC was responsive to the level of employment and income. Whether claimants would be better-off under UC was however a more complex assessment.

8a.6  As of December 2018, there were 1,490 UC claims made at Hackney Job Centre Plus (JCP), with additional claims made at other sites (Hoxton City) which is shared with Tower Hamlets.  It was reiterated that this figure only represented single claimants who were the first cohort to be migrated across to UC since October 2018.  Within this data it was noted that:

·  87-88% of claims were processed on time;

·  600 Hackney tenants were now in receipt of UC;

·  Higher arrears were noted among UC claimants than Housing Benefit claimants.

8a.7  The DWP has made a number of changes to UC in five areas:

·  Whilst child limit (of 2 children) remains in place, this would not be applied retrospectively (i.e. children born before April 2017);

·  In  response to concerns around Domestic Violence, UC benefit will be paid to the main caregiver within the family unit;

·  Only 5% of UC claimants in the private rented sector have their rent paid direct to their landlord, though new arrangements will make this easier;

·  There will be an option of more frequent payments to vulnerable claimants as opposed to standard monthly payment;

·  Childcare payments are more generous under UC (85%) and this will now be available up front where this is conditional to a job offer.

Cllr Gordon in the Chair

8.b  Quarterly Finance Update

8b.1  A range of financial papers had been submitted to the Panel for review which included:

·  2019/20 Budget update

·  2019/20 financial settlement - consultation response

·  Overall financial position of the Council (October 2018)

·  Capital Update report

8.b.2  In relation to the 2019/20 budget, the Panel noted that the  Group Director for Finance was working closely with colleagues across the Council where there were identified overspends (0.5%) and to put in place actions to mitigate these.  The Council had made a formal response to the local government financial settlement for 2019/20 consultation. The final settlement would be announced before 31^st January 2019 to enable local authorities to confirm their respective budgets for the year ahead.  Consultation on new Fairer Funding proposals was proceeding and the Council had continued dialogue with DCLG officials to highlight how these proposals would adversely impact on Hackney (and other London and urban areas).

8b.3   Submitted papers also included budget proposals for 2019/20.  The Panel understood that it was likely that, if approved by Council, Council Tax would rise by the maximum permitted level of 4.99% in 2019/20.  This would encompass the 2% increase allowed for social care and the 2.99% threshold above which a local referendum would be triggered.

8b.4  Given the ongoing budget pressures, the Council was assessing ways in which to reduce future spend in the next Medium Term Financial Plan 2020/21-2022-23.  These included:

·  Introduction of a voluntary redundancy scheme;

·  Reduction in spend on agency staff;

·  Renegotiation of high spend contracts;

·  Development of a strategy for better use of Council assets.

8b.5  The Panel noted that the Housing Revenue Account debt cap had been removed.  Whilst this would not allow unconditional borrowing, it would provide greater flexibility to the Council in the delivery of its housing and regeneration programme.

Questions from the Panel

8b.6  The Panel sought to understand what impact that a future voluntary redundancy programme would have on services, particularly those with customer facing roles (e.g. child and adult social care)?  It was noted that when voluntary redundancy programmes are devised, special consideration was given to how this may impact on front line services and adjusted accordingly. 

8b.7   The Panel understood that the formula for Fairer Funding was complex which incorporated both local needs and the ability of the authority to raise its own revenue (e.g. parking and fees and charges). There were however, other factors which were not fully recognised within the funding formula which possibly had a greater financial impact on the borough, this included a failure to recognise the cost of ‘doing business’ in the capital which was significantly higher than elsewhere.

Questions from the Panel

8.b.8  The Panel noted that some of the projected overspends across the council were  being offset by underspends in staff recruitment, and sought to understand if this was a deliberate policy and if this was impacting on service provision.  The Group Director responded that there would always be a lag within the recruitment process between the time when a person leaves a post and when that post is successfully recruited to.  The Commission noted that this was also not an explicit policy through which services could respond to overspends.

8b.9  The Council continued to face a very challenging financial position in relation to providing services for its most vulnerable residents such as children (SEND) and adult social care.  Will ongoing budget pressures force these services become increasingly reactive and minimise the scope for preventative measures?  The Group Director reported that it was unlikely that there would be any fundamental change in the financial outlook before 2024/2025, so it is likely that the pressures on local services would remain.  It was suggested that local government should instead focus on improving productivity, to ensure that the most benefit is obtained out of allocated resources.  Local authorities were required to provide some services statutorily however, and that these would generally need to be resourced over and above preventative services.  It was hoped that the introduction of Integrated Commissioning however, would help find the necessary efficiencies to maintain a broad range of service provision.

8b.10  The Panel noted that a significant amount of the budgets of local authorities were spent on a relatively few number of vulnerable residents with exceptionally high needs. To assist members in making future funding decisions, it was suggested that it would be helpful if the council could provide a more developed narrative around such high need spends to members along with case examples of how this money is spent.  The Group Director noted that approximately 80% of the budget of the council is spent on 15-20% of residents, most of which have some vulnerability.

8b.11  The Chair thanked the Group Director for Finance and Resources for attending and responding to questions from the Panel.