Key points
 Reducting the time period for claiming backdating of pension credit, housing benefit and council tax benefit ( 82kb)
- The CAB service very much regrets that the DWP are once again proposing to cut housing benefit (HB), council tax benefit (CTB)) backdating, despite the fact that a similar proposal was made in 2000 only to be withdrawn in the face of strong opposition and a highly critical report from the SSAC. Many of the arguments made at that time still apply, and are outlined below.
- We do not consider that these proposals represent coherent policy making. Whatever the merits of the whole pension credit (PC) package, we do not believe that it is appropriate that this should be funded by cuts to housing benefit entitlement for either working age or pensioner claimants.
- The impetus for the proposals comes from the desire to make savings from PC backdating in order to pay for an improved PC claiming process and minor improvements to entitlement. It is then argued firstly that because pensioners will be claiming PC and HB in a single process, the backdating rules for the two benefits must be aligned, and secondly that since HB is also paid to working age claimants, similar (although not the same) rules must be introduced across the board. This is despite the fact that decisions on HB/CTB backdating are made by different decision makers from PC.
- The result is a proposal to cut HB entitlement for working age claimants without any compensating benefit for this group, and without any consideration being given as to why rules which have been in place since 1988 are now no longer needed. As such we believe this a shortsighted policy proposal, the consequences of which will be felt by some of the most vulnerable claimants who may end up facing homelessness as a result.
- We would also challenge the initial premise that the measures represent an overall improvement to the benefits system, certainly as far as customers are concerned. Clearly there are some gains for some pensioners but at the expense of a considerable loss of potential income for others by restricting backdating to three months. Moreover it seems likely that the latter group of pensioners will be more vulnerable, as they will by definition be people who are not even aware of their possible entitlement.
- We consider that the data available on the numbers of claimants receiving backdating for periods greater than three months is inadequate to support the proposed cuts. We also regret that no detailed breakdown is provided on the relative cost of each of a) the improved PC claims process b) the assessed income period run on and c) the 13 weeks temporary absence abroad extension, and how these compare with the estimated savings from reducing backdating for a) PC, b) HB/CTB backdating for pensioners and c) HB/CTB backdating for working age claimants.
- We also strongly dispute the claim which is made throughout the Memorandum, that the backdating cuts will only affect new claimants. Whilst this may be the case for PC, the situation for HB/CTB is far more complex, which partly explains why backdating for those benefits has always been 12 months. Many of the HB backdating cases dealt with by bureaux relate to existing claimants with arrears dating back to a period many months earlier where, for some reason, there was a problem with their claim and benefit ceased.
Detailed comments
Pension Credit
The CAB Service has been working closely with DWP to tackle pensioner poverty. Undoubtedly, pension credit has played an important role in this work and access to 12 months backdating without the need for good cause has been a welcome feature and an incentive for people to claim. We can see no justification for the proposed change and, moreover, it does not seem to fit with the Government’s wider and overarching policy to tackle pensioner poverty and promote the wellbeing of older people (PSA 17).
While we welcome the introduction of a one-call claims process for Pension Credit, Housing Benefit and Council Tax Benefit for older people, together with proposals to allow Pension Credit to be retained for up to 13 weeks of a temporary absence abroad, we do not believe that this compensates for the loss of potential income from backdating, nor that the reduction in backdating is necessary in order to facilitate the one-call process.
A CAB in the Midlands reported the case of a man in his 60s whose hours of work had been reduced, leaving him with earnings of less than £90 a week and a small occupational pension of £370 per month. He was paying full council tax and finding it increasingly difficult to manage financially. He was much relieved when the bureau advised him that he was entitled to guarantee pension credit, which could be backdated up to 12 months.
A CAB in the North reported another man in his 60s who had been self-employed for many years but whose profits had been declining and in the past few years he had made a loss. He had been living off his savings and went to the bureau for help when these were exhausted. He was claiming working tax credit and had a small personal pension but was not claiming council tax benefit and had an interest-only mortgage of £78,000. The bureau calculated that he was due guarantee pension credit of £73 a week and also full CTB of £16 a week. The pension credit award was backdated 12 months but the CTB was originally only awarded from the date of application, until the adviser pointed out to the local authority that pension credit had been backdated 12 months. The backdated pension credit allowed the client to resolves his immediate financial problems and pay off his mortgage arrears
The benefit of take-up work
With funding from the DWP’s Partnership Fund between 2005-07, twenty-three Citizens Advice Bureaux in England and Wales generated thousands of pounds in extra income for vulnerable older people, who might otherwise never have realised that help was available, let alone claimed it. For example:
- Over 12 months, Middlesborough CAB saw 724 clients, resulting in 519 new benefit claims, and an estimated £834,681 in new benefits awarded to older people.
- Salisbury CAB carried out more than 250 visits to vulnerable elderly clients in their own homes, and raised over £400,000 in previously unclaimed income in the first year. Results for the second year were expected to exceed £600,000.
Despite the Government’s work to encourage the take-up of older people’s benefits, including the current “pester power” campaign launched by the Pensions Minister earlier this year, older people continue to miss out on huge amounts of financial help and struggle to make ends meet. Only half of eligible older people claim council tax benefit and as many as four in ten are still missing out on pension credit, estimated to total between £2.5 and £4.2 billion a year. For example:
A Northumberland CAB’s client struggled to get by on her basic state pension of £125, and a tiny occupational pension of £1.77 each week. She had cancer and was living alone in privately rented accommodation. She had been using her savings to pay her rent of £91.15 a week, and was concerned that her savings would only last another 11 months. She had no idea that she was entitled to additional benefits and was living in poverty. The bureau commented that, because the client was receiving the single person discount on her council tax, the council should have been prompted to carry out a full benefit check and determine that the client was entitled to housing benefit and council tax benefit.
A CAB in South-East Wales reported that their client and his wife had missed out on pension credit and council benefit for two years because they thought they wouldn’t be eligible. They told the adviser that they had had the forms, but were put off by the lack of information about entitlement, and felt it wasn’t worth making a claim for something they might not be entitled to. The adviser found that they had, in fact, been entitled to pension credit worth approximately £120 a week for the past two years, as well as full council tax benefit.
Joint teams
We are concerned to see Local Authority Joint Teams, or joint working partnerships, included within the rationale for reducing the time limit for backdating benefits (Equality Impact Assessment, paragraph 6.2). These teams take many forms – a very small number appear to be co-located actual teams, with LA staff doing pension credit claims and DWP staff doing financial assessments for home care, and the work being done on one visit by either organisation. This level of co-operation appears to be very rare, however. At most, it provides a single point of contact for financial assessments and benefits, and concentrates resources mainly on those applying for, or already using, home care services, rather than the majority of pensioners who do not use that service. We are disappointed that the DWP has not commissioned independent evaluation of joint teams in advance of these proposals – with regard, in particular, to the impact, if any, that they have had in increasing take-up.
Choice
The Minister’s initial statement, and the Social Security (Miscellaneous Amendment) Regulations 2008, indicates that the reason for the proposed change was that older people are reluctant to provide the amount of personal information necessary to support a 12-month backdated claim. Bureaux do not believe this to be the case – indeed our evidence is that claimants are very pleased to have the opportunity for such backdating and the additional income it will provide. In any event, the current system allows the decision as to whether to backdate, and for how long, to rest with the claimant, which we believe to be the most appropriate arrangement.
Housing and council tax benefit backdating
A major part of bureaux work involves helping clients with housing debt, taking all possible steps to help them sustain their tenancies and avoid eviction and homelessness. Indeed this is a key aim of the National Homelessness Advice Service (NHAS) which the CAB service is funded by DCLG to deliver, and in 2006/7 bureaux dealt with over 80,000 enquiries on rent arrears. What is very clear from this work is that, despite improvements in HB administration, HB problems continue to be a major feature in rent arrears cases, and the facility to get a claim backdated by up to one year is a therefore a very valuable tool. In 2006/7 bureaux dealt with over 8,000 inquiries relating to HB backdating, and over 5,000 inquiries about backdating of CTB. Moreover, because of the requirement to prove good cause, there can be no doubt that this provision is targeted only on the most vulnerable claimants who most need personal support to help them cope.
A CAB in the south west reported a client who has been pursuing backdated housing benefit for a two month period when he failed to complete his housing benefit application because he was sectioned and hospitalised. The CAB has been helping the client with his claim but he has repeatedly lost contact and had to start again. As a result the whole process has taken well over three months. When the client is well he is fully capable of managing his own affairs. However more severe periods seem to occur without warning and he often loses contact with family at these times.
A CAB client in her sixties living in Surrey was struggling to cope since her husband had died suddenly over a year earlier. This led to mental health problems which resulted in her failing to complete HB review forms or to claim pension credit despite efforts by her local authority landlord to help. She was therefore living on approximately £47.00 per week retirement pension and was eventually evicted from her home for rent arrears. At this point she was referred to the CAB by the local authority.
The bureau adviser realised that she was entitled to a considerable amount of backdated HB, and persuaded the landlord to agree to let her return to the property if the arrears were cleared before they re-let it. The bureau helped her successfully claim seven months backdated HB/CTB and PC, which completely cleared her rent arrears and court costs. She was then granted a new tenancy with a clear rent record.
Aligning backdating rules with other benefits might appear administratively neat. However there are important reasons why HB is different from other means tested benefits and therefore requires different and more flexible backdating provision. Firstly, because benefit is often paid direct or rebated to the landlord, usually four weeks in arrears, there is often a delay before the claimant is even aware that their benefit has ceased and that action is needed to re-claim.
Secondly, unlike other means tested benefits, HB and CTB are paid to meet particular defined liabilities. If the benefit is not received then the debt remains. In May 2007, HB payments averaged £70.16 per week; claimants - by definition on a low income - are unlikely to be able to pay off the resulting rent arrears without a backdated payment. It is important to recognise that the impact of cutting HB/CTB backdating will in many cases be also felt by another part of the public purse: the majority of HB claimants rent from local authorities or housing associations which are likely to see their bad debts rise as a result of the change. Similarly it is likely that the council tax take will reduce.
We welcome the proposals to improve the claims process for HB/CTB claims for pensioners from October 2008. However we do not consider it appropriate that this should be funded by cutting backdating entitlement. The memorandum justifies this by arguing that the improved claims process will reduce the need for new claims to be backdated. However this ignores the fact that many of those who most need the benefit to be backdated beyond three months will be existing claimants, - who will not therefore have benefited from this improved claims process - as well as the most vulnerable pensioners who do not know about their entitlement.
Our main concern however is focussed on the extension of these measures to working age claimants. It appears that the only justification for cutting HB for this group is in order to fund the improved pensioner measures; there do not appear to be any compensating benefits for working age claimants or indeed any assessment of the value of the current rules in tackling rent arrears and preventing homelessness.
Prior to the introduction of pension credit in 2003, HB backdating was available for all HB claimants for 12 months on grounds of good cause. If the intention is therefore to end the transitional arrangements made around the introduction of PC, then 12 months with good cause should be the fall back position. Any change from that “status quo” position must be justified.
It is suggested (para 34) that it is in the customer’s interest to reduce the backdating period because they have difficulty in proving good cause or providing the relevant information for past periods and because the existing provision creates confusion for claimants and staff. This is not the experience of CAB advisers who, on the contrary, report how very valuable claimants find the option to backdate for a period up to 12 months, especially when they are faced with the threat of eviction for rent arrears. In any event, the claimant always has the choice not to backdate their claim if that is what they would prefer.
A CAB in County Durham reported a couple in their 70s and in poor health, who were in receipt of retirement pension, industrial injury disability benefit and a small occupational pension. A benefit check showed that they were due about £23 a week HB and £9 a week CTB. The bureau helped them complete an HB/CTB claim and requested that the benefits be backdated 12 months on the grounds that her poor health meant that they had not been able to seek benefit advice earlier. It was not difficult to provide all the information required for this. When the claim was awarded in January 2008, it was backdated 12 months without any problems.
The level of take up for HB, particularly among people in work is very poor at around 50% in 2005/6. It is important to recognise that the facility to backdate benefit for up to a year is a valuable tool for increasing take up as it ensures that claimants are able to claim their full entitlement. Moreover the good cause provisions mean that it is targeted on vulnerable groups.
Reducting the time period for claiming backdating of pension credit, housing benefit and council tax benefit ( 82kb)
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