Official Report: Minutes of Evidence

The Chairperson (Mr Eastwood): I invite Bronagh Smyth from the social welfare policy team in the Department for Communities to brief the Committee. Thank you, Bronagh.

Ms Bronagh Smyth (Department for Communities): Good afternoon, everybody. Thanks for the opportunity to attend the Committee this afternoon.

The Committee will be aware that, following the Fresh Start Agreement, the Executive committed a funding package of over £500 million to mitigate the welfare reform and tax credit changes. They also asked Professor Evason to lead a small working group to bring forward recommendations on where best to spend the moneys while remaining within the overall financial package. Since January, when the working group presented its report to the Executive, officials have been working on implementing its recommendations. That has included developing operational policy to enable us to deliver mitigation payments to the claimants identified in the report.

Given the extremely challenging timescale in which to implement the recommendations so that they align with the timescale for the introduction of the welfare reforms, it has not been possible to bring the regulations for all the mitigation measures through the legislative process together. An initial set of regulations was considered in March this year by the Social Development Committee, and those regulations have now been made. They provide mitigation payments for claimants affected by the first changes to the benefits system; that is, those affected by the £26,000 benefit cap, which came into effect on 31 May 2016, and those unable to work owing to ill health who are affected by the time-limiting of employment and support allowance (ESA), which is scheduled to come into effect in November.

The second tranche of regulations, which was considered by this Committee in June, are provision for welfare supplementary payments for three categories of claimant: those reassessed to personal independence payment (PIP), which will replace disability living allowance (DLA), and this was launched in Northern Ireland on 20 June; those in receipt of disability premiums who are impacted on by reassessment to personal independence payment; and those carers who are impacted on when the person whom they provide care for is reassessed to personal independence payment.

The Department now requires a third tranche of regulations to be made. The regulations will enable mitigation payments to be made to those claimants with families who will be impacted on by the £20,000 benefit cap, which is expected to be introduced on 7 November 2016. We also plan to bring further sets of mitigation regulations to the Committee over the coming months to implement the final recommendations arising from the working group's report. Those will include powers to recover overpayments and arrangements for mitigation payments to couples when they form or separate. We will also bring forward provisions for the mitigation of social-sector size criteria and a new cost-of-work allowance scheme for working tax credit and universal credit claimants.

The Westminster Government have already legislated to reduce the benefit cap levels to £20,000 a year for families and £13,400 a year for single people living outside greater London. The new benefit cap level will be introduced on 7 November 2016. Equivalent provisions are expected to be made for Northern Ireland in October, with the necessary legislation being taken through the Westminster Parliament. It is planned to introduce the revised benefit cap levels in Northern Ireland, also with effect from 7 November 2016, and the Department's current estimates are that approximately 2,600 households will be impacted on.

As Committee members will be aware, the Fresh Start working group recommended that only families with children affected by the benefit cap should receive a mitigation payment. That means that couples without children and single people without dependants who are affected by the benefit cap will not receive a welfare supplementary payment. However, those claimants will be able to apply for financial support through discretionary housing payments.

The Department is currently delivering mitigation for the benefit cap, as proposed by the working group at £26,000. The provisions in the regulations will ensure that that important financial support is extended to the many vulnerable people who will be affected by this further welfare reform. The Department is satisfied that the proposed amendments will continue to give effect to the working group's proposals and ensure that payments are made to those most in need, while remaining within the agreed budget.

That is all that I wish to say by way of introduction. If the Chair agrees, I will proceed with the briefing and then answer any questions that members have.

I must start by highlighting to members that two amendments have been made to the draft regulations since the Department submitted the SL1. A letter advising of the changes was sent to the Committee Clerk yesterday afternoon. The changes were required to ensure that the regulations will enable the proper payment of mitigation payments, and I will explain the amendments as I proceed. The provisions are to be made by way of amendment to existing regulations; namely, the Welfare Supplementary Payments Regulations (Northern Ireland) 2016. The existing regulations currently allow the Department to make mitigation payments to people with children who are affected by the benefit cap at £26,000. Other than the amendments that I will now explain, these regulations will not make any changes to the administration of the scheme.

Regulation 2 of these regulations will amend regulation 4 of the Welfare Supplementary Payments Regulations (Northern Ireland) 2016. It inserts regulation 4A to provide for the calculation of a welfare supplementary payment from the date on which the new benefit cap level of £20,000 is introduced. The new provision will entitle affected families to a welfare supplementary payment based on the benefit cap of £20,000. For families currently receiving a welfare supplementary payment, that means that their payments will be adjusted and increased from 7 November. Families not already affected by the benefit cap will be entitled to a payment from the first date on which the benefit cap applies to them. To ensure that payments can be made to those families, a further amendment will be made by regulation 2. It will change the definition of "relevant period" at regulation 4(10) in the current regulations. The new definition will introduce a revision that a person will be eligible for a welfare supplementary payment if they were in receipt of a welfare benefit from 6 November 2016 and are initially affected by the £20,000 benefit cap on or after 7 November. As a consequence of the amendment of the relevant period, a further amendment is also required, and that will introduce a definition of when the new benefit cap will apply to a person.

Regulation 3 will amend regulation 13 of the Welfare Supplementary Payment Regulations (Northern Ireland) 2016. It will have the effect of ensuring that payments are made only to people who are resident in Northern Ireland on 6 November 2016.

I am happy to answer any questions that you may have on policy relating to the benefit cap mitigation that I have just outlined. Thank you.

The Chairperson (Mr Eastwood): Thanks very much, Bronagh, for your attendance. Just to be clear: there is no mitigation at all for families that do not have children?

Ms B Smyth: Yes. Professor Evason and her colleagues in the working group recommended that mitigation be paid to those who have dependent children, so for couples without children and singles, there is no mitigation payment, but they will have access to discretionary housing payments.

The Chairperson (Mr Eastwood): Can you expand on that and what it will look like?

Ms B Smyth: Changes will be made to the financial regulations for discretionary housing payments, so, if they are impacted on by the benefit cap, come the £20,000 benefit cap being introduced, they will be able to apply for a discretionary housing payment for the amount that they have been impacted on by the £20,000 cap.

The Chairperson (Mr Eastwood): OK. I have one other question before I open up the meeting. These mitigation payments will not be around forever. When will they finish?

Ms B Smyth: Current funding will take them up to the end of March 2020. Following that, if the decision is taken not to extend the payments in any way — they are a transitional payment, if you like, into welfare reform — after they finish, people will still have access to any of the benefits that they are entitled to and also have access to any of the discretionary help that the Department can provide.

The Chairperson (Mr Eastwood): Thank you. It is important to be clear with people, because there is a lot of confusion. This is a temporary measure, up until 2020.

Ms B Smyth: The budget at the minute is for up until March 2020.

The Chairperson (Mr Eastwood): Is the Department doing — we are asking everybody this — any work to scope out what it might look like if a policy decision were made to extend mitigation payments?

Ms B Smyth: Not at this point in time, as far as I am aware, but I can certainly take that away and find out whether anything has been done to date.

The Chairperson (Mr Eastwood): OK.

Mr Agnew: Thank you for the information. Can you outline what the mitigation provisions are for this particular cap? Is it a one-year mitigation?

Ms B Smyth: Yes. The original regulations that were brought in in March obviously still apply. The only amendment that is being made through this set of regulations is the actual drop to the £20,000 benefit cap, so it is still a one-year payment — sorry, benefit. I beg your pardon. It is up to four years.

Mr Agnew: It is up to four years.

Ms B Smyth: For the benefit cap, it is up to four years. That will remain. As I say, the only difference with this is the drop to £20,000.

Mr Agnew: What is the rationale for administering the reduction through housing benefit? Why that benefit? Regarding the cap, for people who are on a suite of benefits, why is the reduction administered through housing benefit?

Ms B Smyth: The reduction on the benefit cap itself?

Mr Agnew: Yes.

Ms B Smyth: I am not sure of the answer. Again, I can take that away and come back to you if you want me to provide an answer.

Mr Agnew: OK. Finally, Chair, on discretionary housing payment, this is probably the third time that we have been told in a briefing that, if you cannot get mitigation, you can apply for a discretionary housing payment. It seems to be covering all wills at this point in time. What modelling has been done to ensure that the budget for discretionary housing payments is sufficient?

Ms B Smyth: I think that the budget had been increased for discretionary housing payments, so, from that point of view, it is sufficient. The forecast of those who may apply has been profiled. From the point of view of the £20,000 benefit cap and the drop, 15 households or thereabouts may not be eligible for a mitigation payment. That is the forecast. It is quite a low number that do not have dependants in the household.

Mr F McCann: Thanks for the presentation. It was interesting. The benefit cap is one of the aspects of welfare reform that has been difficult for us all to get our head around. Although I know that there was built-in mitigation that would take you through the four years, I think that you could only really set it for four years — the lifetime of this Assembly. It will then be up to the political parties to sit down and discuss it. I also thought there was a built-in review to look at how it was working and consider whether any changes were required. That, again, will be up to the political parties to decide.

I want to ask about the discretionary housing payment. Even before the mitigation started falling into place, I had some concerns about it. The discretionary housing payment has always been there, near enough, to allow people on housing benefit to get top-ups towards their rent. I remember asking a number of questions. I am not exactly sure of the figure and do not know whether you have it, but there were serious increases in the amounts of money for discretionary payments.

Again, it would be up to us as political leaders to argue the point if there were a shortfall in discretionary housing payments. It might have been £5 million or something made available, but maybe I am wrong. If we can get that figure, it will be interesting. I think that £5 million or more had been made available to deal with discretionary housing payments. It was believed at that time that that would cover all the eventualities that might arise. We are in new territory. What we have here does not exist in any other jurisdiction, so we need to let the thing play out. If it needs tweaked, we need to go back and argue that those tweaks should be made.

The Chairperson (Mr Eastwood): You do not need to answer that, Bronagh. [Laughter.]

Mr F McCann: Except for the figure.

Ms Mallon: I have a number of questions, just for my own understanding. The benefit cap has dropped to £20,000 for families and to £13,400 per annum for a single person living outside London. That affects people here as well.

Ms B Smyth: Yes.

Ms Mallon: Is there any mitigation there to help those people?

Ms B Smyth: No, because they are single people.

Ms Mallon: If you are a single person, you just get the cut. There is nothing.

Ms B Smyth: As I say, again, discretionary housing payments are being extended to the social sector.

Ms Mallon: Those people could apply.

Ms B Smyth: They could apply for a discretionary housing payment.

Ms Mallon: OK, but they are not guaranteed to be successful in that application.

Ms B Smyth: They would have to meet the criteria as applied by the statutory housing authority.

Ms Mallon: What about the households that are impacted on by the £20,000 benefit cap? They can apply for and will be successful in getting the discretionary housing payment.

Ms B Smyth: They will not apply for it. It will be —

Ms Mallon: Automatic?

Ms B Smyth: It will be automatic if they have dependants.

Ms Mallon: OK. The outworking of that is that, for the four years that the mitigation package that is in place, they will experience no financial loss: is that correct?

Ms B Smyth: Yes. They could have a change of circumstances, whereby they would not be capped any more. In that case, the mitigation payment would end. From that point of view, there could be changes there.

Ms Mallon: As long as they reach that benefit cap level, they will be successful in drawing down the discretionary housing payment and will not experience any financial loss.

Ms B Smyth: Is that for single people?

Ms Mallon: No, for households that are affected by the £20,000 cap.

Ms B Smyth: Those with children will automatically get a welfare supplementary payment. That is separate from the discretionary housing payment. If people have a change of circumstances as a result of which their benefit cap drops, the welfare supplementary payment will drop alongside that. That is the idea. Moreover, their circumstances may change so that they are no longer capped, and the welfare supplementary payment will end in that situation. Essentially, if people were to be capped on 7 November and their circumstances were to remain the same for the next four years, they would receive a mitigation payment for that level of the loss.

Ms Mallon: For those four years. OK.

There are a number of paragraphs in the section titled "Benefit Cap Mitigation" in the Department's letter to the Committee Clerk. I had difficulty understanding the third paragraph and the last paragraph. Can you give me practical examples so that I can understand exactly what type of household or person will be affected?

Ms B Smyth: The households that will be affected are those with children whose income, as a result of benefits, exceeds £20,000.

Ms Mallon: How many families is that, Bronagh?

Ms B Smyth: About 2,600.

Ms Mallon: That is 2,600 families, and by "families" we mean adult or adults with children.

Ms B Smyth: Yes, we do. That is the number forecast to be affected. As I say, once they are impacted on by the £20,000 benefit cap, payment will be automatic. It will then be made to them if they are found to be eligible. That payment will align with their housing benefit payment in the main. The deduction that is made from their housing benefit will be made up by the supplementary welfare payment that they receive.

Ms Mallon: OK. The last paragraph of the letter states:

Ms B Smyth: Part of the eligibility is that you have to be in receipt of a relevant welfare benefit on the date on which the benefit cap is introduced; that is, any of the benefits that are included in the calculation of the benefit cap, such as child benefit and income-related benefits. People have to be in receipt of one of those benefits on the day before the benefit cap at £20,000 comes in.

Ms Mallon: The letter states that the Department decided that screening sufficed: the proposals did not qualify for a full equality impact assessment (EQIA). I would like some understanding of that, because there is probably a divergence of views. We know with certainty that the mitigation package lasts for four years, but, after that, you are talking about a huge impact. I cannot find it here, but I am thinking of the terminology used in your paper. Are there plans in place for a full EQIA at least at the point after the four years, when there is nothing? Is that currently being prepared or considered by the Department?

Ms B Smyth: Not that I am aware of. Again, I can take that away and come back to you. A full impact assessment was considered and screened out owing to the fact that the payments are beneficial to the different sections. We felt that the full impact assessment was not therefore necessary. We also considered that those who would be impacted on but not eligible for a welfare supplementary payment would have another avenue through the discretionary housing payment.

Mr Agnew: I have one final point, Chair. I suppose that I am repeating a point I made on the bedroom tax. We had brought to our attention letters to people saying that they were getting a reduction, before they received another letter about a mitigation, and there was confusion because of the two. People are in a panic about the reduction, and they do not see the mitigation. Can we ensure that, in communicating this to people, the information is combined in one simple letter explaining that they will be no worse off? We know it — we understand it because we have been through all the Assembly debates — but when people receive the letter that there is a reduction, another letter three days later saying that it is OK is too late.

Ms B Smyth: I can take that away with the benefit cap communications and see how that might work moving forward.

Mr F McCann: That is a valid point. We have all been concerned, especially since housing associations were advising people that the bedroom tax is still there. Technically it is, but the mitigations make it null and void. We have asked at this Committee before that that confusion end. Steven is right: people are really concerned that they will be hit with these bills.
The lines of communication need to be tightened so that people are well aware of the mitigations.

Ms Smyth: I will take that away with me.

The Chairperson (Mr Eastwood): Thank you, Bronagh.

Ms B Smyth: Thank you very much.

The Chairperson (Mr Eastwood): Is the Committee content for the rule to be made?

The Chairperson (Mr Eastwood): Thank you very much.