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Coping with cuts: the view from a Citizens Advice Bureau

We are not all in this together. Benefit changes and service cuts will have cumulative and often profoundly disruptive and painful effects on the lives of poor people, especially as they interact with existing deprivations and difficulties. Citizen's Advice Bureau adviser Deborah Padfield sets out the bottom-up perspective on the government’s plans
Deborah Padfield
21 December 2010

We are not all in this together. Benefit changes and service cuts will have cumulative and often profoundly disruptive and painful effects on the lives of poor people, especially as they interact with existing deprivations and difficulties. Citizen's Advice Bureau adviser Deborah Padfield sets out the bottom-up perspective on the government’s plans.

It is important to be cautious about what we say in time of retrenchment, for cuts and reforms are rarely welcome, always producing predictions of disaster. It would be easy to produce a doomsday scenario, ignoring both deficiencies in the system as it was and shrewd ideas amongst what is proposed. It is also easy to overlook the Labour government’s endeavours to fix the system, evidence not least of the difficulties of the task. The job of Citizen’s Advice Bureaux is not to comment on the government’s direction of travel in response to the deficit. We have to work with it. But we also have to analyse its impacts, highlighting the areas where vulnerable people will be affected in ways which render hypocritical our claims to be a fair society honouring the needs of vulnerable citizens.

My local bureau, in Cambridge, sees many of those vulnerable people. We give advice to all sorts and conditions. We have a gentle trickle of clients with annual incomes between £30,000 and £36,000. But in the last half-year, some half of our clients had incomes below the national poverty indicator – that is, below £230 weekly. (The national poverty indicator for a single person with two children is £247 a week.) I have lost count of the people tying themselves up with apologies for troubling us again, ‘but I don’t know who else to ask.’ More people are likely to be turning to us and to other voluntary advice and support agencies, but there aren’t enough of us around and the squeeze on central and local government funds will squeeze us too. Meanwhile, philanthropic giving stalled last year according to the Financial Times.

Two basic concerns. First, people’s problems, like bananas, come in bunches. It is unreal to look at each proposal in the spending review in isolation; it is the cumulative effect which is potentially serious.

And secondly, in relation specifically to benefits cuts, sanctions directed at the workshy will also hit those with complex needs. The bureau does not help people to claim benefits to which they are not entitled. It is constantly struggling to help those at or nearing the end of their tether. Nearly one in five of the people we advise have physical or mental disabilities, and 26 per cent of those have permanent community care needs. We try to help people find their way through the maze of benefits, employment, community care, housing and discrimination law to the support they need but do not necessarily get. It is a constant battle.

People with disabilities

I advise mainly on disability benefits. The people I see very often want to work. When at all possible, many find part-time voluntary work; very many are involved in supporting other people with similar problems – an unnoticed heartland of the Big Society. Most of them have difficulties which do not fit readily into paid employment. Employment & Support Allowance (ESA) replaced Incapacity Benefit in 2008 with the intention of supporting people back into work. One of its (unsurprising) lessons is that to be relevant to people with long-term difficulties, it must offer them long-term, intensive and flexible help, alongside significant re-education, advice and support for employers. Even in time of relative plenty, it did not adequately do this. Its deficiencies continue to be exposed by voluntary sector agencies, parliamentary debates and independent review.

We see a gentle stream of people who were refused ESA, only to have Job Centre Plus advisers warning them that they’re not realistically fit to work. Between the first quarter of 2009 and the first quarter of 2010, appeals to the first-Tier Social Security & Child Support tribunal increased by 57 per cent, nearly all of the increase being ESA appeals, with a consistent success rate of 40 per cent. Many sick or disabled people are being refused ESA. And behind those appeal statistics lie people baffled by the system or lacking support who, unable to tackle the appeal process, end up inappropriately on Job Seekers Allowance (JSA). They are now threatened not only with reduced housing benefit if they haven’t got a job within a year, but also with up to three-year sanctions on their JSA payments if they act ‘unreasonably’ in failing to apply for or accept jobs. The trouble is, what counts as ‘reasonable’ depends on a person’s situation and vulnerability. To sanction many of these for failing to get a job is to use a hammer to crack the wrong nut.

I think of a man who comes to see me, a long-term JSA claimant. He was moved from care home to care home all his childhood, and has problems with concentration and anger management. Though he hates his current non-life, he is so ashamed of being unable to read and write that he’s terrified of mixing with other people. I’ve tried and failed to find him accessible one-to-one literacy tuition. He has plenty of abilities, but cutting his benefits isn’t the way to help him fulfil them. I think of a young woman who lives alone in a nearby village. She has learning difficulties just below the level which would entitle her to services, and though wanting to work always panics when she feels she can’t cope. Her failure to get a job in the last year hasn’t been for want of trying. To sanction housing benefit seems as counter-productive as inappropriate.

Housing costs, debts and evictions

So does cost-cutting by reducing the rates paid in mortgage interest relief, as is planned. The bureau has figures showing the amounts, in straight money terms, handled by our debt advisers each year. Currently, after credit cards and unsecured loans, mortgage arrears and secured loans (most of which will be on property) are the largest sums. Next come rent arrears, involving smaller sums individually but affecting far more people. Our housing specialist attends the court desk for rent and mortgage arrears twice a week. He tells me that some 40-60 rent cases are heard each day, and some 10-12 mortgage cases. Unsurprisingly, he anticipates the numbers rising. The immediate costs to local authorities of legal eviction and re-housing will be significant; the longer-term costs in terms of family disruption, increased mental health problems and reduced ability to cope with the job search are unquantifiable. The problem is worsened by the standard refusal of social housing providers to allow tenants to downsize while they are in rent arrears.

The cumulative effects of housing benefit changes

Let’s look at the cumulative effects of housing benefit changes. To tackle the first complexity: housing benefit is paid to tenants both of social housing and private landlords. But the two sectors have separate bases, in the private sector benefits being calculated as a ‘Local Housing Allowance’ (LHA) paid usually to the tenant rather than directly to the landlord. Some of the changes now being proposed affect both sectors, some only one.

LHA, for private tenants, is currently set by calculating the median (mid point) of private rents in the ‘Broad Market Rental Area’ (BMRA), a geographical area. This is a tough measure; a Parliamentary Answer in March 2010 revealed that 48 per cent of LHA claimants received payments below their full rents. Cambridge city has very high housing prices. Furthermore, our BMRA is extremely broad, extending far out into local towns and villages where rents are much lower. These lower rents drag the local housing allowance rate well below the going rates in the city, creating a long-standing problem; we are one of the two areas in the country worst affected by the BMRA.

Two proposals will worsen this situation. The government is proposing to reduce the LHA from the median to the third percentile – an additional cut of 20 per cent. This has been brought forward to April 2011, though some transitional arrangements are being made for existing tenants. Secondly, a standard national cap is simultaneously to be introduced on LHA rates payable on each size of property. LHA calculates each claimant’s benefit according to the family size, hitherto to a maximum of five bedrooms, but now going down to four – bad news for big families.

The rationale of these cuts to reduce the huge cost of housing benefit while encouraging private landlords to reduce their rents. Yet recent surveys, including one by the London Boroughs and the DWP’s own November 2010 Impact Assessment, are less positive. They suggest that particularly where there is pressure on private housing, the effects will rather be to deter landlords from letting to claimants, forcing them out of the area and possibly driving up rents at the low end of the market. Such is the demand for housing in Cambridge that private landlords are already ceasing to let to tenants on benefits. The exodus of ‘the poor’ from the city is quietly beginning.

Nor is it only private tenants who will be affected. As I write, there is confusion over what exactly is to happen to housing associations rents; it has been variously announced that they will be able or will have to rise to 80 per cent of the market rate, but how this will be calculated remains unclear. All we know is that the rents will go up. For local authority and housing association tenants, housing benefits will be brought more in line with the LHA rationale, by capping benefit to a locally calculated maximum, according to family size: no one will be supported in a property larger than they are officially deemed to need, subject to special provisions for people with disabilities. As so often, this makes sense on paper, if we disregard the disruption to long-standing tenants and to families of fluctuating size. What will happen to those whose mid-teens children want to try moving out with the option of coming back if it doesn’t work after a year or two; or to those whose children are taken into care? That basic security, a stable home, is becoming ever more clearly a wealth-based privilege.

Adult children living at home

Adult children living at home will from April 2011 abruptly become a far more expensive luxury – those, at least, who refuse or aren’t able to pay their share of the rent. Housing benefits for private and social sector tenants are currently reduced for every ‘non-dependent’ living in the household: for every adult, that is, other than partners and people with disabilities. The amount of the deduction varies with the non-dependent’s income. Since 2001-02, these deductions have been frozen, but in April they are to be up-rated to reflect increases in rent since that date.

Again, this makes a lot of sense in principle, since the local authority should not be subsidising stay-at-home adults. But the scale of the sudden increase will be a body-blow for numerous clients we see at the bureau who cannot persuade – let alone force – their adult children to pay their share. One of my very first clients as a volunteer adviser was an elderly man who physically shook as he told me he couldn’t make his adult son pay him rent. One of my current clients is a woman with bipolar disorder whose non-rent-paying adult daughter has only just moved out. It’s another of those personal agonies quietly tearing people apart, hidden within their four walls and well below the national radar.

Too many whammies, coming all at once

Add another one: from April 2013 people who after a year on JSA haven’t found a job will lose a further 10 per cent of their housing benefit. If they’re forced to move to a cheaper area outside the city as a result, their job search will be yet harder.

Households with children

For households with small children, accessible and affordable nursery places are thin on the ground, particularly those flexible enough to fit round the changeable hours of shift work. The childcare allowance paid through working tax credit is to be reduced from 80 to 70 per cent of the cost, up to a set maximum. It’s a change which counteracts rises in child tax credits in 2011-12, particularly given that couple households will have to work 24 hours a week between them – up from 16 – before getting any working tax credit and hence childcare help at all. Add in the costs of travel to nursery and work for those forced out of the city, and how affordable can work be given the inadequacy of the minimum wage? Increased parking charges for residents and on-street parking have already been signalled for Cambridge; bus fares can be confidently expected to rise. In another section of the Comprehensive Spending Review the Bus Service Operators Grant (BSOG), which subsidises the price of fuel, was cut less than had been feared – by only 20 per cent, with continued provision for low-carbon buses. But it’s a reminder that benefit cuts take effect amongst a multitude of other factors.

If there are older children, determined to stay on at school after 16 despite the family’s poverty, they will no longer get the up to £30 a week Education Maintenance Allowance currently payable to students from low-income families. I have worked with youngsters for whom the abolition of EMA will make the difference between staying in school or not, or at best between being able to cope and achieve at school or not. There couldn’t be a more basic key to individual opportunity and independence than this. The government argues that EMA is not cost effective because of the number of youngsters (88 per cent according to one study) who say they would be in education even without it. A recent study by the Institute of Fiscal Studies, though, says that comparable ‘deadweight’ is not uncommon in public spending; that EMA also ensures better attendance and less need for students to take part time jobs; and that it is progressive in shifting money to low-income families. Those wider effects are important. I’ve worked with mothers shackled to disabling depression by their guilt at their children’s poverty of opportunity. The Social Attitudes Survey may show sympathy for benefit recipients falling, but I have nothing but respect for these parents who struggle so hard against the odds.

Work is unaffordable, allowances are insecure

We have clients who struggle to keep their jobs despite falling ever deeper into rent arrears and other debts as a result. It isn’t that benefits pay better; it’s that work is unaffordable. A little while ago, I was called to speak on the phone to a woman who, after struggling against all the odds to hang on to her job, was going to have to pack it in to save her home. It was a dreadful conversation. She had to be careful, too; JSA can be sanctioned for claimants who ‘voluntarily’ give up work.

I see one young couple where the man became ill and had to give up working. A big part of his debilitating anxiety is the loss of his wage-earning role. It’s a major strain on her also. He claims Employment & Support Allowance (ESA) and, under the new rules, he will lose it after a year since she earns just too much for them to claim means-tested ESA. I have real worries both about the financial impact, given the extent to which their income has already dropped in relation to their commitments, and the strain on their relationship. If – as often happens in our experience – the relationship breaks down under the pressure of debt and disruption and the children go with their mother, this not-particularly-young father will only be entitled to housing benefit for a single room. That’s already the rule for under-25 year-old single people in private tenancies. It is to become the rule for under-35s, from 2012 for private tenants and at a date to be announced for those in the social sector. Farewell my client’s chances of having his children to stay as a responsible dad.

Integrating unemployed people into the workforce

There are uncertainties all round for young people. What happens to those who leave school at 16, or end up unemployed after leaving? Though in place only since April and not yet evaluated, the Young People’s Guarantee of work experience or training for 16-24 year-old JSA claimants is being run down. It’s to be replaced by the new ‘Work Programme’, designed to create partnerships between government and ‘providers from across the public, private and third sectors’. It is a strong idea; but it throws yet another demand for change at claimants and organisations beset with such demands.

The work programme will attempt to reintegrate unemployed people into the workforce. But how about a person with physical or mental disabilities, living in a care home? The mobility component of Disability Living Allowance is to be cut from 2012-13 for them. The higher mobility rate provides people actually or virtually unable to walk with funding which can be used for motability cars. The lower rate is for people whose mental health problems mean they can’t cope with going out without someone accompanying them or without – for example – paying for a taxi. The government’s rationale is that DLA duplicates local authority social care. Arguable in theory; in practice it ignores the unworkable complexities of social care provision and its tightening eligibility criteria. It would be very hard to duplicate the individual autonomy given by DLA mobility component. Such a cut cannot fail to slash the participation of these people in society, Big or small.

Local authority service cuts

The impacts on local authority services resulting from the heavy squeeze on their budgets remain unknown. Cambridge has to manage a 14 per cent cut next year, with effects which depend in part on the rate of council tax, now to be set locally. One thing is certain: an increasing number of authorities will have to raise the entitlement threshold for social care from ‘substantial’ to ‘critical’ needs. The threshold for Cambridgeshire County Council, which provides social care in Cambridge, is currently set at ‘substantial’, ruling out support for ‘moderate’ and ‘low’ needs. For years, throughout the country the gap has been growing between people’s entitlements under community care law and what they actually receive, as shown by a long history of successful legal challenges. Between 1997 and 2006, the number of households nationally receiving local authority care support fell by 25 per cent, despite rising numbers in need. It is going to be very hard for local authorities to fulfil even minimal adherence to statutory duties without cutting corners. Unavoidably, more of our clients will say to us that they are not receiving the care support which they need, and that they don’t know whom to ask.

The undeserved weight of stigma

Or that they’re ashamed to ask. One of the most divisive effects of this debate is the way that benefit claimants are being stigmatised. Glancing references to protection of the ‘most vulnerable’ are lost in the emphases on getting people back to work and reducing the bill, with the not so subtle implication that benefits are a soft option for the ‘ workshy’ and an unaffordable luxury. The grinding work of being a carer, a single parent or a person with physical or mental challenges – work which has no holidays and no social recognition – is wholly forgotten. The bureau has a particular concern for issues of discrimination. We are concerned that the tone of the current debate will worsen the subtle forms of discrimination facing people who need public support in their struggles.

Deborah Padfield is an adviser with the Citizens Advice Bureau in Cambridge. She has written this article in her personal capacity.

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