COMMITTEE FOR FINANCE AND PERSONNEL

OFFICIAL REPORT

(Hansard)

Review of Domestic Rating

Wednesday 3 October 2007

Members present for all or part of the proceedings:

Mr Mitchel McLaughlin (Chairperson)
Mr Mervyn Storey (Deputy Chairperson)
Mr Roy Beggs
Mr Simon Hamilton
Mr Fra McCann
Mr Adrian McQuillan
Mr Declan O’Loan
Mrs Dawn Purvis
Mr Peter Weir

Witnesses:

Ms Lucy Cochrane ) Citizens Advice Bureau

The Chairperson (Mr McLaughlin):
The Citizens Advice Bureau has agreed to give evidence to the Committee on the review of domestic rating, and I appreciate the fact that it has responded at short notice. I welcome Lucy Cochrane to the Committee. The session is being recorded by Hansard, and I remind everyone to switch off their mobile phones.

Ms Lucy Cochrane (Citizens Advice Bureau):
Have all members seen a copy of our submission?

The Chairperson:
Yes. We also have the case studies that you provided, which are very helpful.

Ms Cochrane:
I presented that document to the head of the rating division in July. The Department of Finance and Personnel has been made aware of those issues, and we have a close working relationship. If we receive difficult rates cases, we pass them on.

I refer to the main points of our submission. One of the biggest problems that we noted in the Rates (Amendment) ( Northern Ireland) Order 2006 was that there was no single-person discount. That should have been added to the legislation, because so many aspects of the capital-value system mirror that of Great Britain; yet that was left out. Many people are not eligible for any type of means-tested benefit. They are not eligible for the new relief, or housing benefits for rates, and if they are in a middle bracket for earnings — perhaps on the national minimum wage, or because they are single parents — they will be penalised if they receive a larger rates bill from April 2007. We felt that that issue should be reconsidered.

Since our 2006 consultation, there is less pressure from Land and Property Services on our clients. However, in our submission, we mention that there should be an intermediary, such as the CAB or the advice sector, for ratepayers who are struggling with debt. Currently, it appears that, if a person does not pay the bill, he or she goes straight to court, and we feel that there should be more flexible ways for people to pay those bills. There should be more leeway; for example, Citizens Advice Bureau has a partnership with the Housing Executive for tenants who fall into arrears. The CAB advisor goes through their income and expenditure and comes up with a repayment proposal. A similar model may be suitable.

Citizens Advice Bureau also pointed out that, although the transitional relief for those who had a substantial increase in their rates bill this year is welcome, it should be more generous. Those with a large increase in their bills are struggling, even given the initial scheme. That has had an impact on those who are not entitled to means-tested benefits, but who are not on a high salary.

It is difficult for us to comment on the new rate relief, but I have statistics from the CAB network that I can leave with the Committee. Approximately 20% to 25% of rates issues that have been raised with us are about the new relief, either from people enquiring about access to it, or from those who have made a claim and are waiting to see what has happened. It may take us another few months to examine the trends in the CAB statistics.

The main problems that we have identified with rates relief and housing benefit are IT issues. I mentioned in the submission that that is not due to be fixed until 2008. The computer system does not seem to interact correctly between the collection of rates and the payment of housing benefit and rate relief. Consequently, rate relief is being manually processed because the new calculation of that relief does not tie in with the housing-benefit calculations, and people are receiving an award letter for their housing benefits for rates, and a separate letter for rate relief.

We want to know why that happened, and what IT infrastructure is in place to prevent it from recurring. Should a central Government Department not have a robust IT system that can handle a sudden change in housing-benefit legislation with the introduction of the new relief?

Receiving two award letters has led to confusion and frustration for clients. They go to an advice centre where they are told that they are entitled to a certain amount of benefit each week, and they subsequently receive a letter stating that they will receive a lesser amount, which makes them believe that they have received the wrong information. Then, they receive a letter stating the amount of relief to which they are entitled. One of the first necessary mechanisms is an all-in-one letter that incorporates housing benefit and rate relief.

The problems experienced by individuals who are entitled to full rate relief are gradually being sorted out. There are backlogs, and some outstanding cases go back to 2006. However, as far as our client base is concerned, we are over the worst of those problems. We are concerned about those individuals who have not sought help from an advice centre. If they do not have an advocate who can contact the benefits office on their behalf, their case may sit untouched. That concerns us, but it is lucky that some individuals are able to contact the CAB. In view of that, we are running a large benefit-uptake project in conjunction with the Social Security Agency. We are writing to 17,000 clients, and every one of those will receive a full benefits check, incorporating rates, disability benefits, and any income-related benefits. However, we are concerned about those who are outside the CAB access loop or the independent advice sector.

Clients’ feedback suggests that the award letters are very confusing and unnecessarily long. In some instances, 16 pages of computer-generated letters were sent to say simply that a client was entitled to x amount of housing benefit for rates each week. We have raised that matter with the rating division of Land and Property Services, and it is considering reviewing that process. However, we have not yet seen that review.

Ironically, the manual letters that are received by clients who are receiving the new rate relief scheme are succinct and really easy to understand. We wonder why that template could not be used for housing benefit letters. We understand that many letters are computer-generated, and sometimes letters that go out to recipients can be out of our control. However, we would be interested to see how that process could be reviewed.

Rating division needs to have access to the Social Security Agency’s database that details the other benefits to which a client is entitled. That scheme rolled out with the Housing Executive, so staff can examine clients’ other incomes, such as state or occupational pension. That makes the benefit-uptake process faster and more efficient. We see no reason why rating division should not be able to access that database; there should be better communication between the four agencies.

With regard to queries, the worst of that problem has been dealt with, as the Committee can see from the statistics that I have provided. However, when people’s bills arrived in April and May, there were considerable issues with contacting the rating division. Although I am sure that extra staff and phone lines were available for that period, there must be better planning for next year’s predictably busy times.

Last-minute changes to the Rates (Amendment) ( Northern Ireland) Order 2006, which was amended in April, provide a more generous calculation for people who are over 60. We welcomed the legislation, although we got wind of it only 10 days before it came into operation. That threw a spanner into the works of the Citizens Advice Bureau information system. We were not able to obtain a copy of the legislation, and it was not on the Office of Public Sector Information’s website. That made it difficult for us to disseminate the information to our advisers because we had to make last-minute changes to the information database that they use.

We simplify the legislation for the advisers for when they, in turn, advise their clients. We would have preferred to have had better notice of the change. It took considerable staff time and resources to deal with that in a short space of time, and we would have been able to change our information system with a lot less pressure had we sooner been informed of the correct legislation.

The legislation was introduced hastily here, compared to the legislative process in GB, where organisations are given more notice when changes are made to legislation. In addition, more experienced advisers use maximising software that is bought in, and advisers who worked out the calculations may not have been aware of such changes, because the Statutory Rule had not been passed. Therefore, even the advisers’ calculations had to be changed after the review. That must be taken into account if dramatic changes are to be made to the system in future.

Those are the main points that have been raised on the benefits system, but I have collated more. The Committee has been given a copy of the case studies up to July, and the main issues that have been highlighted since then include delays in the processing of housing benefit and rate relief. The correspondence confuses clients. One adviser pointed out that clients should automatically be sent a letter when their claim has been received to reassure them that their claim has arrived and that it will be worked on.

There is an issue for people over 60 in respect of housing benefit for rate relief and the pension service. Some forms go missing when the pension service distributes them to Land and Property Services. I do not know whether that problem lies with the pension service or with the rating division, but some housing benefit for rate relief forms go through the pension service, but do not end up with Land and Property Services, so that should be flagged up.

I turn to the matter of long delays. One of our clients made a claim in January, but the case was erroneously closed. It was not until that client approached Citizens Advice that they were able to investigate the matter. Another client’s case had expired because it was made in September 2006, but no one had worked on it, so the case was closed until Citizens Advice contacted the client.

The Chairperson:
Examples of communication difficulties are reflected throughout the report. Have there been any improvements as the IT system beds in, or is the situation worsening?

Ms Cochrane:
The Citizens Advice Bureau receives more queries, but I presume that that includes people who make contact through the benefit-uptake programme. However, there has been an improvement in delays because the rating division has been working through the backlog since April. There are outstanding cases, but there is an improvement in the time that they take to process. However, there will be many new cases as a result of the work of Citizens Advice and Advice NI. We are worried about the backlog building up again, and have expressed concerns because there will be a deluge of fresh claims in the next few months.

Mr Weir:
Thank you for your presentation and for the points that you have covered. What is the take-up of reliefs? Do you foresee any problems with that? Could any solutions be employed to ensure that there is a greater take-up? One concern is that some people who perhaps fall within the boundaries of entitlement may not even bother to make a claim.

How do we get around that problem?

Ms Cochrane:
Probably one of the greatest obstacles is that people are unaware of their benefit entitlements. CAB finds that the main problem is with owner-occupiers and with people over the age of 60. Most people have found out about benefits such as pension credit — which is additional to their income — but they do not realise that they can get extra help with rates because they think that homeownership precludes entitlement to that. Perhaps simple measures such as promotional materials are needed to dispel that myth.

A CAB adviser will consider every scenario with any client who looks for advice. For example, an adviser will check a client’s rates. Historically, there has been a slow uptake of rates rebates. There are also additional obstacles — such as gathering data — associated with benefits. Previously, clients had to prove owner-occupation. Many people found it difficult to obtain any kind of paperwork that would prove that they owned their house. As far as the future is concerned, perhaps there should be more publicity that is targeted particularly at older people.

Mr Weir:
If many problems relate to elderly people in particular, what impact do you think that the recent reduction in the number of pension credit advisers will have? You have said that when advice is given, it often goes beyond advice on pension credits and can include advice on rates relief and other issues.

Ms Cochrane:
CAB has offices in 30 different locations with numerous outreach facilities. The current benefit-uptake process is the main issue being addressed by all CABs in Northern Ireland. People can approach their local CAB.

Mr Weir:
If the Department for Social Development’s role is cut back, will that have an impact on the CAB’s advice role?

Ms Cochrane:
Do you mean as far as pension advisers are concerned?

Mr Weir:
Yes.

Ms Cochrane:
It would be difficult for the CAB to know the answer to that question. We deal with clients who have been selected by the Social Security Agency’s anti-poverty unit. Although people make use of pension advisers, the independent advice sector could pick up on that.

Mr Beggs:
First, you mentioned the lack of uptake of certain entitlements. You have also spoken about long delays, computer systems, 16-page letters, telephones not being answered and the need for an advocate to progress a person’s application. Although those seem to be significant reasons that many people might not bother to engage in what appears to be a difficult process, it would be helpful if you could tell us of any other reasons for the lack of uptake?

Secondly, you said that you were given very short notice about the exact content of the legislation and how CAB might give practical advice to clients on how it might affect them. Does the Department of Finance and Personnel consult the CAB about the enactment of new legislation so that it will be aware in advance of any ramifications about how it will work in practice for clients and client advisers?

Ms Cochrane:
In answer to your second question, CAB was fully consulted about the Rates (Amendment) ( Northern Ireland) Order 2006. That consultation process took place over a year.

Mr Beggs:
My question concerns its implementation.

Ms Cochrane:
CAB knew exactly what the new reliefs would look like. However, the last section of the Order, which deals with people over the age of 60, came into force suddenly. A steering group had worked on the section of the Order that dealt with the age sector. However, a last-minute decision was made. On that occasion, CAB felt that it had not been adequately consulted. Nevertheless, CAB was fully consulted in the overall process for the 2006 Order.

In answer to your first question — regarding the way in which people should be told about benefits — when I talk about IT problems and letters, those problems may occur only after someone has actually made a claim. When people make claims off their own bat and do not get an advice worker to fill in the claim form on their behalf, they find that, although the forms have been shortened and simplified, they can still be quite difficult to complete.

There are issues about literacy and sensory impairment, and there have been a couple of cases in which people have been nervous about claiming Government benefits. The anti-fraud campaign on the television did not give people much confidence to claim new means-tested benefits. There are not huge volumes of people reporting that, but we have heard of incidents in which older people in particular have been intimidated out of claiming means-tested benefits because they are afraid that there is going to be an overpayment.

Mr McQuillan:
Has any research been done to identify those people who have not sought help?

Ms Cochrane:
Several pieces of research have been done, but off the top of my head I cannot name any of them. There was some research carried out by the Office of the First Minister and the Deputy First Minister on that subject. It is difficult to gauge, because unclaimed benefits amount to somewhere between £16 million and £74 million a year, which is a wide margin. There is a great deal of statistics on how many households should be claiming benefits in Northern Ireland. I will get back to you on that.

Mr McQuillan:
Do you have any idea how we could make people aware that they are entitled to certain benefits?

Ms Cochrane:
The usual way is through press releases in local and national newspapers, and more publicity, such as leaflets through the door. That is how we promote our services. When everybody got their rates bill in April it was accompanied by an information leaflet on rate relief. It was good to have that, but people need reminding. It may be time for another publicity campaign.

Mr McQuillan:
Should the Department carry out that campaign?

Ms Cochrane:
Yes; through the media.

Mr O’Loan:
Citizens Advice is an important organisation; it is perhaps uniquely well placed to provide information on how people are responding to the changes in the system. I welcome your submission, and it strikes me that you have made several new points. It is important that that information goes to Land and Property Services. I am pleased to hear that your organisation has a good relationship with Land and Property Services; that is important.

The rates bills generated a huge volume of enquiries, and as time has passed, you have commented usefully on a number of matters that need tidying up, shall we say. What is your overall assessment of the management of this substantial change in the rating system?

Ms Cochrane:
You will note that we did not have any criticisms of the relief per se. It is great that the benefit has been improved, and we welcome the new reliefs, although we did suggest that there needed to be some tweaking in certain areas. Overall, there should have been better planning, as I said earlier, to deal with the increased volume of calls in April. This year was different, because although some people’s rates were reduced, many other people experienced a rates increase. A lot of people were confused; they did not know who to contact about, for example, the capital value of their house: should they phone the valuations division; should they phone the rates division? There should have been more hands on deck to handle those queries.

Our biggest issue was the problem with the IT system, which has still not been resolved. Since I last met them in July 2007, staff in the rating division have been working round the clock to clear the backlog. However, cases are still coming through — Rome was not built in a day. The rating division did not promise that the backlog would be cleared overnight. Everyone is being realistic, but the situation could definitely have been handled better. Those in the higher echelons of Land and Property Services should review their IT system to ensure that it can handle the volume.

Mr O’Loan:
That is a useful answer to which, no doubt, Land and Property Services will listen with interest.

You have suggested a couple of extra reliefs, such as an automatic 25% discount for all single-person households.

Ms Cochrane:
Yes, as is the case in GB.

Mr O’Loan:
You have also suggested an extension of the disabled person’s allowance to all cases in which people are on disability-related benefits — and I assume that disability living allowance (DLA) is the primary benefit. Do you have any costings for that, or any view on where to place the burden of cost? Would you spread it across the rest of the ratepayers, or should that income be foregone?

Ms Cochrane:
That is a difficult question.

A Member:
It is meant to be.

Ms Cochrane:
The main theme of our submission is the availability to pay. Since the change in legislation, the disabled person’s allowance has been restricted, which means that new claimants can no longer avail of certain forms of assistance, such as when having central heating installed. Therefore, many people will miss out.

We welcome some new measures, such as those over the age of 60 receiving a higher applicable amount. We presume that a pot of money will be set aside to balance any automatic reduction in rates. Although the reductions would not be means-tested, we presume that a bank of money from ratepayers would accommodate them.

Mr O’Loan:
There appears to be an error in your report, regarding the consequences of the next valuation for domestic rates. This is important, because it is not generally understood that, should every single valuation double, rates bills will not necessarily double, or even increase at all. If capital valuations increase in one part of Northern Ireland and decrease in another, the rates burden will be spread accordingly. However, it is important not to convey the impression that any inflation in house prices will automatically lead to inflation in the rates.

Ms Cochrane:
Does that mean that the current capital valuation system, for as long as it is in place, will not be reassessed based on the capital value of houses in 2010?

Mr O’Loan:
When all the valuations have been completed, a decision must be made as to how much income is to be sought from the rates. A simple doubling of every individual house valuation house does not necessarily lead to any increase in the rates bill for those houses.

Ms Cochrane:
Our understanding is that all properties will be reassessed and that therefore, there will be some increase in the rates.

Mr O’Loan:
It is important that a body such as yours does not convey the wrong message to the public, who already have a right to be fearful about an increase in rates.

Mr Weir:
If I may introduce an analogy, it is similar to reassessing how to slice the same cake. Perhaps if house prices have risen faster in certain areas than in others, they may contribute a larger slice. However, the overall size of the cake would be exactly the same in any reassessment.

Reassessment does not mean that there will automatically be a particular change: any change would be relative to an area. Those areas in which there had been a greater increase in house prices would be badly affected. However, under those circumstances, areas in which there had been a lower-than-average increase in capital values would benefit from a reduction in rates. That is the nature of reassessment.

Mr Weir:
No; rates will rise in some areas and in others they will decrease. That will happen as a result of any reassessment. The consequences would be revenue neutral.

Mr Beggs:
For example, a council would not necessarily spend any more money. Therefore, the issue is about how the money would be raised. The regional rate might be different.

Mr F McCann:
Some of my questions have been answered already. However, I want to pick up on a point that was raised earlier. You said that fairly good consultation has taken place recently between the Department and Citizens Advice on rolling out the new system. However, you also said that there are still major difficulties in trying to contact people to explain the workings of the system. There is a lot of experience in the voluntary sector; and as that sector will have to pick up the pieces, should more consultation take place before the schemes are rolled out to establish what form they should take and how they will work best so as to minimise any difficulties?

You also said that around 17,000 cases have been dealt with by Citizens Advice. I agree that the older people get, the more terrified they are of forms, and many will throw them in the bin rather than read them. Would you agree that a better-resourced outreach approach for people who may not visit offices might be a better way to tackle the issue?

Ms Cochrane:
Are you referring to outreach services from the rating policy division?

Mr F McCann:
No; I am talking about the voluntary sector.

Ms Cochrane:
Outreach workers already make home visits to people who cannot make it to one of our offices, and they also provide outreach surgeries in health centres, and so on. Therefore, a significant amount of consultation does take place. There are quarterly meetings with rating policy division, which includes representatives from the entire voluntary sector.

The Chairperson:
Who attends those quarterly meetings?

Ms Cochrane:
Age Concern, Citizens Advice, Advice NI, Help the Aged, the Housing Rights Service and all the main charities that deal with advocacy on rates; housing benefit for rates and collection of rates. Housing associations are also present.

The Chairperson:
Has that proved to be an effective forum in which to iron out the kinks in the system?

Ms Cochrane:
It is a good way to exchange information.

Mr F McCann:
Have all of your suggestions been taken on board?

Ms Cochrane:
The meetings are based on action points. Therefore, although they provide a forum for the exchange of information and discussion, much is taken away and raised again at subsequent meetings. As the last meeting with rating policy division was in July 2007, another meeting is due. Would you remind me of your other question?

Mr F McCann:
It concerned resources and outreach, which is more of an issue for those who live in rural areas. Would it be beneficial to have better outreach resources to help people who have difficulty travelling to offices?

Ms Cochrane:
In 2003, much of the benefit system changed with the introduction of pension credit, and advice-sector staff were given welfare-reform posts. Perhaps the model should be revisited, and consideration given to funding. Consideration could also be given to the employment of independent advice workers to cover large areas, such as Fermanagh and Tyrone, where many people may be isolated. People in the advice sector would certainly welcome that.

Mr F McCann:
Are contact numbers provided for the Citizens Advice, or one of the other advice agencies, on housing benefit and rate-relief statements? That would allow people who may not be able to deal with issues themselves to contact one of those services directly for assistance.

Ms Cochrane:
As far as I am aware, the statements tell people that they may wish to take advice; however, the statements do not provide phone numbers. It must be borne in mind that there are around 30 CAB offices and around 60 independent advice offices. I am not sure how that problem could be overcome with one dedicated phone number.

We have a dedicated phone number for our uptake project, as does Advice NI, but that is merely to refer callers to their nearest advice worker. That is a big obstacle. Perhaps we should produce a flyer that lists all the office telephone numbers, which would be sent out with any correspondence.

The Chairperson:
The new NI Direct system provides for a single access number. There might be a facility whereby your telephone numbers might be incorporated into that programme. That would serve as an agreed contact point, at least initially, and then people may be referred to a more localised voluntary organisation or agency.

Mr F McCann:
There is a target audience — this issue affects mostly the elderly, and that is the audience on which you could test it.

The Chairperson:
Thank you, Lucy, for your evidence and for your comments, which the Committee will consider in the context of other information that will be brought before it. You have been most helpful. Keep up the good work.

Ms Cochrane:
Thank you.