Council staff handling housing benefit payments will not be transferred into the Department for Work and Pensions when the benefit is superseded by the new Universal Credit scheme, Iain Duncan Smith has confirmed.
Universal Credit aims to merge six working-age benefits – income-based jobseeker's allowance, income support, child tax credit, income-related employment and support allowance, working tax credit and housing benefit – into a single payment.
After a series of high-profile delays, the scheme is set to be rolled out nationally from May next year, with those on the existing benefits set to be transferred to the new scheme by 2021.
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Housing benefit is funded by the DWP, but is currently administered by local authorities.
In a statement published on Thursday, Duncan Smith, the work and pensions secretary, confirmed that existing local authority housing benefit staff would not be brought into DWP because of the "new and fundamentally different" nature of Universal Credit.
He said: "Local Authorities need to plan for the future and have sought clarity about implications for their staff currently administering Housing Benefit. Today I can confirm that my department does not propose to make any staff transfer arrangements for Local Authority staff who currently work on Housing Benefit for people of working age."
The movement of staff between public sector bodies is governed by Transfer of Undertakings Protection of Employment (TUPE) regulations, with further details set out in a Cabinet Office Statement of Practice (COSOP). The rules aim to ensure that employees' rights are protected when the service they work for is transferred to a new employer.
Duncan Smith said that DWP had consulted local authorities and decided that existing Housing Benefit staff would not be needed in administering Universal Credit – but promised that the department would meet the costs of any redundancy payments incurred by councils because of the overhaul.
He said: "My department has concluded that COSOP does not apply where, as here, there is no 'relevant transfer' for the purposes of TUPE; and that the new and fundamentally different delivery model for Universal Credit makes staff transfers inappropriate.
"The phased nature of this process means that the impact on local authorities can be managed in a way which minimises the need for any redundancies. Where this does not prove possible, after the exercise of all reasonable efforts to redeploy people, the department has given Local Authorities a commitment that we will meet their costs of any residual redundancies."
Last month's Spending Review confirmed that DWP's estate is set to shrink by 20% over the course of the decade, with the department expected to "co-locate" Jobcentres and share offices with local authorities. Meanwhile, some staff working at HM Revenue and Customs, which has also unveiled plans to radically cut the size of its estate, will be moved over to the DWP to work on Universal Credit.