Presentation on theme: "13 March 2013 What is happening to welfare? national policy - local impacts."— Presentation transcript:
13 March 2013 What is happening to welfare? national policy - local impacts
What’s happening to welfare? The objectives of welfare reform The national reform programme The local impact The tenant impact The sickness and disability impact The family impact Our local response
The objectives for welfare reform: financial and structural Financial: Set out in the Emergency Budget 2010: cut £18 billion from the welfare budget Confirmed in the Budget statement 2012: cut a further £3.7 billion from the welfare budget Structural: Set out in government White Paper: Welfare for 21 st Century –Target people of working age –Simplify the system –Make work pay –Reduce fraud
The national reform programme: first 3 years Work Capability Assessments for everyone on sickness benefits; contribution-based ESA limited to 52 weeks All benefits and tax credits up-rated by Consumer Prices Index ‘til 2013 (a lower index than the RPI, previously used) Child Benefit frozen for three years to 2013 Cuts to in-work tax credits Local Housing Allowance for private tenants capped Local Housing Allowance up-rated by CPI not market rent 27% hike in housing benefit non-dependant deductions Etc.
The national reform programme: from 2013 ‘Bedroom tax’ for social housing tenants – 14% or 25% of base rent cut from Housing Benefit General out of work benefit cap: £350 / £500 a week limit on benefit income Abolition of council tax benefit – transfer to local authorities with 10% cut Abolition of social fund crisis loans and community care grants – transfer funds to local authorities Abolition of disability living allowance – introduction of Personal Independence Payment with target to cut spending by 20% Benefits, tax credits and LHA caps up-rated by 1%, not CPI
The local impact Financial: Islington’s share of £21.7 billion cut is about £45 to £65 million £3.6 million available locally to mitigate the impact Structural: The benefit cuts target specific groups in the working age population: –Tenants on housing benefit (all tenures) –People sickness and disability benefits –Families with children – in or out of work
The national reform programme: tenant impact A total of 7 reforms cut benefits for tenants Private tenants –Local Housing Allowance: caps based on size criteria –LHA: market rent capped at bottom third of rental market –LHA: abolition of £15 bonus paid to tenants in low rent properties –LHA: single room rent restriction extended to age 35 –LHA: uprated by Consumer Prices Index, not market rent –LHA: uprated by 1% from 2014, not CPI Social housing tenants –‘Bedroom tax’ – under-occupation restriction based on size criteria All tenants –Non-dependent deductions increased by 27%
The tenant impact: LHA cap for private tenants 3,250 private tenants covered by LHA caps in Islington (86% lone parents) 1,316 (40%) LHA households exceed the cap Average loss of benefit is £45.71 a week Range is between £34 and £1000 a week
The tenant impact: LHA cap case study Lone parent on income support with two children (3 and 1) living in a two bedroom private flat: rent £350 a week LHA cap for a her is £290 – £60 cut in HB –IS for mother: £71.00 –Child Tax Credit:£113.63 –Child Benefit:£33.70 –Total family income£218.33 Family income after housing costs: £158.33 (£7.54 per person per day) Council tax to pay from April 2013: £1.71
The tenant impact: ‘bedroom tax’ for social housing tenants Size criteria that apply to private tenants will be applied to social housing tenants under pension credit age 2100 council tenants affected – unknown number in other social housing sector If under-occupying by one room – will have to meet 14% of base rent before housing benefit If under-occupying by more than one room – will have to meet 25% of base rent before housing benefit
The tenant impact: ‘bedroom tax’ case study Lone parent on income support with two children (3 and 1) living in a three bedroom NewLon flat: rent £193.70 a week Service charge is £6.17; 14% cut to rent for HB = £26.25 cut in HB –IS for mother: £71.00 –Child Tax Credit:£113.63 –Child Benefit:£33.70 –Total family income£218.33 Family income after rent: £185.41 (£8.83 per person per day) Council tax to pay from April 2013: £1.71
The national reform programme: sickness and disability impact Three reforms cut benefits for sick and disabled people Sickness benefits –Work Capability Assessments for all who claim sickness benefits –Contribution-based Employment and Support Allowance time limited to 52 weeks Disability –Abolition of Disability Living Allowance for people aged 16 to 64 – replaced by Personal Independence payments
The sickness and disability impact: work capability assessments and DLA Sickness benefits 12,500 Islington residents claim long-term sickness benefits (8% of working age population) Nearly, 8000 Islington residents will have a WCA to assess them for Employment & Support Allowance by 2014 –2950 (37%) expected to be found fit for work – required to claim Jobseeker’s Allowance with average loss of benefit £35 a week Disability Living Allowance Nearly 8000 working age adults getting DLA in Islington –1600 to 2300 may lose benefit when claiming Personal Independence Payment –Potential loss of benefit between £20.55 to £234.85 a week
The sickness and disability impact: case studies Work Capability Assessment Single man age 38 claiming Incapacity Benefit and income support of £101.35 a week. Work Capability Assessment finds him fit for work. Required to claim Jobseeker’s Allowance of £71.00 a week – loss of £30.35. If challenging the decision, can claim Employment and Support Allowance pending the appeal – will be paid at £71 a week- loss of £30.35 a week. Disability Living Allowance Single man age 38 claiming Employment & Support Allowance of £157.35 and DLA of £58.85. Total income = £216.20 Notified that DLA will stop. Claim for Personal Independence Payment turned down. Loses DLA and ESA severe disability premium. Total income = £99.15. Loss of £117.05 a week.
The national reform programme: family impact A total of 17 reforms cut benefits for families Families with young children –Sure Start maternity grant for 1 st child only –Health in Pregnancy Grant abolished –Child Tax Credit baby element abolished –Child benefit frozen for three years Working families –Multiple cuts to in-work tax credits –Childcare element of Working Tax Credit cut by 10% –Working Tax Credit: excludes couples working under 24 hours Workless Families –General benefit cap of £500 a week
The family impact: general benefit cap for workless families From (about) September 2013: most households on out of work benefits capped at £500 a week (couples) or £350 a week (single) DWP have identified 888 Islington households above the cap –600 households lose more than £30 a week –728 households with1853 children –Of the 728 households with children: –112 households are ‘troubled families’ (373 children) Cap does not apply to households getting DLA, certain sickness benefits, war pensions etc.
The family impact: general benefit cap case study Lone parent on income support with three children (3, 2 and 1) living in a two bedroom private flat: rent £350 a week LHA cap for her is £340 – £10 cut in HB –IS for mother: £71.00 –Child Tax Credit:£165.27 –Child Benefit:£47.10 –Housing Benefit£340.00 –Total benefit income£623.37 General cap for her is £500; excess = £123.37 Family income after rent: £150.00 (£5.36 per person per day) Council tax to pay from April 2013: £1.89 a week
The family impact: general benefit cap and employment Lone parent with three children Income before cap Income after capIncome if working Income Support£71.00 £0.00 Child Tax Credit£165.27 Working Tax Credit£0.00 £74.34 Housing Benefit£340.00£216.63£306.89 Child Benefit£47.10 Net earnings£0.00 Total income£645.67£500£742.52 Per person per day£9.76£5.36£13.22 Weekly Council Tax from April 2013 £1.89
The family impact: ready reckoner Family Type No. of children JSA/ISChild Benefit Child Tax Credit Maximum housing costs Lone parent 5£71.00£73.90£268.45£86.65 “6£71.00£87.30£320.04£21.66 “7£71.00£100.70£371.63£0.50 Couple4£111.45£60.50£216.86£111.19 “5£111.45£73.90£268.45£46.20 “6£111.45£87.30£320.04£0.50
Welfare reform and child poverty 2010: Islington’s child poverty rate was 41.4% –Second highest in UK after Tower Hamlets –15,745 children below poverty line –13,545 in workless households Most projections of child poverty rates have been based on assumption that benefits offer a safety net and rise with inflation –Cuts, caps and 1% up-rating of benefits forces a re-assessment of those projections Welfare reforms mean that the features of poverty will change –Destitution will be a reality for larger families in high rent areas 2013: Government consults on changing measures for child poverty –Income just one element in ‘multi-dimensional’ child poverty measure
Our local response Identify the cumulative impact of the reforms at household level Use new data sharing flexibilities to target households for support Work in partnership with JCP to offer households advice on benefit rights, housing options and access to employment and training Develop outreach advice and work with tenants’ groups to prepare local people for the changes Mitigate hardship and prevent escalation of need arising from welfare benefit cuts
Contact Martin Baillie 020 7527 8620 07527 236217 firstname.lastname@example.org Income Maximisation Service 020 7527 8600 0800 731 8081 (freephone) email@example.com