Welfare Reform Benefit Changes 8 June, 2016Welfare Reform Benefit Changes

Welfare Reform Act 2012 The Welfare Reform Act became law on 8 March The Act introduced the biggest changes to welfare benefits for over 60 years. Most of the changes are now in place and have made a significant impact on residents in Southampton with a high number of people struggling to pay their bills. Pensioners have not been affected by the changes if they have reached the qualifying age for state Pension Credit. Visit to calculate when someone will reach the state Pension Credit qualifying age. 8 June, 2016Welfare Reform Benefit Changes

Structure of the benefits system Benefits Means Tested Based upon factors such as existing income, capital, family Universal Credit Income Support Income-based- Jobseeker’s Allowance Income-Related- Employment &Support Allowance Pension Credit Working Tax Credit Child Tax Credit Housing Benefit Council Tax Reduction Employment Legal minimum payment by employers to employees Statutory Sick Pay Statutory Maternity Pay Statutory Paternity Pay Statutory Adoption Pay Non- contributory Not based upon NI contributions Child Benefit Personal Independence Payments Disability Living Allowance Attendance Allowance Carer’s Allowance Industrial injuries Disablement Benefit Maternity Allowance Contributory Based on client’s NI record Contribution based - Jobseeker’s Allowance Contribution based - Employment &Support Allowance Retirement Pension Bereavement Allowance Non-means Tested 8 June, 2016Welfare Reform Benefit Changes

The changes so far: Under Occupancy rules ‘The Bedroom Tax’ Council Tax Reduction Scheme Personal Independence Payment Benefit Cap Universal Credit 8 June, 2016Welfare Reform Benefit Changes

Benefit Changes from April 2016 There are more welfare benefit changes being introduced following the summer budget and autumn spending review in It is important to keep up to date with the changes and know how they may affect our customers. Details of these changes are still being finalised, to make sure that you keep up-to-date with the changes visit June, 2016Welfare Reform Benefit Changes

Working age Benefits frozen for four years From April 2016 most working-age benefits will be frozen for four years this will include Jobseekers Allowance, Employment and Support Allowance, Income Support, Child Benefit, Tax Credits (excluding disability elements) and applicable amounts for Housing Benefit. Pensioner benefits are excluded from the freeze and will be protected by the ‘triple lock’. Disability Benefits (Personal Independence Payment, Disability Living Allowance and Attendance Allowance), Maternity Benefits, Statutory Sick Pay and Employment and Support Allowance (Support Group only) are also excluded and will continue to be uprated in the normal way in line with the Consumer Price Index (CPI). However, in September 2015 the CPI was announced to have fallen, this means these benefits will not be increased in April June, 2016Welfare Reform Benefit Changes

Benefit Cap There is currently a benefit cap in place that restricts the total amount of benefit that an out-of-work family can receive. The cap is set at: maximum of £500 a week for a couple (with or without children); maximum of £500 a week for a lone parent; maximum of £350 a week for a single adult who does not have children or their children don’t live with them. Because this figure includes Housing Benefit more people living in The private rented sector have been affected as well as those with large families. 8 June, 2016Welfare Reform Benefit Changes

Who is affected? The cap is applied to the combined income from a number of different benefits and tax credits including: Income Support; Jobseekers Allowance; Employment & Support Allowance (unless in the Support Group); Child Benefit; Child Tax Credit; Housing Benefit. 8 June, 2016Welfare Reform Benefit Changes

8 June, 2016Welfare Reform Benefit Changes Who is exempt? Some households who receive the following benefits will be exempt from the cap: Working Tax Credit Disability Living Allowance or Personal Independence Payments Attendance Allowance Carers Allowance Guardians Allowance The support component of Employment & Support Allowance Constant Attendance Allowance Industrial Injuries Disablement Benefit War Widows & War Widowers pension. The cap does not apply for 9 months to those who have been in work continuously for the previous 12 months and who lose their job through no fault of their own.

How will the ‘Cap’ be applied? In the short-term if a household is above the benefit cap limit their Housing Benefit entitlement will be reduced by the amount of excess income. As a result some people could lose all their Housing Benefit, except for a nominal amount of 50p which will continue to be paid should the amount of excess income exceed the amount of Housing Benefit awarded. No deductions are made to other benefits because of the cap. In the longer term the cap will form part of the new Universal Credit system and their benefit will be reduced by the Department for Work and Pensions. This means that even if they are not currently affected by the cap because they don't get Housing Benefit, the cap could affect them if they start receiving Universal Credit. 8 June, 2016Welfare Reform Benefit Changes

Example John and Karen have 5 children all under 16. They were claiming Jobseekers Allowance, Child Tax Credit, Child Benefit and Housing Benefit. They rent their home from the Council and their weekly rent was £ Prior to the benefit cap they would have received £ a week in combined benefits. Their Housing Benefit was reduced to bring their total benefits down to the £500 limit. They had to pay £81.28 more rent each week from their remaining benefits. 8 June, 2016Welfare Reform Benefit Changes

Continued from previous example.. John managed to find a job for 24 hours a week which meant they were no longer subject to the benefit cap. Their weekly income included: Working Tax Credit £57.49 Child Tax Credits£ Child Benefit£75.50 Housing Benefit£ Wages£ Total weekly income =£ June, 2016Welfare Reform Benefit Changes

Reduction in ‘Cap’ From October 2016 (exact date is not yet known) the cap will be reduced to: £385 a week (£20,000 a year) for couples (with or without children) and lone parents with dependent children; £258 a week (£13,400) for a single adult who doesn’t have children or whose child/children do not live with them. 8 June, 2016Welfare Reform Benefit Changes

Family 1 James and Kelly have 3 children all under 16. They claim Employment and Support Allowance as James is unable to work, Child Tax Credit, Child Benefit and Housing Benefit. They rent their home from the Council and their weekly rent is £ They currently receive £ a week in combined benefits, this includes £ Housing Benefit. From Autumn 2016 they will lose £65.08 per week of their Housing Benefit to bring their benefits down to the £ limit. They will have to pay £65.08 rent each week from their remaining benefits. 8 June, 2016Welfare Reform Benefit Changes

Family 2 Amir and Yasmina have 5 children They claim Jobseekers Allowance, Child Tax Credit, Child Benefit and Housing Benefit. They rent their home from a Private Landlord and their weekly rent is £ They currently receive £ a week in combined benefits, this includes £33.22 Housing Benefit. From October 2016 they will lose all of their Housing Benefit (HB) apart from £0.50 pence (you must be left with at least 50 pence a week HB so that you can still apply for discretionary housing payments and other ‘passported’ benefits such as free prescriptions, free school meals etc.). They will have to pay £ rent each week from their remaining benefits. Although Amir and Yasmina’s benefit entitlement will be reduced (to £ a week) – their income will be above the cap until they transfer to Universal Credit. 8 June, 2016Welfare Reform Benefit Changes

Family 3 Sara is a single parent who has 4 children all under 16. She claims Income Support, Child Tax Credit, Child Benefit and Housing Benefit. She rents her home from a private Landlord and her weekly rent is £ She is currently receiving £ a week in combined benefits, this includes £ Housing Benefit. From October 2016 Sara will lose £ per week of her Housing Benefit to bring her benefits down to the £ limit. She will have to pay £ rent each week from her remaining benefits. 8 June, 2016Welfare Reform Benefit Changes

Key messages: Exemptions… anyone in the household who is receiving Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Carers Allowance or is working and receiving Working Tax Credit will not be subject to the cap. Anyone affected by the cap may need to look for work or increase their working hours - or they may decide to reduce their outgoings. The Government introduced the ‘cap’ to encourage people back into work and make them less reliant on benefits. 8 June, 2016Welfare Reform Benefit Changes

Universal Credit What is Universal Credit? Universal Credit is the biggest change to the benefits system and will provide support for working-age claimants, both in and out of work. It is being introduced to: reduce the cost of the benefit system; remove barriers to employment; prevent benefit claimants from being better off financially than working families; simplify the existing system. 8 June, 2016Welfare Reform Benefit Changes

Which benefits will go? Universal Credit will replace and combine a number of means-tested benefits and tax credits, including: Income Support Income-related Jobseekers Allowance Income-related Employment & Support Allowance Housing Benefit Child Tax Credit Working Tax Credit. 8 June, 2016Welfare Reform Benefit Changes

Benefits not included in Universal Credit include: Contributory Jobseekers Allowance Contributory Employment & Support Allowance Disability Living Allowance Personal Independence Payment Carers Allowance Child Benefit Maternity Allowance Industrial Injuries Disablement Benefit Bereavement Benefits Council Tax Reduction Statutory Sick Pay Statutory Maternity Pay Statutory Paternity Pay Statutory Adoption Pay Retirement Pension Attendance Allowance Pension Credit 8 June, 2016Welfare Reform Benefit Changes

Who can claim? UC is payable to people who are: out of work; unable to work due to illness, disability or childcare commitments; in work on low incomes. Currently in Southampton you can only claim UC if you are a single jobseeker looking for work. Receipt of UC is dependent on agreeing to sign a ‘claimant commitment’. 8 June, 2016Welfare Reform Benefit Changes

How is Universal Credit worked out? The amount people will receive will depend on their level of income and other family circumstances. There will be a basic personal allowance with additional amounts for disability, caring responsibilities, children and housing costs. Basic Allowance Single claimant aged under 25: £ per month Single claimant aged 25 or over: £ per month Joint claimants both aged under 25: £ per month Joint claimants either aged 25 or over: £ per month 8 June, 2016Welfare Reform Benefit Changes

Additional elements Child Element Childcare Costs Element Disability Elements Carers Element Housing Element 8 June, 2016Welfare Reform Benefit Changes

Conditionality The four groups include: Active job search Work preparation Keeping in touch No conditionality Couples claiming UC will each have their own separate claimant commitment, if one does not meet the conditions of their claimant commitment it may affect their joint claim. 8 June, 2016Welfare Reform Benefit Changes

How will Universal Credit be paid? Universal Credit will be paid as a single monthly payment in arrears – first payment received 1 month and 7 days after the claim is made. It will be paid into a bank or credit union account or other account. Housing costs (Housing Benefit)will be included in the payment and it is the responsibility of the claimant to pay their rent to their landlord. 8 June, 2016Welfare Reform Benefit Changes

Advance payment Claimants can request an advance payment of Universal Credit to help them get by while they are waiting for their first payment. This is called a ‘short term advance’. The advance payment is a loan that will have to be repaid over a period 6 months for new claims and up to 12 months maximum for benefit transfer. Repayments will be automatically deducted from Universal Credit payments until the advance is fully paid back. 8 June, 2016Welfare Reform Benefit Changes

Alternative Payment Arrangements Alternative Payment Arrangements (APAs) can be considered for people who genuinely can’t manage their monthly payment, this might include:  paying the rent directly to the landlord;  making payments more frequently than the normal monthly payment;  splitting the payment within the household. Landlords will also be able to request an APA when the rent arrears ‘trigger’ of two months has been reached. 8 June, 2016Welfare Reform Benefit Changes

How to claim UC is ‘digital by default’ – claims will be expected to be made on-line, claimants will then attend a face-to-face interview. 8 June, 2016Welfare Reform Benefit Changes

Universal Credit roll out The government's timetable for rolling out Universal Credit was originally based on an October 2013 start date. However, this timetable has been substantially delayed. In March 2015 Universal Credit started being rolled out in Southampton but was limited to new claims from single jobseekers; Universal Credit will gradually be rolled out to new claimants nationwide by June 2018 and transfer of existing claimants between 2018 and Please be aware that the above dates may change. 8 June, 2016Welfare Reform Benefit Changes

Tax Credit Changes Income thresholds and taper - the changes to tax credits announced in the Summer Budget which would have resulted in reductions from April 2016 have now been dropped. The tax credits threshold will remain at £6,420 and the tax credits taper will remain at 41% of gross income. Changes to the income disregard The income rise disregard (this is the amount by which a claimants income can increase in-year compared to the previous year’s income) will be reduced from £5,000 to £2,500 from April June, 2016Welfare Reform Benefit Changes

Example Kara has been working in the same job for 2 years and her earnings for 2015/16 were £15,000. She is starting a new job and her salary will increase in April 2016 to £19,500. Under the current rules Kara’s 2016/17 tax credits award would not be affected by her pay rise because the increase of £4,500 is less than the £5,000 disregard. Kara would not see a reduction in her tax credits until April However, under the new disregard her 2016/17 tax credits award will be based on income of £19,500 which means she will see a reduction in her tax credits from April 2016 rather than April June, 2016Welfare Reform Benefit Changes

Support limited to 2 children Child Tax Credit will be limited to two children, any subsequent children born after April 2017 will not be eligible for support. New claims for Universal Credit after this date will also be limited to two children. Child Benefit for third and subsequent children will continue to be paid. Families who already receive tax credits or Universal Credit won’t be affected by the new rules. Exceptions will be made for multiple births. In addition to the two child limit the family element in tax credits and the family premium in Housing Benefit will all be abolished. Families with children born before April 2017 will continue to receive the family element but new claims made after this date will not. The family element in Housing Benefit will be removed for new claims and new births from May June, 2016Welfare Reform Benefit Changes

Parents claiming Universal Credit to look for work when youngest child turns 3 - from April 2017 parents claiming Universal Credit, including lone parents, will be expected to prepare for work when their youngest child turns two, and to look for work when their youngest child turns three. Free childcare increased from 15 to 30 hours per week for 3 and 4 year olds - from September 2017 working families with 3 and 4 year olds who are working more than 16 hours per week on incomes of less than £100,000 a year will receive 30 hours of free childcare per week. 8 June, 2016Welfare Reform Benefit Changes

Housing costs Housing Benefit backdating From April 2016 Housing Benefit claims for working age claimants will only be backdated for four weeks (previously six months) if they can show good cause for making a late claim. Housing Benefit limited when outside the country From May 2016 claimants who travel abroad will only be able to receive Housing Benefit for a maximum four weeks rather than the current 13 weeks. 8 June, 2016Welfare Reform Benefit Changes

Cap on Housing Benefit The rent used to calculate Housing Benefit paid to tenants in the social rented sector will be restricted to the Local Housing Allowance (LHA) rate from April 2018 but will only apply to new tenancies signed after 1 April 2016 (April 2017 for tenancies in supported accommodation). This is to bring them in line with those living in private rented accommodation. For example single people under 35 without dependent children will be restricted to claiming £67.87 a week in Housing Benefit payments whether they are council or private tenants. 8 June, 2016Welfare Reform Benefit Changes

Mortgage Interest Payments From April 2016 Support for Mortgage Interest (SMI) waiting period will return to 39 weeks (at present it is 13 weeks). SMI can be paid with benefits such as Income Support, Jobseekers Allowance or Universal Credit. The capital limit will be maintained at the higher level of £200,000. From April 2018 SMI will become a loan to be repaid when you return to work or sell property. 8 June, 2016Welfare Reform Benefit Changes Mortgage Interest Payments From April 2016 Support for Mortgage Interest (SMI) waiting period will return to 39 weeks (at present it is 13 weeks). SMI can be paid with benefits such as Income Support, Jobseekers Allowance or Universal Credit. The capital limit will be maintained at the higher level of £200,000. From April 2018 SMI will become a loan to be repaid when you return to work or sell property.

Social Housing Rents Rent reduction Rents paid by tenants in social housing in England will reduce by 1% a year for 4 years from April People living in supported housing will be exempt from this reduction for one year while a review is carried out. Pay to Stay From April 2017 social housing tenants will have to start to pay more rent if their household income is over £30,000. This will include a taper where the level of rent will gradually rise to the market rate level as household income increases. Details on how this will be implemented have not yet been released. Tenants in receipt of Housing Benefit will be exempt from these changes. Lifetime tenancies Also from April 2017 the Government will review the use of lifetime tenancies in social housing to limit their use and ensure that households are offered tenancies that match their needs and make best use of the social housing stock. 8 June, 2016Welfare Reform Benefit Changes

Benefit changes from April 2017 for year olds Universal Credit youth obligation Young people aged receiving Universal Credit will be expected to participate in an intensive programme of support at the start of their claim. After six months they will be expected to apply for an apprenticeship or traineeship, or go on a mandatory work placement to give them the skills they need to move into sustainable employment. Housing Benefit/Support Out of work year olds making new claims for Universal Credit will no longer be automatically entitled to the housing element (the equivalent of Housing Benefit). Exemptions will apply for ‘vulnerable people‘. Entitlement to Housing Benefit will continue until a person moves onto Universal Credit and in cases where a young person is in supported accommodation. 8 June, 2016Welfare Reform Benefit Changes

Other changes Employment & Support Allowance From April 2017 new claimants in the Employment and Support Allowance (ESA) work-related activity group (those who receive the lower rate of ESA) will only be paid the equivalent of Jobseekers Allowance (JSA). This is currently worth £29.05 a week. They will receive additional support to help them find work. Current claimants will not be affected by this change. 8 June, 2016Welfare Reform Benefit Changes

Jobseekers Allowance From April 2016 jobseekers will be required to attend the Jobcentre weekly for the first 3 months of their claim and the more intensive support of the ‘Help to Work’ Programme (currently for the long-term unemployed) will be brought forward. Pension Credit limited when outside the country From May 2016 claimants will no longer be able to receive Pension Credit payments if they are out of the country for more than 4 weeks. At present you can receive Pension Credit for up to 13 weeks whilst abroad. 8 June, 2016Welfare Reform Benefit Changes

More information Details of these changes are still being finalised. As soon as we receive more information about these changes we will update the council’s website. benefit-changes/ benefit-changes/ 8 June, 2016Welfare Reform Benefit Changes

Any Questions? 8 June, 2016Welfare Reform Benefit Changes

Welfare benefit advice in Southampton 8 June, 2016Welfare Reform Benefit Changes Welfare Rights & Money Advice Telephone: Southampton Advice and Representation Centre (SARC) 11 Porchester Rd Southampton SO19 2JB Visit: Tel: www.sarc.org.uk Citizens Advice Southampton 3 Kings Park Road Southampton SO15 2AT Visit: Tel: or www.sotoncab.org.uk