Welfare Reform December 2012 Jane Thomas – Operational Manager (Benefits Finance and Tenants Services)

The biggest change to the welfare system in over 60 years Summary The biggest change to the welfare system in over 60 years Reduction in Benefit Levels for private tenants The Benefit Cap Social Housing Size Restrictions Introduction of Universal Credit Council Tax Support Social Fund reform Changes to disability and other welfare benefits

Reductions in Housing Benefit for Private Tenants These following changes are now in place: Reduction in Local Housing Allowance rates for most private tenants 5 bedroom rate removed Age of single room rate restriction increased from 24 to 34 Average loss £9 – maximum £86 LHA rates no longer increased in line with actual rent levels.

Importance of the Private Sector in Cardiff 10,433 claimants live within the private sector 91% increase in claims over past 5 years More claimants now live in private sector than in all housing associations Figures are June 08 to June 12

Benefit cap From April 2013 total benefits received is to be restricted to average earnings If income from certain benefits is over £350pw for single person or £500 for couples & families. HB only will be reduced until Universal Credit is introduced. Exemptions: Pensioners, some disabled people and war pensioners. Those claiming Working Tax Credit, 39 weeks exemption for newly unemployed New protection for some supported accommodation Still includes some hostels and other temporary accommodation

Impact of Benefit Cap Approx 400 households affected in Cardiff, 100 households will lose over £100 pw. 95% have children, 41% have 5 or more children. 51% are council or housing association tenants Equality issues Disproportionate impact on ethnic minority households. Nationally 30% of affected households are from ethnic minority groups. Women (mainly lone parents) are also disproportionately affected.

Case study Sarah is fleeing violence and is staying at a specialist hostel where the rent and service charges are £322.07 a week. Sarah receives Job Seekers Allowance of £75.00 a week. Her total income is £397.07 a week As she is a single person she is only allowed £350 a week Sarah loses £47.07 Housing Benefit per week she will have to make up this shortfall in her rent with her own income Michelle and Leigh have 6 children. They rent a private property for £184.62 per week. They are out of work and receive benefits of £681.88 (Housing Benefit, Job Seekers Allowance, Child Benefit and Child Tax Credit) As a family they are allowed £500 a week They will lose £181.88 housing benefit per week and will have to make up the shortfall in their rent from their other income Based on an estimate of 2013/14 income

Social Housing Size Restrictions From April 2013 social tenants who under occupy will have their HB restricted Pensioners are exempt (reached qualifying age for Pension Credit). Disabled are not. Children are expected to share a room until aged 10, (aged 16 for children of the same sex) 14% restriction for one room (£13.50*) 25% restriction for two rooms (£24.00*) Higher proportion cut if not on full benefit *based on 3 bed council rent

Impact of Size Restrictions Equality Issues Nationally 66% will have a disability Ethnic minorities less affected as generally have larger families. Higher proportion of female claimants will be affected. Higher proportion (55%) will be over age 45 as children have left home. 2,300 working age council tenants in Cardiff currently under occupy (527 by 2 rooms) 1,800 HA claimants will have a reduction Need to collect an additional £1.8m from low income council tenants - Concerns about rent arrears / evictions / homelessness and costs of rent collection

Case study Julie lives in a 4 bed house. Her rent is £100 a week and she currently gets full Housing Benefit. She has a son, 17, and two daughters, 5 and 10. She only has a 3 bed need as her daughters are expected to share a bedroom From April 2013 because she has a 3 bedroom need the amount of rent that her benefit will be worked out on will reduce by 14%. This means the maximum amount of housing benefit she can claim will now be £86 - she will need to pay £14 a week extra from her income. If her son then moves out meaning she now only has a 2 bed need, the amount she loses increases to 25%, - £25 a week

Council Tax Support From April 2013 Council Tax benefit is to be replaced by local council tax support schemes Devolved to Welsh Government who have issued draft regulations. Includes some very limited local discretion Pensioners will not be protected Funding to be cash limited – will not increase with demand or council tax increases Assembly failed to agree the regs on 5th December Council must carry out public consultation and adopt scheme by 31 Jan 2013 Then amend software, train staff by Feb 2013

Impact - Council Tax Support 35,000 households currently claim in Cardiff,13,000 are pensioners. 27,500 currently receive full benefit and pay no council tax. 32.7 million paid out in 2011.12 Increase of £7.2m since 2008.9, average increase 8% a year Of this increase £4.4m (61%) is due to growth in demand. More recently growth has slowed

Impact – Council Tax Support Concerns about ability to pay – increase debt. Recovery costs could double the amount of the bill. Low recovery levels & financial loss to the Council Additional costs of recovery for low level debts (27,500 households pay no council tax at present will now need to pay) Concerns about reducing administration costs

Sue and Steve are a couple both 55 year old in receipt of Job Seekers Allowance of £111.45 per week. They rent a 3 bed council property and under occupy by 2 bedrooms as their children have moved out. They will need to pay £24 rent a week from April. They will also need to pay £9.22 a month Council Tax. Overall they will need to pay £26.30 a week extra out of their JSA. Case studies John is 49 year old single person in receipt of Job Seekers Allowance of £71 per week. He owns his own Band D property and currently receives full Council Tax Benefit. He has a single person discount so from April he will need to pay £6.91 a month (based on 12 monthly payments). (Based on a 10% council tax support cut)

Social Fund Reform Some social fund payments are to be devolved to Welsh Govt from 2013 Community Care Grants – e.g. to help vulnerable people settle in community Crisis Loans – to meet needs in disaster or emergency WG are contracted with a national service, Northgate to lead with Wrexham Council and Family Fund Implementation to take place by March. In Cardiff - approx 18,000 applications were made in 2009.10 – 12,000 claims were paid amounting to £1.7million. Overall in Wales 179,000 claims a year are expected.

Changes to Disability Benefits Equality Issues The disabled in Wales will be more affected by the changes: 9.4% of working age in Wales are claiming ESA or ICB (GB average 6.5%) Wales has the highest level of DLA claimants 7.5% of working age population compared to 5.2% (GB average) Incapacity Benefit being replaced by Employment Support Allowance claims are being reassessed - Ongoing until 2014. 75% found fit for work. Many claimants winning on appeal if supported Disabled Living Allowance to be replaced by Personal Independence Payments (PIP) from April 2013 for people of working age. Everyone to be reassessed. 13,000 cases in Cardiff The assessment will be more rigorous. Estimated 20% reduction in claims. Middle care rate removed Other benefits will also be reduced as a result including WTC / HB /CTB and Motability – loss could be £200+ pw.

Changes to other benefits Working tax credits – couples have to work 24 hours to qualify – lone parents 16 hours Earnings threshold reduced – less people qualify If annual income goes down by £2,500 or less, no change in award Sanctions – JSA stopped for up to 3 years if leave their job or are not actively seeking work Lone Parents – must claim JSA and seek work when youngest child is 5 Qualifying age for pension credit – this was previously 60 but is currently increasing. At present it is just over 61 but increases by 2 months every month.

Universal Credit Housing Benefit, Income Support and many other welfare benefits are to be replaced by Universal Credit To be phased in from October 2013 to 2017. Not expected to affect Cardiff until Feb 2014. Contains significant work incentives and penalties Most customers will be expected to apply online Payment to be made monthly in arrears directly into claimants account Direct payment to social tenants rather than landlord (being piloted in Torfaen)

Impact of Universal Credit Equality Issues Some claimants will gain under UC: More ethnic minority claimants gain financially as couples are better off. Under 25s are more likely to benefit and over 50s least likely to benefit. Vulnerable may suffer from lack of direct payment and need for face to face help Concern about rent arrears due to direct payment & support that will be available to help claim 608 (7%) private sector claims are currently paid direct to landlord due to vulnerability / rent arrears Currently 2,500 customers seen face to face each week in Cardiff 170 jobs affected in Cardiff Councils’ future role uncertain – face to face pilots are taking place.

Economic Impact Wales - 18.4% of working age households are claiming benefit (GB average 14.5%) Households in Wales to lose 4.1% of their income or £1,110 per year, loss to the economy could be 1.5 times this amount. Inner city area of Cardiff is among worst affected in Wales

Impact on Child Poverty The reforms combined will result in a significant increase in child poverty The poorest households with children will lose the largest proportion of their income Worst affected will be families with children under 5 - or with more than 2 children Children changing school – disrupted education and possible mismatch in school places

Social & Financial impacts Possible reduced social and ethnic mix and greater concentration of benefit claimants Removal of families from support networks Increase in homelessness Increase in debt – use of loan sharks, personal bankruptcy & pressure on advice services Cuts to benefit and the timing and frequency of payments can impact on crime levels Increase in ASB, prostitution and social discontent

Action so Far Briefings for stakeholders Information sent to private tenants and their landlords Increased Discretionary Housing Payments used for rent in advance and bonds to help people move to private accommodation or down size Additional resources for Housing Advice Multi Agency group established to identify impacts

Action so Far Working with housing associations to develop new types of accommodation for single people. Letters sent to all Council Tenants under-occupying about their options and offering financial help to move Information provided to Housing Associations to help them encourage downsizing. Credit union pilot, to help Council Tenants with budgeting Consultation started on Council Tax Reductions Corporate approach to debt is being reviewed