The Coalition Government and Welfare reform Dave Simmonds Centre for Economic & Social Inclusion

June 2010 Budget reforms Commitment to continuing with plan for reassessment of all Incapacity Benefit (IB) claimants by 2014 Reforms to Housing Benefit Lone parent obligations for those whose youngest child is 5 years from Oct 2011 Introduction of a new assessment for Disability Living Allowance claimants Savings of £11bn per annum

Comprehensive Spending Review 2010 Changes to welfare benefitsSavings in (£bn/yr) Remove Child Benefit from higher rate tax payers2.5 Limit contributory Employment and Support Allowance (ESA) to 12 months unless severely disabled 2.0 Cut spending on Council Tax Benefit0.5 Freeze part of Pension Credit0.3 Benefit cap of £500/wk (£50/wk if single no kids)0.3 Cut LHA for single people aged Cut DLA for people in care homes paid for by state0.1 Total cuts over CSR including those previously announced in the budget Over £18bn

Announcements on Housing Benefit Announcement 1: Local Housing Allowance (LHA) caps: £250 for 1 bed - £400 for 4 bed. – Local impact huge in some areas (over 17,000 households affected in London?). Boris - an exercise in “social cleansing”? Announcement 2: LHA to be set at 30 th percentile rather than median (50 th percentile) Announcement 3: Index linking of LHA to lower inflation – By 2020 EVERY tenants HB will be too low to cover rent (Chartered Institute of Housing) Announcement 4: HB award reduced by 10% after 12 months for JSA claimants – withdrawn Announcement 5: Limiting HB entitlement for single people aged 25 – 35

Distributional impact of CSR announcements by (source: IFS)

Incapacity Benefit reform Reassessment of almost 1.5m IB claimants by 2014 = 10,000 assessments per week Claimants will reassessed using ‘Work Capability Assessment’ (WCA) WCA has been criticised for being inaccurate and insensitive – 40% success rate for challenged decisions at appeal Consequences of people being transferred onto the wrong benefit are serious

Overview of WR Bill What’s in the Bill Housing Benefit Under-occupation of social housing ESA Disabled Living Allowance Household benefit cap Child maintenance Conditionality Sanctions Appeals Social Fund

Universal Credit UC is a much needed and welcome change with a good rationale Dual aims of simplification and increased work incentives Introduced in October 2013 for new claimants and will be paid monthly using ‘real time’ PAYE system Combines in and out of work means-tested benefits to create one single application, one single payment, one withdrawal rate (65%), assessed and paid on a household basis Basic allowance for adults with additions for children, disability, housing costs and caring New conditionality regime: 4 levels Earnings disregards will encourage “mini-jobs” Government commitment: no existing claimants will experience a reduction in cash terms following introduction of UC

Universal Credit – key delivery issues Purse to wallet Budgeting Internet use IT system

Welfare Reform Bill - key benefits issues Passported benefits Childcare Council Tax Benefit Housing (Housing Benefit, social housing) Social Fund Benefits cap

Winners and losers Cash protection at the point of transition Official winners and losers Losses occur before UC introduced Official losers: – Working families – Self employed – Those in areas of high housing costs – Large families – Second earners

All lose out but more in London

Impact on claimants Good intent being undermined by benefits cuts More uncertainty, fear and confusion? – Lower income – Changing entitlements and re-assessments – New conditionality and increased sanctions Increased incentive to work Many critical pieces are still unclear and work incentives may be undermined by childcare, passported benefits, etc Greater need for independent advice and support

Role of local partners Scrutiny: monitoring impact of reforms and performance of Work Programme and Jobcentre Plus Aligning local provision: local projects, childcare, health, housing, skills, advice Information and advice: jobs, skills, welfare and money advice