An overview of the Welfare Reforms The Welfare Benefits Unit Heather Theobold October 2012

Welfare Reform

Aims to: Improve work incentives Simplify the benefits system Make it less costly to administer Make significant savings ‘a life on benefits will no longer be an option’ Ian Duncan Smith

Benefits Changes 2011 £190 Health in Pregnancy Grant abolished £500 Sure Start Maternity Grant paid to first child only Child Trust Fund stopped for those born after 1/1/11 Child Benefit frozen for 3 years Most benefits increased by CPI (Consumer Price Index) not RPI (Retail Price Index) Education Maintenance Allowance abolished

changes

Migration to Employment and Support Allowance

Commenced October 2010 Change to Limited Capability for Work Assessment in March 2011 Protection of amount of benefit received leading to a static income for those transferred Increase in number of jobseekers.

Employment and Support Allowance April 2012 Contributory work-related activity group limited to 12 months Waived NI contributions rules for young people abolished

Housing Benefit

Main changes affect Private Rented Sector Local Housing Allowance Housing Benefit

Deductions for non-dependants increased

Local Housing Allowance April ‘11 £15 weekly top up ends Max LHA level 4 bedroom rate Maximum national upper limit Additional bedroom for overnight non-resident carer

Reduction in Rates Reduced to 30 th percentile from April ‘11 for new claims Re-assessed from ‘Anniversary Date’ for existing claimants 9 months transitional protection January ‘12 Local Housing Allowance

Local Housing Allowance Jan ‘12 Shared room rate for 35 year-olds Local Housing Allowance April ‘12 Rates set annually, not monthly

Estimated impact “We estimate that, in total, 99 per cent of cases assessed under the Local Housing Allowance arrangements (1.02 million at March 2010) will be affected in some way by the changes to the Local Housing Allowance arrangements ” (Explanatory memo to SSAC para 40) Local Housing Allowance

“ There should be no need with the discretionary allowance that anyone should be made homeless. “There is no need for councils to think or to worry about the idea of having to put people into homeless accommodation.” November 2010 Iain Duncan Smith Secretary of State for Work and Pensions Discretionary Housing Payments

Changes to Tax Credits 2012

Changes to Tax Credits Couples must work 24 hours, one doing at least 16 hours 50+returners category withdrawn, 60+introduced (16 hrs work) Family element included in full assessment, removal of £40,000 threshold First £2,500 of income reduction will be ignored Backdating reduced to 1 month

Lone Parents May 2012 Income Support abolished for lone parents whose youngest child is 5, (they need to claim Jobseekers Allowance)

Changes for 2013 and beyond

April 2013 Size criteria rules for working age customers living in social rented sector HB changes

Other Benefits changes 2013 January Child Benefit withdrawn from higher rate taxpayersApril Household benefit payments capped PIP introduced Housing Benefit to be reassessed annuallyOctober Introduction of Universal Credit

Personal Independence Payments 2013

Personal Independence Payments Replace DLA for 16 to 64 2 standard and enhanced rates Awarded and reviewed through an objective assessment process. Aim to target those with greatest need for: –support; and –to overcome barriers

Universal Credit 2013

Planned introduction 2013 One single benefit for working age people Replaces existing income based benefits: –Income Support –Jobseeker’s Allowance (IB) –Employment & Support Allowance (IR) –Working Tax Credit –Child Tax Credit –Housing Benefit Universal Credit

= single benefit of many elements Income Element – living costs Housing Element – rent or mortgage costs Disability Element – long-term incapacity for work Child Element – children and child care costs

Universal Credit Claimant Commitment to agree – on line, telephone, face to face Work-related requirement No work-related requirement Work-focused interviews Work-focused interviews and work prep All work-related requirement

Simpler! ?? Transitional protection for those already claiming Working Tax Credits New claimants for UC with £16,000 or over will be excluded Couples with one member under PCQA need to claim UC and not PC Some existing premiums abolished Universal Credit

For single person proposed at £18,200 a year or £350 per week Family proposed at £26,000 a year or £500 per week Exemptions include working households or on DLA/PIP. Estimated 50,000 households with reduced income Household Benefit Cap

April 2013 Council Tax Benefit abolished New LA schemes introduced Cost 10% less than CTB Social Fund – Crisis Loans and Community Care Grants abolished Replaced by local LA schemes, food vouchers, furniture stores, food banks etc Localism Agenda

Benefits changes No new claims for Tax Credits Migration to Universal Credit for all - in and out of work Monthly payments of Universal Credit

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