1. The new Welfare Reforms…. What are they? Who will be affected? Winners and Losers? How the CHS Money Matters Team can help… (Sue Reynolds – Senior Money Matters Advisor)

2. Welfare Reforms (2015) The Welfare Reform and Work Bill was laid before parliament on 9 th July 2015. The second reading took place on 21 st July 2015.

3. What are these Welfare Reform changes? Many Welfare Benefits and Tax Credits rules (for working age claimants) are changing….

4. Benefit rate freezes The main rates of income support (IS), jobseeker’s allowance (JSA), employment and support allowance (ESA), housing benefit and Universal Credit (UC) will be frozen for four years from April 2016. Various other parts of other benefits and tax credits will also be frozen. As inflation increases this means in effect that there has been a reduction in the worth of the benefits…

5. Child Tax Credit The family element of CTC will be abolished from April 2017 (a loss of £545 a year) Payments of individual elements for children will be restricted to a maximum of two children born after April 2017 (a loss of £2,760 a year per child) Similar restrictions will apply to the children’s elements payable through Universal Credit (UC )

6. Changes to Tax Credit thresholds and tapers The income threshold for Working Tax Credit reduced from £6,420 to £3,850 a year. Similar rules for CTC (reduction of threshold of CTC from £16,105 to £12,125) All resulting in fewer claimants being eligible for tax credits The taper rate in working tax credit will increase from 41% to 48%. All resulting in fewer people being eligible and those who do will receive less money..

7. Example of reduction to WTC Example 1 Shirley is a lone parent with 2 children aged 5 and 10. She works 20 hours a week and her gross annual income is £9,000. She has no childcare costs. Her Tax Credit entitlement for 2015/16 is £9,017. This is £173 a week. From April 2016, Shirley’s Tax Credit entitlement will go down if her household income stays the same. Her Tax Credit entitlement will be £7,603 or £146 a week. This is a reduction of £1,414 a year or £27.20 per week.

8. Example of reduction to WTC Example 2 Martin and Janet have 3 children aged 2, 5 and 7. Martin works 35 hours a week. Janet doesn’t work. His gross annual income is £13,650. Their Tax Credit Entitlement for 2015/16 is £10,700.70, which is £205.78 a week. From April 2016, Martin and Janet’s Tax Credit entitlement will go down if their income stays the same. Their Tax Credit entitlement will be £8,961.00 or £172.33 a week. This is a reduction of £1,739.40 a year or £33.45 a week

9. The Benefit Cap – Why cap benefits? One of the Coalition Government’s welfare reform measures aimed at deficit reduction. The key aims were to: Increase incentives to work Introduce greater fairness into the welfare system between those on out-of-work benefits and taxpayers in employment; and Make financial savings and incentivise behaviours that reduce long-term dependency on benefits The Benefit cap was introduced initially in April 2013 and fully rolled out by September 2013

10. Benefit Cap reduction from April 2016 In our area: Reduced from £26,000 to £20,000 a year for couples and lone parents (£384.62 a week) Reduced from £18,200 a year to £13,400 a year for single people (£257.69 a week)

11. Benefit Cap – How does it work? Households with income from benefits in excess of these caps experience a reduction in their housing benefit entitlement. They will have to pay something towards their rent (or may have to pay it all!) Those not in work will have their benefit capped when it goes over this amount and Housing Benefit will be reduced unless they are exempted from the Cap.

12. Benefit Cap Exemptions Disability Exemptions: In receipt of ESA (Support Group) In receipt of DLA, AA or PIP (or partner or dependant children being in receipt) Working Exemptions: In receipt of Working Tax Credit Earning too much to be entitled to WTC

13. How many tenants have been affected so far? The Benefit Cap so far has affected far fewer tenants within the housing association sector and is far less widespread than the size criteria (‘Bedroom Tax’). Housing Associations estimate that only 0.19% of all their tenants receiving HB have had their HB reduced due to the Benefit Cap. (45% of those capped are in London, where rents are higher.) CHS Group has only had 2 families affected so far… However, for those who are affected it is a major issue… The DHP budget may be able to help them at the moment while there are so few affected…

14. Likely effects of the reduced Benefit Cap Substantial number of social housing (and other) homes, particularly the ‘affordable rents’ (up to 80% of market rent) will be unaffordable in London and the south east. Those with 3 + children or in a 3 bedroom house will be affected. Increase in rent arrears, evictions and homelessness. Larger families will be affected to a much greater extent. Families made homeless due to the Benefit Cap will NOT be treated as ‘intentionally homeless’, which has implications for Local Authorities having to provide emergency accommodation

15. Example of Benefit Cap change: How with the reduction affect those already capped? For example : Household- couple + 5 children (aged between 2-10 years) Current cap reduces HB by £7.91 per week Under the new cap the whole HB award will be capped leaving entitlement to only 50p per week! Loss of £111.49 per week How will they make up the difference?

16. Employment & Support Allowance (ESA) From April 2017 the ‘Work Related Activity Component’ of ESA (the WRAG) will be abolished for new claimants (with similar rules for UC). This is a loss of £29.05 a week. This means that they will get the same amount as if they are on Jobseekers Allowance (£73.10 for a single person). Those in the ESA ‘Support Group’ will continue to receive the extra amount.

17. Housing Benefit for 18-21 years olds Automatic entitlement to housing support part of UC (old HB) for 18-21 year olds removed for new claimants who are out of work. Some exemptions for vulnerable young people and those who have been in work for 6 months prior to claim. They will be able to receive housing support for 6 months while they look for work.

18. Pay To Stay Social Housing tenants with household incomes of over £30,000 (outside London) will be required to pay the market rent. How will we know how much our tenants earn?

19. Rent Reduction…. Social Housing rents must be reduced by 1% a year for four years from April 2016. This sounds like good news for tenants! But it will mean a substantial reduction in income for CHS. CHS will still need to manage the same number of properties and employ the same number of people to get the jobs done. This is a difficult conundrum!

20. Winners and losers……… (or losers and even bigger losers!) A recent Joseph Rowntree Foundation report (September 2015) looked at the effects of the recent (July 2015) Welfare Reform changes on various household types. The study’s calculations project what will happen to their living standards by 2020.

21. The Minimum Income Standard (MIS) The MIS benchmarks budgets for a minimum acceptable standard of living for different household types, based on the goods and services needed.

22. The Minimum Income Standard (MIS) Working-age families on out-of-work benefits will fall further behind this standard as inflation and cuts erode benefits. Single claimants will have just 35% of MIS in 2020, down from 41% in 2010. Families with children had nearly two-thirds of MIS in 2010, but will have only half in 2020.

23. Pensioners – Winners! Pensioners (over Pension Credit age) are not affected by most of the 2015 Welfare Reforms. Pensioners on means – tested benefits have enough for the Minimum Income Standard; their income is linked to earnings growth.

24. Winners! Low pay households not needing state help will see substantial increases in living standards through the National Living Wage (NLW) and rising personal tax allowance.

25. Winners! Single people over 25, working full time on the NLW will have 97% of the Minimum Income Standard by 2020, compared with only 79% on the national minimum wage (NMW) in 2010.

26. Losers…. Many working families, especially lone parents, will lose significantly through benefit reductions outstripping pay increases. Full time working lone parents with one child, earning the NMW/NLW, will have 71% of the MIS by 2020, compared with 97% in 2010.

27. More losers… Most low-income families – both working and non-working households will see living standards eroded substantially between 2010 and 2020, from an already inadequate level. The lack of a link between state support and rising prices means that even those who may become better off are vulnerable to inflation, which could quickly erode any gains.

28. Summary Families on out-of-work benefits will typically have only half the income they need by 2020, compared with two thirds in 2010. The NLW will bring gains to single working people and couples working full time. Most working families will be net losers, especially lone parents.

29. CHS is on your side! This is a time of many changes and this can be very unsettling! CHS is putting every effort into forecasting what effects the Welfare Reforms will have on CHS’s financial situation and on the finances of CHS tenants. We have a ‘Welfare Reform Group’ that meets regularly to consider strategy and tactics. We will support tenants through the changes and look into ways of helping tenants through exemptions, managing their finances, and navigating through the increasingly complex benefit system.

30. What can the Money Matters Team do to help? The CHS Money Matters Team (part of Community Investment) comprises of: Sue Reynolds, Carol Hopkinson, Sally Land and Alyssa Hearnden. We can help with: Benefits, tax credits, budgeting, debt, applying to charities, energy issues, DHP, the Local Assistance Scheme, sorting out finances etc.

31. What we do that is new…. New tenant visits, with contact as soon (or before) sign up to see what support is needed and help to apply for grants for essential items, help with energy issues, benefits etc. This will (hopefully) make sure the tenancy gets off to a good start and deals with problems at the earliest opportunity. It will help to sustain the tenancy. Even more important as Universal Credit is gradually introduced (paid monthly to the tenant)

32. Exemptions from the Benefit Cap Identify tenants who may be benefit capped and contact them to see if they would like some help. It may be possible to get them exempted through the disability route (moved into the ESA Support Group, apply for DLA,PIP or AA). Or we can offer help (through the Training Matters Team) to get them exempted through the work route by helping prepare them for work and get a job.

33. Money Matters Team For more information please contact: Sue Reynolds – Senior Money Matters Advisor (01223) 713748 sue.reynolds@chsgroup.org.uk Thank you. Any questions?