An overview of the

Welfare Reforms

The Welfare Benefits UnitHeather Theobold

October 2012

Welfare Reform

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

2011-2012 changes2011-2012 changes

Migration to Employment and Support Allowance

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 ofjobseekers.

Employment and Support AllowanceApril 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

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 30th 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 ParentsMay 2012

Income Support abolished for lone parents whose youngest child is 5,

(they need to claim Jobseekers Allowance)

Changes for 2013 and beyond

April 2013April 2013

Size criteria rules for working age customers living in social rented sector

HB changesHB changes 2012-2013 2012-2013

Other Benefits changes 2013Other Benefits changes 2013

JanuaryJanuary• Child Benefit withdrawn from higher

rate taxpayers

AprilApril• Household benefit payments capped• PIP introduced• Housing Benefit to be reassessed

annually

OctoberOctober• Introduction of Universal Credit

PersonalIndependence

Payments2013

Personal Independence Payments

• Replace DLA for 16 to 64• 2 components @ 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 CreditUniversal Credit

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 CreditClaimant 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 CapHousehold 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 2014-17Benefits changes 2014-17

• No new claims for Tax Credits• Migration to Universal Credit for all - in

and out of work• Monthly payments of Universal Credit

Do you have any questions ?Do you have any questions ?