Welfare reform- an updateLondon Advice Conference – 3 July 2012

Ros WhiteEditor

www.rightsnet.org.uk

Themes of welfare reform

• simplification of the benefit system

• reduction in spending

• making work pay

• getting claimants back to work

ESA and Work Programme

• 1.5m incapacity benefit claimants being migrated to ESA between Feb 2011 to March 2014;

• of 114,000 who started reassessment process before July 2011, 63% entitled to ESA (34% WRA group and 29% support group);

• Minister for Employment says 700,000 people now on work programme;

• less ESA referrals than expected to Work Programme causing concern to providers.

Pensions Bill (May 2012)

• introduction of flat rate state pension higher than pension credit (£140?)

• brings forward increase in pension age to 67 between 2026 and 2028

• commitment to increasing pension age in future in line with changes in longevity

Tax credit changes include -

• April 2011 – taper on income reduced from 39% to 41%, childcare element reduced from 80% to 70% of costs

• April 2012 – hours requirement increase for couples from 16 to 24 combined, freeze in adult elements, reduction in backdating from 3 to 1 months, 50+ element abolished

NB – tax credits to be superseded by universal credit from 2013

Welfare Reform Act 2012[the biggest shake up of the system for 60 years]

‘Our reforms will end the absurdity of a system where people too often get rewarded for doing the wrong thing, and those who strive to do the best by their families get

penalised … [and] will put work, rather than hand-outs, at the heart of the welfare system.’

Iain Duncan Smith | February 2011

Housingbenefit

changes

Localisationof the

social fund

Benefitcap

Personalindependence

payment

Universalcredit

Other measures include -

• limiting awards of contributory ESA to maximum of 365 days – May 2012

• lone parent with children 5 and over to claim jobseeker’s allowance – May 2012

• more stringent sanction regime – up to 3 years• administrative penalties – minimum £350 up to

£2,000 for ’low level fraud’ from May 2012

Personal independence payment

• replaces disability living allowance for working age claimants• introduced in north west from spring 2013 and everywhere in

summer 2013• two components - ‘daily living’ and ‘mobility’ – each paid at

two rates (losing lower rate care component), no night time.• new 'objective assessment' based on descriptors with

assessment by doctor under contract to DWP• 3 month backwards and nine months forward qualifying period• DWP estimates number of working age claimants cut by

500,000 and save £2.24bn in benefit expenditure by 2015/2016

‘Reassessment of existing DLA claimants should only proceed once DWP is confident that the assessment process produces accurate results and is working properly for new claimants .’

Work and Pensions Committee

Household benefit cap• to be introduced from April 2013• applies to, e.g. income support; JSA; ESA; HB & CTB; child benefit; child tax credit;

carer’s allowance …• capped by reference to the average earnings of working households (£350 / £500)• exemptions, e.g. for DLA recipients; and war widows• DWP writes to 67,000 affected families in May 2012 to offer ‘support’ to get work,

with suggestion of considering moving house • average weekly loss £83 per week, 17% with loss of more than £150

'If the welfare state is going to gain the trust of the British people, it needs to reflect the British sense of fair play … no family should get more from living on benefits than the average family gets from going out to work.'

George Osborne

Housing benefit changes

• April 2011 – removal of 5 bedroom rate; cap on weekly LHA (£250 for one bedroom, £290 for 2 bedroom etc; LHA rates set at 30th percentile of rents rather than median; £15 excess benefit rules abolished)

• January 2012 - shared accommodation rate rules extended to most single people aged under 35

• April 2013 - size criteria for working age HB claimants in the social rented sector – reduction of 14% for one bedroom and 25% for two (average £12 and £22 a week);

and linking LHA rate increases to the CPI

Abolition of the social fund – April 2013

• Community care grants and crisis loans to disappear• Social Fund Commissioner and the Independent Review

Service to be abolished• to be replaced, from April 2013, by ‘locally-administered

assistance’• no new statutory duty on local authorities to deliver the

service• funding transferred from the DWP to local authorities will

not be ring-fenced

NB – council tax benefit also goes, to be replaced by local provision with 10% cut in funding and protection for pensioners

Universal credit• replaces income support; income based JSA; ESA; working tax credit and

child tax credit; and HB• means tested, with a single taper (proposed to be 65%)• paid in and out of work• to be administered by the DWP …• … based on ‘Real Time Information’ provided by HMRC (pilot of 10

employers starts in April 2012)• tougher sanctions and conditionality • pathfinder in North West from April 2013, new claims in one district per

region from October 2012 with rest of new claims by ‘mid 2014’. for new claimants and those whose circumstances change;

• existing claimants migrated between 2013 and 2017 –details to be announced this summer.

‘Both universal credit and Real Time Information are on track and on time’

Lord Freud, April 2012

Impact in London

• more than 130,000 households will be impacted by either LHA or benefit cap

• two thirds of those affected by benefit cap face shortfall of over 10 per cent; and one sixth face loss of over 30 per cent

• average loss across London of £105/week

Does the Cap fit?London Councils (Nov 2011)

Legal Aid Reform

Areas of social welfare law taken out of scope include –

• welfare benefits (except to upper courts and where appeal contains ‘legal issue’)

• debt, where the client’s home is not at immediate risk • specified housing matters• employment• certain immigration cases

(Legal Aid, Sentencing and Punishment of Offenders Act 2012)

‘Legal aid is not justified in [welfare benefit] cases because the issues are not generally of sufficiently high importance to warrant funding, and the user-accessible nature of the tribunal will mean that appellants are able to represent themselves. In addition, they may also have access to help and advice from other sources in order to help them resolve their issues ….’

The future?

• Chancellor signalled further £10bn of cuts to welfare by 2016 (on top of £17bn by 2015 already announced) in Budget 2012;

• 25 June 2012 – Prime Minister suggests major cuts to ‘working-age benefits’ including cut to housing benefit for under 25s, reduction in uprating, reduction in benefit after period of entitlement and possible restriction for families with more than three children –

‘Quite simply, we have been encouraging working-age people to have children and not work, when we should be enabling working-age people to work and have children.’

resourceswww.rightsnet.org.uk

• universal credit discussion forum … /forums

• universal credit, personal independence payment & welfare reform workshops … /training

• universal credit and personal independence payment areas ... /toolkit

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