WELFARE REFORM – THE

OTHER BITS

GARY VAUX

NOVEMBER 1ST. 2012

The key issues………….2012/16

Migration from Incapacity Benefit to ESA – 2011-2014

Changes to LHA and ‘bedroom tax’ - 2010-2013

Time-limiting of Contributory ESA – April 2012

Reductions in tax credit entitlement - April 2012

Sanctions and penalties – October 2012

Introduction of PIP to replace DLA – April 2013 - 2016

Total Benefit Income cap - April 2013

Localisation of council tax support - April 2013

Ending of Community Care Grants and Crisis Loans - April 2013

Universal Credit – entitlement, conditionality, calendar monthly payment, new rules, administration - Oct 2013

Need for financial, benefit and budgeting advice as a result of all the above and more………..NOW!

Pensioners

Raising of pension age – impacts on

pension credit, winter fuel payments etc

Protected to some extent – no changes to

attendance allowance, council tax support;

exempt from under-occupation penalty

“Mixed-age” couples are NOT protected

unless in benefit system by April/October

2013

Some pensioners may decide to go on

working – out of necessity or choice

Income support for lone parents

From 21 May 2012 new claims for IS by lone

parents can only be made if they have a

child under 5 (some exceptions e.g.

disabled child). Existing lone parent

claimants with a youngest child aged 6

began to lose their entitlement.

From 20 August 2012 - applied to existing

lone parent claimants with a youngest child

aged 5.

124,000 affected by this change.

Council Tax Benefit/Support April 2013 - CTB to be ‘localised’ and replaced by

fixed grant – 10% cut compared to present

expenditure but pensioners (and others?) protected.

Increased take-up/more ‘protection’ means less

money available per claimant.

Plans have to be in place by Jan 31st 2013

Maximum rebates set at 70-80% in many authorities.

Other changes e.g non-dep deductions/capital

limits/withdrawal taper/certain discounts etc

Severely undermines and complicates the ‘better-off

in work’ calculations

INCAPACITY BENEFIT

NO NEW CLAIMS SINCE OCTOBER 2008

ALL EXISTING IB CLAIMANTS TO SWITCH

TO ESA FROM APRIL 2011 ONWARDS

(COMPLETED BY MARCH 2014) – except

those approaching pension age.

WITH EXISTING I.S. CLAIMANTS – AROUND

1.5m PEOPLE TO BE ‘MIGRATED’

SO FAR, 37% ARE FOUND FIT FOR WORK,

29% GO INTO ESA SUPPORT GROUP AND

34% GO INTO ESA WORK-RELATED

ACTIVITY GROUP

EMPLOYMENT AND

SUPPORT ALLOWANCE Income-related ESA – affected by partners earnings/capital

Work Programme if in WRAG

C-ESA limited to 12 months from April 30th 2012 (unless in support group) – then means-tested

Some lose all benefit; some switch to income-related ESA (and then Universal Credit)

Tax credits – April 2012

Reduced help with child care (April 2011)

Reduction in income cut-off point for CTC (down to £26k in some cases)

New rules for couples (must work 24 hours per week, not 16 hours)

New rules if income falls (first £2500 of fall wont count)

Universal Credit will be less generous to most new claimants with a disabled child.

FIXED PENALTY NOTICES From 1 October 2012, DWP or local authorities can impose a £50 penalty in the event of a claimant -

making an incorrect statement or representation or negligently giving incorrect information or failing to provide information or evidence about a claim for a benefit or failing to notify the appropriate authority of a change of circumstances

The civil penalty will be added to the overpayment amount, and will be recoverable by the same means as the overpayment

New sanctions

October 22nd, 2012:-

new sanctions for people who leave work voluntarily without a good reason (a fixed13 weeks disentitlement apart from hardship payment - 26 weeks for a second offence and 156 weeks for a third).

fail to make themselves available for work or fail to undertake work preparation action (disentitlement to benefit until the claimant remedies the offence PLUS a further 4 weeks sanction for the first offence and 13 weeks for every repeat).

DLA and PIP

2013-2016 – DLA CHANGES TO

“PERSONAL INDEPENDENCE

PAYMENT”

BASED MORE CLOSELY ON MEDICAL

ASSESSMENT BUT STILL “MOBILITY”

AND “DAILY LIVING” ELEMENTS

POINT-SCORING SYSTEM

NON-CONTRIBUTORY AND NO

MEANS-TEST

PIP

Primarily phone-based claiming and a two-part process before reaching the medical assessment (“making a claim” and “how your disability affects you”) – limited role for advisers.

Harder to get claim form unless with claimant

Both components will have:

Standard rate – limited ability (8 points)

Enhanced rate – severely limited ability (12 points)

Payment rates still to be decided

DLA/PIP • DWP ESTIMATE IS 500,000 FEWER CLAIMANTS (2.2m

reducing to 1.7m)

• ONLY TWO RATES FOR DAILY LIVING, NOT THREE AS

WITH DLA CARE

• ALL CLAIMS TO BE REASSESSED EXCEPT THOSE AGED

UNDER 16 OR OVER 65

• TRANSFER NOT AUTOMATIC – CLAIM HAS TO BE MADE

•EITHER RATE OF PIP FOR DAILY LIVING WILL ENABLE

CARER TO GET CARERS ALLOWANCE

•IMPACT OF LOSS OF DLA/PIP ON OTHER BENEFITS AND

RULES EG BENEFIT CAP OR PREMIUMS

SOCIAL FUND – April 2013

Abolition of community care grants and

crisis loans (but alignment payments to

remain with DWP)

Money going to top-tier local councils (i.e.

Social Services) instead but not ring-fenced

'Based on a sample of 12 authorities, the

average reduction in funding for the social

fund replacement schemes between

2011/2012 and 2013/2014 will be 13.9%

(CPAG – August 2012)

Each council to make own priorities and

arrangements

The Social Fund now and in the future Current social fund provision Provision after April 2013

The regulated social fund: funeral

payments, cold weather payments,

winter fuel payments and Sure Start

maternity grants

Remain the responsibility of DWP.

Budgeting loans Replaced by a system of budgeting advances

within IS/universal credit from April 2013

Crisis loans for alignment

purposes, benefit disallowance or

sanction

Replaced by a system of short term advances

within IS/universal credit from April 2013, or by

DWP hardship payments

All other crisis loan expenditure Funding devolved to local authorities

Community care grants Funding devolved to local authorities

Universal Credit

abolishes…

Income related

Jobseeker’s Allowance

Income related

Employment and Support

Allowance

Income Support

Child Tax Credit

Working Tax Credit

Housing Benefit

Social Fund (budgeting

loan elements)

But the following benefits

will still be available…

• Disability Living Allowance

(replaced by PIP in 2013)

• Contributory Benefits

• Child Benefit

• Pension Credit (to include a

Housing Credit to replace

HB and an additional amount

for children to replace CTC)

• Carers Allowance

• Council Tax Support

Oct ‘13 Apr ‘13 Oct ‘14 Oct ‘15 Oct ‘16 Oct ‘17

Test New claims from out of work customers

Apr ‘14 Feb ‘11

Design

& build New claims from in work customers

“Natural” migrations as a result

of changes of circumstances

Managed migrations

Legacy load

JSA, ESA, IS, HB, WTC, CTC

8m 6m 4.5m 2.5m

UC load

When will DWP deliver UC?

UNIVERSAL CREDIT Oct 2013 for new claims; 2014-2017 for existing claims.

Brings together all major means-tested benefits for working age people except council tax rebates.

Basic allowance plus amounts for children, disability, housing and caring.

No losers at point of change but frozen benefits and reassessed when circumstances change. ‘Comparative’ losers making new claims e.g. parents of disabled children

‘Digital by default’ – make and maintain claims on-line – including emailed notifications etc

Extended ‘conditionality’ e.g. p/t workers; substance misusers; parents of 1-4 year olds

UNIVERSAL CREDIT Conditionality

– The Welfare Reform Act 2012 prescribes

the 4 conditionality groups:

No work-related requirements

Work-focused interview

Work preparation

All work-related

requirements

BBA’s, POCA, jam jars and CU’s

Basic bank accounts – how available?

Post Office card accounts – how useful?

Jam-jar accounts – money placed into dedicated sub-accounts

Credit unions offering current accounts with saving/membership option

www.housing.org.uk/publications/find_a_publication/finance/universal_credit_and_financial.aspx

DEMAND FOR LOANS

Loss of income from e.g. changes to

ESA; DLA; HB (e.g. Capping and

‘bedroom tax’); CTB changes

Switch to calendar monthly payments

Absence of direct payments for rent

Reliability of UC administration

especially link to tax information when

working.

Abolition of CCG’s and crisis loans

HOW INTERESTING?

WONGA – 4214% APR

PROVIDENT – 272.2% APR

PAYDAYUK – 1737% APR

LOGBOOK LOANS – 478.3% APR

KRAYDAY LOANS – 2512% APR

CREDIT UNIONS – 12.7% APR

HOW INTERESTING?

Total amount borrowed - £1150

Duration - 78 weeks

Total amount repaid - £3317.34

Fixed annual interest rate -

125.64%

Repayments 78 @ £42.53 a week

HOW INTERESTING?

From a credit union………

Amount borrowed - £1150

Duration - 52 weeks

Total amount payable - £1221.45

Fixed annual interest rate – 12.7%

Repayments 52 @ £23.49 a week

Thank you

Questions and comments…….

www.hertsdirect.org/benefits

gary.vaux@hertfordshire.gov.uk

A video explaining welfare reform featuring rabbits, owls and hedgehogs:

www.pandapaw.co.uk/news-welfarereform.html

www.westlea.co.uk/news/wiltmoney.htm

www.samaritans.org