Welfare Reform Overview.

East Salford Community Committee.

December 2012

Catherine Connors.

Mother collecting her Family Allowance 1946.

Welfare Reform Act (WRA) 2012.

Our welfare benefits system is undergoing radical change; one of the most significant under the WRA is the introduction of Universal Credit from 2013.

A series of cuts will also impact directly on the financial support available to those on low incomes and many residents will see a reduction in what they receive or can claim.

These changes are taking place at a time of significant cuts to public sector resources, nominal wage growth and steep rises in the costs of living.

The combined effect is likely to adversely affect many groups in the City particularly people with disabilities and long term ill-health, families with children, those unable to find work and those on a low wage.

Coalition Government’s rationale .

Paid work is the best route out of poverty.

Benefit system is too complex & contains insufficient work incentives.

Belief that people need a carrot & stick approach – greater conditionality and sanctions will “encourage” behaviour change/increase personal responsibility and encourage claimants to “choose” employment.

Reduce welfare expenditure - £18billion cuts announced, to be implemented between 2011-2015 and a further £3.7bn cuts in 2015-2016 announced in Autumn statement.

Government has fuelled a culture of blame calling for an end to “welfare dependency”.

Headlines 2012

People with long-term ill-health or disability

Transfer from Incapacity Benefit to ESA (2008 – 2014)

From October 2010 recipients of Incapacity Benefit (IB) have been reviewed under the Work Capability Assessment for Employment and Support Allowance.

Estimated weekly losses are between £9.55 and £40.95 per week.

Appeals quadrupled in two years - up to 9 months to get a hearing.

Nationally 31% of decisions overturned Salford Welfare Rights Service appeal success rate 79%.

Contributory Employment & Support Allowance is limited to 12 months (unless in Support Group).

ESA in Youth abolished – increased reliance on means testing.

Intense criticism of new medical assessment administered by ATOS in particular, difficulties with process encountered by those with mental health problems.

Overall around 5,000 Salford residents set to lose Incapacity Benefit amounting to a loss of £10.6 million to the local economy.

IB / ESA Claimants at Ward Level: February 2012

WardNo. % Ward

No. %

Pendleton 1,105 13.4 Walkden South 745 7.3

Winton 1,045 12.3 Kersal 735 9.3

Pendlebury 1,000 9.5 Langworthy 715 16.6

Broughton 940 16.2 Swinton North 700 9.3

Little Hulton 940 14.0 Ordsall 655 9.7

Walkden North 880 11.7 Claremont 650 7.8

Eccles 870 10.6 Swinton South 515 6.1

Barton 865 11.8 Cadishead 490 7.6

Blackfriars 820 8.4 Irlam 470 7.2

Weaste & Seedley 800 12.5 Worsley & Boothstown 305 3.5

Disability Living Allowance abolished (April 2013-2016)

• From April 2013 Personal Independence Payment replaces DLA for adults aged 16-64 from 2013 (DLA for children and DLA/AA for 65 & over not affected).

• New points based medical test designed to remove 20% of current claimants and reduce “complexity”. ATOS awarded NW contract.

• Government cite rise in claims (up 30%) as evidence of fraud within current system.

• Set to affect nearly 11,000 disabled people in Salford of which over 2,000 are set to lose over £8 million a year.

• PIP will be introduced for new claims from 8th April 2013 for the North West.

• Existing claimants will be assessed under the new PIP rules from January 2014;

If an existing DLA award ends If a claimant reports a change of circumstances Part of a managed transfer process

DWP estimate that compared to DLA,PIP caseload will be around 550,000 lower than it would have been without reform

Families with children.

• Child Trust Fund abolished.

• Health in Pregnancy Grant abolished Jan 2011.

• Social Fund Maternity Grant paid to first baby only.

• Working Tax Credit - baby addition abolished & childcare element reduced from 80% to 70% & tax credits uprated by 1%.

• Couples have to work 24 hours between them with one partner working 16 hours to access Working Tax Credit (Apr 2012)

• Child Benefit abolished for higher rate tax payers

Increased conditionality on lone parents – transfer from Income Support to Jobseeker’s Allowance

• Workless lone parents on Income Support transferred onto JSA if youngest child aged 5 or above from May 2012.

• Issues – availability of suitable jobs, accuracy of JC+ better off calculations, childcare costs and availability.

• Risks – non attendance at JC+ interviews or non-compliance with preparation for work can result in benefit cuts.

Tenants

April 2011 • Non-dependant deductions uprated by 27%

• Various cuts to support with rent available in private sector including capping Local Housing Allowance and single room rate extended to under 35’s

April 2013• “Bedroom tax” - Housing Benefit entitlement for working age

tenants in social housing will reflect family size. Reductions in HB if “under occupying”.

Pensioners

Protected from many of the reforms but affected in 3 ways;

Maximum Savings Credit was frozen for 3 years from April 2011

Under Universal Credit, couples where one member is under pension age will be treated as “working age” rather than currently as “pension age”

A “housing credit” will be introduced to Pension Credit from 2014 to replace HB and a new capital limit will apply to Pension Credit.

The Benefit Cap – April 2013

• Cap on total amount of ‘benefit income’ for those of working age set at net median earnings; £26,000 pa/£500 pwk for couples/ £350 pwk single person.

• DWP has identified approximately 200 Salford households likely to be affected.

• Benefit income includes Housing Benefit, Child Benefit, Carer’s Allowance, Income Support and most other benefits implemented by reducing Housing Benefit. (eventually via Universal Credit).

• Limited exemptions apply eg household member receiving DLA, WTC,ESA (support group), war widows.

Localisation agenda & welfare reform

• Council Tax Benefit will be replaced by local rebate schemes from April 2013 but with 10% less central funding (loss of £2.64 million).

• 19,000 Salford households paying extra or paying for the first time.

• Government has decided pensioners must be protected plus undefined “vulnerable” groups.

• Council’s replacement scheme has been out to consultation (closed 9th Dec) includes a number of proposals including a new addition.

Example case study – Paul and Kate.

Couple with 2 children claiming JSA and in a Band D property.

Currently, annual Council Tax bill is £1,523.29 or £29.21 per week.

No Council Tax to pay as they receive full Council Tax Benefit.

The maximum council tax support they would receive after April 2013 would be 91.5% of the council tax for their band D property.

Paul & Kate would receive annual Council Tax bill of £1,393.81 per year.

They would now have to pay £2.48 per week towards their council tax.

Localisation agenda & welfare reform

• Crisis Loans and Community Care Grants, elements of the DWP Social Fund will be abolished from April 2013 and funds transferred to local authorities.

• Working group established within the council with JC+ input considering options for Salford’s proposed scheme to continue to assist vulnerable people.

• In the interim, Budgeting Loans will remain available but likely to be replaced by “payments on account” within Universal Credit.

Universal Credit

21st October 2013 – October 2017

Most radical proposal in WRA- replaces main means-tested benefits and tax credits for people of working age.

Income Support Income Based Jobseeker’s Allowance Income Related Employment and Support Allowance Working Tax Credit Child Tax Credit Housing Benefit

Universal Credit Aims

Simplification Increase work incentives

Reduce poverty

Implementation of Universal Credit .

For new claims to UC, "the Pathfinder", will begin in the North West in April 2013 to test system (Tameside, Oldham, Wigan and Warrington).

Existing benefit claimants will be transferred to UC gradually by “managed migration” until 2017.

Digital by default; DWP will offer limited telephone support to make a claim & face to face only in exceptional circumstances.

Ofcom research confirmed 22% of the UK adult population (about 11 million people) did not use internet at home and risk being left behind in the drive for public services to be digital by default. (Bridging the Gap: Sustaining online engagement, May 2012).

Claimant commitment – must sign to agree to stringent conditions in order to claim with punitive sanctions if fail to comply.

Administration relies on IT systems and a live feed from PAYE payments of UC can be adjusted where earnings reduce or increase.

UC consists of a basic personal allowance (single/couple rates) plus additional amounts for disability, caring responsibilities, housing costs and children.

Paid calendar monthly directly to claimant .

Decisions regarding “passported” support eg free school meals/health benefits to be announced.

Universal Credit – impact.

Estimates (Institute of Fiscal Studies)

1.4 million families will lose, particularly lone parents (DWP – 1.1 million)

Estimates (Save the Children)

150,00 poorest one parents (nationally) to lose as much as £68 a week

250,000 more children further into poverty

Families with disabled children to lose up to £1,400 a year for each disabled child.

Overall impact of government’s welfare reforms.

The changes are likely to result in;

• Increased levels of debt• Increased arrears of rent and Council Tax• Increased use of high interest lenders and loan sharks• Increased homelessness presentations• Fewer residents with savings• Fewer residents with home contents insurance• Higher levels of depression and anxiety• Higher demand for welfare rights and debt advice services

Help and support.

• Partners including social landlords, strategic housing partnership, advice providers all raising awareness of changes targeting those likely to be affected to offer benefits advice, help with improving skills and finding employment .

• Frontline worker training on welfare reforms provided by Council’s Welfare Rights and Debt Advice Service to enable workers to support residents through changes.

• Financial Inclusion Strategic Group – working in partnership to promote the availability of affordable credit/ savings, financial capability for adults & young people, frontline worker capacity building programme.

Any questions or comments?