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Welfare Reform
From Poverty to Financial Inclusion
17th October 2012
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Purpose of the session
• Help you to understand the changes to benefits
• Consider how the changes will affect the residents of Oldham
• Think about how we can work together to support our residents through the changes.
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Welfare Reform Act 2012
The aims are to
• Reduce the cost of the welfare system by £18bn over five years
• Incentivise people into work – make work pay
• Make the system simpler and fairer all round
• Take a stronger line on tackling fraud
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Welfare Reform changes from April 2013
Some residents will be affected by multiple changes
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Universal Credit
Brings together a range of working age benefitsinto a single streamlined monthly payment.
The benefits replaced by Universal Credit are• Income Support• Income-Based Job Seekers Allowance • Income-Related Employment and Support Allowance• Housing Benefit• Child Tax Credit• Working Tax Credit
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The DWP national estimates
• 2.7 million claimants would see no changes to their benefits
• 2.8 million claimants would see an increase in benefits as a result of moving into work
• 2.2 million claimants would see a reduction in their benefits (though this will not be an immediate impact due to transitional protection rules)
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Testing before delivery
• Live Innovation Trialling (started in April 2012)
• Model Office (first took place in April 2012)
• Direct Payment Demonstration Projects (started June 2012)
• Local Authority-led pilots (to start Autumn 2012 – end September 2013)
• Pathfinder (planned for April 2013 in Greater Manchester and Cheshire)
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Oldham’s Universal Credit Timeline Date Claimant group
November 2012
Local Authority-led (face to face) pilot commences
April 2013 Pathfinder commences with a limited group of new JSA claimants
October 2013 Roll out commences for all new JSA claimants
January 2014 New Working Tax Credit and Child Tax Credit will be claims for UC
April 2014 New IS, ESA and HB claims will be claims for UC
July 2014 Managed migrations with priority given to those who will benefit most from the transition
From 2015 - 2017
A gradual managed transfer of the remaining claims
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Local Authority-led (face to face) pilot
• From November 2012 to September 2013 we will test mechanisms for
– Providing support to those who will be moving to UC – with a strong focus on testing approaches with BME communities
– Supporting on line access
– Providing access to Financial and Budgeting Support
– Identifying claimants with complex needs and assessing support required
• We will monitor, evaluate and provide feedback
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Implementation Planning Activities for Pathfinder
Stage 1 Stage 2 Stage 3
2 tasks
Landlord Engagement and
Awareness
Staff Awareness
10 tasks 5 tasks
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Benefit Cap
• The benefit cap will be introduced from April 2013 and will apply to the combined income from the main out-of-work benefits, plus Housing Benefit, Child Benefit and Child Tax Credits
• The benefit cap levels will be:
– £500 per week for couples and lone parents
– £350 per week for single adults
• The benefit cap will delivered from April 2013 by local authorities through deductions from Housing Benefit, in the future it will be delivered as part of Universal Credit.
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Benefit Cap
•The cap will not apply to those receiving – Working Tax Credit – Disability Living Allowance – Personal Independence Payment (from April 2013) – Attendance Allowance – Industrial Injuries Benefits – Employment and Support Allowance (support component)– War Widow's or War Widower's Pension
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Benefit Cap in Oldham
• Information received from DWP shows– 316 households affected – All are households with children
• The highest cap in Housing Benefit is £185.00 per week
• The highest overall cap is £303.60 per week
• The HB reductions applied from April 2013 will total £936k per annum
• When all claimants have transferred to UC the total reduction in benefit will be £1.2m per annum
. Based on data scan 3 received September 2012
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Size Criteria (underoccupation)
• Size criteria will be introduced to Housing Benefit for working age claimants in the social rented sector from 1st April 2013
• Those considered to be under-occupying their accommodation will see a reduction– 14% of their total eligible rent for under-occupation by
one bedroom; and– 25% of their total eligible rent for under-occupation by
two bedrooms or more.
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Size Criteria (underoccupation)
Claimants will qualify for one bedroom
(up to a maximum of four) for: – Every adult couple – Any other adult aged 16 or over – Any two children of the same sex aged under 16 – Any two children regardless of sex aged under 10 – Any other child aged under 16 – A non-resident carer (claimant/partner have disability
and need overnight care).
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Size criteria • 8,791 working age Housing Benefits claimants in the
social rented sector
• Approximately 30% are believed to be under occupying
• For those under occupying – by 1 bedroom the average reduction in eligible rent will be £11
per week– by 2 bedrooms or more the average reduction in eligible rent will
be £21 per week
• Estimate the total reduction in HB to be £1.7m per annum
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Replacement of Disability Living Allowance with Personal Independence Payments
• From April 2013 new claimants age 16-64 will claim PIP • Different assessment criteria and face to face
consultations as part of the assessment • Existing claimants transferred from DLA to PIP
between October 2013 and March 2016 • As at February 2012 residents in Oldham receive
approximately £32m in DLA payments per year • National estimates suggest that there will be a 20%
reduction in benefits paid, this could mean a £6m reduction for residents in Oldham.
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Social Fund Reform
• Abolition of Crisis Loans for living expenses and Community Care Grants
• Replacement with local welfare provision
• Flexibility to design emergency provision for vulnerable groups according to local circumstances
• 2013/14 Oldham will receive a non ring-fenced grant of £1.038m
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Options currently being considered
• Development of a scheme which utilises, builds and funds supportive projects already in place.
• Develop a scheme which is similar to the current DWP scheme.
• Develop a scheme which supports both residents and the groups and organisations supporting them.
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Council Tax Benefit replaced by local scheme
• Reduction in funding to local authorities
• Claimants of Pension Credit Age are protected
• Consultation runs until the 3rd December 2012.
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What does this mean for Oldham?
• Estimated £3.044m reduction in funding (which includes £400k for the fire and police preceptors)
• Estimated £1.044m additional income will be raised from Council Tax changes to empty properties and second homes
• Estimated £2m less available to pay in benefit
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Oldham CTB Claimants
Type of Recipient Number %Protected
from Changes
Pension Credit Age 10,786 39%Yes
Working age - passported benefits 11,008 40% No
Working age – other
5,806 21%No
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Oldham’s proposed scheme
• Benefit will only be calculated based on the Band A Rate of Council Tax (this will affect all claimants in Band B or above).
• In addition for all working age claimants benefit will be reduced by 25%.
• Second adult rebate for working age claimants will be abolished.
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Risks and Issues
• Residents affected by multiple changes • Wider impact on residents – not just financial • Lots of information still unknown or being
developed by DWP• Increase in demand for advice services at the
same time as changes to legal aid are being introduced
• Increased demand on organisations for support
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What are we doing?• Raising awareness and seeking opportunities to work
together • Developing an action plan and communications plan • Attending a wide range of DWP groups • Working with RSL’s in the Borough• Planning the delivery of the Stage 1 activities for UC
Pathfinder • Preparing for the commencement of the face to face pilot • Preparing a draft local welfare scheme for consideration• Reviewing the Discretionary Housing Payment Policy• Linking into Welfare Rights Take Up Activities
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Any Questions
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Discussion points
1. What might the impact be on • Residents• Organisations • Borough
2. How can we work together to support those affected?
