Welfare reform slides

www.adviceleeds.org.uk March 2012 1

Building excellent advice services through partnership


Welfare ReformThe timetable for

change


April 2011

• Child Benefit rates frozen for three years• Higher rate mobility component of

Disability Living Allowance to cover those with a severe visual impairment

• Consumer Price Index (CPI) will replace Rossi and Retail Price Index (RPI) as the tool used to decide benefits increases in April each year


• Some Jobseeker's Allowance claimants may have to do unpaid work, or work-related activity

• Pension Credit - Maximum Savings Credit award to be frozen for four years

• Sure Start Maternity Grant will only be available for the first child


Housing benefit• £15 excess rule will be removed• Local Housing Allowance (LHA) restricted to four-

bedroom rate regardless of household size• Non-dependant deductions (NDD) to be increased

(up-rated) on the basis of prices using the Consumer Prices Index

• Baby element of family premium will no longer be available

• An extra room will be allowed for a non-resident carer• New maximum LHA rate based upon property size• LHA rates will be at a value of 30% of the average

rents in an area


Excess benefit rule removed

Old rules Rent charged is £60 per weekLHA is £100.38

HB worked out on actual rent plus max £15 excess.HB paid at £75 per week.

New rulesRent charged is £60 per weekLHA is £100.38

HB worked out on actual rent with no excess.HB paid at £60 per week.


Excess benefit rule

New claims

- no excess from April 2011

Existing claims

- excess stops on Annual Review date


4 bedroom maximum

The 5 bedroom rate was abolished for new applicants from April 2011

March 2011 5 bed rate £335.00 p/week

April 2011 4 bed rate £173.08 p/week


4 bedroom maximum

• Existing applicants have 9 months protection from review date.

Example• Claim made April 2010 – rent used £325.00• Reviewed April 2011 – should fall to £173.08

but granted 9 months protection• Rent reduced to 4 bed rate January 2012

(£184.62)


30th percentile

• LHA rates originally based on the 50th percentile of market rents.

• 50% of the rents above the LHA and 50% below

From April 2011• Based on the 30th percentile• 30% of rents below the LHA and 70% above


Reduction in LHA - Leeds

March 2011 April 2011

Shared 61.50 59.00

1 room 109.62 98.08

2 room 126.92 114.23

3 room 144.23 126.92

4 room 206.54 173.08

5 room 335.00 XXXXX


Reduction in LHA - Leeds

New claims after April 2011 – applies straight away

Existing applicants as at April 2011 have 9 months protection from review date

Example (1 bed rate)• Claim made January 2011 – rent used £109.62• Reviewed January 2012 – should fall to £100.38 but

granted 9 months protection• Rent reduction takes effect from October 2012


Maximum LHA

From April 2011 the weekly LHA cannot exceed

• £250 for a one bedroom property• £290 for a two bedroom property• £340 for a three bedroom property• £400 for a four bedroom property

National figures - No claims in Leeds affected


Carers – Extra Room

• Extra room allowed when a claimant with a disability has a non resident carer

• Must need overnight care and be getting– Attendance Allowance, or– the middle or high rate of DLA for care, or– if not getting one of these benefits will need to

provide sufficient evidence to show that they require overnight care


Carers – Extra Room

The local authority must be satisfied that they

• reasonably require, and• have arranged for one or more people

– to be engaged in providing overnight care– regularly stay overnight to provide care– be provided with the use of a bedroom

which is additional to those used by the claimant.


Non-dependent deductions

How the rates have increased since 2010

2010/11 2011/12 2012/13

Other income 7.40 9.40 11.45

Gross income levels based on 2012/13 figures (in work)less than £124.00 7.40 9.40 11.45£124 to £182.99 17.00 21.55 26.25£183 to £237.99 23.35 29.60 36.10£238 to £315.99 38.20 48.45 59.05£316 to £393.99 43.50 55.20 67.25£394 and above 47.75 60.60 73.85

A further comparable increase is planned for April 2013


Housing benefit• the age threshold for the shared

accommodation rate of Local Housing Allowance (LHA) will be increased from 25 to 35

January 2012


Shared Room Rate

• age limit increasing from under 25 to under 35

January 2012 LHA ratesShared £61.501 bed £100.38

loss in HB of £38.88 per week (£168.50 per month)

• 1500 people in Leeds will be affected


Shared Room Rate

New claims from January 2012 – applies immediately

Existing claims

• Next review date, or

• At end of 9 month transitional protection from April 2011 changes


Shared Room Rate

Exemptions – shared room rate does not apply

• Responsible for a child• Have a non resident carer who regularly

stops overnight to provide care• Have another adult who lives in the home

(for example non dependant)• If the tenant qualifies for a severe disability

premium on their Housing Benefit• Care leavers under the age of 22


Shared Room Rate 25-35

Two new exemptions introduced

1) Over 25 and subject to active multi-agency management under the Multi Agency Public Protection Arrangements (MAPPA)

2) Over the age of 25, and spent more than 3 months in a specialist hostel for the homeless


ESA• People in the Work Related Activity

Group of contribution based ESA will have their claims limited to one year

• Contributory ESA in youth to be abolished

April 2012


Tax credits• 50+ element removed from Working Tax Credits (WTC)

• Couples with children must work at least 24 hours a week between them, with one working at least 16 hours to qualify for WTC

• If your income falls by up to £2,500 during the Tax Credit award year, the amount you get will not be revised to see if you are entitled to a higher Tax Credit payment

• Second income threshold removed

• Backdate for new applications and changes of circumstances for up to one month instead of three

• Couple and lone parent rates of Working Tax Credit will be frozen


• Income support - Lone parents with a child aged 5 and over not longer eligible for IS

• Tougher sanctions for failure to meet conditionality requirements

• Housing benefit - A further £40million per year will be added to the Discretionary Housing Payment budget

• From April 2012 the LHA will be frozen for one year

• DLA mobility Component withdrawn for those in residential care (now postponed)

• New payment system will replace benefits cheques (date to be confirmed)


Fraud and Error changes• Cautions scrapped

• Admin Penalty increased to 50% of overpayment or £350 whichever is greater

• 1-strike sanctions extended

• £50 civil penalty introduced for failure/negligence in reporting changes

April 2012 continued


January 2013

• Child benefit abolished for higher rate tax payers


• Council Tax Benefit is to be replaced by localised support for Council Tax

• Social Fund scheme transferred to councils

Housing Benefit• Size criteria will apply in the social rented

sector for working-age claimants• LHA rates will be increased in line with

the Consumer Price Index instead of the market rents in each area

April 2013


Local scheme of support for Council Tax

• The new Council Tax Support scheme means a 10% reduction in funding in comparison to the current scheme

• Pensioners protected (may be potential to also protect other groups)

• No decision on scheme to be adopted in Leeds


Local scheme of support for Council Tax

Customers affected in Leeds• 94k claims for CTB received in 2010/11

of which 35k from pension age claimants and 15k from vulnerable claimants; overall 10% reduction in funding would need to be applied to the remaining 44k claimants. LA estimates that this would mean a reduction of 18% in CTB for these claimants


Social Fund schemetransferred to council

Crisis Loans and Community Care Grants to councils

Budgeting Loans stay with Jobcentre Plus

Funding for Crisis Loans to be reduced

No compulsion to run a scheme

Councils can provide goods rather than cash

Councils can devolve schemes to voluntary sector to run


Social Housing – Size Related Criteria

• Applies to both LA and Housing Association tenants

• Size criteria similar to LHA

• Reduction in HB will be achieved by reducing eligible rent for HB purposes by 14% where 1-room too many and 25% for 2 rooms or more

• Average loss of Housing Benefit of £13 per week for 670,000 claimants nationwide


Size Related Criteria - Impact on Leeds

LA analysis of caseload suggests that:– 360 tenants would lose £0.01 to £5.00 pw– 4300 tenants would lose £5.01 to £10.00 pw– 1230 tenants would lose £10.01 to £15.00 pw– 1360 tenants would lose £15.01 to £20.00 pw– > 50 tenants would lose >£20 pw

• Assumes 14% cut for 1-bed and 25% cut for 2-bed or more


•DLA to be replaced with a new benefit called Personal independent payment

•Tax credits - Any rise in income of £5,000 or more during the award year will be taken into account when finalising your Tax Credit award

•Total household welfare benefit cap to be introduced

April 2013 continued


Personal Independent Payment• From April 2013, Personal Independence Payments

replace DLA for claimants aged between 16 and 64

• Programme of reviews will take place to reassess current DLA recipients for PIP

• Assessment will cover 11 areas

• Claimants will need to score over a certain threshold of points to be entitled to PIP with level of entitlement affected by level of score

• DWP impact assessment states that changes will save £2.1bn

• DWP stats suggest around 21,000 DLA recipients in Leeds aged between 16 and 64


‘Benefit Cap’• The ‘benefit cap’ will limit the amount of

benefit that a family not in work can receive to the average earnings

• The ‘benefit cap’ will be applied by local councils who will reduce the amount of Housing Benefit in payment until the cap limit is reached


‘Benefit Cap’

• Cap will apply to combined income from:– JSA, IS, ESA, HB, Child Benefit, Chid Tax Credit,

Industrial Injuries Benefit, Carer’s Allowance

• People getting the following benefits will be exempt from the cap:– DLA, Personal Independence Payment, Constant

Attendance Allowance and Attendance Allowance;

– War Widows and War Widowers will also be excluded as will people working sufficient hours to get Working Tax Credits


‘Benefit Cap’ - Impact on Leeds

• Latest analysis indicates 184 families in Leeds would be affected with reductions ranging from £1.60 a week through to loss of full Housing Benefit

• All are families with 4 or more children

• 14 families lose all their Housing Benefit entitlement (including some families renting in the social sector) with all these families having 7 or more children

• Average reduction in Housing Benefit for the 184 families affected is £65pw


October 2013

• Universal Credit to be introduced – a new benefit that will replace tax credits, HB, IS, income based JSA and ESA


Universal Credit

• Will be delivered by DWP from Jobcentre Plus and HMRC teams

• Will be ‘digital by default’ with expectations that 50% of claimants will claim online from October 2013 rising to 80% by 2017

• Jobcentre Plus will provide ‘front of house’ services in the first instance with longer term delivery model to be decided in 2015

• Will normally be paid monthly in arrears directly to the claimant (including housing rent element and mortgage interest element)


Universal Credit

• All claimants need to sign a ‘Claimant Commitment’ setting out conditionality requirements. Conditionality requirements are expected to apply to in-work claimants earning up to £212.80 a week (35hrs x National Minimum Wage)


Universal Credit

• Migration Strategy:– Phase 1 (Oct 13 – Mar 14): new claims

and ‘natural’ migration i.e. certain changes in circumstances

– Phase 2 (Apr 14 – Dec 15): those likely to benefit from Universal Credit

– Phase 3 (Dec 15 – 2017): managed migration by LA boundary


Save the Children CEO Justin Forsyth said -

'Universal Credit will help some families, but mums working hard to stay above the breadline are its big blind spot. It's incredibly hard bringing up 3 kids on £370 a week - losing almost a fifth of that will push many families over the edge.

The government must make sure mums who want to work keep more of their incomes and get more support with childcare. Otherwise we’ll see fewer women in the workplace and more children growing up in poverty.'


9.05.12 • Responding to the legislative programme

announced in the Queen’s speech, the Chief Executive of Child Poverty Action Group, Alison Garnham, said: From next year, low income families with a disabled child will face a massive cut of £1,400 a year to disability additions when they are moved onto universal credit. This will mean a total cut of £22,000 by the time a disabled child is sixteen, which will do far more harm to health, learning and life chances than you can remedy by changing how ‘choice’ works in education.”


Cut to the legal aid budget by £350 million

• Debt advice

Legal aid will only fund debt advice when

a person’s home is at ‘immediate risk’

• Employment law advice

All legal aid funding will be cut, except in

cases of discrimination


• Family law advice

Legal aid will only fund advice on family

problems in cases of domestic violence.

In all other cases, legal aid will not fund

advice on issues like divorce, contact

with children, adoption or family

maintenance


• Housing law advice

Legal aid will only fund advice on

homelessness or serious disrepair

threatening health

• Immigration law advice

Legal aid will only fund cases where someone

is detained or fleeing torture, persecution or

otherwise seeking asylum.


• Welfare benefits advice

All legal aid funding will be cut, including

issues like appealing decisions for

sickness benefits

• Other advice

Many other specific issues will no longer be

funded through legal aid. This includes advice

and representation at many types of tribunal

against companies or government agencies


2015

• Means-tested pensioner benefits will be replaced by a new flat rate ‘Citizen’s Pension’ which is not linked to National Insurance contributions


April 2016

State Pension Age• Equalisation of women’s pension age with

men’s will be sped up from April 2016 so that women’s pension age reaches 65 in November 2018Pension age for men and women will then increase to 66 by Oct 2020Further increases to the State Pension age are being considered to raise it from 66 to 68


Advice Leeds Partnership

• Making best use of available/reducing resources

• Developing gateway services

• Develop telephone and web-based services

• Prioritising most vulnerable for most support

• Self-help and signposting information and materials

• Training for front-line staff – reception, support workers, advice

workers

• Social policy


Possible options for clients

• Check the clients circumstances and that the changes are being applied correctly

• Try to negotiate a rent reduction with the landlord

• Get ‘money advice’ to budget carefully and cope with the extra cost of a shortfall in HB

• Move to a cheaper area, or cheaper property

• Apply for discretionary housing benefit

• Apply for a grant from a charity


Support & Advice - Clients• Maximise clients income

– Are they getting the right benefits?– Do they need extra help due to illness, disability or caring responsibilities?

• Turn2us• Local advice services

• Budgeting, money or debt advice– Turn2us – Money Advice Service– Consumer Credit Counselling Service (CCCS)– National Debtline– Local Advice Services

• www.adviceleeds.org.uk• Overcoming financial difficulty – A guide to services• Credit Union

• Housing information or advice• Other support or advocacy


Support & Advice - Frontline staff• Resources

– Information, updates– Leaflets, websites

• Training– Briefing sessions– Tool kits

News & Politics

Welfare reform slides