Notice Board


Notice Board

Welfare Reform Update

05 August 2011

The Government states that it is to make the benefits and tax credits system fairer and simpler by creating incentives to get more people into work by ensuring work always pays, while protecting the most vulnerable in our society and delivering fairness to those claiming benefit and to the tax payer.  A main feature of the bill is the introduction of Universal Credit - which will merge out-of-work benefits and in-work support into a single benefit.

Changes that may affect you already

  • £2,500 of any drop in income disregarded for tax credit purposes - those whose income drops by £2,500 or more receive £1,025 less in tax credits (2012-13)
  • Family element of child tax credit reduced to flat rate £10.50 a week
  • Tax credits childcare costs reduced from 80% to 70%  (Apr 2011)
  • Basic and 30 hour elements of working tax credit (WTC) frozen (April 2011)
  • To receive WTC, couples with children must work 24 hrs (instead of 16) between them, and one must work at least 16 hrs, (Apr 2012)
  • £190 health in pregnancy grant withdrawn from 2011
  • Child benefit frozen for three years

Changes that may affect you in the future

  • Child benefit will be withdrawn from families with a higher rate tax payer from January 2013
  • £500 Sure Start maternity grant withdrawn from 2013
  • Universal Credit to integrate means-tested working age benefits and tax credits
  • Disability Living Allowance replaced with Personal Independence Payment
  • Cap on total household benefits
  • Up-rating of benefits and tax credits by CPI
  • Contribution-based Employment Support Allowance (ESA) for those in work-related activity group limited to 12 months
  • ESA cut for young people who haven't paid NI
  • Housing Benefit cuts where social housing tenants are under-occupying
  • Changes to discretionary social fund payments

Universal Credit - from 2013

  • How it will work
    • Combines working age benefits and tax credits into on household allowance - "personal allowance" Universal credit is intended to be a new benefit which will replace:
      • child tax credit
      • housing benefit
      • income related employment and support allowance, (but not contributory ESA)
      • income based jobseekers allowance, (but not contributory JSA)
      • income support
      • social fund budgeting loans
      • working tax credit
  • Payment levels
    • Full allowance if household has no other income and up to £6,000 of savings; percentage of allowance if savings between £6,000 & £16,000; none payable at all for savings over £16,000.
    • Households to be entitled to varying earnings disregards.
    • Single taper set at 65%.

Personal Independence Payment (PIP)

  • DLA replaced by a Personal Independence Payment (PIP) from 2013 - 14
  • Mobility and daily living component - each with two rates
  • Qualifying time six months
  • No automatic entitlement for certain conditions but existing rules apply for terminally ill
  • Assessment
    • advice from independent health care professional
    • consider aids and adaptations
  • All awards subject to periodic review
  • Penalty for failure to notify changes in circumstances
  • Signposted to other forms of support

Employment Support Allowance

  • Contributions based ESA limited to 12 months for hose in the work-related activity group
  • Withdrawal of ESA from young people who have not accrued NI contributions

Discretionary Social Fund Payments

  • Welfare Reform Bill proposes abolition of:
    • Community care grants (CCGs)
    • Crisis loans (CLs) for living expenses

Cap On Total Benefits

  • Applies to out-of-work households
  • Based on average wage of in-work households - £500 per week for couples and lone parents, and £350 per week single people

Under-occupancy in Social Housing

  • HB entitlement will be restricted for working-age households living in social housing accommodation considered to be too large for their needs, rather than being based on the actual rent of their home
  • This will apply to new and existing tenants from 2013

Sanctions

  • Severity in current system increased.  Penalties vary:
    • Low: failure to prepare for work - payments cease until recompliance and fixed minimum period (JSA & ESA WRAG)
    • Medium: failure to actively seek work/be available - 1st failure payment cease 4 wks, 2nd failure payments cease 3 months (JSA)
    • High: failure to accept reasonable offer, apply jfor job or attend MWA - 1st failure cease 3 months, 2nd failure cease 6 months, 3rd failure cease 3 years (JSA)