The Coalition Government and Welfare reform

1. The Coalition Government and Welfare reform Dave Simmonds Centre for Economic & Social Inclusion

2. June 2010 Budget reforms • Commitment to continuing with plan for reassessment of all Incapacity Benefit (IB) claimants by 2014 • Reforms to Housing Benefit • Lone parent obligations for those whose youngest child is 5 years from Oct 2011 • Introduction of a new assessment for Disability Living Allowance claimants • Savings of £11bn per annum

3. Comprehensive Spending Review 2010

4. Announcements on Housing Benefit • Announcement 1: Local Housing Allowance (LHA) caps: £250 for 1 bed - £400 for 4 bed. • Local impact huge in some areas (over 17,000 households affected in London?). Boris - an exercise in “social cleansing”? • Announcement 2: LHA to be set at 30th percentile rather than median (50th percentile) • Announcement 3: Index linking of LHA to lower inflation • By 2020 EVERY tenants HB will be too low to cover rent (Chartered Institute of Housing) • Announcement 4: HB award reduced by 10% after 12 months for JSA claimants – withdrawn • Announcement 5: Limiting HB entitlement for single people aged 25 – 35

5. Distributional impact of CSR announcements by 2014-15 (source: IFS)

6. Incapacity Benefit reform • Reassessment of almost 1.5m IB claimants by 2014 = 10,000 assessments per week • Claimants will reassessed using ‘Work Capability Assessment’ (WCA) • WCA has been criticised for being inaccurate and insensitive – 40% success rate for challenged decisions at appeal • Consequences of people being transferred onto the wrong benefit are serious

7. Overview of WR Bill Child maintenance Conditionality Sanctions Appeals Social Fund What’s in the Bill • Housing Benefit • Under-occupation of social housing • ESA • Disabled Living Allowance • Household benefit cap

8. Universal Credit • UC is a much needed and welcome change with a good rationale • Dual aims of simplification and increased work incentives • Introduced in October 2013 for new claimants and will be paid monthly using ‘real time’ PAYE system • Combines in and out of work means-tested benefits to create one single application, one single payment, one withdrawal rate (65%), assessed and paid on a household basis • Basic allowance for adults with additions for children, disability, housing costs and caring • New conditionality regime: 4 levels • Earnings disregards will encourage “mini-jobs” • Government commitment: no existing claimants will experience a reduction in cash terms following introduction of UC

9. Universal Credit – key delivery issues • Purse to wallet • Budgeting • Internet use • IT system

10. Welfare Reform Bill - key benefits issues • Passported benefits • Childcare • Council Tax Benefit • Housing (Housing Benefit, social housing) • Social Fund • Benefits cap

11. Winners and losers • Cash protection at the point of transition • Official winners and losers • Losses occur before UC introduced • Official losers: • Working families • Self employed • Those in areas of high housing costs • Large families • Second earners

12. All lose out but more in London

13. Impact on claimants • Good intent being undermined by benefits cuts • More uncertainty, fear and confusion? • Lower income • Changing entitlements and re-assessments • New conditionality and increased sanctions • Increased incentive to work • Many critical pieces are still unclear and work incentives may be undermined by childcare, passported benefits, etc • Greater need for independent advice and support

14. Role of local partners • Scrutiny: monitoring impact of reforms and performance of Work Programme and Jobcentre Plus • Aligning local provision: local projects, childcare, health, housing, skills, advice • Information and advice: jobs, skills, welfare and money advice