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Universal Credit: Reforming Welfare System for Better Work Incentives and Dependency Reduction

This comprehensive welfare reform aims to tackle the structurally escalating Housing Benefit bill and perceived dependency culture. Through cuts, simplification, and fraud regulation, the government seeks to encourage work incentives. Universal Credit encompasses various benefits while excluding certain others. The implementation timeline spans from 2011 to 2017, affecting millions of claimants across different benefit categories. Direct payment policies and housing benefit adjustments have significant implications for social housing occupants and private renters. The ongoing legislative changes, defeats in the Lords, and sector wins show a dynamic landscape of welfare policies. Contact Policy Officer Lizzie Clifford for more details and insights.

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Universal Credit: Reforming Welfare System for Better Work Incentives and Dependency Reduction

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  1. Welfare Reform Lizzie Clifford, Policy Officer, National Housing Federation Lizzie.clifford@housing.org.uk

  2. Motivation for reform • Government attempting to eliminate structural current deficit • Housing Benefit bill up from £11bn in 1999/2000 to £20bn in 2009/10 • Government plans to cut £2.1bn a year off the HB bill by 2014/5. • Desire to reform perceived ‘dependency’ culture and improve work incentives

  3. The solution? • Cuts • Simplification • Clamp down on ‘abuse’ and fraud • Administration

  4. Scope of Universal Credit In Scope: • Income-based Jobseeker’s Allowance • Income-related Employment and Support Allowance • Income Support (including Support for Mortgage Interest) • Child Tax Credits • Working Tax Credits • Housing Benefit • Social Fund (budgeting/alignment) • Out of Scope: • Council Tax support • Disability Living Allowance • Contributory Benefits (although earnings rules aligned) • State Pension • Child Benefit • Pension Credit • Carer’s Allowance

  5. Implementation Timescale Oct ‘17 Apr ‘13 Feb ‘11 Oct ‘13 Oct ‘14 Oct ‘15 Oct ‘16 Apr ‘14 New claims from out-of-work claimants Test Design & build New claims from in-work claimants Natural transitions due to change of circs (mainly JSA) Managed transitions (mainly other benefits) 2.5m 4.5m 6m 8m Legacy load JSA, ESA, IS, HB, WTC, CTC UC load

  6. Personal independence payment 2013/14 DLA PIP Test based on daily task and mobility test – build up points 2 rates of care Fixed term assessments Reduced caseload • Automatic entitlement for some conditions • 3 rates of care

  7. 20% Working age adults, not claiming Housing Benefit 35% Working age adults in receipt of a partial Housing Benefit payment Estimate of vulnerable group of working age adults claiming Housing Benefit 25% Pension age tenants claiming Housing Benefit Working age adults claiming Housing Benefit & new to Direct Payments 10% 10% All households in the Social Rented Sector, Great Britain Who will the direct payment to tenant policy affect?

  8. CUTS From April 2011: • Local Housing Allowance cut and capped (PRS) • £15 LHA excess scrapped (PRS) • Charges for non-dependents increased (social and PRS) From April 2012: • Single people aged under 35 restricted to rate for room in shared house (PRS)

  9. CUTS From April 2013: • Cap on overall benefits (£350/500 per week?) • Under-occupation penalty in social sector • Social Fund replaced with local authority schemes • LHA uprated by Consumer Price Index (PRS) From October 2013: • Introduction of Universal Credit and end to direct payment to landlords for some

  10. The Bill: the latest • Under-occupation amendment: Lords defeat Gvt • Promise to look at problem of adapted properties, and extra DHP • Cap: child benefit – Lords defeat Gvt • Cap: Gvt announces transitional protection and DHP • Financial privilege

  11. Welfare Action Week: 10-16 Oct 2011

  12. Wins for the sector • Plan to cut housing benefit of long-term jobless axed • DHP to help disabled people in adapted properties at risk of under-occupation penalty • Ministers to review impact of housing benefit cuts in private rented sector • Secured pledge to subject regulations to greaterParliamentary scrutiny • Retention of direct payments for older and vulnerable people and introduction of trigger for arrears. • Transitional protection and DHP for people hit by cap

  13. Exempt accommodation • DWP plans to align with Universal Credit, but not cut costs • 3 proposals for 3 categories: • Registered providers: actual rents and service charges (service charges subject to further review) • Short term housing with support (hostels, refuges) and sheltered: LHA + fixed sum • Long term housing with support: LHA + discretionary pot

  14. Contact Lizzie Clifford Policy Officer National Housing Federation 020 7067 1074 Lizzie.clifford@housing.org.uk

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