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Welfare Reform

Welfare Reform . Welfare reform agenda. Government’s policy agenda on welfare: to reduce welfare bill to improve work incentives by ‘making work pay’ to reduce welfare dependency to reduce complexity. Cuts to Housing Benefit. From April 2011

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Welfare Reform

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  1. Welfare Reform

  2. Welfare reform agenda • Government’s policy agenda on welfare: • to reduce welfare bill • to improve work incentives by ‘making work pay’ • to reduce welfare dependency • to reduce complexity

  3. Cuts to Housing Benefit From April 2011 • Local Housing Allowance (LHA) rates capped. • LHA rates set at the 30th percentile of local rents (instead of the current 50th percentile). • Maximum LHA rate reduced from five to four bedrooms. From January 2012 • Shared accommodation rate restriction for single people extended from under 25 to under 35.

  4. Some of the cuts affecting children • Child benefit frozen for three years • Child benefit will be withdrawn from families with a higher rate taxpayer from January 2013

  5. Changes in Welfare Reform Bill • Universal Credit to integrate means-tested working age benefits and tax credits • DLA replaced with PIP • Cap on total household benefits • Uprating of benefits and tax credits by CPI (not RPI) • Contribution-based ESA for those in work-related activity group limited to 12 months • ESA cut for young people who haven’t paid NI   • HB cuts where social housing tenants are under-occupying • Changes to discretionary social fund payments

  6. Universal Credit – from late 2013 • Combines working age benefits and tax credits into one household allowance - “personal allowance” • 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. • Single taper set at 65%

  7. Universal Credit - our concerns • Over-simplification could stop system responding flexibly • Lack of detail in the Bill, and reliance on regulations • Cumulative impact of changes on some groups

  8. 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.

  9. Change to up-rating • Move to CPI (Consumer Prices Index) for up-rating of benefits, tax credits and public sector pensions. • LHA rates to be uprated by CPI rather than reflecting local rents

  10. 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. • 670,000 households will be affected. • Households will face average shortfalls of £13 per week

  11. Under-occupancy in social housing Our concerns • Under-occupying households will face a shortfall between their HB and their rent • DWP impact assessment shows disabled and ethnic minority households particularly affected • Even if they are prepared to move, it won’t be possible for everyone to transfer to a property of the right size. (CLG stats show there is a surplus of 3 bed properties and a shortage of 1 beds at the national level. )

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

  13. Discretionary Social Fund payments • Welfare Reform Bill proposes abolition of: • Community care grants (CCGs) • Crisis loans (CLs) for living expenses • Budgets added, un-ringfenced, to Gov grants to LAs • LAs expected to make local arrangements to meet need • LAs could support existing schemes: foodbanks, credit unions, furniture/ goods re-use schemes • Alignment Crisis Loans and Budgeting Loans become advance payments of UC

  14. Welfare Reform

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