Welfare Reform Awareness Update November 2013

1. Welfare Reform Awareness Update November 2013 John Mulholland LL.B

2. What will be covered • Benefit Cap • Size Criteria (bedroom tax) • Conditionality/Sanctions • Universal Credit • Statutory Reconsideration

3. Benefit Cap • South Ayrshire July 2013 • Out of work benefits, plus housing benefit, child benefit and child tax credit • £500 per week for couples/lone parents • £350 per week for single adults • Exemptions from cap, working tax credits, DLA, PIP, AA, Support Component of ESA, Industrial Injuries Benefits and equivalent war disablement pensions and other payments under the Armed Forces Compensation Scheme • War widows and War Widowers pension • Claimant employed for 52 weeks prior to claim exempt for a grace period of 39 weeks

4. Impact of Cap • 56,000 households will be effected 2013/14 • Average reduction in benefit £93 per week • 46% affected in the social rented sector • 54% affected in private rented sector • 74% affected has 3 or more children • 28% affected has 5 or more children • 39% are in receipt of income support • 34% are in receipt of JSA

5. Size Criteria – Bedroom Tax Maximum HB is calculated on size of accommodation required by household ; • Lone Parent or couple :- 1 bedroom • Each other person aged 16+ :- 1 bedroom • Two children same sex under 16 :-1 bedroom • Two children under 10 :- 1 bedroom • Any other child :- 1 bedroom • Overnight carer :- 1 bedroom • Maximum number of bedrooms allowed is 4 (will not apply in social sector)

6. Reduction • In Social Rented sector if property is under occupied the maximum HB will be reduced if 1 bedroom by 14% and 2 or more by 25% • Rent of £80 with full entitlement to HB, entitlement will reduce by £11.20 for 1 bedroom and for 2 or more it will be reduced by £16 even if on income related benefit

7. Options for Tenants • Take up employment or increase working hours • Make up rent from other sources of income • Take in a lodger • Ask family members to contribute more • Seek alternative accommodation

8. Size Criteria Foster Carers, Armed Forces • HB/CTB A10/13 • Foster carers :- Extra bedroom approved foster carer, kinship carer in Scotland; who has a child placed with them, If between placements extra room for a period up to 52 weeks from the date of the last placement. Newly appointed carers extra bedroom up to 52 weeks following approval • Parents of Armed Forces Personnel :- Adult children who are in the armed forces but who continue to live with parents will be treated as continuing to live at home for purpose of the size criteria when deployed on operations. • Non dependent deductions will not apply until they return home

9. Overnight carers • HB A3/2011 “A person who requires overnight care” • Receives Attendance Allowance or • Middle or highest care rate of DLA or • LA is satisfied that there is sufficient evidence to show that this type of care is required, in addition • LA is satisfied that the customer or partner reasonably requires and has in fact arranged that one or more people who do not occupy as their dwelling to which the claim or reward for HB relates should; i. Be engaged in providing overnight care, ii. Regularly stay overnight at the dwelling for that purpose, iii. be provided with the use of a bedroom in that dwelling additional to those used by the persons who use the dwelling as their home

10. Area’s of Dispute • Severely disabled; couples requiring separate bedrooms (Glasgow Tribunal) • Severely disabled children requiring separate bedrooms (Gorry) • When is a bedroom not a bedroom (size of room, established use of room, exceptional use, need to store medical equipment) • Children and Separated Couples • The Government has provided additional funding from 2013/14 for discretionary housing payments to seek to offset some of the impact, South Ayrshire Council has also increased funding to support DHP • Judicial Review re size criteria (10 cases) , this has been appealed • New Judicial Review lodged 24th September 2013, overnight carer for disabled child, supported by CPAG • Fife Lower Tribunal decisions (Room sizes and actual use) • Local activity, Ayr Housing Aid Centre involved and preparing a range of cases for Tribunal

11. Size Criteria/ AHAC • Cases opened between 25/2/13- 16/10/13 • 602 Cases • 558 Direct Referrals to Visiting Officer • 44 Cases opened by Advice and Information

12. Conditionality 1 • Applicants must accept a claimant commitment, are placed in 4 groups • Subject to no work related requirements; limited capacity for work due to health, support group of ESA, lone parent or main carer in a couple with a child under one, carers with regular or substantial care for a severely disable person, person earning above a set threshold • Subject to work focus interview requirement only; lone parent or main carer in a couple with a child over one but below the age of 5 , Lone foster carers or main carer in a couple with a foster child under 16, people who become the main family and friends carer for a child in the past year. This group is expected to attend periodic interviews to discuss plans to return to the labour market.

13. Conditionality 2 • Subject to work preparation requirements; people with limited capacity to work because of health and disability (work related activity group of ESA) The group is expected to take reasonable steps to prepare for work, attending skills assessment, improve personal presentation, to part in training or employment programme and undertake work experience or work placement • Subject to all work related requirements, everyone else, default for claimants including lone parents and main carer in couple with children over the age of 5. This group is subject to work search requirements (including making applications and registering with employment agencies) and work availability requirements (subject to limitations as agreed) • Each adult in a household is placed into a conditionality group • In work conditionality, unless earning at least the minimum wage x 35 hours must look for more work or less if reduced availability has been agreed

14. All Work Group Expectations • Available for work of any hours up to 35 and type within 90 minutes of travel from home • Take all reasonable action to look for work (usually 35 hrs of searching per week • Be willing and able to immediately take up work • Be willing and able to immediately attend an interview • Look for more work, or better paid work if the claimant falls below an administrative cut off.

15. Sanctions 1 • High Level – imposed for failure to meet the most important requirements, such as taking up an offer of paid employment without good reason • Medium Level – Claimant fails immediately take up paid work or more paid work • Low Level – Not meeting requirements designed to help claimants prepare for work • Lowest Level – failure to participate in a work focussed interview • Issues of good cause for failure can be raised

16. Sanction Duration

17. Sanctions Amounts • Subject to high, medium, low 100% of standard allowance for specified period • Subject to lowest level will be 40% of standard allowance • Can apply for hardship, only payable once claimant has complied with requirements, payment is repayable and would amount to 60% of the amount within the sanction

18. Universal Credit (UC) • 12.5 million claims will be replace by UC • Single withdrawal rate 65% (earnings disregard) • Child care support available for any hours worked • Claims and administration online, digital by default • Increased conditionality and sanctions • One monthly payments to claimants account, including housing costs • Additional amount payable so no one is worst off when moving from old benefits to UC

19. Administration • Department of Works and Pensions • Claimants will only have one system to work with, no need to provide repeat information • Default electronic claims • Similar system will reduce claimant error and official error • Reduce fraud in system • Phased implementation of credit with first applicants October 2013 followed by gradual closure of existing benefits and tax credits • Complete transfer October 2017

20. UC • Single person or a couple jointly • Age at least 18 (regulations may prescribe a different age in special cases) • Under qualifying age for pension credit (61 and 10 months in October 2013 rising to 65 by 2018) • Capital rules apply same as income support with lower and capital limits and tariff income applied between the limits, people excluded savings over £16,000 • Income disregards for example DLA (personal independence payment) other income taken into full account • Net earnings above the disregard will be deducted at a rate of 65% • New minimum income will be assumed for self employed claimants (minimum wage x hours worked

21. Components of UC • Personal amount for single claimant or couple • Children or qualifying young person, additional amount for children with disabilities • Rent or mortgage • Childcare • Limited capacity for work • Limited capacity for work related activity • Regular and substantial caring responsibilities for severely disabled person

22. Amount UC per month • £246.81 (under 25) £311.55 (25/over) single • £387.42 (under 25) £496.06 (25/over) joint claim with one at least 25 and over • £272.08 eldest or only or qualifying young person • £226.67 each other child or qualifying young person • £123.62 disabled child lower amount (child get DLA or aged 16 and over gets PIP) • £352.92 disabled child higher amount ( child gets high care rate of DLA or enhanced rate daily living component of PIP or registered blind)

23. Limited Capacity for Work • Additional amount can be added to standard allowance if claimant or partner are ill or disabled. • Limited capability for work element £123.62, completing questionnaire and attending medical, conditionality applies, may be entitled to ESA (contribution based) if so separate assessment for UC • Limited capability for work and work related activity; £303.66, this assessment considers whether illness or disability is so serious that currently you should not be expected to return to work may be entitled to ESA (contribution based) if so separate assessment for UC • Special rules for terminal illness • Carer element £144.70 if regular and substantial caring responsibilities for a severely disabled person

24. Child Care Costs Element • If in paid work and paying for formal childcare, registered child minder, nursery, after school club and paying for child care. You are treated as working of you are on SSP, MA or SMP or paternity and adoption pay • There are no minimum hours worked requirement • 70% of actual childcare costs up to a maximum £532.29 per month for one child and £912.50 per month for two or more children

25. Example Single mother aged 26 with 3 children living in private rented at £500 pcm; Standard:- £311.55 First child :- £272.08 Other children :- £453.34 Rent :- £500.00 Total :- £1,536.97 ( £354.68 per week)

26. Housing Costs • Appropriate amount added to credit to help meet costs of rent and mortgage interest • Payments similar to payments under current HB system • Rates in private rented sector based on lowest third of market rents • Size criteria • Further consideration in terms of payment of housing component • Support for people not eligible for credit, over the upper age limit will be through pension credit

27. Size Criteria – UC Overnight Carers • Universal Credit Regulation 2013, Schedule 4 • Renter/joint renter entitled to one additional bedroom if one or both requires overnight care, 2 conditions need to be met • First condition the renter is in receipt of Attendance Allowance or Middle or highest care rate of DLA or Daily living component of PIP • Second condition, one or more people who do live in the renters home are engaged to provide overnight care for the renter and to stay in the accommodation on a regular basis; and overnight care is provided under an arrangement for that purpose

28. Payment of Housing Costs • Part of the Universal Credit • Paid direct to the claimant • Concerns expressed by Councils, RSL’s and Scottish Government • Elements of direct payments being tested June 2012 and June 2013 • Initial feedback increased rent arrears in demonstration areas (Dec 2012), Press stating substantial increases in rent arrears • Consider trigger points in which direct payments should be sent direct to landlord (tenant falls into arrears) • Vulnerable claimants and pensioners housing costs will be paid direct to landlord

29. Protection for renters and landlords • Announcement from Lord Freud, 27th June 2013 • “Letting claimants pay their own rent is an important way of breaking down barriers to help people in work” 3 Levels of protection • Decisions about whether tenants should receive direct payments will be made in collaboration with social landlords • If arrears build up to the equivalent of 1 months rent the decision to make direct payments will be reviewed • If arrears reach the equivalent of 2 months rent, the claimant will have housing payments switched to the landlord or managed payments

30. Work allowance (earnings disregard)

31. Non-dependent Deductions • Note some households exempt • Sliding scale will not apply • Housing Costs Contribution • Non-dependent will contribute £68 per month (£15.69 per week)

32. Exemptions • A person under 21 • A person in receipt of state pension credit • A person in receipt of care component of DLA, middle or high rate • A person in receipt of AA • A person in receipt of daily living component of PIP • Entitled to 3 above but not receiving under Social Security Regulations • A person in receipt of carers allowance • A person who is a prisoner • A person responsible for a child under 5

33. Guidance on personal budgeting support • Help claimants to adapt to single household payments, paid monthly and rent paid direct to the claimant • Two key elements, money advice to help claimants cope with monthly payments and paying bills on time • Alternative payments arrangements for claimants who genuinely cannot manage standard monthly payments and are at risk of financial harm to the claimant or their family • Claimants will be offered money advice when they make a claim for UC and will be given to those in clear need • Different levels of advice, some claimants will be signposted to online services, some may be offered single session over the phone others intensive face to face session with follow up calls • External providers with relevant expertise are expected to deliver money advice

34. Alternative Payment Arrangements • Payment of housing costs direct to landlord, making more frequent payments, splitting awards between partners, applications for this will be considered on a case by case basis The priority given in terms of alternative payments ; • Safeguard the claimants home • Consider more frequent payments for example bi-monthly • Split payments, financial abuse, domestic abuse Payment combinations could include; Housing only, frequency only (non-householders), housing and frequency, housing and split, frequency and split, (non-householder couples) housing, frequency and split

35. Roll Out of UC 29th April 2013 28th October 2013 to April 2014 End April 2014 to Late 2015 End of 2015 to October 2017 • New unemployed persons in the Ashton-under Lyne pathfinder will claim UC rather than JSA, this is restricted to single and seeking work, this will be rolled out to other pathfinder areas • Rolled out to 6 Jobcentres by March 2014, only one in Scotland, Inverness • Claimant commitment will be rolled out to all Jobcentres moving to the new UC commitment regime • Access to digital services will be improved • Significant volumes moving to UC throughout 2014, change from full roll out • 3 million household receiving Housing Benefit will transfer to UC on a Local Authority boundary basis as the old system winds down. UC and natural migration will continue throughout this period

36. Statutory Reconsideration • Changes the appeal procedures on a range of welfare benefits from 28th October 2013 for example JSA, ESA and PIP • On negative decision for example you not been awarded less than 15pts in your Work Capability Assessment, if you wish to appeal you must firstly request a statutory reconsideration from the DWP, this must be done in writing or the phoned within 28 days of the failed Work Capability Assessment • During the period of reconsideration ESA would stop, prior to this the benefit would continue during the appeal period • Following a request for reconsideration the DWP will notify the claimant of the outcome in the Mandatory Reconsideration Notice and it is only on receipt of this a claimant can appeal. • An appeal is now to HM Courts and Tribunal Service using form SSCS1, the Mandatory Reconsideration Notice should be attached to the appeal, then benefit is reinstated pending outcome of the appeal • In South Ayrshire Welfare Rights have prepared a standard reconsideration form further information contact Enquiry and Information Team • If benefit is suspended then HB/CTB is stopped it is very important that contact is made with the Council, could be housing officer/housing benefit and advise that you have zero income