Welfare reform
and impact
Clive Davis
Newcastle Welfare Rights Service
Newcastle City Council
To cover
• An overview of welfare reform
• Its impact on people and in Newcastle
• What is being done to try to mitigate
the impact
• Your ideas?
• Who can help?
Welfare reform: Government savings
• £18 billion a year by 2014/15
£83m + a year in Newcastle
• + £4.5bn in Autumn statement
• Further £10bn planned by 2016
• DWP & HMRC cut by over a quarter
Higher benefit areas – hit harder e.g.
• Newcastle 14% on out of work benefits (28,790)
• York 7%
People incapable of work
• Incapacity Benefits reassessed under new
Employment & Support Allowance (ESA) till 2014
(100 a week)
• Tougher test  4,000 plus in Newc to fail test and sign on drop in income of about £40 a week
• Appeals & demands on services increase
• 40% appeals are successful
• May 2012. Contribution based ESA (for those who
have paid National Insurance) stops after 1 year
• Income drop by up to £91 a week for some
• Some exemptions
Tax Credits from April 2011
• Amounts cut & less people able to claim e.g.
• help with child care costs cut
• couples with children have to work 24 rather than
16 hours a week - April 2012 (exemptions)
e.g. £8k yr wage - lost WTC of £61 a wk
• Average TC cut £1,000+ a yr
• 27,700 on Tax Credits in Newcastle (£5m lost)
• Nationally, £6.5b Tax Credits goes unclaimed
Housing Benefit - private
Since 2008 limited to average rent on set No. of bedrooms.
£91(1), £103(2), £113(3), £150(4) …
• 2011 limited to 4 bedrooms & cheaper rents
(3,000 in Newc losing £4 - £34 HB a week)
• Jan12 bedsit rate for single under 25’s extended
to under 35’s
(344 in Newc losing £31 a wk)
• Exemptions
Housing Benefit - social
• April 2013. working age only, YHN, HA’s.
Under occupancy rule (bedroom tax) = cut in
the rent that’s eligible for HB. If:
1 spare bedroom = 14% (av HB cut £12/wk),
2 spare bedrooms = 25% (av HB cut £22/wk)
• 6,000 YHN tenants affected.
• Some exceptions.
• Extra discretionary housing payment for hardship
Who is a bedroom allowed for?
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Single person or couple
Any other person aged 16 or over
Two children of the same sex under the age of 16
Two children aged under 10 regardless of their sex
A child aged 10 or over with no siblings of the same sex
A non-resident carer providing overnight care for the
claimant or their partner
– A severely disabled child who the LA considers cannot
share a room with a sibling
– Foster children in some circumstances
– Armed Forces personnel in some circumstances
Impact of Housing Benefit changes
• Will have to find the rest of the rent or move home to
cheaper/overcrowded property
• Increased demand for affordable social housing
• Increased arrears, hardship and demands on services
• Vulnerable may want to remain in supported housing
• Lack of one bed properties in social housing
• Eg. Jobseeker 25+ left with £37.50 after fuel, water, TV
• If bedroom tax (£7.57), left with £29.93 a week
• If LHA bedsit cut, left with £4.50 a week
Children
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Child Benefit
• Frozen till 2014
• Withdrawn from higher earners £50 - £60K yr [Jan 2013]
Lone parents – no Income Support once youngest child turns 5
Maternity Grant now only for first child
Cancelled:
• Free school meals for those on Working Tax Credit
• £190 pregnancy grant
• Child Trust Fund
• EMA (up to £30/wk) replaced by smaller bursaries
A baby born to a low-income family from April 2011 is around £1,500 worse off
compared to a sibling born in April 2010
IFS predict child poverty will rise by 600,000, peaking at 3.1 million by 2013.
Disability Living Allowance
From 8 April 2013 DLA for those aged 16 - 65 will be replaced by
Personal Independence Payment
• 10,860 in Newcastle
• Based on 20% desired cut to DLA, 1,944 in Newcastle expected to
lose (£5m a year)
• Connected benefits lost (extra IS, Carers Allowance etc)
• Less independence & mobility
• More appeals and demands on services
Timetable:
• 8 April13. new claims in North for PIP
• 7 Oct13. Certain existing DLA claimants to claim PIP
• Oct15 – Oct17. rest of existing claimants to claim PIP
Older people
• Retirement age for women is increasing from
60 to 65 (by 2018), 66 (from 2020) then 67
from 2026 (8 yrs earlier)
• Age rise for other help e.g. Winter Fuel
Payments and Pension Credit - so have to
remain on working age benefit longer:
• Loss of £3,632 a year - single person
• Loss of £5,395 a year – couple
(difference between JSA and Pension Credit)
Work and conditionality
• More work and training requirements for jobseekers and
ESA claimants e.g. Youth Contract – subsidized work
placements for 18–24 yr olds and Mandatory Work
Activity – 4 weeks
• Fail to comply:
• JSA cut or reduced to £42 wk from 4 wks to 3 yrs - Oct12
• ESA cut by £71 to £28.15 min. Plus £42.60 if hardship - Dec12
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490 JSA sanctions a month average in Newcastle
Can appeal but no or reduced JSA in meantime
Jobseekers lose mortgage help after 2 years
9,000 people on JSA in Newcastle
More changes this year
April: Devolved to councils:
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Social Fund grants and crisis loans (shortfall £150k)
Supported Independence Scheme & Crisis Support Scheme
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Council Tax Benefit. Working age people to get less
Support limited to 91.5% of the bill. Exempt if severe disability
From July to September:
Household benefit cap (exemptions: pension age, WTC, DLA, in ESA
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support group):
Benefit limited to average wage
e.g. unemployed family with 6 children could lose all Housing Benefit due to the
benefit cap
Average loss £83 a week, 120 families in Newcastle
Jill’s welfare reform story
Mild Aspergers, gets ESA & low rate DLA.
Loses ESA and DLA means a drop of £48.70 to
£71 a week JSA.
• After outgoings of £38.50
£2 crisis loan repayment, £6 water rates, £15 gas & electric,
£5.50 TV license, £10 rent and Council Tax due to April’s under
occupancy rule and localised CT support
• Left with £32.50 for food, clothing, travel etc.
Fails to comply with work requirements:
• £71 down to £42.60 hardship
• Left with £4.10 for food, clothing, travel etc
Universal Credit Oct 2013 - 2017
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Simplified income related benefit for those in and out of work
Replacing IS, TC, HB & income related JSA & ESA (working age)
Other benefits will interact with it – as now
Online claims and contact (like online banking) *
Housing element paid to tenant rather than landlord *
Paid monthly (rather than 2 weeks) in arrears to one in a couple *
Mortgage help may stop if start work
Some disability additions not continued in UC e.g. £3,500 a yr less
Timetable:
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Oct13 new claims from Jobseekers, treated as UC claim
Oct13 existing claimants moved to UC if certain change in circumstances
April14 new claims from people in work treated as UC claim
April14 - Oct17 remaining existing claimants phased ‘migration’ to UC
Transitional protection only for those migrated
Welfare reform actions
• ‘Financial Inclusion’ work by NCC, YHN, Newcastle
Futures, vol sector etc
• Raising awareness e.g. 100+ presentations, information
• Help people mitigate welfare reform, exceptions, maximising
entitlement, targeted take up, housing advice,
homelessness prevention, prepare services & people for
PIP and UC, online training
• budgeting advice, saving opportunities, digital inclusion
(online claims support), libraries (best fuel tariff advice), coordinated advice
• YHN bus, visiting 7000 tenants at risk, more advisers
• Employment and training support
Newc Welfare Rights Service
• Citywide service providing f2f benefit
and money advice
• 9000 clients last year with 17,050
issues
• £19.5+ million (£48m in last 3 yrs) in
annualised benefit gains (= 300 jobs)
• £3 million debts written off
• Information, training, support
More information and support
• Welfare Rights advice line (professionals and priority
groups): 0191 – 277 2627
• Referral form via email:
welfare.rights@newcastle.gov.uk
• Debt line: 0191 – 277 1050
• Citizens Advice: 0844 245 1288
• All in ‘Where to Get Advice in Newcastle’
• Social Fund replacements: www.newcastle.gov/css
and www.newcastle.gov.uk/sis
• Website….
•More on welfare reform
•Debt and benefit information
•Where to get advice
•Referral form
•Fact sheets
•Self help material e.g. DLA, how to
appeal a decision
•Benefit bulletin – news – sign up
www.newcastle.gov.uk/welfarerights
What can you do?
• Be aware of welfare reform and impact
• Understand cumulative impacts
• Know there may be exemptions and
mitigations
• What can you do?
• Know who to sign-post/refer people to..