Wincred
Welfare Reforms & Financial
Inclusion
Background
• Welfare Reform Act 2012 gained Royal
Assent 8th March 2012
• Government purpose is to
– Reduce benefit expenditure
– Make the benefits system simpler
– Encourage claimants into paid employment
Welfare Reforms – what are they?
• Over inflation increases to non-dependant
deductions
• Changes to entitlement to Tax Credits
• Benefit Caps in line with average working
income
• Universal Credit and Direct Payments to
tenants (monthly in arrears)
• Working Age Under-occupation cuts
(Bedroom Tax)
Background
From April 2013:
• Cap on overall benefits
• Families £500 per week, £26,000 per annum
• Single adult household £350 per week, £18,200 per
annum.
• 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.
Under-occupation deductions
“The Bedroom Tax”
• Restrict Housing Benefit for working age social
tenants based on number of rooms they need
• How will it work?
– Cut in housing benefit depending on level of underoccupation
• 14% for one room, DWP average of £11/wk (DWP estimate
530,000 claimants affected)
• 25% for 2 or more rooms, DWP average of £20/wk (DWP
estimate 150,000 claimants
affected)
How do you calculate
under-occupancy?
• Every adult / couple - 1 room
• Every other adult aged over 16 - 1 room
• Any two children same gender aged 16
and under - 1 room
• Any two children regardless of gender
aged under 10 - 1 room
• A non resident carer (overnight care)
Who is this likely to affect?
• Single person on Job Seekers Allowance
of £71.00/week, lives in a 3 bed property,
rent is £95/wk
• At the moment rent is paid in full
• However there will be:
– 25% deduction on Housing Benefit = £23.75/wk
– £71.00/wk - £23.75 = £47.25/week
Impact on just one Wincred partner
• 3,300 under-occupiers would be hit by the
bedroom tax 2,206 under-occupy by 1 bedroom
(average rent is £86.30 per week with average
shortfall of £12.05 each week)
• 1,094 under-occupy by 2 or more bedrooms
(average rent is £84.82 per week with average
shortfall of £21.21 each week)
• Shortfall to be collected each week is £49,850
• Shortfall to be collected each year is
£2.5 million
What Next?
The “bedroom tax” comes in on April 1st
2013. National Housing Federation leaflet
“what you need to know about changes to
Housing Benefits” is useful.
http://www.housing.org.uk/publications/find_a_publication/general/h
ousing_benefit_changes.asp
WHAT DO YOU THINK WE
SHOULD DO?
Universal Credit
• Replacing all means tested benefits
• New claims from October 2013
• Existing claimants transferred
between 2013-2017
– Transitional protection as long as
circumstances remain same
What will Universal Credits
Replace
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Working tax credits
Child tax credit
Housing Benefits
Income Support
Jobseeker’s Allowance
Employment and support allowance
Universal Credit
• Who Can Claim?
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Age 18 +
Savings below £16,000
Low / Middle income
In or out of work
Not excluded – eg some people from abroad
Meet conditionality
Not be in education
Accept a claimant commitment
if one member of a couple claim is above state
pension age they will need to apply for universal
credit as a couple. People below 18 can also apply:
lone parent, or are estranged from their parents.
Universal Credit
• Conditionality
• None
– Support group
– Lone parent child under 1
– Carers – substantial care
• Work Focused interview
– Lone parents child between 1 and 3
• Work Preparation
– Limited capacity for work
– Lone parents child between 3 and 5
– Lead member of couple with child under 5
• Full
– Everyone else
Universal Credit
• How to claim?
– One claim per household
– Main claimant
– Claim on-line
– DWP assess / call centres / limited face to
face
Universal Credit
Payments
• Monthly in arrears
• To the main claimant
• Default to pay housing element directly to
claimant
• Limited exceptions when it could be paid
direct to landlord. Pilot projects are currently
being carried out when and how payments
can be made to the landlord.
Financial Inclusion
Financial inclusion is about ensuring that everyone has
access to appropriate financial services & products to:
manage their money on a day-to-day basis; plan for the
future and deal effectively with financial distress.
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Access to affordable and responsible credit
Access to an appropriate bank account
Access to face to face debt advice
Access to basic home contents insurance
Access to savings facilities
Improved financial education, literacy & capability
What does the credit situation look like today?
• £1,451bn - total UK personal debt at the end of September 2011
• £55,795 - average household debt including mortgages
• £8,025 – average household debt excluding mortgages. This
increases to £15,432 if the average is based on the number of
households who actually have some form of unsecured loan.
• £209bn - total consumer credit lending to individuals at the end of
September 2011
• £174m - personal interest paid in UK daily - £63.4bn in the last 12
months or £2,440 per household each year.
• 8,910 - number of new debt problems dealt with by CAB each
working day (as at June 2011)
• every 14.6 minutes a property is repossessed
• every 4.31 minutes someone will be declared insolvent or bankrupt
(stats courtesy of Credit Action)
How to assist customers move
towards financial inclusion?
• Opportunities to promote financial capability (demand side)
– Money Advice Service
– Budgeting skills
– Money management workshops
• Opportunities to support tenants to access appropriate products
(supply side)
– Support around opening bank and savings accounts
– Promotion of credit unions Walsave’
– Ensuring access to appropriate debt and financial advice
wincred
• Wincred website is available to colleagues and
customers giving advice and guidance on
financial inclusion, where to seek help.
• The website can be used as a tool to help
colleagues and customers to manage their
finance.
• Cost of Running you home booklet is already
available as a basic guide with an opportunity to
do simple income and expenditure.
Where can I get help with benefits
and debt advice within Walsall?
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Walsall Council, Welfare Rights Service
Walsall Citizens Advice Bureau
Walsall Money Advice Project
Age Concern
Willenhall Money Advice
whg Welfare Benefits and Debt Advice for
whg tenants only
Action needed?
WHAT DO YOU THINK WE
SHOULD DO?