Welfare Reform:
• Changes to Employment and Support Allowance
• Introduction of a Benefit Cap
Thursday, May 2, 2013
Social Security Agency Information Session
Introductions
1. Changes to Employment and Support Allowance:
Judith Clarke,
Denise Monroe,
Communications Strand
Employment and Support Allowance Project
2. Introduction of a Benefit Cap:
Monica Clarke, Benefit Cap: Implementation Manager
Mairead Duddy, Benefit Cap: Project Manager
What’s in the Bill?
1.
2.
3.
4.
5.
6.
7.
8.
Universal Credit
Personal Independence Payment (replacing DLA)
Reform of the Social Fund
Housing Benefit reforms
Changes to Employment & Support Allowance
Introduction of a Benefit Cap
New Conditionality and Sanction powers
New Fraud powers
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Why is reform happening?
•
•
•
•
Sustainability: The system has become too expensive
Simplicity: The system has become too complex
Targeted: To ensure resources are focused on those most in need
Personal responsibility: To ensure that those who can work are
helped move towards work, and not trapped in benefit
dependency
• Fairer: To make the system fair for those funding it i.e. the
taxpayer
• Parity: Northern Ireland does not have the capacity to run or fund
its own social security system. Cost = £5.1bn per year; more than
the cost of running the Health Service in Northern Ireland.
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Why are the changes being
introduced?
• Changes to ESA and the introduction of a Benefit Cap are part
of the Welfare Reform Bill for Northern Ireland.
• Northern Ireland operates a system of parity with Great
Britain, meaning that all benefit rules and rates should be the
same here as they are in GB.
• The changes were introduced in Great Britain in May 2012
and April 2013 respectively.
The timetable
Assembly Stage
Date
First Stage
1 October 2012. Completed
Second Stage
9 October 2012. Completed
Committee Stage
10 October. Completed
Deadline for tabling amendments for
Consideration stage
9.30am 10 January 2013
Consideration Stage
TBC
Deadline for tabling amendments for
further consideration stage
TBC
Further consideration stage
TBC
Final Stage
TBC
Formal consideration of regulations
TBC
Royal Assent
Expected June 2013
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1. Changes to Employment and
Support Allowance
Today we will explain:
•
•
•
•
•
•
What is Employment and Support Allowance?
What is changing?
Why change?
Who will be affected and how?
How many customers will be affected?
How the changes will be introduced.
What is Employment and Support
Allowance (ESA)?
• ESA was set up in 2008 to replace Incapacity Benefit.
• All existing Incapacity Benefit customers will be
reassessed for ESA by mid 2014.
• ESA provides financial help to people who are unable
to work due to illness or disability.
• ESA also provides personalised support to help people
prepare for suitable work.
What is Employment and Support
Allowance?
There are two types of ESA:
• Contribution-based, ESA (C). Customers will
receive this if they have paid enough National
Insurance contributions.
• Income-related, ESA (IR). Customers will receive
this if they do not have enough money coming in,
or they have not paid enough National Insurance
contributions, and they satisfy the entitlement
conditions.
What is Employment and Support
Allowance?
There are two phases:
1. Assessment Phase: the first 13 weeks of
a claim.
2. Main phase:
• Support Group, OR
• Work Related Activity Group.
What is changing?
• Time limiting – customers not in the Support Group will
receive ESA (C) for a maximum 365 days. (Previously there
was no limit).
• ESA Youth – removal of the special contribution conditions
that allowed some 16 to 24 year olds to qualify for ESA (C)
without having paid National Insurance contributions.
IMPORTANT: Customers most severely affected by their
medical condition or disabilities (i.e. those in the Support
Group) will not be affected by these changes.
Why change?
• ESA (C) for people in the Work Related Activity Group was
never intended to be a long term benefit.
• To align treatment of ESA Youth so that all customers will
need to satisfy the same conditions for receipt of
ESA (C).
• To simplify the benefit system and to better align ESA (C) rules
with contributory Jobseeker’s Allowance.
Who will be affected & how?
• Customers in the Support Group will not be affected by these
changes.
• Customers in the Assessment Phase and Work Related
Activity Group will be affected as follows:
– ESA (C) will stop after 365 days;
– ESA (C) “Youth” will stop after 365 days;
– Where there is ESA (C) and ESA (IR) entitlement then ESA (IR)
will continue when ESA (C) stops;
– Potential customers will not be able to claim under the ESA
“Youth” conditions when the changes are introduced.
The date the changes can be introduced is subject to the passage
of the Welfare Reform Bill
How many customers will be
affected?
• 57,100 people in Northern Ireland were receiving ESA as of
November 2012.
• Of these, 8,224 customers had received ESA (C) in the Work
Related Activity Group or Assessment Phase for at least 365 days.
• 22% of these customers may have entitlement to ESA (IR).
• 6,414 customers. (11% of the 57,100 total ESA customers) could
therefore be affected.
Figures taken from the Northern Ireland Employment and Support
Allowance Information Booklet which is available at www.dsdni.gov.uk
How many customers will be
affected?
• 78% of ESA (C) customers who flowed off the benefit from the
Assessment Phase and Work Related Activity Group had been
claiming for less than one year and so would have been unaffected
by the changes.
• 448 customers receiving ESA (C) and ESA (IR) under the ESA
‘Youth’ conditions as of November 2012 – these customers will be
unaffected.
• 28 customers receiving ESA (C) only under the ESA ‘Youth’
conditions as of November 2012.
– 26 customers in the Support Group - unaffected.
– 2 customers potentially affected.
How will the changes be introduced?
Planning assumption is that:
• Prior to introduction of the changes a letter will be issued to all
customers likely to be affected by the changes.
• Following this the ESA Centre will be contacting customers who are
likely to be affected by the changes and inviting them to apply for
ESA (IR), if they meet the criteria. This activity will commence 8
weeks prior to introduction of the changes.
ESA Existing Customers
ESA (C)
Support
Group
Customers
not
affected
Agency calls
customers to
advise of the date
that ESA (C) will
exhaust and invites
applications for
ESA (IR) if
appropriate
3
1
2
Agency
issues a
letter
advising
of
proposed
changes
to ESA
(C)
Customer
applies for
ESA (IR)
and
receives a
notification
advising of
outcome.
Customers
who do not
apply for
ESA(IR)
move to
touchpoint 7
ESA (C) exhausts a
letter is issued to
advise that ESA (IR) is
now payable. The
amount of benefit does
not change
5
A letter is issued to advise ESA
(IR) is not payable and credits
only will continue from the day
after ESA (C) exhausts
4
6
7
Letters issued to
customers who will
automatically move
to ESA (IR ) when
ESA (C ) exhausts
ESA (C) exhausts, a
letter is issued to
advise that credits only
will continue from the
day after ESA (C )
exhausts
1
New ESA customers who claim after introduction
ESA (C)
Support
Group
Customers
not affected
Agency assess
customer for
ESA (C) and
ESA (IR)
entitlement
Letter issued to
advise that
customer is entitled
to ESA (C) and
(IR) and ESA (C)
is payable for a
maximum of 365
days
Letter issued
56 days
before ESA
(C) exhausts
5
4
3
1
2
6
7
Customer makes
a claim to ESA
(C) – invited to
make a claim to
ESA (IR) if
appropriate
Letter issued to
advise that
customer is
entitled to ESA
(C) only and ESA
(C) is payable for
a maximum of
365 days
ESA (C) exhausts after 365 days,
customer moves seamlessly to ESA
(IR). The amount of benefit does not
change.
ESA (C) exhausts
after 365 days,
customer continues to
receive ESA Credits
Only from the day
after ESA (C)
exhausts
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Letter issued to
customer 56 days
before ESA(C)
exhausts
1
Reassessed Incapacity Benefit Customers on ESA (C)
ESA (C) exhausts after 365 days, a letter is
issued to advise that ESA (IR) is now payable.
The amount of benefit does not change
Customer
applies for ESA
(IR) and
receives a
notification
advising of
outcome
As a result of reassessment
customer is entitled to
ESA(C), Agency telephones
customer to advise of
reassessment decision, to
advise that ESA (C) is
payable for a maximum of
365 days and invites an
application for ESA (IR) if
appropriate.
4
ESA (C) exhaust after 365 days, a letter is
issued to advise ESA (IR) is not payable
and credits only will continue from the day
after ESA (C) exhausts
2
1
3
5
Allowance
notification issued
which advises that
ESA (C) is
payable for a
maximum of 365
days and includes
details of how to
apply for ESA (IR)
ESA (C)
Support
Group
Customers
not affected
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ESA (C) exhausts after 365
days and a letter is issued to
advise that credits only will
continue from the day after
exhaustion
Summary
• Customers in the Support Group will not be affected
by time limiting.
• Time limiting will affect customers receiving ESA (C)
including those who qualified under the current ESA
Youth conditions – payment of ESA (C) will be limited
to 365 days for those in the Work Related Activity
Group or Assessment Phase.
• ESA ‘Youth’ conditions will be removed.
Questions
For more detail go to:
www.dsdni.gov.uk
23
Where you will find...
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2. Introduction of a Benefit Cap
Today we will explain:
 What the benefit cap is
 What is changing
 How many households will be affected and how
 How the changes will be introduced and when
 How affected households will be supported
What is the Benefit Cap?
 An upper limit to the amount of state support that
households can receive
 It will ensure households with no-one in work do not
receive more (in benefits) than the average working
household.
 It will only apply where Housing Benefit is in payment
What is the Benefit Cap?
The upper limits for benefit cap are:-
 A maximum of £350 a week (or £1517 per month) if the
customer is a single person and either:
has no children; or
the children they have responsibility for do not live
with them.
 A maximum of £500 a week (or £2,167 per month) if the claimant
is either:
a couple, with or without dependent children; or
a lone parent with dependent children.
What is the Benefit Cap?
Benefits included in the cap calculation:-
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•
•
•
•
Bereavement Allowance
Carer’s Allowance
Child Benefit
Child Tax Credit
Employment and Support
Allowance
(except when support component
is awarded)
• Guardian’s Allowance
• Housing Benefit
•
•
•
•
•
•
Incapacity Benefit
Income Support
Jobseeker’s Allowance
Maternity Allowance
Severe Disablement Allowance
Widowed Mother’s/ Parent’s
Allowance
• Widow’s Pension
What is the Benefit Cap?
Exempt Benefits/Income:
 Working Tax Credit (do not have to be in receipt of WTC).
 Employment and Support Allowance (if Support Component awarded)
 Industrial Injuries Benefits
 Armed Forces Compensation Scheme (AFCS) (Guaranteed Income
Payments), Armed Forces Independence payment (AFIP); and, before 6
April 2005, the War Pension Scheme (WPS) (this includes war
widow's/widower's pension and war disablement pension); and
 Attendance Allowance
 Disability Living Allowance and its replacement Personal Independence
Payment
What is the Benefit Cap?
Certain one off payments are disregarded:
 Discretionary Housing Payments
 Rates element of Housing Benefit
 Budgeting Loans
 Community Care Grants
 Crisis Loans
 Sure Start Maternity Grants
N.B: This list is not exhaustive
What is Changing?
 Currently there is no limit to the amount of benefits households
can claim
The introduction of a benefit cap will:
 Promote fairness between those receiving benefits and those in
work
 Ensure that being in receipt of benefit is not seen as a barrier to
finding work
How many households will be affected?
 Only 620 NI households will potentially be affected
Of those:
 40 households have 3 children or less
 140 households have 4 children
 460 households have 5 children or more
And how:
 Average impact is a reduction of £53.00 per week
N.B: Due to rounding figures above do not total to 620
How the changes will be introduced?
 Initially the cap will be deducted from Housing Benefit
 In the longer term the cap will be applied as part of
Universal Credit
And when:
 Upon Royal Assent of the Welfare Reform Bill
How affected households will be
supported?
 Early identification of the affected households
 Direct contact with each individual household
 Issue of a Maildrop to:
1. Explain the benefit cap; and
2. Signpost customers towards
available support
How affected households will be
supported?
Other support available:
Northern Ireland Housing Executive:
 Help to claim Discretionary Housing Payment
 Help to seek more affordable housing
Department for Employment and Learning:
 Help in seeking work
Her Majesty’s Revenue & Customs
 Help to claim Working Tax Credit
For more detail go to:
www.dsdni.gov.uk
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Where you will find...
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Questions