Housing and Welfare Reforms:
Issues for ALMOs
Steve Wilcox
University of York
Housing and welfare reforms:
Issues for ALMOs
Housing Benefit Reforms
The Maximum Benefit Cap
Universal Credits
The Housing benefit reforms
Private sector reforms
Caps & lower LHA rates
CPI Indexation (& definition)
Increased non dependent deductions
Social sector size limits
Additional bedroom for carers
Discretionary Housing Payments increase
Caps and Lower LHA Rates
Maximum National Caps
Maximum 4 Bed Rate
30th Percentile Rates (5/8% below median)
Removing £15 excess provisions
Increased pressure on social sector
The Maximum Benefit Cap
Based on national average earnings
Applies to all tenures
Only applies to out of work households
Doesn’t apply to disabled or retired
Impact on large families in high rent areas
Likely to be some modifications?
Impact of Maximum Benefit Cap
600
£ per week
500
400
300
200
100
0
Single
Couple
Couple + 1
Basic Credits
Couple + 2
Maximum Housing Credits
Couple + 3
Couple + 4
Universal Credits I
Major Structural Simplification
Based on Dynamic Benefits
Single Integrated Taper
Aims to promote work incentives
Higher initial costs
Long term savings from work impacts ?
Universal Credits II
Transitional protection
Future ‘gainers’ and ‘losers’
Integrated ‘real time’ weekly adjustments
Challenging IT and Admin Reforms
Limited lone parent allowances
Help with housing costs reconfigured
Universal Credits:
Help with housing costs
High earnings disregard
But reduced if help with housing costs
Mortgage costs included (?)
Council tax benefit excluded (?)
Many in work claimants better off
But complexity will dilute message
Percentage deduction from
gross earnings
Marginal deductions from gross earnings:
Current system and universal credit
100
80
60
40
20
0
Tax
Tax
Housing benefit
NI
Tax
credits
Housing
benefit
National insurance
Council tax benefit
Council
tax
benefit
Universal
credits
UC (incl
CTB)
Tax credits
Universal credits
The Earnings Disregard Formula
Earnings disregard for tenants =
Higher earnings disregard
- Rent times 1.5
- Subject to lower earnings disregard floor
But no disregard for a single person
Higher and lower earnings disregards
Household
Higher
Lower
Couple
£57.70
£10
Housing Cost
Trigger
£31.80
Couple + 1
£109.60
£20
£59.80
Couple + 2
£109.60
£25
£56.40
Lone parent + 1
£148.10
£40
£72.10
Lone parent + 2
£148.10
£45
£68.70
The current benefit poverty trap
600
400
300
200
100
0
£5
0
£8
0
£1
10
£1
40
£1
70
£2
00
£2
30
£2
60
£2
90
£3
20
£3
50
£3
80
£4
10
£4
40
£4
70
£5
00
£5
30
£5
60
£5
90
£ per week
500
Net Earnings
Child Benefit
Working Tax Credit
Child Tax Credit
Housing Benefit
Council Tax Benefit
Couple with two children. £80 pw rent. 2010/11 Rates
Under £180 pw less than 30 hours
The structure of universal credits
600
400
300
200
100
0
£5
0
£8
0
£1
10
£1
40
£1
70
£2
00
£2
30
£2
60
£2
90
£3
20
£3
50
£3
80
£4
10
£4
40
£4
70
£5
00
£5
30
£5
60
£5
90
£6
20
£6
50
£ per week
500
Net Earnings
Child Benefit
Housing Costs
Council Tax Costs
Universl Credit
Couple with two children. £80 pw rent.
Net impact of systems compared
500
£ per week
450
400
350
300
250
49
47
45
43
41
39
37
35
33
31
29
27
25
23
21
19
17
15
13
11
9
7
5
3
1
200
Hours worked
Current benefits
Universal credits
Couple + 2 children. Rent £80. Council Tax £15. £5.93 per hour earnings.
Universal Credit Issues
Risks & intermediate rents
The national cap & work
Complexity of earnings disregards
The direct payment issue(s)
The monthly payment norm
Provisions for mortgage costs?
Council tax benefit?