Welfare Reform for Children
and families
Sam Royston,
Poverty and Early Years Policy Adviser, The Children’s Society,
December 2011
Key recent welfare changes
for children and families
• Changes to Local Housing Allowance
• Cuts to Maternity Benefits
• Frozen Child Benefit
• Additional support through the Child element of Child
Tax Credit (!)
• Changes in Benefit Uprating from RPI to CPI (and LHA
to be uprated with CPI rather than local rents)
Changes to Local Housing
Allowance
•
LHA maximum local rates to be based on 30th percentile of
local rents, rather than 50th percentile of local rents.
•
(estimated to cost nearly 800,000 households an average of
£9 per week)
•
Cap maximum rates of LHA payable at £250 for a one
bedroom property, £290 for a two bedroom property, £340 for
a three bedroom property, and £400 for a four bedroom
property
•
(estimated to cost around 20,000 households an average of
£74 per week.)
Changes to Maternity Benefits
•
Health In Pregnancy grant (worth £190) abolished
•
Sure Start Maternity Grant (worth £500 per child) cut back to
apply to first child only
•
Baby element of Child Tax Credit abolished (worth an additional
£545 to families with a child under 1)
•
Child Trust Fund (which provided a £500 nest egg for children in
low income families) abolished
•
Toddler element of Child Tax Credit not to be implemented
•
For the poorest families, these entitlements are worth up to
£1735 over pregnancy and the first year of a child’s life.
Overhauling the Welfare
System: Children and families
and the WRB
- The Welfare Reform Bill radically overhauls key
components of the welfare system supporting children
and families.
- Key aspects of the Bill include:
- The Universal Credit
- A “Benefit Cap”
- Uprating of Local Housing Allowance with CPI
- Localisation of the Social Fund
- The Bill is currently in the House of Lords, it is
expected to be passed into law in early 2012.
Universal Credit – disabled
children
•
Support for children with disabilities are to be substantially cut
under Universal Credit, through replacement of the disability
element of child tax credit with a “disability addition” for a child.
•
The money is being moved into a substantial increase in the
support component of ESA for disabled adults.
•
Changes could cost disabled children up to around £1400 per
year.
•
This could amount to substantially more than £22,000 over the
childhood of a disabled child, (for a family with two disabled
children this loss could be more than £44,000.)
•
The Government estimates that 100,000 children could be
affected by this change.
Universal Credit – Young
Carers
• The Severe Disability Premium currently gives additional
support to disabled adults with no other adult to care for
them. This additional support helps to cover the additional
costs of living with a disability but no carer.
• The Government is abolishing the Severe Disability
Premium through the introduction of the Universal Credit.
• This will cost families with a young carer up to £55.30 per
week (£2876 per year). This cut could be equivalent to
20% of household income after housing costs.
• In addition the Enhanced Disability Premium is also being
abolished, in total this means that families with a young
carer looking after a disabled parent could lose up to
£69.50 per week - more than £3500 per year.
Universal Credit – Childcare
costs
• UC childcare element will cover 70% of childcare
costs up to £175 per week for one child and £300
for two or more children.
• availability of support with childcare costs to be
extended to parents working under 16 hours per
week.
• However, many households can currently receive
up to 95.5% of CCCs covered through the
benefits and tax credit system, as a result of
HB/CTB disregard. They will see help reduced to
70%
Free School Meals
• Eligibility criteria for FSM (and other passported benefits)
will need to be revised as a result of abolition of key current
passporting benefits under UC.
• Potential introduction of an income threshold for FSM over
which entitlement would be lost – creating a “benefit cliff
edge”
• This benefit cliff edge is created because FSM has a
significant cash value - worth an average of around £367
per child - for a family with three children this is equivalent
to £1100
• As such a family could be left significantly worse off as a
result of earning more.
Benefit Cap
•
Government plans to cap benefits for out of work families at
median weekly wages for working households (£500 pw approx).
•
50,000 households will be affected. The average loss resulting
from the cap will be around £93 per week of household income,
and 7,500 households will lose more than £150 per week.
•
Analysis reveals that children are disproportionately affected by
these proposals. 210, 000 children will be affected by the
cap, compared to 70,000 adults.
•
This means that 75% of those affected are children, making
them nine times more likely than adults to be affected. Only
one in 556 adults are affected, and one in 64 children stand to
lose out DWP Household Benefit.
•
80,000 children could be made homeless as a result of the cap.
Conclusion – the overall impact of
welfare reform measures on children
•
Earlier this year the IFS predicted Child Poverty to
rise by 800,000 by 2020.
• Without the introduction of the Universal Credit this
would be considerably worse.
• The Government admit that measures taken in the
Autumn statement (the withdrawal of the additional
£110 investment in CTC and WTC freezes) will
increase Children in poverty by 100,000.
• Some groups of children likely to be particularly
affected. For example, the Benefit Cap and LHA cuts
are likely to have particularly severe consequences on
big families and those in private rental housing.