Welfare Reform
John Ede
Partnership Manager
CAB Cornwall
Welfare Reform
• Where are we now- Health Warning Regulations?
• Welfare Reform
– Housing Benefit
– Council Tax Benefit
– Incapacity Benefit –transfer to ESA April 2014 at
the latest
– DLA – transfer to Personal Independence
Payment (PIP)
• Universal Credit
– Which benefits it will replace,
– How it works
– Timetable for its implementation
Leaking Bucket Syndrome
Debt in Cornwall
Sample
Size
Average Debt
Single People
74
£11,645.08
Couples with
Children
53
Lone Parents
Average
Monthly
Income
Debt /
Income
Ratio
Available
Income to
pay debts
Years to Pay
off Debt
£612.00
19
-£36.95
NEVER
£14,277.16
£1,510.43
9
£0.85
1,303
52
£10,421.00
£1,115.98
9
£19.25
42
Couples
55
£20,568.99
£1,284.85
16
£71.63
22
Pensioners
50
£23,921.39
£925.08
26
£11.66
168
50+
113
£21,542.63
£979.84
22
-£14.98
NEVER
Totals
284
£15,793.31
£1,057.35
15
Families on Benefits (55)
•
•
•
•
•
•
•
Ave No. Children 2 (27x1, 19x2, 6x3, 3x4, 0x5)
Monthly Total Income Ave £1,200.31 (Debt Income Ratio 7)
32 Renting, 1 Mortgage, 22 other arrangements
Ave Total Debt £7,857.55 (Excludes Mortgage)
Ave Priority Debt £1,197.57
Ave Non Priority Debt £6,659.98
Available income deficit £5.54 each per month.
• NEVER years to pay off debt.
• Fuel Poverty 27 Transport Poverty 45 Water Poverty 30
0
Camborne and Redruth
West Penwith
St Austell
Newquay
Falmouth and Penryn
China Clay
Truro and Roseland
Hayle and St Ives
Helston and the Lizard
Liskeard and Looe
Cornwall Gateway
Bodmin
St Blazey, Fowey and
Lostwithiel
Launceston
Bude
Caradon
St Agnes and Perranporth
Wadebridge and Padstow
Camelford
Cornwall Working Age Welfare
Benefits Total 126,367
25,000
20,000
15,000
10,000
5,000
Welfare Reform Act 2012
• The Act sets out in law fundamental changes to
the welfare system,
• aimed at improving the benefits system
• reduce dependency on welfare,
• improve incentives to work,
• making work pay
• reducing overall spend at a time of economic
instability in the UK
• A single working age benefit-
UNIVERSAL CREDIT
Tax Credits
Number of couples with children and children benefiting from Working Tax Credit and working between 16
and 24 hours as of December 2011
Source: PQ answer 88172, 10 Jan 2012
Note: official data was not available for 30 constituencies, so date fields are left blank in these instances.
Constituency
Number of Households
Number of children in those
households
Camborne and Redruth
370
780
North Cornwall
200
465
South East Cornwall
205
390
St Austell and Newquay
350
690
St Ives
295
555
Truro and Falmouth
190
430
Totals
1,610
3,310
Key Welfare Reform Changes
• 2010 Budget and spending reviews – key cuts
• Universal Credit – major reform
• Disability Living Allowance replaced with Personal
Independence Payment
• Time limiting of contribution-based ESA
• Localisation of support for council tax benefit
• Reform of the social fund – ‘localisation’ of crisis
loans & community care grants
• Housing Benefit Changes
• Total benefit cap
Where the cuts will hit –
annual by 2014
• Cuts targeted at
working age
claimants, and their
dependants
• Benefits for
pensioners protected
• Change to
entitlements under
Universal Credit:
– 2.7m households no
change;
– 2.8m higher;
– 2m households
lower
Housing Costs
Households in Cornwall receiving Housing Benefit
42,820
Housing Costs
• Local Housing Benefit
Cap-
mainly affect London & SE
• Non Dependant Deductions-
Large increase over next 3 years to make up
ground since last increase 10 Yrs ago. Affects tenants for example with parents, grown
up children living in the house.
• Local Housing Allowance Rates- changes unwind throughout 2012
for existing claims from private tenants- set at the 30th percentile of local
private rent prices, not 50% 1/3 housing affordable to HB claimants. (341 Props to Rent
May 12)
• Single room rent restriction for single people extended to people
under 35yrs
• Restriction to the number of rooms “needed” in Social Housing
(already happens in private rented housing) April 13
• Local Housing Allowance rates- up rated with Consumer Price Index
not average market rents
• HB used to apply CAP on total benefits income with exceptions e.g.
DLA, WTC
• MORTGAGE INTEREST The end of temporary measures for support
for mortgage interest that were designed to help stabilise the owner
occupied market during the Credit Crunch (Jan 2013)
Mortgage and Landlord possession claims leading to orders
made in England and Wales
by Parliamentary Constituency 2011, Not seasonally adjusted
Constituency
Mortgage
Landlord
Camborne and Redruth
64
115
North Cornwall
60
70
South East Cornwall
70
50
St Austell and Newquay
85
65
St Ives
45
100
Truro and Falmouth
35
60
Totals
359
460
Universal Credit
• Single benefit for working age people
• 42,100 Key working age benefits in Cornwall will
be affected
• All means tested benefits replaced by UC
• ‘making work pay’ – Taper 35p for every £1
earned
• Pathfinders from April 2013
• New out of work claimants from October 2013
• All new claimants from April 2014
• All pre-existing claimants by October 2017
Which Benefits will UC
replace
• UC will eventually replace the following means
tested benefits AND tax credits
– Income Support
– Income based Jobseekers Allowance
– Income related Employment Support Allowance
– Child Tax Credit
– Working Tax Credit
– Housing Benefit
– Budgeting loans (Will be replaced by an
advanced payment on Universal Credit)
Universal Credit: wins
• No more reporting extra income several times &
report to one department only
• No more difficulty deciding which benefit to claim
• Ability to work any number of hours & gain
financially
• BUT..........
• No fixed hours rules – positive BUT
A challenge for providing easy point from which to
passport to entitlement to other benefits and
discounts
Who’s losing: time limiting
CB ESA
(Contribution-based Employment Support Allowance)
• Contribution-based ESA limited to 12 months for
those in the work related activity group
• 300,000 will lose almost £100 a week
• Affects claimants with savings or a partner with
income
• Destroys the principle that those who have paid
National Insurance Contributions (NICs) will be
protected if the become sick
• Undermines the intention to support people with
disabilities to live independent lives
UC: losses for disabled people
• Universal Credit – far fewer disabled adults will
get extra support
• Those living alone without a carer
• People with a disability or health condition in low
paid work
• Pensioners with working age partners – could
lose £100 a week or more
• Some families with disabled children – equivalent
of child disability element cut in half
• Potential rise for ESA support group
Transferred to UC
• Transitional Protection
• You will be transferred from your current benefit to
UC at some point
• If your UC is less than your current benefit you’ll be
entitled to some extra UC to make up the
difference, as long as your circumstances have not
changed substantially.
• Its not clear how much extra UC you’ll get under
these rules or whether there will be any shortfall
• The government have not yet announced which
changes mean they will transfer you from your old
benefit to UC without transitional protection.
Maximum UC can be made up
of
•
•
•
•
A standard allowance for a single person (or Couple)
An amount if you’re responsible for a child or young person
An amount for housing costs, whether Rent or Mortgage
Amounts for other particular needs or circumstances
e.g. caring
responsibilities or disability
• An amount for child care costs (if you are working)
Your UC payment is your UC Maximum payment minus:
• 65% of your earnings, although the DWP will ignore some types of
earnings and apply an earnings disregard
• Types of income other than earnings e.g. occupational pensions
• If income less than your Max UC payment you would be entitled to,
you will get UC to top up your income
• If income more than your Max UC payment- No UC
Who will UC affect, and
When
• From April 2013 UC will apply to new claims in Pathfinder
areas. (Tameside, Oldham, Wigan, Warrington)
• UC will be introduced gradually in other areas from October
2013
• DWP will phase out new claims for the benefits and tax
credits that UC replaces between Oct 2013 and April 2014
• New claims for Housing Benefit and Tax Credits will be the
last to end in April 2014
• If you are already getting a benefit but your
circumstances change after UC is introduced e.g.
you move into work or have a child you will move
onto UC from the date of the change
How will UC be paid
• DWP is likely to pay UC monthly to most
claimants
• Pay Claimants or Landlords?
• Single Payment per household?
• Include Housing Costs (Cap?)
• Monthly payments into Bank Accounts
• Administered by centralised IT system (still in the
design phase)
• Plan initially 50% claims on Line rising to
80% Claims on Line by 2017
Universal Credit: delivery
issues
• ‘Digital by default’ – aim for all universal credit
applications to be made online
• Currently only JSA can be claimed online & less
than a third do
• Risks and challenges for some claimants
• All Universal Credit paid together
• Rent no longer paid to landlords
• Child related payments no longer to main carer
• Paid monthly – instead of several more frequent
payments
• Budgeting challenges – potential rent arrears
• Exceptions will be available – but to what extent?
• Complexity 3 systems in operation till 2017
Personal Independence
Payment (PIP)
• DLA replaced by Personal Independence Payment
(PIP) from April 2013
• Reform led by 20% cut
• Fewer people will be eligible – some people who
need support will no longer qualify
• Qualifying period 3 months plus a further 9
months
• A lot of lobbying during passage of the Bill
• Accuracy of face to face assessments – lessons
from ESA
• Passporting – alternative routes to other help will
be needed
Localisation – support for
Council Tax Benefit
• Almost 54,500 individuals claim council
tax benefit in Cornwall
• Average claim around £16 a week
• CTB abolished from April 2013
• Local authorities to devise their own
system with 10% reduction in budget
• Low income pensioners protected (in
England)
• Non – pensioner households – could
experience over 20% cut in support
Localisation – Social Fund
Changes
• Existing Community Care Grant and Crisis
Loan schemes abolished
• Budgets (not ring-fenced) given to LAs
• LAs expected to make local arrangements
to meet need (e.g. benefit uptake
campaigns, food-banks, credit unions,
furniture schemes)
• Provision for crisis situations unclear
Financial Impacts on Claimants
• Universal Credit
– 400,000 will lose over £50 a week in UK
• Housing support
– Affordable housing harder to find
– Moving or supplementing support from benefit income
– Risk of rent arrears & homelessness
• Council Tax – less support risks hardship & debt
• Civil penalties - £50 penalty for error & tough sanctions for
insufficient engagement with work – risks for most vulnerable
• Crisis loans & community care grants
– No guarantees of help
– Currently 3.6m crisis loan applications a year
Financial impacts on Disabled
& Pensioner clients
• PIP
– 0.5m fewer people will be entitled
– Thousands entitled to smaller awards
– Impact on other support (e.g. carer's allowance)
• ESA – time limiting
– Up to 300,000 lose almost £100 a week
• Pensioners with working age partners
– Lose almost £100 a week
Vulnerable Clients
Vulnerable claimants are individuals who are –
– Unable to safeguard their personal welfare or the
personal welfare of others (including dependents). They
may have difficulties which could affect their welfare and
well-being. These difficulties could include
comprehending information, interpreting situations,
making decisions, giving consent, communicating
information or their views or requesting specialist help.
– This may be related to age, health conditions, physical,
mental or learning disability (including individuals whose
circumstances require an appointee)
Vulnerable Clients
• Or Severe financial insecurity or hardship and/or because of
their personal circumstances at that time.
– Vulnerable claimants have difficulty coping with
demands of the organisations processes including the
channels used to access benefits or services and/or
meeting the obligations or conditions they are required
to meet. Consequently vulnerable claimants will need
additional help and support that takes account of their
changing circumstances (recognising that people move
in and out of vulnerability) to safeguard their welfare
and well-being in a co-ordinated way.
Edge of Poverty
• The work looked at households that are in
work but suffering high levels of financial
stress and have stated that they are finding it
very difficult to cope with their current income
(therefore it does not include those already
experiencing poverty and deprivation).
• This work identified that 26% of households in
Cornwall are at risk of poverty, ranking 21st out
of 424 local authorities in the UK –
• this places Cornwall within the top 5% of areas in
the UK.
CC Community Intelligence Team
Partnership Working
Opportunities & Risks – the opportunities include
reducing the cost of welfare paid and increased
employment rate (positive for economy and
individuals)
However, the risks are that people come under intense
financial pressures.
• Mitigating the affects on vulnerable households
• Opportunity to coordinate services locally
• Child Poverty, Families, Schools
• Preparing vulnerable clients for the changes
• Financial Capability, Budgeting, Bank Accounts, Debt
and Benefit Uptake, Cornwall Together Cooperative.
• ?????????
Cornwall’s demand for advice
CABC 2011-12
Other 452
Legal 2,750
Relationship/Family
2,817
Housing 4,282
Employment 4,793
C onsumer 840
Immigration 301
Benefits 20,752
Debt 29,293
Thank you
• Thank you to the Volunteers and Staff of
the CAB in Cornwall.
• www.adviceguide.org.uk
• Online help from Citizens Advice