Welfare Reform – Overview of the changes

January 2013 Lisa Black – Head of Revenues, Benefits and Welfare Rights

Welfare Reform Act - Overview

- Most fundamental reforms to the social security system for 60 years - Changes began in 2010, still happening now and continue in 2013 and beyond - Changes in: - Housing and Council tax Benefit - Disability related benefits “Out of work” related benefits

Changes to the current welfare system – quick recap so far

•Up-rating of all benefits linked to Consumer Price Index •Tax credits reduced in 2011, further squeezes in 2012 •Child Benefit frozen •Lone Parents transfers to Job Seekers Allowance when youngest is 5 •Education Maintenance Allowance abolished • Transfer from Incapacity Benefit to Employment Support Allowance begun •Winter Fuel payments reduced Housing Benefits •Local Housing Allowance reduced to 30 th percentile and limited to £400 per week •Non-dependent deductions increased significantly •Extra room for overnight carer •Local Housing Allowance rate for under 35s limited to room in a shared house

Headline Changes to the current welfare system – 2013

January 2013

Child Benefit removed gradually for those on incomes of £50k -£60k; removed completely if income over £60k

April 2013

Council Tax Benefit abolished Social Fund abolished Working age benefits uprated by 1%, not linked to prices (CPI)

DWP changes that Councils have to implement

: Housing Benefit under-occupancy changes take effect (for working age and social rented sector) Benefit cap introduced – phased in with 4 London LA’s first

Other DWP changes

Disability Living Allowance replaced by Personal Independence Payments

October 2013

Universal Credit begins

Nottingham City Council position

• Full Council Motion adopted September •

“This Council believes that the Governments intention to transfer responsibility for Council Tax Benefits to Local Authorities is being carried out in an unfair way which severely disadvantages some of the most vulnerable people in Nottingham.

•

It resolves to lobby the Government to rethink its position both in terms of current funding allocation and future uprating”.

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Councillor Graham Chapman – Portfolio holder

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Welfare Reform: Localisation Council tax Support scheme

Been out to consultation DCLG have offered £100m to reduce impact of local scheme   Caveats attached Decision to be reached    Scheme proposals Putting a maximum limit on the amount of council tax support that can be paid to

working age people

– where everyone has to pay at least 8.5% towards their Council Tax bill And:  removing second adult rebate • setting a minimum award level of 50p per week

 

Welfare Reform: Localisation Discretionary Social Fund

Department for Works and Pensions (DWP) delivers and provides Discretionary Social fund payments for Community Care Grants (CCG) and Crisis Loans for Living expenses (CLLE’s).

From April 2013, the Welfare Reform act abolishes the Discretionary Social Fund  Instead:  Funding devolved to upper tier Councils to implement ‘locally appropriate solutions’  Programme funding is reduced – for Nottingham the allocation for 13/14 and 14/15 is £1.8m

  The Government has not placed any new duties to provide any local emergency hardship support BUT it expects: 

“the funding to be used to provide new local provision in lieu of the social fund and concentrated on those facing greatest difficulty in managing their income”.

AND:



households are expected to face increasing hardship due to the economic climate and wide welfare changes

• Demand in Nottingham - The current DWP Social Fund is oversubscribed

Welfare Reform: Localisation Discretionary Social Fund

 NCC has approved the use of the full £1.8million to create an Emergency Hardship Scheme which includes:  -

Emergency Support

- critical short term financial help as a result of unavoidable emergency or disaster e.g. vouchers or cash to provide essential food or heating  -

Household Support

- support to establish or maintain independent living e.g. white goods and furniture  And 

Emergency Loan Scheme

– to provide support to those that do not directly meet the eligibility criteria.

Welfare Reform: Housing Benefit – Under-occupancy

- Rules changing for Housing Benefit from April 2013 for people who live in social housing.

- Reduces the amount of help with rent for working age people who under occupy their home 1 “extra bedroom” = Eligible rent reduced by 14% 2 or more “extra bedrooms” = Eligible rent reduced by 25%

Welfare Reform: Housing Benefit – Under-occupancy

- Reduction will be through Housing Benefit - 7,000 households in Nottingham affected - DWP advice on how to manage the financial impact: Renting out the “extra bedroom” - Transfer to a smaller home - Apply for a Discretionary Housing Payment

Welfare Reform: Housing Benefit – Benefit Cap

• Cap set at: – £350 a week for single adults without children – £500 a week for couples or lone parents • Benefits included are: – Job Seekers Allowance; Income Support; ESA (working group); Housing Benefit; Child Benefit; Child tax credits; Carers allowance; Maternity allowance • Not included are: – Social fund loans; Free school meals; Council Tax Benefit (or Local replacement); payments for child care costs

Welfare Reform: Housing Benefit – Benefit Cap

• Cap will not apply where someone in the household – Obtains work and becomes entitled to Working Tax Credit – receives War Widows or Widowers pension; DLA (PIP); AA; or support component of ESA • Cap applied through reducing Housing Benefit

• • • • • •

Welfare Reform – Universal Credit

The Government’s stated aims are for Universal Credit to: • • make work pay as people move into and progress in work help lift people out of poverty • • reduce the ongoing cost of the welfare system reduce administrative cost and complexity • reduce fraud and error by simplifying and streamlining the system • • • • • • • • How Universal Credit is intended to work: managed by DWP, with potential role for LAs in delivery 80% claims to be managed online single monthly payment per household (like a salary) real time data on earnings (requires 2 new IT systems) ‘taper’ approach to withdrawing UC so work always pays No-one should be worse off than existing benefits

Welfare Reform – Universal Credit

• Universal Credit, to begin being introduced

October 2013

• – – – Transition to Universal Credit in 3 phases: Phase 1 (

2013-14

) – new claims/ change in circumstances Phase 2 (

2014-15

) – households who will ‘benefit most’ Phase 3 (

2015-17

) - remaining households • • • Awaiting National Roll out plan

Welfare Reform – Universal Credit

• Current system Income related JSA Income related ESA Income Support Working Tax Credits Child Tax Credits Housing Benefit

Universal Credit Pension Credit, Child Benefit, Carer’s Allowance (will remain) Council Tax Benefit (Localised Council Tax Schemes) Contributory JSA and ESA (still considering how these will work)

What are we doing to prepare?

• Working with partners to

boost citizens’ financial capacity

and access to affordable banking services – Nottingham Credit Union – Developing “Jam Jar” accounts to help manage priority payments • • •

Shaping communications

with RSL’s; Advice Sector and Faith groups to raise awareness of the changes • Delivering

awareness sessions

across partners; front line colleagues and volunteers to create informed networks

Sharing information to identify households

be directly affected to

offer support

that will where we can

Policy

– Developing local policies to respond to the changes; influencing thinking (consultation responses); aligning all policy decisions on welfare reform; understanding impact and risk

How you can help….

- Spread the word - Help people to understand; - Pay attention to letters and information that they receive - Tap into the support and advice available - Advice sector - DWP & HMRC RSL’s - Credit Union awareness - Feedback to us; emerging questions; concerns

Thank you

• Feedback or Questions?