Transcript The Coalition Government and Welfare reform

The Coalition Government
and Welfare reform
Dave Simmonds
Centre for Economic & Social
Inclusion
June 2010 Budget reforms
 Commitment to continuing with plan for
reassessment of all Incapacity Benefit (IB)
claimants by 2014
 Reforms to Housing Benefit
 Lone parent obligations for those whose youngest
child is 5 years from Oct 2011
 Introduction of a new assessment for Disability
Living Allowance claimants
 Savings of £11bn per annum
Comprehensive Spending
Review 2010
Changes to welfare benefits
Savings in 201415 (£bn/yr)
Remove Child Benefit from higher rate tax payers
2.5
Limit contributory Employment and Support Allowance (ESA) to 12
months unless severely disabled
2.0
Cut spending on Council Tax Benefit
0.5
Freeze part of Pension Credit
0.3
Benefit cap of £500/wk (£50/wk if single no kids)
0.3
Cut LHA for single people aged 25 - 35
0.2
Cut DLA for people in care homes paid for by state
0.1
Total cuts over CSR including those previously announced in the
budget
Over £18bn
Announcements on
Housing Benefit
 Announcement 1: Local Housing Allowance (LHA) caps: £250
for 1 bed - £400 for 4 bed.
– Local impact huge in some areas (over 17,000 households affected in
London?). Boris - an exercise in “social cleansing”?
 Announcement 2: LHA to be set at 30th percentile rather than
median (50th percentile)
 Announcement 3: Index linking of LHA to lower inflation
– By 2020 EVERY tenants HB will be too low to cover rent (Chartered
Institute of Housing)
 Announcement 4: HB award reduced by 10% after 12 months
for JSA claimants – withdrawn
 Announcement 5: Limiting HB entitlement for single people
aged 25 – 35
Distributional impact of CSR
announcements by 2014-15 (source: IFS)
0.0%
Change in net Income
-0.5%
-1.0%
-1.5%
-2.0%
-2.5%
Assumes councils means-test CTB
more aggressively
-3.0%
Poorest
2
3
4
5
6
Income Decile Group
7
8
9
Richest
Incapacity Benefit reform
 Reassessment of almost 1.5m IB claimants by 2014 =
10,000 assessments per week
 Claimants will reassessed using ‘Work Capability
Assessment’ (WCA)
 WCA has been criticised for being inaccurate and
insensitive – 40% success rate for challenged decisions
at appeal
 Consequences of people being transferred onto the
wrong benefit are serious
Overview of WR Bill
What’s in the Bill
 Housing Benefit
 Under-occupation of
social housing
 ESA
 Disabled Living Allowance
 Household benefit cap
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Child maintenance
Conditionality
Sanctions
Appeals
Social Fund
Universal Credit
 UC is a much needed and welcome change with a good
rationale
 Dual aims of simplification and increased work incentives
 Introduced in October 2013 for new claimants and will be
paid monthly using ‘real time’ PAYE system
 Combines in and out of work means-tested benefits to
create one single application, one single payment, one
withdrawal rate (65%), assessed and paid on a household basis
 Basic allowance for adults with additions for children,
disability, housing costs and caring
 New conditionality regime: 4 levels
 Earnings disregards will encourage “mini-jobs”
 Government commitment: no existing claimants will
experience a reduction in cash terms following introduction of
UC
Universal Credit –
key delivery issues
Purse to wallet
Budgeting
Internet use
IT system
Welfare Reform Bill - key
benefits issues
Passported benefits
Childcare
Council Tax Benefit
Housing (Housing Benefit, social housing)
Social Fund
Benefits cap
Winners and losers
 Cash protection at the point of transition
 Official winners and losers
 Losses occur before UC introduced
 Official losers:
–
–
–
–
–
Working families
Self employed
Those in areas of high housing costs
Large families
Second earners
All lose out but more in London
Worse off under Universal Credit (2014) compared with the
current system (April 2011) if working full-time on minimum
wage, annual (£)
London
National
Lone parent - two children - 2 Beds
Couple - three children - 3 beds - both working
Couple - two children - 3 beds - both working
Couple - two children - 2 beds - both working
Couple - three children - 3 beds - one working
Couple - two children - 3 beds - one working
Couple - two children - 2 beds - one working
-£6,000
-£4,000
-£2,000
£0
Impact on claimants
 Good intent being undermined by benefits cuts
 More uncertainty, fear and confusion?
– Lower income
– Changing entitlements and re-assessments
– New conditionality and increased sanctions
 Increased incentive to work
 Many critical pieces are still unclear and work incentives
may be undermined by childcare, passported benefits,
etc
 Greater need for independent advice and support
Role of local partners
 Scrutiny: monitoring impact of reforms and
performance of Work Programme and Jobcentre
Plus
 Aligning local provision: local projects,
childcare, health, housing, skills, advice
 Information and advice: jobs, skills, welfare
and money advice