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Welfare Reform ~ The Way Forward

Welcome

Department for Work and Pensions

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Welfare Reform ~ The Way Forward

• • Universal Credit Personal Independence Payment • Employment Support Allowance time-limiting • Benefits cap • Lone Parent obligations • Social Fund changes • • Housing Benefit changes State Pension Single tier

Department for Work and Pensions

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The Scale of the Changes

• • • • • • Universal Credit 12 million in 8 million households Pension Reform 12 million people Personal Independence Payment 3.2 million people IB to ESA Migration 2.6 million people Benefit Cap 142,000 people Digital services the norm

Department for Work and Pensions

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Universal Credit

Department for Work and Pensions

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Why do we need Universal Credit?

• We are

simplifying a complex system

of multiple benefits: – the current system has over 10,000 pages of guidance for advisers and 301 different combinations of benefits – – It will replace a range of Working Age benefits it is expensive to administer • We are

making work pay

: – more help for low income working families – – – claimants will keep more of what they earn improving incentives to increase hours of work simplified system will make moving to work feel less ‘risky’ Department for Work and Pensions

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Simplifying a complex system Of the current system

Jobseekers Allowance (JSA) Income related Employment Support Allowance (ESA) Income related Income Support Working Tax Credits Child Tax Credits Housing Benefit

Universal Credit

Pension Credit, Child Benefit, Carer’s Allowance (will remain) Council Tax Benefit (DCLG still considering how this will work) Contributory JSA and ESA (still considering how these will work) Department for Work and Pensions

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Making work pay

“Universal Credit will mean that people are consistently and transparently better off for each hour they work and every pound they earn”

Iain Duncan Smith, Secretary of State for Work and Pensions

• The Government wants families to be able to manage their affairs in a manner that best reflects the demands of modern life, whether in or out of work. • A key aspect of Universal Credit will be that it should mimic work and the receipt of a salary,

to be paid calendar monthly

.

• Universal Credit is designed to ensure that it is always worth working by allowing people to keep more of their benefit in the transitional period back to work.

• Actual rates and tapers to be decided by Autumn 2012.

Department for Work and Pensions

It pays to work

I n c o 200 m e 100 0 8

Universal Credit: lone parent with two children

100 £100 Total in-pocket income Universal Credit payment £200 £300 £400 Earnings £500 £600 £700 Department for Work and Pensions

It pays to work - Real Time Information (RTI) system

9 Universal Credit payments will be reduced in stages, taking actual earnings into account at the time they are received. A Real Time Information (RTI) system being brought in by HMRC will support this, changing the way an employer notifies their employee’s earnings.

• HMRC are working with Payroll Software manufacturers to help make RTI as easy to use as possible.

• The pilot with employers using RTI starts in April 2012 - building up gradually to 300 employers during May and June 2012.

• A further 1,300 volunteer employers joining the pilot July – Sept 2012 and up to 250,000 employers will be submitting RTI by March 2013.

Department for Work and Pensions

Key dates

APRIL 2013 OCT 2013 APRIL 2014

Testing Period New claims from unemployed claimants start New claims from in-work claimants start Managed migrations start 10

2017

Managed migration activity completed Department for Work and Pensions

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Helping disabled people live full, active & independent lives

.

An introduction to

Payment.

Personal Independence

Department for Work and Pensions

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What is changing?

• Personal Independence Payment will replace Disability Living Allowance (DLA) for people of working age

from April 2013

• Retains the key features of DLA -

non means tested and non taxable payable both in and out of work

• More

objective assessment process

• Awards will be

based on

the: - individual circumstances of the person claiming - impact of their disability / health condition - extent to which they are able to live independently and participate in society Department for Work and Pensions

Why is it changing?

• DLA has been in place for almost 20 year

largely unchanged

• Personal Independence Payment will

better reflect today’s understanding

of disability which has changed a lot in 2 decades • DLA was: –

Unsustainable

in the long term – Complex and

confusing

– Used

little independent evidence

– Had

no systematic review

to make sure an award still met the claimants needs 13 Department for Work and Pensions

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When will it change?

Personal Independence Payment

is being introduced in stages: •

April 2013:

Initial pilot testing, although not in Devon and Cornwall •

June 2013:

We plan to take new claims from all claimants in all parts of the country •

Jan 2014:

Full national reassessment likely to begin •

March 2016:

All current DLA claimants of working age will have been contacted about claiming Personal Independence Payment Department for Work and Pensions

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What is PIP made up of?

• • Personal Independence Payment is

made up of

:

A Daily Living component A Mobility component

Awards will be made up of one or both of these components.

• • Each component will have

two rates

:

Standard Enhanced

The amount for each rate is still to be decided.

Department for Work and Pensions

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How will assessment work?

• Assessment for Personal Independence Payment will involve

health professionals

considering the evidence provided by the claimant and any professional that may support them on a regular basis.

• Most people will also be asked to a

face to face consultation

with this health professional as part of the claim process • The health professional will provide

advice to a benefit decision

maker at the Department for Work and Pensions • The benefit decision maker will then

use all of this information

to decide your entitlement to Personal Independence Payment Department for Work and Pensions

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What the criteria will look like?

• • • • • • The assessment criteria will: be more transparent and

objective

assess disabled people as focus on the

impact individuals

that their health condition or impairment has on their daily lives consider the individual’s

ability

activities to carry out key everyday take account of physical, sensory, mental, intellectual and cognitive

impairments

and developmental needs reflect variable and

fluctuating

conditions Department for Work and Pensions

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What’s the impact on other benefits and services?

• We intend to maintain existing passporting arrangements wherever possible •

Motability:

we are still considering how Personal Independence Payment will provide access to the Motability scheme. Department for Work and Pensions

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Employment Support Allowance

Department for Work and Pensions

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Employment Support Allowance Changes

 12 month limit for ESA (contribution based)  Makes ESA more consistent with JSA  Came into effect on 30 April 2012  Estimate that 60% of those affected will be eligible for ESA (Income based) Department for Work and Pensions

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Benefits Cap

Department for Work and Pensions

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Benefits Cap

• • • • • • April 2013 the Government will introduce a cap on the total amount of benefit. it is estimated that it will be set at £500 per week for families and at £350 per week for single adult households without children 44% of households are in the Social rented sector 69% of households have 3 or more children 63% of households in London and South East Affect 750 households across Devon and Cornwall Department for Work and Pensions

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Benefits Cap

The cap will apply to the combined income from the main out of-work benefits (Jobseeker’s Allowance, Income Support, and Employment and Support Allowance except when the Support Component is in payment); • • • • •

Universal Credit (from October 2013) Housing Benefit; Child Benefit Child Tax Credit; and Other benefits such as Carer’s Allowance .

Department for Work and Pensions

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Benefits Cap Exemptions

• The following households will be exempt from the cap: Those entitled to

Working Tax Credit

• • • • • • • Those in receipt of: Disability Living Allowance Personal Independence Payment (from April 2013) Attendance Allowance The support component of ESA Constant Attendance Allowance Industrial Injuries Disablement Benefit War Widows and War Widowers pension Claimants who have been in employment for 52 weeks or more when they claim benefit will be exempt from the cap for up to 39 weeks Department for Work and Pensions

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Lone Parent Obligations

Department for Work and Pensions

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Lone Parent Obligations

• Lone Parents will no longer receive Income Support solely on the grounds of being a Lone Parent • This will be rolled out as follows and will extend jobseeking support to more lone parents.

From 21 May 2012 for new & repeat claims those with youngest child aged 5.

From 21 May 2012 existing lone parent customers with youngest child aged 6 will begin to lose their IS entitlement.

From 20 August 2012 for existing IS claims based solely on being a lone parent where youngest child is 5.

Informing customers by letter from 22 March.

Work Focused support also available for those on IS.

Department for Work and Pensions

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Social Fund Changes

Department for Work and Pensions

The Changes

From April 2013, the Government is abolishing the current system of discretionary payments from the Social Fund. In their place in England will be a new local provision provided by Local Authorities to replace Community Care Grants and general living expense Crisis Loans. Social Fund scheme currently includes a regulated scheme made up of: • Sure Start Maternity Grants • Funeral Payments • Cold Weather Payments • Winter Fuel Payments And a discretionary scheme made up of: • Community Care Grants • Budgeting Loans • Crisis Loans 28 Department for Work and Pensions

Social Fund Reform

Community Care Grants and Crisis Loans

Community Care Grants and Crisis Loans for general living expenses (including rent in advance) will be abolished from April 2013 and replaced by new local provision. The new provision will be administered by local authorities in England and the devolved administrations in Scotland and Wales.

Crisis Loan Alignment Payments

From April 2013 Crisis Loan alignment payments and other Crisis Loans paid due to issues with benefit will be replaced by a new national scheme of Short Term Advances. This will be administered by the Department for Work and Pensions.

Budgeting Loans

Budgeting Loans will continue to be available until Universal Credit is fully rolled out. As people migrate across to Universal Credit they will have access to a new system of Budgeting Advances that will replace Budgeting Loans for Universal Credit recipients.

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Short Term Advances

Short Term Advances of benefit will replace Social Fund Crisis Loan alignment payments and interim payments of benefit from April 2013 for all benefits.

This will ensure that those facing immediate financial need when making a new benefit claim or following a change of circumstances continue to have access to some funds.

It is likely that claimants will be required to repay a Short Term Advance over a reduced period of time, when compared to Crisis Loan alignment payments.

Short Term Advances will be an advance of benefit and not a loan.

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Budgeting Loans

Budgeting Loans are intended to help claimants with intermittent expenses such as needing to buy essential items like furniture, household equipment or expenses related to starting work. Once all claimants have migrated to the Universal Credit platform, Budgeting Loans will no longer be available. • • To retain the protection currently available to benefit claimants via the Social Fund : Budgeting Advances will replace Budgeting Loans for Universal Credit claimants from 1st April 2013. Budgeting Loans will continue for legacy benefit claimants yet to migrate to Universal Credit.

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Budgeting Loans

BUDGETING LOANS BUDGETING ADVANCES

Budgeting Loans can be “topped up” to the maximum so long as a certain amount has been repaid.

Only one Advance at a time. No further Advances until it is repaid in full.

Repaid over a period of up to 104 weeks, although often less. Repaid over a maximum period of 12 months.

Is a Loan paid out of the Discretionary Social Fund.

Will be an Advance of benefit in Universal Credit. 32 Department for Work and Pensions

Implementation timeline

April 2013

– Community Care Grants and Crisis Loans will be abolished. Replacement local welfare provision will be implemented. Alignment payments and Interim payments will be replaced by Short Term Advances of benefit.

October 2013

– the introduction of Universal Credit. Introduction of Budgeting Advances for eligible Universal Credit customers to replace Budgeting Loans. However, this will be introduced from April 2013 in Pathfinder areas.

2013 to 2017

– Budgeting Loans will remain for those receiving legacy benefits until Universal Credit is fully rolled out and all customers migrate across to Universal Credit. Budgeting Advances will replace Budgeting Loans for Pension Credit customers during this time.

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Pensions Changes

Department for Work and Pensions

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The Pensions Act

• • • From April 2016, women's State Pension age will rise faster than originally planned, equalising with men's at 65 by November 2018. Between December 2018 and October 2020, men and women's State Pension ages will be increased from 65 to 66.

Under the current law State Pension age will already increase to: – – 67 between 2034 and 2036 68 between 2044 and 2046 … but the government aims to increase the State pension age sooner!

Department for Work and Pensions

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Single Tier Pension

• This will help simplify a complex, means tested system 45% of existing pensioners eligible for Pension Credit At present it will take decades to yield equal state pension outcomes for women and for low paid workers • Introduce a flat rate state pension above the basic means tested level – Go Live 2016 Department for Work and Pensions

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Auto Enrolment

• Around 7 million people are not currently saving enough for their retirement and many face significant barriers to starting to save • Starting from October 2012, millions of workers will be enrolled into a workplace pension. Those working for the largest employers will be enrolled first. Aim is that all firms implement by 1 st April 2017.

• Individuals looking for information on what automatic enrolment means for them should go to www.direct.gov.uk/workplacepension • There is a call centre available for those without internet access.

Department for Work and Pensions

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Our Digital Service

Directgov

24/7 online service

£ ?

Benefits adviser, estimates, ‘what if’ scenarios – already used by 3.2m + customers

Channel Shift

80% JSA related contacts digitalised by 2013 More vacancies online, digital job alerts, automated job matching Online changes e.g. address, payment method Digital claim process including some appointment booking – choice of access e.g. PC, smart phone Department for Work and Pensions

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Key Dates

April 2012 May 2012 August 2012 ESA (C) WRAG time-limiting Lone Parent IS Entitlement changes

(New / Repeat)

Lone Parent IS Entitlement changes (Existing) April 2013 Benefits Cap Social Fund Reform Universal Credit pathfinder Personal Independence Payment (PIP) pathfinder June 2013 PIP New Claims October 2013 Reassessment of DLA claims begins April 2014 Universal Credit (start transfer of existing claims) Incapacity Benefit reassessment complete Department for Work and Pensions

Any questions 40 Department for Work and Pensions