Welfare Reform

David GrayWelfare Rights Manager

Peter McCannHead of Revenues and Benefits and

Customer Services

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Overview of presentation

• 1) Welfare agenda Dave

• 2) Changes from April Peter

• 3) Longer term changes Dave

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Welfare Reform Act 2012

• Royal Assent 8/3/12

• Biggest Change to welfare system in 60 years

• Stated intentions of Government – Make work pay - Protect the vulnerable - Fair to tax payers - Fair to benefit claimants

Expenditure savings

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Measures

• Universal Credit

• Housing Benefit Reform

• Abolition of Council Tax Benefit

• Personal Independence Payments (PIP)

• Employment Support Allowance

• Enhanced benefit sanctions

1. Bedroom Tax2. Discretionary Support Scheme3. Council Tax Reduction Scheme4. Discretionary Housing Payments5. Benefits Cap6. Council Tax Empty Property Charge

Introduction

Bedroom Tax

Bedroom Tax

One bedroom calculated for each of the following:• A single claimant or every adult couple• Any single adult aged 16 or over • Any two children under age 10• Any two children of the same sex aged up to 15• Any other child (other than a foster child or child

whose main residence is elsewhere)• A non-resident overnight carer

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Housing Benefit – Bedroom Tax

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• Housing Benefit is reduced by making a reduction to eligible rent

- 14% one room (2,000)

- 25% two rooms (600)

• 2,600 households affected

• Total Housing Benefit reduction is £1.8m

Housing Benefit – Bedroom Tax

Exemptions:• Temporary accommodation• Supported accommodation• Claimant or partner qualifies for state pension credit Protections:• Recent bereavement – 12 months• New claim – 13 weeks 10

What is Halton BC doing?

• Supplied lists to RSLs of households affected• December 2012 - Council wrote to claimants informing of under

occupancy• Number of bedrooms & household composition• Amount of Housing Benefit reduction• Claimants requested to inform HBC if household composition is

incorrect• Over night care cases identified• Disabled adaptations identified

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Non Dependants

• Where are they?

Discretionary Support Scheme

• From April Halton Council has a new scheme which may or may not be able to help you

• From April 2013 the Discretionary Social Fund will end

• Not a like for like replacement

Background

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• As a result of the Welfare Reform Bill, the national Discretionary Social Fund, currently administered by DWP, will be disbanded from April 2013

• Crisis Loans for general living expenses and Community Care Grants will be replaced by new local assistance schemes to be administered by Local Authorities

• Expected that the grant to LAs will be based on the equivalent social fund spend 2012-13 (£178m) But Halton £100k down on 2011/2012!

• Will be non-ring fenced

• No new statutory duties to provide local scheme

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Regulated scheme • Sure Start Maternity Grants• Funeral Payments• Cold Weather Payments• Winter Fuel Payments

Discretionary scheme • Budgeting Loans • Crisis Loans

-Alignment Payment

-General living expenses• Community Care Grants

Changes to the Social Fund Scheme from April 2013

Remains with DWP

Locally designed &

administered provision

Awards 2011/12

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April to Sept 2011

Updated Full year information

Crisis Loan Items

Crisis Loan Living Expenses Actual Total

Number of Applications received 730 4,940 5,670 Total expenditure £35,300 £213,900 £249,200 Number of Awards 230 3,800 4,030

April to Sept 2011

Updated Full year information

Community Care Grants- Actual

Number of Applications received 2,200 Total expenditure £504,800 Number of Awards 1,000

• No cash• Freephone number• List of considerations reduced• Online applications for support in community

Key Message

• Discretionary Social Fund now no longer exists

• Halton Council may be able to help you

Council Tax Support Scheme

(Abolition of Council Tax Benefit from April 2013)

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Expenditure:Housing Benefit £52mCouncil Tax Benefit £11m

Caseload:Housing Benefit 13,014Council Tax Benefit 15,305

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Current Position

Current Council Tax Benefit Scheme

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Caseload CTB Expenditure

Pensioners:

Passported 4,338 £3.45m

Non passported 2,085 £1.24m

6,423 £4.69m

Working Age:

Passported 6,435 £4.94m

Non passported 2,447 £1.48m

8,882 £6.42m

Total 15,305 £11.11m

Council Tax Benefit caseload & expenditure

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Current Position

• Demand led

• Funding- Councils are reimbursed 100% of the full amount of Council Tax Benefit paid out correctly

• From April 2013 Council Tax Benefit will be abolished and replaced by a locally designed scheme

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A Local Scheme - BUT…..New local scheme should:

• Protect pensioners ( 41% of Halton’s benefit caseload are pensioners)

• Take into account vulnerable groups – responsibilities regarding child poverty, the disabled, homelessness and equalities

• Incentivise people to work

But:

• There will be a 10% reduction in funding (equates to £1.4m in Halton)

• The pensioner protection increases the burden to around 18% for working age claimants

• Any expenditure above the cash specific sum must be met pound for pound by LA

• The more people protected the higher the burden

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The Scheme

• Reduction in non pensioner benefit of a % amount to be deducted at the end of the calculation

• The % amount to be determined by Members each year once the grant details have been received

• For 2013/2014 it will be 21.55%

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The Scheme

• The % reduction ensures that the cut is shared equally

• Retaining present system ensures the in-built protection for various groups is maintained

• Small sums will be billed ( poll tax)

• Average between £2 & £4 per week

• People billed for the first time

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General Issues

• Increased cost of recovery

• Small amounts soon become big

• Difficulty in gauging future demand & subsequent financial impact

• 3 schemes will be operating

• Confusion

• Have written to 9,000 households at the start of the year

Key Message

• Don’t ignore the Council Tax Bill

• Get in touch with the Council

Benefits Cap

Benefit Cap

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• As part of the Welfare Reform Bill, a cap on the maximum amount working- age households can claim in benefits will be introduced from April 2013 (now summer 2013)

• This is to prevent claimants receiving more income from benefits than the average wage paid to those who are working.

• The cap is set at £26k per annum (£500 per week for households with children or £350 per week for single claimants without children).

• Some benefits are excluded such as Working Tax Credits and Disability Living Allowance.

• Department for Work and Pensions (DWP) have written to all households that they think may be affected.

• DWP have identified 104 households in Halton that may be effected (have incomes of between £26k and £46k).

• DWP have wrongly identified some clients as being effected.

Benefit Cap

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• Until the implementation of Universal Credit, the cap will be applied to Housing Benefit

• Owner Occupiers will not be effected until transfer to Universal Credit

• Claimants likely to see it as a reduction in Housing Benefit rather than a reduction in overall benefits

• Have written to 100 people

Discretionary Housing Payments

• Amount increased from £87k to £282k • Bedroom Tax alone is £1.8m shortfall

• Publicity states that this will be the safeguard!

Discretionary Housing Payments

Council Tax

Council Tax

• Changes to charges for Empty Properties

• Change to charges for Second Homes

• Everyone currently receiving exemptions have been notified

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Final Message

• Impact on individuals - Social Fund/Bedroom Tax/ CTRS – which do I pay?

• Impact on Halton’s wider community- (less money in economy)

• Collection issues for Council/RSLs

• Confusion & uncertainties for everyone as Government amends legislation

• ‘It won’t affect me’ syndrome - £100m reinforces this

• Capacity issues of Council as its all in one area

• Get in touch

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Current System Reformed System

Income related JSAIncome related ESAIncome Support (inc SMI)Working Tax CreditsChild Tax CreditsHousing Benefit

Universal Credit

Disability Living Allowance Personal Independence Payment

Pension Credit, Child Benefit, Carer’s Allowance (will remain)

Council Tax Benefit ( to be replaced)

Contributory JSA and ESA ( now has 52 week limit)

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Universal Credit

• Single means tested benefit

• Payable in or out of work

• Initially for new claimants- stock transfer to follow

• Oct 2013 for new claims, April 2014 to start transfer ( by Oct 2017)

• Transitional Protection

• Pilots being undertaken

• Digital agenda

Universal Credit

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UNIVERSAL CREDIT – RISKS/IMPACTS

• Universal Credit will be paid directly to the customer.

• Customer will need a bank account. (preferably one that will accept Direct Debits for rent payments.)

• Will be paid monthly in arrears and to one person if part of a couple.

• As yet still no definition of ‘vulnerable’ for payment to go to landlord.

Potential substantial risk for increase in rent arrears

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Personal Independence Payment (PIP).

PIP

• Replaces DLA for new claimants of working age from April 2013-10,600 benefit claimants in Halton on DLA

• Points based

• Many currently entitled to DLA would not get PIP

• Intention is to save money

• Disproportionate effect on Halton

• North West pilot

PIP

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Wider Reforms• Tax Credits

• Eligibility criteria made harsher

Employment Support Allowance

• Existing Incapacity claimants to be assessed against harder criteria for ESA.

• Substantial proportion move onto Job Seekers Allowance

Child Benefit Reform

Restrictions for Higher Rate Taxpayers

The Biggest Impacts

The Benefit Cap

Summer 2013

Council TaxReduction

Scheme April 2013

DLA/PIPApril 2013

Universal Credit –

October 2013 -2017

Incapacity Benefits

migrating to ESA

2011-2014

Non Dependant Deductions

increased from 2011 -2014

The Bedroom Tax - Under occupation April 2013

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Summary of Welfare Reform

• A lot covered very briefly and very complex

• Deserves more detail

• Full detail of changes not yet available

• Intentions – saving money - less generous to benefit claimants

• Help available through Welfare Rights Service (tel: 0151 511 8930)