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Welfare to Work Convention
Manchester 9 and10 JulyUniversal Credit - breakout sessions
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The Reform Story
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Overview (1) The Reform Story
“A system that was originally designed to support the poorest in
society is now trapping them
in the very condition it was
supposed to alleviate”
Iain Duncan-Smith, Secretary of State for Work and Pensions
• The Welfare Reform Act introduces the most fundamental reforms to the social security system for 60 years. It aims for a simpler, fairer benefits system and to ensure work pays.
• Money needs to be targeted more effectively; we have to ensure that support continues to be available to those who need it most. Employment must be an aspiration for everyone who is able to work.
• Our services need to change to reflect the diversity and complexity of the issues that many people in society face today, requiring more joined-up working across government and beyond.
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Overview (2) The Reform Story
• We are introducing greater fairness to the welfare and pensions systems by making work pay and reinvigorating incentives to save for retirement, whilst protecting the most vulnerable – disabled people and pensioners.
• The nation’s finances also need to be put on a more sustainable footing – while this means making difficult decisions on tax and spending, we believe it is possible to do this and help people lift themselves out of poverty, and stay out of poverty, through work and saving backed by the right support and encouragement.
• Our Reforms will:- ensure people are always better off in work than on benefits- provide unconditional support for disabled people that need it- prepare the long term unemployed for the world of work- ensure people receive a fairer pension and are encouraged to save for retirement- support separating families.
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• January The Shared Accommodation Rate was extended to under 35’s
• March Social Justice: Transforming Lives published
• April Jobseeker’s Allowance Domestic Violence Regulations came into force
» Local Housing Allowance rates frozen
• May Time limiting for Employment and Support Allowance claimants in the Work Related Activity Group came into effect
Lone Parent Income Support entitlement changed for new and repeat claims
Direct mail activity alerting claimants to the fact they may be affected by the benefit cap began
Tougher benefit fraud administrative penalty came into force
The Story so far: January - May 2012 The Reform Story
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• May-November Lone Parent Income Support entitlement changed for existing claims
• June Direct Payment Demonstration Projects began
• July Local authority/DWP data sharing regulations to support welfare services came into effect
• Autumn Universal Credit local authority pilots began
• October The revised Jobseeker’s Allowance sanctions regime implemented
Civil penalty for negligently giving incorrect information / failing to report a change in circumstances came into force
• December The revised Employment and Support Allowance sanctions regime was implemented
2012 child maintenance scheme opened on a pathfinder basis
The Story so far: June - December 2012 The Reform Story
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• January Single Tier Pensions White Paper published
• April Universal Credit Pathfinder – start of early Universal Credit rollout in Manchester and Cheshire areas
Benefit cap came into force for new and existing claimants in Bromley, Croydon, Enfield and Haringey local authorities
Removal of the spare room subsidy came into force
Controlled start for new claims to Personal Independence Payment for those living in the North West and parts of the North East of England
Introduction of Localised Support for Council Tax
Community Care Loans and Crisis Grants abolished and new Local Welfare Provision introduced
Publication of Social Justice: transforming lives – one year on
• July Roll-out of Universal Credit in Wigan
The Story so far: 2013 The Reform Story
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Social Justice
• The government published its Social Justice strategy “Transforming Lives” in March 2012.
• Previous approaches to tackling disadvantage and social exclusion have focused on increasing income levels of poorer families to bring them above a notional poverty line.
• More working age adults live in poverty than ever before.
• Social Justice sets out new approach to understanding and tackling the root causes of poverty rather than its symptoms.
• Social Justice principles will increasingly influence our overall direction, our policies, and the delivery of DWP services.
Social Justice
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Welfare Reform and Universal Credit
A policy
A benefit
A gateway
A platform
An ambition
that tackles welfare dependency, poverty and worklessness by making work pay
that replaces a complex system of working-age (in/out work benefits and credits) with the Universal Credit and a single set of rules
that together with our employment support programmes, helps people into work
largely self service; internet-age and digital - whilst continuing face-to-face support for those who need it
transforming lives and society through work
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• Universal Credit (UC) replaces six in work and out of work benefits
• UC is formed around a new ‘claimant commitment’ which sets out what is expected in return for assistance
• Claimants will be able to claim their benefits online
• A single payment will be made to a household rather than an individual. This will include housing costs. It will be paid monthly, in arrears.
• As claimants earn more money, financial support will be withdrawn at a slower rate than is the case under the current system.
• Local support will be available to help claimants where appropriate, through DWP and local authority delivery partnerships.
Universal Credit – the service
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Andy Chiga and Felicity Ridgway10 July 2013
Welfare to Work Convention
Personal Budgeting Support
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REQUIREMENT FOR A PERSONAL BUDGETING
STRATEGY IS DRIVEN BY THESE CHANGES
Context - Claimant Preparation
Housing costs direct to tenant
Single payment to household
Monthly Payment
We want to help people to be able to manage their own finances successfully, whether they arein or out of work
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Personal Budgeting Support – overview
Alternative Payment
Arrangements
Moneyadvice
Financial products
Claimants managing their
money
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Alternative Payment Arrangements
• For a minority of claimants, alternative payment arrangements may be required; these might include – paying the rent directly to the landlord– making more frequent than monthly payments – splitting the payment within the household
• We will also have the option to make rent payments direct to the landlord if a claimant reaches a certain level of rent arrears.
• These alternative payment arrangements will be considered on a case by case basis and assessed on their individual merits.
• When considering alternative payment arrangements, a series of Tier 1 and Tier 2 factors indicating potential support needs will be used to help to decide if these arrangements are appropriate to an individual.
• The decision about whether an alternative payment arrangement is suitable will be made by a UC adviser through the PBS process. Information from a third party i.e. the claimants’ representative, and / or their landlord can be used to inform a decision.
• Subject to a review, the goal being that claimants move to the standard payment over time supported by money advice.
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Alternative Payment Arrangements – consideration factors
Tier One factors – Highly likely / probable need for alternative payment arrangements
• Drug / alcohol and / or other addiction problems e.g. gambling • Learning difficulties including problems with literacy and/or numeracy• Severe / multiple debt problems • In Temporary and / or Supported accommodation• Homeless • Domestic violence / abuse• Mental Health Condition• Currently in rent arrears / threat of eviction / repossession• Claimant is young either a 16/17 year old and / or a Care leaver• Families with multiple and complex needs
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Alternative Payment Arrangements – consideration factors
Tier Two factors - Less likely / possible need for alternative payment arrangements
• No bank account • Third party deductions in place (e.g. for fines, utility arrears etc)• Claimant is a Refugees / asylum seeker• History of rent arrears• Previously homeless and / or in supported accommodation• Other disability (e.g. physical disability, sensory impairment etc)• Claimant has just left prison• Claimant has just left hospital• Recently bereaved• Language skills (e.g. English not spoken as the ‘first language’).• Ex Service personnel• NEETs - Not in Education, Employment or Training
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Money advice
Money advice will include:– Online budgeting tools for claimants who can help themselves - such as those offered
by Money Advice Service and Citizens Advice.– Advice services offered by external organisations for those who need more support
with, for example, getting a bank account or doing a monthly budget plan.
• Advice will be delivered through online, telephone and face-to-face channels by expert providers at a national and local level through the Local Support Services framwork.
• A personal planner is available on gov.uk to help claimants understand and prepare for financial changes arising from the introduction of Universal Credit. It asks claimants a set of questions about their readiness for claiming Universal Credit and, depending on the answers given, sets out an individual action plan.
• We are also trialing the new concept of a Budgeting Club for new and existing claimants. This will provide face to face practical help to claimants, initially in a group setting and subsequently on a one to one basis if needed.
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Financial Products
• 75% of people are paid earnings monthly in arrears. Monthly payment of benefit will prepare households for the reality of budgeting on a monthly income, will ease the transition into work, and will make it easier for households to take advantage of cheaper tariffs for essential costs such as utility bills.
• The majority of Universal Credit claimants will continue to be paid through mainstream current or basic accounts.
• Having access to a transactional account will enable claimants to make electronic payments out of the account – such as Direct Debits or standing orders – for bills such as rent, gas and electricity.
• Up to 1.3 million potential UC claimants currently do not use a transactional bank account to manage their benefit payments. Most of these individuals currently use a Post Office Card account (POCa) which does not offer transactional facilities.
• We are looking at ways to make accounts with budgeting functionality, such as ‘jam jar’ accounts, more widely available. We are consulting with financial providers across the private, social and third sectors and considering the best ways to make these types of products more available.
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PBS initial filter
APA data gather
Agrees Claimant
Commitment
PBS filter 2
PBS filter1
PBS provision
UC claim continues
Signpost to MAS
Yes to any
No to all
APA decision& review set
Implement APA
PE
No PBS action
No PE
UC paid
Refer to PBS provider where appropriate
Notify APA decision
To quickly filter out those who
need no support or can self serve
To identify those most likely to
need APA
To confirm money advice is needed
ClaimsUC
Completing the APA data gather
Glossary:• APA – alternative payment arrangement• MAS – Money Advice Service• PBS – personal budgeting support• UC – Universal Credit
PBS initial filter
APA data gather
Agrees Claimant
Commitment
PBS filter 2
PBS filter1
PBS provision
UC claim continues
Signpost to MAS
Yes to any
No to all
APA decision& review set
Implement APA
PE
No PBS action
No PE
UC paid
Refer to PBS provider where appropriate
Notify APA decision
To quickly filter out those who
need no support or can self serve
To identify those most likely to
need APA
To confirm money advice is needed
ClaimsUC
Completing the APA data gather
Glossary:• APA – alternative payment arrangement• MAS – Money Advice Service• PBS – personal budgeting support• UC – Universal Credit
The PBS High Level Design (Pathfinder)
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01/01Date of Claim
+7 days
1st UC PaymentCalc/notification
to claimant:01/02
1st UC Payment
Received by Claimant:
07/02
Regular UC Assessment Period
2nd UC PaymentCalculation:
01/03
2nd UC PaymentReceived by Claimant:
07/03
UC Payments
30/0 28/02
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More Frequent Payments: bi-monthly
01/01Date of Claim
+7 days31/01 28/02
½1st Payment (a)Received by Claimant:
07/02
½2nd Payment (a)Received by Claimant:
07/03
Regular UC Assessment Period
½3rd Payment (a)Received by Claimant:
07/041st Payment (b)
Received by Claimant:
21/10
2nd Payment (b)Received by Claimant:
22/03
(14 days) (14 days) (15 days) (16 days)
31/03
1st UC PaymentCalc/notification
to claimant:01/02
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UC Advance: new claims
• A claimant can request an advance of up to 50% of their indicative UC award.• The advance can be claimed at any point during the first month and will be issued via BACS after 3 days.• The advance will be recovered from UC payments in equal deductions over the following 6 months.
+7 days31/01 28/02
Regular UC Assessment Period
(35 days)
1st payment:£1000
2nd payment:£1000
Standard Monthly PaymentPayment minus repayment of UC advance(new claim)
UC Advance(up to 50%)£500
£926.67 £926.67
(3 days)Based on an indicative claim of £1000 pcm
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UC Advance: benefit transfers
• A claimant can will be offered an advance of up to 50% of their indicative UC award.• Our current assumption is that the advance will be issued half way through the initial claim period. • The advance will be recovered from UC payments in equal deductions over the following 12 months.
+7 days31/01 28/02
Regular UC Assessment Period
(19 days)
1st payment:£1000
2nd payment:£1000
Standard Monthly PaymentPayment minus repayment of UC advance(benefit transfer)
UC Advance(up to 50%)£500
£958.34 £958.34
(19 days)Based on an indicative claim of £1000 pcm
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Thank you and any questions?