Welfare Reform Overview. Colleen Hamilton Redbridge Citizens Advice Bureaux

Transcription

1 Welfare Reform Overview Colleen Hamilton Redbridge Citizens Advice Bureaux

2 Agenda 1. Why What When 2. Changes to the Social Fund - What will London Borough of Redbridge Do? 3. Changes to Council Tax Benefit What will London Borough of Redbridge Do? 4. The Benefit Cap 5. Changes to Disability Living Allowance 6. The Main Features of Universal Credit 7. Sample calculations for Universal Credit

3 Why All three parties agree the benefit system needs to change because: It is costly billon for DLA alone in 2012/13 Complicated - DWP/HMRC/local authority all administer benefits and can use different criteria for eligibility Disincentive to work - people better of on benefits Keeps people in poverty - Government say 900,000 adults and children will be lifted out of poverty with their reforms The governments approach to reform has been heavily influenced by the think tank Centre for Social Justice whose chairman is the current Secretary of State for Work and Pensions Ian Duncan Smith, The Welfare Reform Act 2012 the biggest change to the welfare system in 65 years, in the main, is the result of their ideas. Please note : although the act became law on the 8 th March 2012 it s regulations will not be finalised until December 5 th As a result we are unable to give some of the details of the reforms and information given in this pack may change.

4 What The main features of the Welfare Reform Act 2012 Replacing 6 main means tested benefits and tax credits for people of working age with Universal Credit (UC) Changing some discretionary elements of the Social Fund with Local Welfare Assistance Replacing Disability Living Allowance (DLA) with Personal Independence Payments (PIP) for people over 16 Replacing Council Tax Benefit with Council Tax Support Introduction of a Welfare Benefits Cap

5 When It all starts in April 2013 and finishes end of 2017 Changes to, The Social Fund, Council Tax Benefit and the Benefit Cap will come into force April 2013 The start of the introduction of PIP (in London) - June 2013 new claims - October 2013 DLA claimants with change in circumstances - January 2014 managed transfer of everyone else (randomly selected) completed by the end of 2016 The start of the introduction of UC (in London) - October 2013 new claims in 1 region per district and change in circumstances - April 2014 managed transfer of everyone else, completed by the end of 2017

6 Changes To The Social Fund Discretionary Social Fund payments abolished Community Care Grants and Crisis Loans will be replaced with Local Welfare Assistance Funding will come from the money these benefits would have been used for but it is likely to be much less Funding will NOT be ring fenced local authorities can do with it as they please and some are considering not giving cash amounts to individuals but giving it to local voluntary charities i.e. food banks, homeless projects etc. mainly due to the difficulty with recovery Budgeting loans will be replaced with Payment on Account from UC i.e. claimant gets money for one off essentials and money is taken back out of your UC benefit Regulated elements of the Social Fund i.e. Winter Fuel Payments, Sure Start Maternity grants and Funeral Grants will stay

7 What Will Redbridge Do? At a meeting in September the London Borough of Redbridge said they will Operate some form of grant system These will NOT be loans and therefore not recoverable They are unsure of how it will be administered i.e. eligibility, how often someone can apply etc.

8 Changes To Council Tax Benefit Council Tax Benefit will be abolished and replaced with Council Tax Support Funding will be from Government but will only be 90% of the amount of the old council tax benefit bill for the area. This means the amount is fixed no matter how many people are eligible and therefore will have to be rationed It will be up to each local authority who will lose out and by how much

9 What Will London Borough Of Redbridge Do? My understanding is that after consultation the London Borough of Redbridge have decided to do the following over the next 2 years: Council Tax Support will be restricted to 95% of council tax costs for properties in bands A B and C If you live in band D and above properties claimants will only get 95% Council Tax Support for a band D property Non dependent reductions will increase from 5 to 15 per week The cap on capital will be 10,000 as opposed to 16,000 now There will be no second adult rebate No change for people of pension age (based on age for pension credit) There will be a hardship fund of 200,000 for people who are struggling (might continue after first year). The criteria for the hardship fund will be similar to that for Discretionary Housing Payments.

10 The Benefit Cap This is a benefit cap on households which will put a maximum limit on the total amount of benefits people of working age can receive. Please note the cap is calculated per household. A household for benefit purposes includes an individual, their partner and any children they are responsible for and live with them. The amount of the cap will be 350 per week for single adults 500 per week for lone parents or couples with or without children. The DWP estimate that 56,000 people will be affected by the cap of which 49% will be in London losing on average 93 per week while saving the treasury 290 million in 2013/14

11 What Benefits Are Included And Disregarded In The Benefit Cap? Included in the Cap Carers allowance Child Benefit Child Tax Credit ESA (except where support component is awarded) Housing Benefit Income Support Job Seekers Allowance Allowances for severe disablement/ maternity/bereavement/widowed parent s and mothers/guardians and widows pension Disregarded Council Tax Support Discretionary Housing Payments Social Fund Payments Pension Credit Statutory maternity/paternity/ adoption and sick pay Winter Fuel Payments Bereavement Payments Residency order Payments

12 What Benefits Make A Claimant Exempt From The Benefit Cap? If a person or someone in their household is entitled to any of the following benefits their household will be exempt Working Tax Credit (don t have to be getting it or if someone meets hours worked for WTC but their income would mean nil amount they are still exempt) Attendance Allowance ESA support component War Widow/Widows Pension DLA/PIP Industrial Injuries Armed Forces Compensation Scheme War Pension Scheme In addition to the above any one who has worked continuously for the past have a 39 week grace period during which the cap will not apply 12 months will

13 The Administration Of The Benefit Cap The Cap will be applied initially by reductions in a claimants Housing Benefit So if a claimant does not get Housing Benefit or the amount to be deducted is more than their Housing Benefit then they can t take all of it as deductions can t be taken from other benefits (although this will change with UC) Their will be no right of appeal about the cap but a claimant can ask for a review if they think the calculation is wrong Help is available via JCP to get work or via Discretionary Housing Payments to meet a shortfall in rent or help with a deposit for new accommodation. Although this is not automatic as the claimant will still have to meet the eligibility criteria for claiming DHP. THE DWP STARTED TO WRITE TO PEOPLE WHO WILL BE AFFECTED BY THE CAP IN MAY YOU MIGHT HAVE ALREADY SEEN SOME CLIENTS WITH PROBLEMS DUE TO THIS BENEFIT CHANGE. TRY AND GET YOUR CLIENTS OR SOMEONE IN THEIR HOUSEHOLD ON WTC OR ONE OF THE OTHER EXEMPT BENEFITS.

14 Changes to Disability Living Allowance Disability Living Allowance (DLA) will be abolished and replaced with Personal Independence Payments (PIP) The government estimate the number of people claiming PIP will be 500,000 lower than the figure for DLA (this figure must be viewed with caution as it is based on a sample of only 900 people) There will be no automatic transfer to PIP from DLA. Individuals on DLA will be invited to apply and have a face to face assessment if they don t apply when invited or attend the assessment they won t get PIP. If a claimant is terminally ill (6 months to live) they may not have to undergo a face to face assessment. No illness or disability will passport a claimant automatically onto PIP

15 PIP Entitlement To be entitled to PIP a person must be: Over 16 and under 65 (children under 16 will still get DLA as will people over 65 if they claimed before their 65 th birthday and have no change in illness/disability) Not subject to immigration control, be resident and present in Great Britain meaning now and for 2 out of the past 3 years and meet the Habitual Residency and Right To Reside Tests. Entitlement will end if you are out of the country for more than 4 weeks except for up to 26 weeks for medical treatment Assessed against 2 components : Daily Living Component and Mobility Component - Each component is broken down into activities 9 for Daily Living and 2 for Mobility - Each activity has a number of descriptors which are scored - There are 2 rates: 8 points standard rate and 12 points enhanced rate - Each descriptor must be satisfied for 3 months before and 9 months after making the claim. If terminally ill you will automatically satisfy and get enhanced Daily Living Component. You will not automatically satisfy the Mobility component although if you do you will get it without delay. Please note a person can only get points for 1 descriptor in each activity it is not clear what will happen if more than one descriptor is scored and or how intermittent illness/disability will be assessed

16 PIP Assessment/Points System Daily Living Component Mobility Component Standard rate 8 Enhanced rate 12 Standard rate 8 Enhanced rate 12 Activities 1 to 9 1, Preparing food (0-8) 2, Taking Nutrition (0-10) 3, Managing therapy (0-8) 4. Bathing/grooming (0-8) 5. Managing toilet needs or incontinence (0-8) 6, Dressing//undressing (0-12) 7. Communicating (0-12) 8. Engaging socially (0-8) 9. Making financial decisions (0-6) Activities Planning/following a journey (0-15) 2, Moving around (0-15) Example of Descriptors for (1) above Can plan and follow a journey unaided (0) Needs prompting for all journeys to avoid overwhelming Psychological distress (4)

17 Making A Claim Awards and Payments Initial claims online or telephone Questionnaire sent out (supporting evidence can be sent back at this stage) Health Assessor will invite most people for face to face assessment interview Health Assessor will advise DWP of the assessment. DWP will make decision on entitlement, level and length of award (2,5 or 10 years) PIP will be paid 4 weeks in arrears (unless terminally ill) PIP can not be backdated but you can make an advanced claim i.e. you can show you have already met 3 month condition and are likely to meet 9 month condition Please note decisions are yet to be made about passport benefits.

18 The Main Features of UC What is changing? UC will be a single means tested benefit replacing the main means tested benefits and Tax Credits for people who are between 18 (16/17 in certain circumstances) and pension credit age who are unemployed or in work. Which Benefits will it replace? - Income Support - Income based Jobseekers Allowance - Income related Employment and Support Allowance - Child Tax Credit - Working Tax Credit - Housing Benefit - Budgeting loans (replaced with payment on account in uc) How much will it be? Amounts are not yet finalised but are likely to be similar to current benefits. Although the amount for most disabled children will be halved and amounts for most disabled adults less as there will be no disability premium. There will be an allowance for a single person or couple plus amounts for children, housing costs, childcare costs, caring for someone and limited capability for work/work related activity What are the disregards? -Some benefits will be disregarded i.e. DLA/PIP - There will be a higher earnings disregards. The amount will depend on which of 4 groups you are in i.e. single/couple, lone parent, couple with children, disabled - You can also keep 35 pence in the pound of earnings over the previous mentioned earnings disregard. - 2 levels of total disregards depending on whether housing costs are claimed. - Capital above which no UC will be paid and income earned from capital will be as per Income Support i.e. 16,000 and 1 per every 250 over 6,000 Conditions All claimants must accept a claimant commitment they will be placed in 1 of 4 groups - no work related requirements: ESA support group, Loan parent or lead carer for child under 1, carers - Work focused interview: lone parent/care for a child over 1 under 5, foster carer child under 16 - Work preparation: ESA work related activity - All work related requirements: everyone else Part timers earning less than minimum wage for 35 hour week will be expected to look for full time work

19 The Main Features of UC What sanction will there be? Sanctions will be more severe under UC. The length and amount of a sanction will depend on the group you are in, the offence committed and frequency of the offence. Claimants will be fined 50 for not informing of a change in circumstances Offences which can result in court action will also be more severe A claimant may be able to claim a hardship payment if sanctioned but it will be recovered from UC Challenging decisions A revision will be necessary before an appeal. But there will be no time limit for revision decisions. Administration The DWP will administer UC and it will be heavily IT based i.e. claim on line, online claimant accounts. It will also be linked to HMRC to get real time data thereby making the transition between work and benefits or increase in wage etc easier Couples will have to make a joint claim in most instances Claims can be backdated for 1 month in restricted circumstances Payments will be made monthly and 4 weeks in arrears. If circumstances change during the month i.e. get work you will be classified as having worked the whole month. Self Employed Minimum assumed income for self employed people i.e. 35hrs per minimum wage

20 Calculation Examples Example 1 Lone Parent with one child No other income apart from child benefit. No savings. No health problems or disability in the family. Pays rent of 500 per month. Maximum UC: Standard monthly allowance Amount for child Housing costs 500 Total As there is no other income apart from child benefit which will be disregarded this is the monthly amount of UC payable.

21 Example 2 Single person with disability Receives contributory ESA of per month (including the work-related activity component). Also receives the lower rate care component of DLA. No other income or savings mortgage with eligible housing costs pf 225 per month. Maximum UC: Standard monthly allowance Amount for child Housing costs Total Income: ESA DLA is disregarded UC: less = per month

22 Example 3 Couple with two children One partner working and earning 1000 per month (net). No other income apart from child benefit. No savings. No health problems or disability in the family. Pay rent of 600 per month. Maximum UC: Standard monthly allowance Amount for first child 269 Amount for second child Housing costs 600 Total Income: Net earnings 1000 less Earnings disregard 247 Total 753 x 65% = Child benefit is disregarded UC: less = per month