Learn with us. Improve with us. Influence with us www.cih.org UK Summer Budget Briefing Sam Lister, Policy & Practice Officer, CIH
Content Budget summary savings and previous reforms HB caseload and UC roll out The individual measures (ex-cap) The cap and modelling the changes Devolution Any questions Learn with us. Improve with us. Influence with us www.cih.org 2
Budget summary & UC reform Learn with us. Improve with us. Influence with us www.cih.org
Budget welfare cuts Description April 2016 million New and existing awards April 2017 million Freeze working age benefits and LHA for 4 years 90 940 Reduce benefit cap to 20,000 100 310 Reduce TC threshold TC and UC work allowance 2880 3060 Increase TC taper rate to 48% 1475 1035 Limit backdating in HB to 4 weeks 10 * New claims only Limit child element in TC /UC to 2 children 315 Remove family element/ premium in TC/UC/HB 220 410 End HB for most out-of-work 18-21 year olds 25 35 Abolish WRA component in ESA 55 Learn with us. Improve with us. Influence with us www.cih.org 4
Weekly net earnings & benefits (ex CTR) Current & UC compared 600.00 500.00 400.00 Earnings plus basic benefits (excluding CTRS) HB/WTC/CTC 300.00 200.00 100.00 Earnings plus basic benefits (excluding CTRS) UC 0.00 Gross weekly pay ( ) Couple, two children, one earner, rent 75.00, council tax 23.00 Before July 2015 Budget changes Learn with us. Improve with us. Influence with us www.cih.org 5
General observations Designed not result in direct losses New claims and failure to uprate Existing awards much less harder hit No attempt at external policy justification Target large families Mainly non-housing cost income Applies to in-work and out-of-work families Work does not pay as much but gap between existing benefits and UC is maintained Learn with us. Improve with us. Influence with us www.cih.org 6
General observations Some of the smallest savings are likely to cause the biggest disruption End help with housing costs for 18-21 year olds Benefit cap Mainly losses to household income rather than direct help with rent Potential losses to household income far greater than bedroom tax Learn with us. Improve with us. Influence with us www.cih.org 7
The individual measures Learn with us. Improve with us. Influence with us www.cih.org
End UC HCE for 18-21s New claims of UC or UC HCE from April 2017 Does not affect those with children or in work Grace period if recent work Exempt if vulnerable (SAR rules?) 3660 social tenants 1030 private sector tenants Learn with us. Improve with us. Influence with us www.cih.org 9
4 year benefits freeze April 2016 No April uprating for 4 years JSA, ESA, IS, CTC, WTC personal allowances and child benefit affected Private rented LHA rates also frozen in HB Estimated from OBR forecasts (single 25+) Year 1 and 2: 0.20 and 0.95 per week Year 3 and 4: 2.00 and 3.55 per week Learn with us. Improve with us. Influence with us www.cih.org 10
Limit child element to two Limit child element in CTC/UC to two Equivalent allowances in HB affected Child born after 5/4/17 or new claims Transitional protection if existing award with an interruption of 6 months or less Lose 53.46 for each other child in TC If on partial HB lose also up to 8.74 per child Learn with us. Improve with us. Influence with us www.cih.org 11
Abolish the family element End family element in CTC /UC Family premium in HB abolished Child born after 5/4/17 or new claims CTC/UC HB new born or new claims from April 2016 April 2016: Up to 11.34 from partial HB April 2017: 10.48 from CTC and up to 4.52 in HB 6.81 from UC Learn with us. Improve with us. Influence with us www.cih.org 12
TC taper from 41% to 48% April 2016 All claims not on maximum TC Helps keep UC ahead of TC For partial HB marginal tax rate Rises from 86% to 88% (HB/CTC) Rises from 94% to 95% (HB/CTC/CTR) Learn with us. Improve with us. Influence with us www.cih.org 13
TC /UC work allowances April 2016 for all TC/UC claims No further cash loss if migrated onto UC TC tapers away after 74 instead of 123 Loss rises to 23.72 then further 7% for each 1 UC work allowances Childless non disabled reduced to zero All other households reduced to 25.61 Existing UC allowance worth up to 25.61 if work part-time, 16.65 if full time Learn with us. Improve with us. Influence with us www.cih.org 14
The cap and modelling Learn with us. Improve with us. Influence with us www.cih.org
Couple no children 350.00 300.00 250.00 200.00 150.00 100.00 HB and tax credits 2015 UC 2015 HB and tax credits 2017 UC 2017 50.00 0.00 Couple one earner, rent 75.00 July 2015 Budget changes Learn with us. Improve with us. Influence with us www.cih.org 16
0.00 30.00 60.00 90.00 120.00 150.00 180.00 210.00 240.00 270.00 300.00 330.00 360.00 390.00 420.00 450.00 480.00 510.00 540.00 570.00 600.00 630.00 660.00 690.00 720.00 750.00 780.00 810.00 840.00 Couple two children 800.00 700.00 600.00 500.00 400.00 300.00 HB and Tax credits 2015 UC 2015 HB and tax credits 2017 UC 2017 200.00 100.00 0.00 Couple, two children, one earner, rent 75.00 July 2015 Budget changes Learn with us. Improve with us. Influence with us www.cih.org 17
0.00 30.00 60.00 90.00 120.00 150.00 180.00 210.00 240.00 270.00 300.00 330.00 360.00 390.00 420.00 450.00 480.00 510.00 540.00 570.00 600.00 630.00 660.00 690.00 Couple 2 children 70.00 60.00 50.00 40.00 Couple two children, 2015 to 2017 compared 30.00 20.00 Net loss HB (2015/2017) Net loss UC (2015/2017) 10.00 0.00-10.00 Couple, two children, one earner, rent 75.00, July 2015 Budget changes Learn with us. Improve with us. Influence with us www.cih.org 18
Couples Couple 2015 and 2017 compared 25.00 20.00 15.00 10.00 Net loss HB (2015/2017) Net loss UC (2015/2017) 5.00 0.00-5.00 Couple, one earner, rent 75.00 July 2015 Budget changes Learn with us. Improve with us. Influence with us www.cih.org 19
Benefit Cap Start April 2016 phased Single: from 350 to 258 per week Couple/lone parent: 500 to 385 per week More affected in current system because benefit income is higher (TC/HB cuts are mainly new claims only) Housing 3 child family in PRS becomes difficult Scottish concession on UC payment? Learn with us. Improve with us. Influence with us www.cih.org 20
per week The cap 2017 450.00 400.00 350.00 300.00 195.60 128.44 114.74 101.04 250.00 200.00 269.76 106.92 106.92 106.92 150.00 100.00 184.59 53.46 20.70 34.40 48.10 61.80 50.00 73.10 114.85 114.85 114.85 114.85 114.85 0.00 Single Couple Couple + 1 Couple + 2 Couple + 3 Couple + 4 JSA Child Benefit Child Credits Maximum Housing Costs Learn with us. Improve with us. Influence with us www.cih.org 21
PRS cap 2017 system 90 80 70 60 50 40 30 20 2 bed Couple 2 child 2 bed Lone parent 2 child 3 bed Couple 2 child 3 bed Lone parent 2 child 3 bed Couple 3 child 3 bed Lone parent 3 child 10 0 Learn with us. Improve with us. Influence with us www.cih.org 22
PRS effect of cap 2015 system 160 140 120 100 80 60 40 20 2 bed Couple 2 child 2 bed Lone parent 2 child 3 bed Couple 2 child 3 bed Lone parent 2 child 3 bed Couple 3 child 3 bed Lone parent 3 child 0 Learn with us. Improve with us. Influence with us www.cih.org 23
Other measures Seven UC waiting days (3 August 2015) HB backdating limited to 4 weeks (April 2016) SMI limit maintained at 200,000 (April 2016) SMI becomes a loan (April 2018) UC lone parent work conditionality minimum child age 3 years (April 2017) ESA work related activity paid at JSA rate in new claims ESA/UC. Loss 29.05 (April 2017) Learn with us. Improve with us. Influence with us www.cih.org 24
Devolution Learn with us. Improve with us. Influence with us www.cih.org
Scotland Bill powers? UC payment powers Frequency Single household payment Payment of HCE to landlord as standard Power to vary UC HCE calculation Power to vary DLA, PIP, AA Power to top up reserved benefits Support for unemployed Regulated social fund Learn with us. Improve with us. Influence with us www.cih.org 26
Scottish income tax Existing UK bands reduced by 10p Scottish IT applied to all Scottish tax payers in main UK bands Block grant reduced proportionately Changes to UK bands affect Scottish revenues Higher proportion of Scottish tax payers in income bands up to 50k Lower proportion in income bands 50k and above Learn with us. Improve with us. Influence with us www.cih.org 27
Budget: Scotland 2012 Expenditure: Scotland million Social security 17,770 Retirement pensions 6,783 Child benefit 920 Tax credits 2,275 Housing benefit 1,789 DLA & AA 1,939 Incapacity /ESA 1,123 Health 8,862 Education 7,807 Fire, police 1,300 Housing 300 Public sector pensions 5,437 Rest of Scottish block 10,071 Rest of AME 226 Defence, foreign etc. 4,320 Total Scotland 56,093 Learn with us. Improve with us. Influence with us www.cih.org 28
Conclusions Learn with us. Improve with us. Influence with us www.cih.org
Conclusions Cuts mainly to non-housing costs but to money in householders pocket Make 2010 cuts look minor by comparison Some of the smallest cuts are the most damaging Undermine tax credits so that UC stays ahead Devolution powers are unlikely to fill the gap Devolved taxation is double edged sword Learn with us. Improve with us. Influence with us www.cih.org 30
Any questions? Learn with us. Improve with us. Influence with us www.cih.org