An overview of welfare reform in London Kate Bell London Campaign Co-ordinator Kbell@cpag.org.uk www.cpag.org.uk
A long list of welfare reforms 1 Change Who will it affect Who will implement this Date of change implementation Migration from Incapacity Incapacity Benefit claimants Jobcentre Plus 2010-2014 Benefit to Employment and Support Allowance From April 2011 – National caps on Local All LHA claimants Local Authorities who Housing Allowance (LHA) administer Housing Benefit, applies to new depending on property size until the introduction of claimants, and on the Universal Credit which anniversary of existing includes housing costs claimants tenancies Increases in non-dependant All LHA claimants with non- Local Authorities who In April 2011, and deductions dependants living with them administer Housing Benefit, again in April 2012. until the introduction of Universal Credit All LHA claimants April 2011 Removing the £15 excess that Local Authorities who LHA claimants could keep if administer Housing Benefit, their rent was below LHA rates until the introduction of Universal Credit
A long list of welfare reforms 2 Change Who will it affect Who will implement this change Date of implementation Setting LHA rates at the 30th percentile All LHA claimants Local Authorities who administer From October 2011 of rents in each Broad Rental Market Housing Benefit, until the Area rather than the median introduction of Universal Credit Shared accommodation rate applies to All LHA claimants Local Authorities who administer From January 2012 single tenants up to 35 years old (rather Housing Benefit, until the than as previously those up to 25 years) introduction of Universal Credit Tax credits can only be claimed by Low income HMRC From April 2012 couples when they work over 24 hours a working families week. Previously the minimum hours claiming tax credits level was 16. All LHA claimants Uprating LHA by the Consumer Price Local Authorities who administer From April 2013 (rents Index rather than by increases in rents Housing Benefit, until the frozen from April 2012 in introduction of Universal Credit preparation) Introduction of ‘under - occupation’ From April 2013 Housing Benefit Local Authorities who administer penalties in the social rented sector claimants in the Housing Benefit, until the (‘Bedroom tax’ Social Rented introduction of Universal Credit Sector
A long list of welfare reforms 3 Change Who will it affect Who will implement Date of this change implementation Localisation of the Social Fund All local residents Local Authorities April 2013 Localisation of Council Tax Benefit All local residents Local Authorities April 2013 The Benefit Cap (no individual will be All benefit claimants Local Authorities who April 2013 able to claim more than £350 benefits a administer Housing week, and no family will be able to Benefit, until the receive more than £500). introduction of Universal Credit Introduction of Personal Independence Disabled people receiving Jobcentre Plus April 2013 until 2016 Payment (replacing Disability Living Disability Living Allowance Allowance) Introduction of Universal Credit All benefit and tax credit claimants Department for Work and October 2014 until (replacing most other means tested Pensions, working with 2017 benefits) Local Authorities
3 major changes to housing for families 1:LHA changes • LHA is Housing Benefit paid to tenants in Private Rented Sector. • Rates now set at 30 th percentile of rents, not 50 th and uprated by CPI not rental values. • + total caps on rents: • £250 for a one bedroom property • £290 for a two bedroom property • £340 for a three bedroom property • £400 for a four bedroom property.
3 major changes to housing for families: 2 the Benefit Cap • From April 2013, the total weekly benefits that a household can receive will be limited to £350 per week for single people or £500 per week for single parents and couples. • Exemptions if working (nb WTC for couples now only available if working 24 hours). • Initially applied through Housing Benefit, then through Universal Credit. • No exemptions for families in Temporary Accommodation.
3 major changes to housing for families: 3 The Bedroom Tax • The size criteria will restrict housing benefit to one bedroom for each person living as part of a household, with the following exceptions: • Children aged under 16 of same gender must share a bedroom; • Children aged under 10 must share, regardless of gender; • Disabled tenants who have a non-resident overnight carer can have an extra bedroom.
Impacts in London • London Councils research : 133,000 workless households in London, 20% of the total will be unable to afford their current rent as a result of either the household or LHA cap • 11% of workless households, some 73,000 in total, would experience a shortfall in their benefits against their living and housing costs as a result of the household benefit caps. • Almost two-thirds of these households will face a shortfall equivalent to more than 10 per cent of their living cost benefits. Over a third face a shortfall above 20 per cent and one in six, of over 30 per cent. • The household cap has a disproportionate impact on families and on larger families in particular: e.g. 1/3 single parents with 3 children unable to afford rent, ½ of couples with 3 children unable to afford rent. • DWP : 54 per cent of households affected by benefit cap are in London. Source: HBAI, 2009/10, IFS 2011
Responses from families? • Government aims: − Move people into work − Decrease rents − Tackle overcrowding −Increase ‘fairness’
Responses from families? − Move people into work? Barriers include childcare costs – 23% higher in London − Decrease rents? No sign yet that rents coming down. Affordability in outer boroughs also decreasing. − Tackle overcrowding? Some families may move into smaller accommodation to stay in borough − Increase ‘fairness’ ? Families will make trade offs: rent/heating/eating Only practical response may be moves out of London – impact on access to services, social networks, employment?
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