Welfare Reform Act 2012
Welfare Reform Act 2012 • One of Government’s flagship Acts and part of their ongoing substantive reform. • Received Royal Assent on 8 th March this year. • Biggest Change to welfare system since the 1940s. • Aims at simplification of benefit system, improve incentives to work and cut welfare bill by £18bn by 2015.
Overview • Merging of several benefits into Universal Credit • Changes to Housing Benefit • Benefit Cap • Changes to Employment Support Allowance • Transformation of Disability Benefits • New responsibilities for Local Authorities around Council Tax Benefit and Social Fund Changes • Expected to impact around 1/3 of Halton residents
Making work pay “Universal Credit will mean that people are consistently and transparently better off for each hour they work and every pound they earn.” Iain Duncan Smith, Secretary of State for Work and Pensions • The Government wants families to be able to manage their affairs in a manner that best reflects the demands of modern life, whether in or out of work. • A key aspect of Universal Credit will be that it should mimic work and the receipt of a salary. • Universal Credit is designed to ensure that it is always worth working by allowing people to keep more of their benefit in the transitional period back to work.
Universal Credit • A single benefit to be paid both in and out of work. • Replaces Income Support, Income Based JSA, income related Employment Support. Allowance, Housing Benefit, Child Tax Credit and Working Tax Credit. • Paid via a single monthly payment unlike current fortnightly arrangements. • Will be a mostly online claims system.
Universal Credit • Will require claimants to sign a new claimant commitment setting out expectations and requirements as well as outlining sanctions. • Amount of Universal Credit will depend on claimants income level and other family circumstances. • Single taper rate and levels of disregard will be introduced to broadly ensure work pays. • Will be rolled out in phases from 2013.
Universal Credit – why a digital service? • The service will be digital by default to be: – available : not limited to office or contact centre hours – flexible : helping people navigate the system – responsive : can be rapidly improved in light of user feedback – informative : giving a single, integrated picture based on up-to-date information, including latest earnings – integrated : developing over time to join up work and benefit services, and forming a core part of government’s online offer – accessible : designed from the outset to meet the needs of a wide range of users. • digital because the future is digital : – employers expect digital skills for almost all jobs – mobile devices are more prevalent and powerful – people can save money by accessing online services. • But recognise that some claimants will need help to use the online service - other channels will be available for the minority who need them, mainly phone, but also face-to-face or post.
Childcare • Support for Childcare will be absorbed into Universal Credit whilst retaining most of current structure. • Childcare payment limits will be calculated monthly rather than weekly. • Parents will be able to recover childcare costs of 70% up to a limit of £760 for one child or £1300 for two. • Universal credit will annul the Tax credit requirement to work at least 16 hours before qualifying for support.
Housing • Under occupancy (or bedroom tax) will see potential reductions in housing benefit for working age households in Council or housing association homes. • Allows for one bedroom for each person or couple living in a household. • Children under 16 of the same gender will be expected to share. • Children under 10 will be expected to share regardless of gender.
Housing • Will be reduced by 14% for under occupying by one room, or by 25% if under occupying by two rooms. • Customers will be expected to meet the shortfall. • Housing Benefit component of Universal Credit for most working age claimants will be paid to the claimant rather than the landlord.
Benefit Cap • No couple or lone parent to receive more than £500 pw in combined benefits. • No single adult to receive more than £350 pw in combined benefits. • Will be introduced from 2013. • There will be certain exemptions to the cap.
A new benefit for disabled people is being introduced • Personal Independence Payment (PIP) will replace Disability Living Allowance (DLA) for eligible working age claimants from 8 April 2013 • Disability Living Allowance has been in place for almost 20 years largely unchanged • DLA does not have some of the checks that are a key part of other state benefits and it needs to be brought up to date. • DLA can sometimes focus more on an individual’s condition rather than the needs that actually arise • The overall cost of DLA has risen by a third over the last nine years and the number of people claiming DLA has also continued to increase
Personal Independence Payment • This will replace Disability Living Allowance for all working age people from 2013 onwards. • There will be no automatic transfer to PIP, so people affected will need to make a fresh claim. This will include an assessment by a health professional . • DLA will remain for those aged 65 and over. • PIP will be non means tested and non taxable.
Personal Independence Payment • New claims will start in April 2013. • Reassessment of existing claimants will start from October 2013. • Will affect people who have been in receipt of lifetime or indefinite awards of DLA. • Will be paid as daily living and mobility components at either a standard or enhanced rate according to need.
What’s not changing? • Decisions on eligibility will still be made by DWP decision makers • Children will continue to claim DLA until they are 16 - they’ll need to decide whether to claim PIP when they reach 16 • DLA will remain for people aged 65 and over • People receiving Attendance Allowance will not be affected by the introduction of PIP • PIP is non means tested, non taxable, and is payable both in and out of work • Special rules will remain to support claimants who are terminally ill • PIP will still act as a passport to other benefits or services
The new assessment • The PIP assessment will involve health professionals who consider the evidence provided by the claimant, along with any further medical evidence they think is needed • It assesses disabled people as individuals, and focuses on the impact their condition has on their daily lives and over a range of different activities • Most people will be asked to a face-to-face consultation with a health professional as part of the claim process. Claimants can take somebody with them to the consultation
The new assessment • Home visits will be available when necessary • Face-to-face consultations may not be necessary for everyone – for example, those who are terminally may not have to have them • The assessment provider will send a report back to the DWP decision maker
Potential Impact 400,000 people will stop receiving DLA. Half a million fewer claimants £ 2.24 billion saved 16% of people will become more reliant on the NHS. 2.2 million extra GP appointments will be needed 3.2 million out of work-only 1 million jobs available DWP estimate 600,000 disabled people in work within year.
More information • Information for support organisations and advisers is online at www.dwp.gov.uk/pip. The site includes a quick guide to PIP for advisers and frequently asked questions. • latest news in the monthly Touchbase bulletin – sign up at the DWP website • Information aimed at claimants is available at direct.gov.uk/pip. Please signpost to these pages from your own sites or materials. • Updated leaflets will be available too – generic information in existing leaflets from the Autumn, and PIP specific leaflet from early next year.
Social Fund From April 2013 : • Community Care Grants and Crisis Loans for general living expenses will be abolished. Funding will be transferred to local authorities in England and to the Devolved Administrations in Scotland and Wales to establish alternative provision. • Crisis Loans for alignment to benefit and Interim Payments of benefit will be replaced by Short Term Advances of benefit and will be administered by DWP from April 2013.
Social Fund From October 2013: • Budgeting Loans will be replaced by Budgeting Advances and be paid as part of Universal Credit. • Regulated Social Fund (Funeral Payments, Sure Start Maternity Grants and Cold Weather Payments) will continue with Universal Credit as a qualifying benefit.
Council Tax Benefit • Replaces centralised support for Council Tax Benefit with a localised support mechanism from April 2013. • There will be a 10% reduction in funding. • Pensioners will be protected and vulnerable groups and responsibilities be considered. • Any expenditure above the grant available must be met by the local authority, whereas 100% of Council Tax Benefit is currently reimbursed.
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