Welfare Reform Sam Lister, Policy & Practice Officer, CIH Learn - PowerPoint PPT Presentation

Welfare Reform Sam Lister, Policy & Practice Officer, CIH Learn with us. Improve with us. Influence with us | www.cih.org

Current issues in welfare • The election • Welfare spending cap • The (slow) introduction of universal credit • Universal credit and housing business models Tenant payment  Rents and work incentives   Safety net or improving life chances? Approach to solving problems  2 Learn with us. Improve with us. Influence with us | www.cih.org

How we approach problems 3 Learn with us. Improve with us. Influence with us | www.cih.org

Cap on welfare spending • ESA, SPC, DLA (PIP), AA, tax credits, child benefit, HB (except JSA), maternity pay and universal credit • cap set at £119.5 billion 2015/16 • Expected spending £113.1 4 Learn with us. Improve with us. Influence with us | www.cih.org

Trends in welfare spending 14 Forecast 12 10 Per cent of GDP 8 6 4 2 0 1983-84 1986-87 1989-90 1992-93 1995-96 1998-99 2001-02 2004-05 2007-08 2010-11 2013-14 2016-17 Children and working age P ensioners T otal Source: DWP, HMR C, OBR 5 Learn with us. Improve with us. Influence with us | www.cih.org

Welfare cap spending £ billion Outturn Forecast 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Welfare cap DWP social security 71.2 71.5 73.3 74.3 75.0 76.0 76.8 of which: Incapacity benefits 1 13.3 13.3 13.4 13.5 13.7 14.0 14.3 Statutory maternity pay 2.3 2.3 2.4 2.4 2.5 2.6 2.7 Income support (non-incapacity) 2.7 2.6 2.6 2.5 2.6 2.7 2.8 Pension credit 7.4 7.0 6.6 6.5 6.3 6.1 5.9 Winter fuel payments 2.1 2.2 2.1 2.1 2.1 2.1 2.0 Disability living allowance and personal 13.4 13.9 14.8 14.7 14.1 13.5 13.6 independence payments Attendance allowance 5.4 5.4 5.5 5.6 5.7 5.8 6.0 Carer's allowance 1.9 2.1 2.3 2.4 2.6 2.7 2.8 Universal credit 2 0.0 0.0 0.0 0.0 0.1 0.5 -0.2 Housing benefit (not unemployed) 19.9 20.3 21.3 22.1 22.9 23.5 24.2 Other DWP in welfare cap 2.6 2.4 2.4 2.4 2.4 2.5 2.5 Personal tax credits (AME spending) 26.8 27.2 26.8 27.1 29.3 31.7 33.0 Tax free childcare 0.0 0.0 0.0 0.2 0.7 0.8 0.9 NI social security in welfare cap 3.2 3.2 3.2 3.3 3.3 3.3 3.3 Child benefit 12.2 11.6 11.7 11.9 12.1 12.4 12.6 Paternity pay 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Welfare cap in AME 113.5 113.6 115.1 116.9 120.4 124.2 126.7 Personal tax credits (negative tax element) 3.0 2.7 2.7 2.5 1.6 0.3 0.0 Total welfare cap 116.5 116.4 117.8 119.5 122.0 124.6 126.7 6 Learn with us. Improve with us. Influence with us | www.cih.org

Welfare that works 7 Learn with us. Improve with us. Influence with us | www.cih.org

Current benefits & tax credits 600 500 Net pay, benefits and tax credits 400 300 200 100 0 Weekly gross pay Net pay Child benefit Jobseekeer's allowance Working tax credit Child tax credit Housing benefit Localised CTRS Couple, two children, one earner, rent £75.00, council tax £23.00 8 Learn with us. Improve with us. Influence with us | www.cih.org

Universal credit £600.00 £500.00 Net pay and benefits £400.00 £300.00 £200.00 £100.00 £0.00 Weekly gross pay Net pay Child benefit Universal credit Localised CTRS Couple, two children, one earner, rent £75.00, council tax £23.00 9 Learn with us. Improve with us. Influence with us | www.cih.org

Current & UC compared £600.00 Weekly net earnings & benefits (ex CTR) £500.00 Earnings plus basic benefits £400.00 (excluding CTRS) HB/WTC/CTC £300.00 Earnings plus £200.00 basic benefits (excluding CTRS) UC £100.00 £0.00 Gross weekly pay (£) Couple, two children, one earner, rent £75.00, council tax £23.00 10 Learn with us. Improve with us. Influence with us | www.cih.org

Escape velocity Escape velocity: The gross earnings required to escape means tested benefits and tax credits for a given family type and rent 11 Learn with us. Improve with us. Influence with us | www.cih.org

Social sector rents Couple, two children, single earner 2013/14 tax and benefit rates. Rent £75.00 per week (average social sector rent) Rent £75.00 per week Gross weekly Gross annual income income Housing benefit £346 £17,992 Tax credits £623 £32,396 Universal credit £681 £35,412 12 Learn with us. Improve with us. Influence with us | www.cih.org

Benefit escape velocities Couple, two children, tax and benefit rates 2013, 2 bed LHA rate 2013 Rent: £212.26 per week Gross weekly Gross annual (Outer East London) income income Housing benefit £828 £43,030 Tax credits £623 £32,396 Universal credit £1,025 £53,300 Rent: £296.38 per week Gross weekly Gross annual (Inner North London) income income Housing benefit £1,051 £54,652 Tax credits £623 £32,396 Universal credit £1,248 £64,896 13 Learn with us. Improve with us. Influence with us | www.cih.org

Earnings percentiles 2013 Percentile (London) Weekly* annual Lower quartile (25 th ) £445.62 £23,172 Bottom 40% (40 th ) £553.17 £28,765 Median (50 th ) £630.77 £32,800 Top 30% (70 th ) £825.00 £42,900 Top 20% (80 th ) £980.48 £50,985 14 Learn with us. Improve with us. Influence with us | www.cih.org

UC the new rules in detail… Available from CIH bookshop Learn with us. Improve with us. Influence with us | www.cih.org

Pilots • Universal credit pathfinder areas UC live claims   Mainly North West (singles, couples) • Direct payment demonstration projects (DPDP)  HB payment only (not other elements) Run course – evaluation done  • Local authority led pilots Test aspects of UC without UC  Partnership, triage, financial and digital inclusion  • Local support services framework pilots 11 just starting   Two in London 16 Learn with us. Improve with us. Influence with us | www.cih.org

Timetable • Unknown • Official position still full roll out by 2017 • Labour Party review (3 months post election) but still supports UC in principle • All jobcentre offices in North West 1/1/2015 Singles only  Couples also Harrogate, Bath, Rugby, Inverness  • ‘Natural migration’ then block transfer 17 Learn with us. Improve with us. Influence with us | www.cih.org

UC payment – principles • UC is a surrogate wage • Paid the wage earner (or jobseeker) • No separation of housing costs • Paid monthly in arrears • No third party (landlord) rights to know 18 Learn with us. Improve with us. Influence with us | www.cih.org

Personal Budgeting support • DWP strategy for claimants who need support • Money advice • Alternative payment arrangements (APAs) Managed payments ‘switch back’ 1. Payment frequency 2. Split payments 3. • Two tiers (one-off, on-going) • Delivered locally (LSSF) • Led by DWP districts 19 Learn with us. Improve with us. Influence with us | www.cih.org

APAs • Principles  Case by case basis Claimant knowledge and consent  Always a temporary arrangement  • Except… DWP is exploring ‘trusted partner’ status  Arrears trigger (20%-30%?)  20 Learn with us. Improve with us. Influence with us | www.cih.org

DPDP main findings • Initial shock but returning (almost) to baseline • Payment patterns are complex (not binary) • Part payment more common – non payment greater impact on arrears • Vulnerability characteristics remain unclear • No one has cracked support take-up • Designing programme longer than expected • IT systems inadequate to support early intervention • Data not robust enough to prove it is more resource intensive • Does change landlord and tenant behaviour and in some cases organisational objectives 21 Learn with us. Improve with us. Influence with us | www.cih.org

Cost of under-banked • Average London energy bill 2013 (standard payment) £591 Electricity  £772 Gas  • Average London energy bill 2013 (direct debit) £551 Electricity   £715 Gas • Total annual saving: £97 • Energy efficient homes? Direct debit savings fall with rising energy use  Source: Department for Energy and Climate Change 22 Learn with us. Improve with us. Influence with us | www.cih.org

Free banking? • A basic bank account costs the bank £136 p.a.  That’s why ‘penalty’ charges are so high It is only ‘free’ if you stay in credit/ agreed limit  • What is the cheapest solution? Depends on the personal payment behaviour   Transaction charge or account fee may be cheaper Look at total costs and benefits (e.g. bill payment)  23 Learn with us. Improve with us. Influence with us | www.cih.org

Collective switching How it works No obligation registration with intermediary   Attain critical mass of customers Reverse auction  Which? / 38 Degrees 287,000 registered, 37,000 switched  Average saving £223 per year  Manchester Councils  Ten local councils 15,000 signed up in two weeks  www.facebook.com/gmfairenegy  24 Learn with us. Improve with us. Influence with us | www.cih.org