Welfare reforms - BT Benevolent Fund

Report
Welfare Reform
Changes to Benefits
BT Benevolent Fund – June 2013
Presentation Outline
• To provide an overview of the Welfare
Reform Act and the proposed changes to the
Welfare Benefits system.
• To show a time line for the benefit changes
• To provide an overview of the criteria for the
new benefits.
Welfare Reform
Why The Change?
• Too complicated
• Too costly
• To provide the right incentives to get people
into work.
Aims of the Reform
• To provide a system that is fairer, more
affordable, and better able to tackle poverty.
• To create the right incentives to get more
people into work, whilst supporting those
who cannot.
• To be fair to both those claiming benefit, and
to the tax payer.
Current system
Contributory benefits (for
those who cannot work –
based on NI contributions)
Non-contributory benefits (for
specific circumstances –
“needs based”)
Means-tested benefits (for
those whose income is still
low)
Changes Already
Implemented
HOUSING BENEFIT
• LHA rates capped
• Bedroom allowances & removal of 5 bedroom
rate
• Rates set at 30th percentile – no longer 50th
• Removal of excess payment
• Non dependent deductions increased
• Extra bedroom for non resident carer
• Discretionary Housing Payments Budget
increased
• Age threshold for shared room rate raised to 35
Housing Benefit
One bedroom is allowed for:
• Every adult couple
• Any other adult aged 16 or over
• Any 2 children of the same sex under 16
• Any 2 children of either sex under 10
• Any other child
LHA RATES
LHA national weekly rates capped at:
-
£250 for 1-bed
£290 for 2-beds
£340 for 3-beds
£400 for 4-beds or more
(mainly affecting London)
Changes Implemented
continued
Tax Credits
• 50+ element removed from Working Tax
Credits (WTC)
• new applications and changes only
backdated for one month.
• a couple with at least one child must work
least 24 hours a week between them, with
one working at least 16 hours per week.
• Falls in income of up to £2500.00 will not be
re-assessed.
Changes Implemented
Employment & Support Allowance
• People in the work related activity group
who are on contribution based ESA will have
their benefit limited to one year.
• Those still on Incapacity Benefit to be moved
to ESA by 2014.
Income Support
• Lone parents with a child aged 5 and over
will be moved to JSA.
Welfare Reform Act –
Main Changes
• Child Benefit – taxable for high earners
from January 2013
• Benefit Cap – from April 2013
• Housing Benefit changes – April 2013
• Council Tax changes – April 2013
• Personal Independence Payments – from
April 2013
• Changes to Social Fund
• Universal Credit – from October 2013
January 2013
Child Benefit – from 7 January 2013
• Income tax charge to be applied to any taxpayer
who has an adjusted net income of over
£50,000, where they or their partner receives
Child Benefit.
• Rate of 1% of the child benefit for every £100 of
income between £50,000 and £60,000.
• For earnings above £60,000 the income tax
charge will be their total child benefit.
• People can decide to opt out of child benefit.
• Will be included in the “benefit cap” from April 13
and Universal Credit from October 13.
HB changes
From April 2013
• LHA rates reviewed and increased in line
with CPI, rather than actual rents
• Social tenants of working age will have HB
reduced:
– By 14% if they have 1 spare bedroom
– By 25% if they have 2 or more spare
bedrooms
Personal Independence
Payment
• Personal Independence Payment (PIP) will
replace DLA for eligible working age (16 –
64) claimants from 8 April 2013.
• Children under 16 will remain on DLA
• DLA recipients over 65 will not be migrated
onto PIP
• AA remains for all those over 65.
• No automatic transfer to PIP. Existing DLA
recipients will be invited to make a claim for
PIP – from October 2013. All on PIP by
2017.
• If PIP not awarded, DLA will cease.
Features of PIP
•
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3 month qualifying period remains
New 9 month “forwards” test
Special rules for terminal illness remain
Remains non means tested and non taxable
Payable both in and out of work
Assesses individual needs
More consistent use of supporting evidence
Based on how a claimants condition affects
them, not on the actual condition
• Reviews at appropriate intervals – no
lifetime awards
Personal Independence
Payment
Made Up of Two Components:
• Daily Living Component
• Mobility Component
Awards will be made up of one or both
Components
Each component will have two rates:
• Standard
• Enhanced
PIP Criteria
The criteria DWP will use to assess people
against for PIP will:
• Assess disabled people as individuals
• Focus on the impact that their health
condition or impairment has on their daily
lives
• Consider the individual’s ability to carry out
key everyday activities
• Take account of physical, sensory, mental,
intellectual and cognitive impairments and
developmental needs
• Reflect variable and fluctuating conditions
PIP Criteria
They take into account whether activities can
be carried out:
• Reliably
• Repeatedly
• Safely, and
• In a timely manner
Areas of assessment
Daily living component
1. Preparing food and drink
2. Taking nutrition
3. Managing therapy or monitoring health conditions
4. Bathing and grooming
5. Managing toilet needs or incontinence
6. Dressing and undressing
7. Communicating
8. Engaging socially
9. Making financial decisions
Mobility Component
10. Planning and following a journey
11. Moving around
Scores required for benefit
• Daily living component payable if points
scored under activities 1-9
Standard rate = 8 points
Enhanced rate = 12 points
• Mobility component payable if points scored
under activities 10-11
Standard rate = 8 points
Enhanced rate = 12 points
Variable conditions
• If one descriptor in an activity applies for more than
50% of the time, then that descriptor should be
chosen.
• If more than one descriptor in an activity applies for
more than 50% of the time, then the descriptor
chosen should be the one which applies for the
greatest proportion of the time.
• Where one single descriptor in an activity is not
satisfied for more than 50% of the time, but a
number of different descriptors in that activity, when
added together, are satisfied for more than 50% of
the time, the descriptor satisfied for the highest
proportion of the time should be selected.
Claims for PIP
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•
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•
•
“Tell Story” form
Assessment of claim against descriptors
Medical evidence
Account taken of Aids
Most will have face to face meetings and can
be accompanied
• Health professional will provide evidence to
DWP decision maker
• No change for terminally ill
Benefit ‘cap’
From April 2013 income from means tested
benefits will be capped for some people.
The level of the cap will be:
•£500 a week for couples (with or without
children living with them)
•£500 a week for single parents whose
children live with them
•£350 a week for single adults who don’t have
children, or whose children don’t live with
them
Benefit ‘cap’
The cap will not apply where if anyone in the
household (excluding non – dependents):
• Is entitled to Working Tax Credit
• In receipt of IIB, DLA, AA or PIP
• In receipt of War widows/widowers
pensioners
• In receipt of the ESA support component
• Claimants who have been in employment
for at least 12 months before their job
ends (only for the first 39 weeks)
Benefits Included in the
Cap
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Bereavement Allowance
Carers Allowance
Child Benefit
Child Tax Credit
Employment & Support Allowance
Guardian’s Allowance
Housing Benefit
Incapacity Benefit
Income Support
Jobseekers Allowance
Maternity Allowance
Severe Disablement Allowance
Widowed Parent’s Allowance
Benefit Cap
The following benefits are not included:
•
•
•
•
•
Council Tax benefit
Pension Credit
State Retirement Pension
Statutory Sick Pay
Statutory Maternity / Paternity/ Adoption
Pay
Benefit Cap
From April 2013, any excess deducted from
Housing Benefit
Options:
• Apply for discretionary housing payment
( £75 million allocated from 2013)
• Check benefits
• Consider trying to increase working hours
Likely Impact
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56,000 households will be affected by the cap in 2013/14
The average benefit reduction is £93 a week per household
46% of households affected by the cap are in the social
rented sector
54% of households affected by the cap are in the private
rented sector
74% of households affected by the cap have 3 or more
children
28% of households affected by the cap have 5 or more
children
50% of households affected are lone parents
34% of households affected receive jobseekers allowance
25% of households are in receipt of ESA
39% of households are in receipt of Income Support
Council Tax Benefit
• Local Authority budget for C. Tax support cut by 10% in RBC this equates to £1.2 million.
•Local Authorities must decide on their own scheme of
Council Tax Support – must be in place by 31 Jan 2013
Money not ring fenced, but some principles apply:
• Local authorities will have a duty to run a scheme
of council tax support
• There should be no change to the current scheme
for pensioners
• Local authorities should consider support for other
vulnerable groups
• Local schemes should support work incentives
RBC Proposals
• Council Tax support to be based on 85% of
council tax bill, not 100%
• Working age claimants who have £3000.00
and over in savings will not be eligible for
any support in that tax year.
• Abolition of Second Adult Rebate scheme.
• Automatic switch to new scheme for those
already in receipt of CTB.
• No Backdating of benefit.
• Proposing discretionary hardship fund.
Social Fund
Current DISCRETIONARY system of:
• Community Care Grants
• Crisis Loans
• Budgeting Loans
No change to regulatory Payments, e.g. winter
fuel payments, cold weather payments,
maternity grants, funeral payments.
Social Fund
From April 2013:
• Community care Grants abolished from April
2013 – replaced by “local welfare assistance”
from Local Authority for emergency
situations.
• Crisis Loans abolished. Replaced by scheme
of short term advances – administered by
DWP.
• Budgeting Loans remain for those not on UC.
• From October 2013 – 2017 Budgeting Loans
will be replaced by payments in advance for
claimants on Universal credit.
Local Welfare Assistance
“The Government is committed to removing
burdens and controls from local government,
and so there will be no new statutory duty
requiring local authorities to deliver the
service. Local Authorities will have the
flexibility to design new locally based
support to meet local needs in the best way
that they see fit.”
Universal Credit
• National roll out from October 2013 for new
claimants
• A single benefit to top up income of working
age people ( whether in or out of work)
• From April 2014 all existing claimants start
to be transferred to UC
• All to be transferred by 2017
Universal Credit features
A single benefit to “top-up” income for people
of working age
Can be claimed whether working or not as long
as claimant is working age.
Claimants and partners must sign a “claimant
commitment”
Universal Credit
Will replace:
• Income Support
• Income Based JSA
• Income Based ESA
• Child Tax Credit
• Working Tax Credit
• Housing Benefit
DWP is now calling these “Legacy Benefits”
UC - Eligibility
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Aged 18 or over (some exceptions)
Resident in Great Britain
Not in Education
Savings and Capital not more than £16,000.
Income not too high
Income rules
• Capital limit £16000
• Minimum assumed income for self-employed
• Generous earnings disregards:
– more of earnings are disregarded if
housing costs are low or if there is a
disability
– Only 65% of earnings after the disregard
are taken into account (incentive to work)
Work Related Conditions
• Most people will have to show that they are
taking steps to prepare themselves for work
Those exempt from work preparation:
• Those in Support Group of ESA
• Those with a child under the age of 1
• Those already earning the equivalent of a
full time job
• Those who are the victim of recent domestic
violence
How does it work?
Universal Credit includes set amounts for:
• Claimant and partner
• Children
• Housing costs
• Additional needs (e.g. disability/carer)
• Childcare costs (for working claimants)
If income is less than the total of the amounts calculated
for the above, then Universal Credit is payable
Transitional protection for existing claimants upon
migration
No changes to capital limits.
Universal Credit
Standard Allowances
Set allowances are given for:
• A standard rate for a single person or a couple
• An amount for each child
• An amount for each disabled child (2 rates)
• An amount for a sick or disabled adult (2 rates)
- limited capability for work
- limited capability for work related activity
• An amount for housing costs
• An amount if claimant or partner is a carer
• An amount for a carer
• An amount for childcare costs
The total of all appropriate allowances = claimants
potential maximum benefit.
Disability elements –
problems?
• Disability elements dependent on client
receiving ESA (adults) or DLA (children);
– WRAG or DLA low/mid for children £28.15
– SG or DLA high for children £77
• No enhanced disability premium
• No severe disability premium
• Cannot get carer premium and disability
premium together
Income
• If no income or capital, claimant will receive
maximum benefit (total of all applicable
allowances).
Income deducted from maximum benefit
• Earned income (less disregard)
• Income from an occupational pension is
deducted.
• Income from contributory benefits – C-ESA,
C-JSA, Incapacity Benefit, SSP, SMP etc
• Assumed income from savings
Earnings Disregards
• Minimum and maximum amounts of
earnings disregards
• Clients not receiving any housing costs in UC
will have the maximum disregard applied
• Clients receiving housing costs in UC will
have the maximum disregard reduced by
1.5x the amount of their housing costs
• No-one will get less than the minimum
earnings disregard
Earnings Disregards
Min
Max
Single person
No children
£13.46
£ 13.46
Couple no children
£36.92
£57.69
Lone Parent
£43.46+
£173.08
Disabled Person
£40.00
£134.62
Claimant Commitment
• Signed commitment outlining the steps
people must take when in receipt of the
benefit.
• Applies to partners as well claimant.
• Lists work related requirements whilst
receiving UC
• Sanctions for failure to comply
Claimant Commitment
4 Work related Requirements:
•
•
•
•
Work
Work
Work
Work
Focused Interview
Preparation
Search
Availability
Exemption from
Commitment
No work-related requirements
• People in support group
• Child under 1
• Carers
• Earning over 35 x NMW
• Recent victims of domestic violence
Sanctions
If conditions of claimant commitment not met:
• UC can be reduced
• Period of sanction can vary from 4 weeks to
3 years
• UC will be reduced by the amount of the
adult standard allowance
Can apply for a hardship payment
Claiming
Administered and paid MONTHLY by DWP
Payments to claimant
Claims made and managed online
Couples claim jointly
Extra components within UC in respect of
‘passported’ benefits
Pensioners on Pension
Credit
• Pension credit will remain outside UC
• Those on pension credit will receive a
Housing credit element in their benefit to
cover rent.
• Council Tax rebates will be awarded by Local
Authorities in line with their new strategy.
Overpayments
From 8 March 2012 – 6 year limitation rule does not
apply to recovery by deduction from benefit
From 8 May 2012 – Extension of admin penalties
From 1 July 2012? – Overpayments can be recovered by
deduction from earnings
From 1 October 2012 – A civil penalty (£50) for
‘negligent misrepresentation’ or ‘failure to provide
information’
From April 2013? – All overpayments of UC, JSA and
ESA to be recoverable. No right of appeal against
decision to recover
Govt estimates when Bill first
published as to savings
(in £millions)
Measure
2012/13
2013/14
2014/15
Lone parent conditionality
£70
£220
£300
HB restrictions social
sector
£0
£470
£470
Uprating LHA by CPI
£0
£40
£240
DLA reform to PIP
£0
£350
£1040
Benefit cap
£0
£220
£260
Time limiting ESA
£860
£1130
£1430
Abolishing ESA (youth)
£10
£10
£10
Other
£20
£60
£110
Total
£960
£2510
£3870

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