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The Welfare Reform Act

The Welfare Reform Act. Sue Royston. Summary. Summary of main issues in the Act Summary of issues within Universal Credit Particular focus on disabled people How will these changes affect people?. Main issues in the Act. Two new benefits: Introduces Universal Credit DLA replaced by PIP

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The Welfare Reform Act

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  1. The Welfare Reform Act Sue Royston

  2. Summary • Summary of main issues in the Act • Summary of issues within Universal Credit • Particular focus on disabled people • How will these changes affect people?

  3. Main issues in the Act Two new benefits: • Introduces Universal Credit • DLA replaced by PIP Other changes: • cap on total household benefits • ESA(CB) for those in work-related activity group limited to 12 months • Greater conditionality and longer and harsher sanctions • Social fund – abolition of CCGs and crisis loans. Budget transferred, un-ring-fenced, to LAs • Abolition of council tax benefit and transfer budget (less 10%) to LAs • HB cuts where social housing tenants are under-occupying • Have to apply for a revision before appealing

  4. Universal Credit • Not working • Maximum personal allowance (for household) • Includes • earning replacement amount • Housing costs (LHA rate) • Amount for children • May have WR or support or carer addition • Working • Maximum personal allowance reduced by £6.50 for every £10 earned • Disregards used to give support –much larger if no housing costs included (like £6420 disregard in tax credits

  5. At its simplest • Single adult paying rent (& LHA) of £100 • Unemployed • £65 (approxJSA rate) + £100 (housing costs) • UC of £165 • Earning £113.50 • Keep first £13.50 • UC reduced by 65%of next £100 = £65 • UC = £100 + earnings of £113.50 = Total income of £213.50

  6. Summary of main issues in UC • Couples and single people without children usually better off • Smoother steadier gain for increasing earnings but this makes passporting difficult • Support for childcare reduced compared to current system • Savings limit of £16,000 • Couples with one under pension age will have to claim UC • Support for disabled people will be restructured • Conditionality and sanctions increasing • Delivery changing – benefit paid monthly, not to main carer

  7. Issues in UC • Childcare in current system – • pays 70% of childcare costs through WTC • Further 25.5% through HB/CTB for those on low income who rent • In UC will only pay 70% - will leave some people worse off if they increase their hours • No pensioner premium • Couples where only one is pension age will not be able to claim pension credit – huge drop in income

  8. Support for disabled people in UC • The disability element for most disabled children will be half the current element in CTC • No equivalent of the disability element of WTC unless the person qualifies as not fit for work • No equivalent of the severe disability premium

  9. How support for disabled adults will be structured • Gateway to all extra support for disabled people in UC is WCA – new test for those in work • Work related or support component plus disability disregard for those in work • No extra support in UC for disabled people found fit for work eg if can self propel a wheelchair 50 metres • Govt have said will increase the support component when savings allow

  10. Severe Disability Premium • No equivalent of SDP in UC • SDP paid to • people on DLA MR or HR care • Don’t have a carer • Live on own • Costs are clearly greater if live on own • Young carers will lose out • Couple where one disabled, partner works fulltime but still provides care will qualify for carer prem • Where child at school providing care no premium

  11. Disabled children Now • Children on DLA get £55 dis el of CTC • Children on HR care get £55 + £21 severe dis el (£76) Under UC • Children on DLA get £27 dis addition • Children on HR care (and those with severe sight impairment) get £77 higher dis el • Support for childcare also an issue for parents of disabled children

  12. Personal Independence Payment • Driven by 20% reduction in spending • No equivalent of lower rate care – this will save 8% so more cuts • Assessment method – face to face assessments • Qualifying time amendment agreed so will be 3months as under DLA not 6months but ongoing has to be likely to last further 9 months • Reduction in numbers eligible for disability benefits

  13. ESA(CB) time limiting • ESA(CB) limited to 1 yr for WRAG • Starts April 30th 2012 – some will lose benefit immediately • Concerns round exceptional circumstances rule • Amendment won those with deteriorating conditions who are time-limited will be able to receive ESA when eligible for support gp if continue to qualify for WRAG in intervening period

  14. Other measures in the Act • Housing element • Under-occupancy – ‘bedroom tax’ • Shared room rate up to 35yrs old • Conditionality and sanctions • Much tougher • Civil penalties -£50 for ‘negligence’ • Benefit cap • Delivery – • payment monthly • Not paid to main carer • ESA(CB)not paid to recipient • Housing costs not paid to landlord • Much greater use of discretionary payments • increased fund substantially to cope with hard cases

  15. Summary of what is changing? • UC • No severe disability premium in UC • No equivalent of disability element of WTC if fit for work • Support for all disabled children halved • Not money saving – all money going into support group • PIP • No equivalent of lower rate care • Qualifying time 6 months • ESA (CB) – time limited to 1yr for those in WRAG • Other – HB changes, conditionality, benefit cap, delivery

  16. How will these changes affect people?

  17. Someone in support group and eligible for SDP • Someone in support group who has a carer will be better off as savings allow • At present £114 • Aim is to raise it to £144 • Someone in support group and eligible for SDP will be worse off • £169 now • likely to get just £114 until savings allow increase • Even when raised will still only have £144

  18. What will be the effect on disabled people who are working • Someone found fit for work but on mid rate care eg registered blind • Someone paying rent & earning £100 have £190 disposable income in present system less than £100 in UC • PIP may be lower than DLA.

  19. Someone found fit for work on lower rate care • eg someone with MS • Someone paying rent and earning £100 have £144 in the present system plus £20 DLA less than £100 in UC – same as someone without impairment • Unlikely to get PIP • LAs and other orgs use DLA as a proxy for other support eg travel and leisure passes • Will lose recognition of disability anywhere in system

  20. Disabled children • £27 reduction in support for most disabled children • Includes children with Downs syndrome, profoundly deaf etc

  21. Evidence we need • Evidence about the extra costs for someone living alone with a significant health condition/impairment • Extra costs for disabled person of working which are not not covered by Access to Work • High costs of childcare for disabled children

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