Understanding Financial Inclusion and Welfare Reform in Scotland

1. FINANICAL INCLUSION & WELFARE REFORM Presentation by Sharon MacPherson & Robert Hinds

2. Programme • Financial exclusion in Scotland – what are the facts? • Welfare reform – what’s happening & when? • Impact on your clients • Group discussion • Feedback • Conclusion

3. Financial Inclusion – why is it important? • No access to bank accounts and Direct Debit • Lack of affordable credit • Charging ATMs • Cheque cashing/ payday loans/Cash pawnshops • Increased insurance premiums • Higher utility costs- fuel/ telephone • Poverty Premium- £1,300 per annum

4. Financial inclusion – the facts • SHS best indicator • Key questions on financial circumstances • How households are managing financially • Savings and investments • Banking

5. How are households managing financially?

6. Savings & Investments

7. Banking

8. Welfare reform – What’s happening & when? • Wide ranging reforms • Focus on 5 key areas: • Housing Benefit changes • Social fund • Tax Credits • Universal Credit • DLA / PIP

9. Housing Benefit changes • April 2011: non dep deductions up by 27% • April 2011: Local Housing Allowance Cases • LHA: method by which HB is calculated in PS • Removal of up to £15 weekly excess • Max rent payable in LHA cases cut (50th to30th) • Removal of 5 bedroom rate (max now 4) • Capping of LHA rates

10. Housing Benefit changes 2012 • 1 Jan 2012 (in private sector) - Shared room rate (bedsit rate) extended from single under 25 to single under 35 • Previous exemptions still apply • Additional exemptions but only for those aged 25 or over • Applies to new claimants as per 1 Jan 2012 straight away • Existing claimants have limited protection will all be moved over by end of 2012

11. Housing Benefit • April 2012 • Non dep deductions increased by 21% • April 2013: Social Rented Sector • Entitlement for working age claimants reflect household size • 1 spare bedroom 14% reduction in rent allowed for HB - 2 or more spare 25% reduction apply

12. Social Fund • From 2013 • Abolition of the discretionary social fund • CCG, CL replaced by local system • BS and CL alignment loans replaced by payments on account • Abolition of Social Fund Commissioner and the Independent Review Service

13. Tax Credits • April 2012: - Backdating reduced from 3 to 1 month - 50 plus element removed from WTC - Introduction of £2,500 disregard - Increase in hrs per week couples with children must work to qualify from 16 to 24 - £40k second income threshold removed

14. Universal Credit • Means tested benefit • People of working age • Replace IS, income based JSA, income related ESA, HB and both types of tax credits • Paid monthly* • Single payment* • Claim online

15. Universal Credit • APRIL 2012: limited pilot • OCTOBER 2013: roll out for new claimants and some existing claimants migrated over • APRIL 2014 – OCTOBER 2017: firstly migration for households who will benefit most and then by end of 2015 full scale migration to UC

16. Disability Living Allowance/PIP • 2013 • Introduction of Personal Independence Payments as a replacement for DLA for working age claimants • Continue to be non means tested and non contributory • Paid in work or out of work (?) • Intention to cut claimants and budget by 20%

17. Disability Living Allowance/PIP • New assessment tool similar to ESA • Timetable • APRIL 2013 – Introduction for new claimants Bootle Benefits Centre • JUNE 2013 – Intro for new claimants across GB • OCT 2013 – Limited migration of existing claimants • JAN 2014 – End 2016 – Full scale migration exercise

18. HOW DO WE RESPOND?

19. FEEDBACK

20. CONCLUSIONS