Important changes to benefits
Earlier this year the Government published a Welfare Reform Bill, which proposes fundamental changes to the welfare benefit system.
The aim of the changes is to reduce dependency on benefits, create incentives to work, tackle poverty and create a simpler and more streamlined system. Last year’s Emergency Budget and Spending Review have already set some major changes in motion, and the Welfare Reform Bill is going to take these even further.
Changes already taking place:
Employment and Support Allowance
Claimants who currently get Incapacity Benefit, Income Support and Severe Disablement Allowance are now being migrated to the new Employment and Support Allowance. The assessments began nationwide in April this year and are planned to be completed by March 2014. Anyone who currently gets any of these benefits will have to take part in an assessment to look at their ability to work. People who fail the new assessment will be classed as fit for work and will move to JSA, which could mean less money, having to sign on every 2 weeks and they will be expected to actively seek employment.
Switching lone parents from Income Support to Jobseeker’s Allowance
Since last October lone parents whose youngest child is aged seven or over have been moved from Income Support to Jobseeker’s Allowance, if they are only claiming IS because they are a lone parent. From October this year lone parents will move from IS to JSA if their youngest child is aged five or over, unless they are able to claim Employment and Support Allowance or Income Support for another reason.
Higher Non –Dependent Deductions from Housing Benefit payments
Claimants living with other adults in their property, have already faced a reduction in the HB they receive (called non-dependent deductions). The adult living with the tenant is then expected to pay this sum towards the rent. The level of reduction has been frozen since 2001 but that is now being reversed, and by 2014 it is expected to be linked to inflation. Those already affected have faced reductions of between £2 and £13 a week.
Discretionary Housing Payments
These are payments made by the local authority to provide residents with further financial assistance for help with housing costs. The budget for 2011 – 2012 has been increased by £10 million to £30 million. Contact Sheffield Homes for more information about this.
Winter Fuel Payment
Winter fuel payments will be reduced for the winter of 2011/2012. The payments for people who have reached female state pension age will reduce from £250 to £200 and, for people aged 80 and over, from £400 to £300.
Tax Credits
The percentage of childcare costs that parents can claim through the childcare element of working tax credit will be reduced from 80% to 70%.
Sure Start Maternity Grant
This will only be available for the first child, unless it is a multiple birth or the new child is the only one in the family under 16.
Future changes:
The Welfare Reform Bill sets out proposals for three major changes that will have a big impact on housing association residents. These are the introduction of a Universal Credit, bringing in a benefit cap and completely changing the housing benefit system.
Universal Credit
The Universal Credit (UC) lies at the heart of the changes. The idea is to replace a range of commonly claimed benefits - including Jobseeker’s Allowance, Income Support, tax credits and Housing Benefit - with a single payment. The UC will apply to working age households, providing a basic allowance with extra money for people with children, disabilities, care responsibilities, and housing costs. To encourage people to work, as earnings rise the UC will be withdrawn more gradually than the current benefits it is replacing. It is planned to introduce the UC for new claimants from October 2013.
Benefit cap
The Bill proposes introducing an upper limit to the amount of total benefits that a household can get, equivalent to the average income of a working family. By April 2013 this is projected to be £500 a week for families and £350 for single households. To help incentivise work, households claiming Working Tax Credit would be exempt from the cap. People getting disability benefits will also be exempt, as will income from contributory benefits that are paid to people who have made enough National Insurance contributions.
Housing Benefit payments
The Government wants to reduce the amount it spends on Housing Benefit and one of the proposals is size criteria will be applied to housing association properties. This means that people living in houses larger than they need will have to move to somewhere smaller or make up the difference in rent because their Housing Benefit will be based on a smaller property. This is only for working-age people but it is expected to affect 670,000 social sector tenants if the proposal in the Welfare Reform Bill is introduced. The proposals would not come in until April 2013 and the Government hasn’t clarified how big the cuts would be, but it is believed they are working towards a 10-15% cut for one room and a 20-25% cut for two rooms. Sheffield Homes is assessing how many of our residents would be affected and what the likely impact would be.
Other changes:
• Child Benefit will be withdrawn from families with a higher rate taxpayer from January 2013
• An “objective medical assessment” for Disability Living Allowance will be introduced from 2013-14.
• A new payment system will replace benefit cheques for those who do not have access to a bank of post office account.
We will continue to bring you more information about these changes as and when they are announced.
Unfortunately it seems inevitable that these changes will put extra pressure on household budgets. If you have any concerns about being able to pay your rent, it is very important that you contact us right away. We want to ensure that every one of our customers is able to maintain their tenancy by paying their rent regularly and on time, and also to maintain a decent standard of living. We will offer you as much advice, help and support as we can
