Welfare Reform November 2012 Jo Robinson – Revenues & Benefits Manager

Welfare Reform - An Update Localisation of Council Tax Benefit Today ’ s Session

Welfare Reform WELFARE REFORM Reforming the welfare system – to make it fairer, more affordable and better able to tackle the poverty, worklessness and welfare dependency LOC ALISATION Coalition principles of increasing freedom and sharing responsibility by localising power and funding De-ringfencing of funding, abolition of top down targets & inspection regime DEFICIT REDUCTION Governments top priority Taxpayers were paying almost £ 120 million per day I debt interest – more than Council Tax, Stamp Duty and Inheritance tax combined for 2011 Source DCLG

Welfare Reform Timeline April –Housing Benefit/LHA linked to the Consumer Price Index (CPI) rather than the Retail Price Index (RPI) means a real net deduction of around 1%. –Benefit Cap – introduction of a cap to the maximum amount of benefit that can be claimed –Social Sector Rent Restrictions ‘Bedroom Tax’ - Restricts Housing Benefit entitlement for Social Housing Tenants whose accommodation is larger than they need –Social Fund reform – Social Fund current arrangements will be abolished –Universal Credit Pathfinder – Universal Credit replaces the current benefit entitlement system –Personal Independence Pathfinder – Personal Independence Payments replace Disability Living Allowance

Welfare Reform Timeline June –New claims for Personal Independence Payments – following outcome of pathfinders in April October –Reassessment of DLA claims begins –Universal Credit – phased roll-out begins –Changes to the rules regarding pensioner/working age households

Universal Credit Aims to –Simplify the system, making it easier for people to understand, easier and cheaper for staff to administer –Improve work incentives –Smooth the transitions into and out of work –Reduce in work poverty –Cut back on fraud & error It is a single benefit that will incorporate WTC, CTC, Housing Benefit, IS, JSA (ib) and ESA (ib) into one benefit as a basic allowance, additional elements for Children, Disability, Housing and Caring where appropriate Calculated and delivered electronically according to monthly income reported via upgraded PAYE system Conditionality – those who can work will be required to take all reasonable steps to find and move into employment

What do we know? New claims for Housing Benefit from customers who are out of work will move to Universal Credit from October 2013 New claims for Housing Benefit from customers who are in work will move to Universal Credit from April 2014 Universal Credit will go live in the Greater Manchester & Cheshire region in April This will be a pathfinder project to test the new system before it is rolled out nationally in October 2013 Will be administered by DWP and will be digital by default Job Centres will be the primary channel for local, face to face support – although some LA’s will be involved in local pilot schemes for UC. Pilots are expected to start in Autumn Approx. 4.5 million records will be transitioned to the new IT platform between October 2014 to 2017

Universal Credit – Migration Key Dates APRIL 2013 OCT 2013 APRIL Pathfinder Go Live New claims from unemployed claimants start New claims from in-work claimants start Managed migrations start Managed migration activity complete

Payment of Universal Credit Universal Credit will be paid: –As a single monthly household payment –On a calendar monthly basis in arrears –Will include a direct payment of housing costs to the claimant – will then be the claimants responsibility to pay their rent to their landlord Six volunteer areas are testing direct payments with their tenants from June 2012 to June Around 2,000 tenants in each area are involved. DWP envisage 4 levels of support with regard to direct payments:- IndependentAble to budget Light SupportAble to budget with short term support Intensive SupportOnly able to budget with ongoing help ExceptionsUnable to budget even with support “ Wherever possible, exceptions to the standard process is seen as a transitional state ” DWP IRRV Benefits Conference Feb 2012

Direct Payments of Universal Credit Direct Payments – project currently underway with 6 LA’s to: –Test impact of various trigger points and safeguards for social landlords –Test safeguards for different groups of people e.g. Trigger points for making payments to landlords and test budgeting tools for claimants –Evaluate communication strategy with claimants and also landlords’ strategies for maintaining financial viability Outcome of pilot project is due shortly but it is rumoured that a third of tenants are in arrears

Preparing for Universal Credit Engage with residents early around financial inclusion before UC is rolled out Residents should be helped to open a bank account at the point of signing up to new tenancies Work with financial service providers (e.g. Credit Unions) to support wider financial inclusion Support the move into work – closer links/referrals with local Job Centre plus, job clubs, help with CV’s

Personal Independence Payments April 2013 will see the introduction of Personal Independence Payments (PIP) for eligible working age people aged 16 to 64 to replace Disability Living Allowance (DLA) Will apply to pathfinder areas in April 2013, rolled out nationally in June 2013 for all new claims No automatic transfer - Between 2013 and 2016 everyone aged 16 to 64 receiving DLA will be individually reassessed against new entitlement criteria People entitled to the new PIP will have their claims transferred over and their DLA will stop No current plans to replace DLA with PIP for children aged under 16 and people over the age of 65 Although we don’t administer DLA, this will affect the residents of our borough From those residents currently in receipt of Housing and/or Council Tax Benefit 1,959 receive DLA More information at

Restrictions for Social Sector Tenants Introduced from April 2013 for new and existing working age Housing Benefit claimants living in the social sector (Council Tenants and those renting from Housing Associations) Final regulations not yet received, but draft regulations propose: –One bedroom for each person or couple living as part of the household with the following exception Child aged 15 or under would be expected to share with one other child of the same gender; and Child aged 9 or under would be expected to share with one child aged 9 or under, regardless of gender

Benefit Cap From April 2013 the Government will introduce a cap on the total amount of benefit that working age people can receive so that households on out of work benefits will no longer receive more in benefit than the average weekly wage earned by working households Decided by DWP but administered by the Local Authority as a cap to Housing Benefit £500 per week for a couple and lone parents, £350 for a single person

Cap will apply to the combined income from: –Out of work benefits (Jobseeker’s Allowance, Income Support and Employment & Support Allowance, except where the Support component is in payment) –Housing Benefit –Child Benefit & Child Tax Credit –Universal Credit (From October 2013); and –Other Benefits such as Carer’s Allowance and Maternity Allowance Cap will not apply when someone in the household: –Obtains work and becomes entitled to Working Tax Credit –Is in receipt of War Widows Pension, Disability Living Allowance, Attendance Allowance or support component of ESA Based on current data 90 of our customers will be affected by the cap. DWP contacting all those affected by letter. The scan identifies those affected based on current details and also those who may be affected from April DWP helpline or online at

Example 1 –Mr & Mrs A have 4 children and are both out of work. Their combined benefit income (including Housing Benefit) is £600 per week. –Their Housing Benefit entitlement is £120 per week –As their income exceeds the benefit cap by £100, their Housing Benefit from April 2013 will be £20 per week Example 2 –Mrs C is a lone parent with 5 children and is not working. Her benefit income (including Housing Benefit) is £556 per week. –Her Housing Benefit entitlement is £138 per week –As her income exceeds the benefit cap by £56, her Housing Benefit from April 2013 will be £82 per week

Impact of Welfare Reform Less income for residents More rent and council tax for the council to collect Inability to pay other bills Increase in demand for debt advice Greater demand on homelessness and housing options Greater levels of overcrowding Landlords less willing to take benefit claimants – no safeguards Increased applications for Discretionary Housing Payments Greater concentration of tenants in cheaper, poorer quality housing Likely to increase demand for smaller properties – may be difficult to meet Higher demand for social housing from privately rented tenants

Localisation of Council Tax Benefit Current Council Tax Benefit Scheme Means tested benefit Where applicable a joint application for Housing & Council Tax Benefit is made Data sharing arrangements with the DWP Assessment is based on national set of legislation Legislation applies to working age and those of pensioner age Council Tax Benefit awarded is reclaimed via a national subsidy system. There is no ‘maximum’ in terms of the amount of subsidy we can reclaim

Localisation of Council Tax Benefit New Council Tax Support Scheme Part of the Local Government Finance Bill published on 16 th December 2011 The Bill requires Local Authorities to establish a Council Tax Reduction Scheme by 31 st January 2013 Will be paid as a discount rather than a benefit We will receive a fixed grant to cover the cost – but only 90% Regulations will include the following provisions: –Pensioners should not see any change in their current level of awards as a result of this reform –Local Authorities to consider support for other vulnerable groups –Local Schemes should support work incentives, and in particular avoid disincentives to move into work

Current Caseload Data Total Caseload-13,028 Council Tax Benefit Caseload-12,139 Pensioner Age Claimants- 5,583 or 46% Working Age Claimants- 6,556 or 54% Those that are working or self employed or not in receipt of any state benefits 2,272 Those on Job Seekers Allowance1,224 Those on Income Support2,339 Those on Employment Support Allowance721

Consultation Took place between 6 th August & 28 th September Focussed on six key proposals:- –All working age claimants should pay something –Protection for vulnerable claimants –Work incentives –All members of the household should contribute –Late applications –Removal of Second Adult Rebate –Rates of Allowances & Premiums frozen at 2012/13 rates –Hardship fund

Local Council Tax Support Scheme Following consultation the six key proposals were agreed by Cabinet on 7 th November Will now be reported to full Council in December Now busy looking at the administration of the scheme including the collection of Council Tax from working age claimants affected by the changes

Conclusion Biggest period of change in over 30 years Lots of work still to do! Welfare Reform group has been set up to decide how best to communicate these changes to all of our residents Also need to consider what help and advice we can give regarding financial inclusion

Questions ?