1. John Ede Partnership Manager CAB Cornwall
Welfare Reform
John Ede
Partnership Manager
CAB Cornwall

2. Welfare Reform Where are we now- Health Warning Regulations?
Housing Benefit
Council Tax Benefit
Incapacity Benefit –transfer to ESA April 2014 at the latest
DLA – transfer to Personal Independence Payment (PIP)
Universal Credit
Which benefits it will replace,
How it works
Timetable for its implementation

3. Leaking Bucket Syndrome

4. Debt in Cornwall Sample Size Average Debt Average Monthly Income
Debt / Income Ratio
Available Income to pay debts
Years to Pay off Debt
Single People 74
£11,645.08
£612.00 19
-£36.95
NEVER
Couples with Children 53
£14,277.16
£1,510.43 9
£0.85
1,303
Lone Parents 52
£10,421.00
£1,115.98
£19.25 42
Couples 55
£20,568.99
£1,284.85 16
£71.63 22
Pensioners 50
£23,921.39
£925.08 26
£11.66
168
50+
113
£21,542.63
£979.84
-£14.98
Totals
284
£15,793.31
£1,057.35 15

5. Families on Benefits (55)
Ave No. Children 2 (27x1, 19x2, 6x3, 3x4, 0x5)
Monthly Total Income Ave £1, (Debt Income Ratio 7)
32 Renting, 1 Mortgage, 22 other arrangements
Ave Total Debt £7, (Excludes Mortgage)
Ave Priority Debt £1,197.57
Ave Non Priority Debt £6,659.98
Available income deficit £5.54 each per month.
NEVER years to pay off debt.
Fuel Poverty 27 Transport Poverty 45 Water Poverty 30

6. Cornwall Working Age Welfare Benefits Total 126,367

7. Welfare Reform Act 2012
The Act sets out in law fundamental changes to the welfare system,
aimed at improving the benefits system
reduce dependency on welfare,
improve incentives to work,
making work pay
reducing overall spend at a time of economic instability in the UK
A single working age benefit-
UNIVERSAL CREDIT

8. Number of children in those households
Tax Credits Number of couples with children and children benefiting from Working Tax Credit and working between 16 and 24 hours as of December 2011 Source: PQ answer 88172, 10 Jan 2012 Note: official data was not available for 30 constituencies, so date fields are left blank in these instances.
Constituency
Number of Households
Number of children in those households
Camborne and Redruth
370
780
North Cornwall
200
465
South East Cornwall
205
390
St Austell and Newquay
350
690
St Ives
295
555
Truro and Falmouth
190
430
Totals
1,610
3,310

9. Key Welfare Reform Changes
2010 Budget and spending reviews – key cuts
Universal Credit – major reform
Disability Living Allowance replaced with Personal Independence Payment
Time limiting of contribution-based ESA
Localisation of support for council tax benefit
Reform of the social fund – ‘localisation’ of crisis loans & community care grants
Housing Benefit Changes
Total benefit cap

10. Where the cuts will hit – annual by 2014
Cuts targeted at working age claimants, and their dependants
Benefits for pensioners protected
Change to entitlements under Universal Credit:
2.7m households no change;
2.8m higher;
2m households lower

11. Housing Costs
Households in Cornwall receiving Housing Benefit ,820

12. Housing Costs Local Housing Benefit Cap- mainly affect London & SE
Non Dependant Deductions- Large increase over next 3 years to make up ground since last increase 10 Yrs ago. Affects tenants for example with parents, grown up children living in the house.
Local Housing Allowance Rates- changes unwind throughout for existing claims from private tenants- set at the 30th percentile of local private rent prices, not 50% 1/3 housing affordable to HB claimants. (341 Props to Rent May 12)
Single room rent restriction for single people extended to people under 35yrs
Restriction to the number of rooms “needed” in Social Housing (already happens in private rented housing) April 13
Local Housing Allowance rates- up rated with Consumer Price Index not average market rents
HB used to apply CAP on total benefits income with exceptions e.g. DLA, WTC
MORTGAGE INTEREST The end of temporary measures for support for mortgage interest that were designed to help stabilise the owner occupied market during the Credit Crunch (Jan 2013)

13. Mortgage and Landlord possession claims leading to orders made in England and Wales by Parliamentary Constituency 2011, Not seasonally adjusted
Constituency
Mortgage
Landlord
Camborne and Redruth 64
115
North Cornwall 60 70
South East Cornwall 50
St Austell and Newquay 85 65
St Ives 45
100
Truro and Falmouth 35
Totals
359
460

14. Universal Credit Single benefit for working age people
42,100 Key working age benefits in Cornwall will be affected
All means tested benefits replaced by UC
‘making work pay’ – Taper 35p for every £1 earned
Pathfinders from April 2013
New out of work claimants from October 2013
All new claimants from April 2014
All pre-existing claimants by October 2017

15. Which Benefits will UC replace
UC will eventually replace the following means tested benefits AND tax credits
Income Support
Income based Jobseekers Allowance
Income related Employment Support Allowance
Child Tax Credit
Working Tax Credit
Housing Benefit
Budgeting loans (Will be replaced by an advanced payment on Universal Credit)

16. Universal Credit: wins
No more reporting extra income several times & report to one department only
No more difficulty deciding which benefit to claim
Ability to work any number of hours & gain financially
BUT
No fixed hours rules – positive BUT
A challenge for providing easy point from which to passport to entitlement to other benefits and discounts

17. Who’s losing: time limiting CB ESA (Contribution-based Employment Support Allowance)
Contribution-based ESA limited to 12 months for those in the work related activity group
300,000 will lose almost £100 a week
Affects claimants with savings or a partner with income
Destroys the principle that those who have paid National Insurance Contributions (NICs) will be protected if the become sick
Undermines the intention to support people with disabilities to live independent lives

18. UC: losses for disabled people
Universal Credit – far fewer disabled adults will get extra support
Those living alone without a carer
People with a disability or health condition in low paid work
Pensioners with working age partners – could lose £100 a week or more
Some families with disabled children – equivalent of child disability element cut in half
Potential rise for ESA support group

19. Transferred to UC Transitional Protection
You will be transferred from your current benefit to UC at some point
If your UC is less than your current benefit you’ll be entitled to some extra UC to make up the difference, as long as your circumstances have not changed substantially.
Its not clear how much extra UC you’ll get under these rules or whether there will be any shortfall
The government have not yet announced which changes mean they will transfer you from your old benefit to UC without transitional protection.

20. Maximum UC can be made up of
A standard allowance for a single person (or Couple)
An amount if you’re responsible for a child or young person
An amount for housing costs, whether Rent or Mortgage
Amounts for other particular needs or circumstances e.g. caring responsibilities or disability
An amount for child care costs (if you are working)
Your UC payment is your UC Maximum payment minus:
65% of your earnings, although the DWP will ignore some types of earnings and apply an earnings disregard
Types of income other than earnings e.g. occupational pensions
If income less than your Max UC payment you would be entitled to, you will get UC to top up your income
If income more than your Max UC payment- No UC

21. Who will UC affect, and When
From April 2013 UC will apply to new claims in Pathfinder areas. (Tameside, Oldham, Wigan, Warrington)
UC will be introduced gradually in other areas from October 2013
DWP will phase out new claims for the benefits and tax credits that UC replaces between Oct 2013 and April 2014
New claims for Housing Benefit and Tax Credits will be the last to end in April 2014
If you are already getting a benefit but your circumstances change after UC is introduced e.g. you move into work or have a child you will move onto UC from the date of the change

22. How will UC be paid DWP is likely to pay UC monthly to most claimants
Pay Claimants or Landlords?
Single Payment per household?
Include Housing Costs (Cap?)
Monthly payments into Bank Accounts
Administered by centralised IT system (still in the design phase)
Plan initially 50% claims on Line rising to 80% Claims on Line by 2017

23. Universal Credit: delivery issues
‘Digital by default’ – aim for all universal credit applications to be made online
Currently only JSA can be claimed online & less than a third do
Risks and challenges for some claimants
All Universal Credit paid together
Rent no longer paid to landlords
Child related payments no longer to main carer
Paid monthly – instead of several more frequent payments
Budgeting challenges – potential rent arrears
Exceptions will be available – but to what extent?
Complexity 3 systems in operation till 2017

24. Personal Independence Payment (PIP)
DLA replaced by Personal Independence Payment (PIP) from April 2013
Reform led by 20% cut
Fewer people will be eligible – some people who need support will no longer qualify
Qualifying period 3 months plus a further 9 months
A lot of lobbying during passage of the Bill
Accuracy of face to face assessments – lessons from ESA
Passporting – alternative routes to other help will be needed

25. Localisation – support for Council Tax Benefit
Almost 54,500 individuals claim council tax benefit in Cornwall
Average claim around £16 a week
CTB abolished from April 2013
Local authorities to devise their own system with 10% reduction in budget
Low income pensioners protected (in England)
Non – pensioner households – could experience over 20% cut in support

26. Localisation – Social Fund Changes
Existing Community Care Grant and Crisis Loan schemes abolished
Budgets (not ring-fenced) given to LAs
LAs expected to make local arrangements to meet need (e.g. benefit uptake campaigns, food-banks, credit unions, furniture schemes)
Provision for crisis situations unclear

27. Financial Impacts on Claimants
Universal Credit
400,000 will lose over £50 a week in UK
Housing support
Affordable housing harder to find
Moving or supplementing support from benefit income
Risk of rent arrears & homelessness
Council Tax – less support risks hardship & debt
Civil penalties - £50 penalty for error & tough sanctions for insufficient engagement with work – risks for most vulnerable
Crisis loans & community care grants
No guarantees of help
Currently 3.6m crisis loan applications a year

28. Financial impacts on Disabled & Pensioner clients
PIP
0.5m fewer people will be entitled
Thousands entitled to smaller awards
Impact on other support (e.g. carer's allowance)
ESA – time limiting
Up to 300,000 lose almost £100 a week
Pensioners with working age partners
Lose almost £100 a week

29. Vulnerable Clients Vulnerable claimants are individuals who are –
Unable to safeguard their personal welfare or the personal welfare of others (including dependents). They may have difficulties which could affect their welfare and well-being. These difficulties could include comprehending information, interpreting situations, making decisions, giving consent, communicating information or their views or requesting specialist help.
This may be related to age, health conditions, physical, mental or learning disability (including individuals whose circumstances require an appointee)

30. Vulnerable Clients
Or Severe financial insecurity or hardship and/or because of their personal circumstances at that time.
Vulnerable claimants have difficulty coping with demands of the organisations processes including the channels used to access benefits or services and/or meeting the obligations or conditions they are required to meet. Consequently vulnerable claimants will need additional help and support that takes account of their changing circumstances (recognising that people move in and out of vulnerability) to safeguard their welfare and well-being in a co-ordinated way.

31. Edge of Poverty
The work looked at households that are in work but suffering high levels of financial stress and have stated that they are finding it very difficult to cope with their current income (therefore it does not include those already experiencing poverty and deprivation).
This work identified that 26% of households in Cornwall are at risk of poverty, ranking 21st out of 424 local authorities in the UK –
this places Cornwall within the top 5% of areas in the UK.
CC Community Intelligence Team

32. Partnership Working
Opportunities & Risks – the opportunities include reducing the cost of welfare paid and increased employment rate (positive for economy and individuals)
However, the risks are that people come under intense financial pressures.
Mitigating the affects on vulnerable households
Opportunity to coordinate services locally
Child Poverty, Families, Schools
Preparing vulnerable clients for the changes
Financial Capability, Budgeting, Bank Accounts, Debt and Benefit Uptake, Cornwall Together Cooperative.
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33. Cornwall’s demand for advice CABC 2011-12

34. Thank you
Thank you to the Volunteers and Staff of the CAB in Cornwall.
Online help from Citizens Advice