1. Welfare Reform Clive Buckman, LBTH Benefits

2. Contents (1) ► An overview of the welfare reform programme, as it affects people currently claiming HB/CTB, and the transfer to Universal Credit (UC) and Pension Credit (PC). ► The changes to LHA in April 2011, including LHA caps, 30th percentile LHA rates, extra rooms for non-resident carers and Transitional Protection. ► The inflationary increases in ND Deductions in April 2011, 2012 and 2013 ► The extension of Single Room Rate restriction for single 25-35s from January 2012. This will include exceptions and Transitional Protection

3. Contents (2) ► Increased DHP budget ► The changes in safeguard procedure. ► The abolition of CTB in April 2013 and its replacement ► The introduction of under occupation charges for RSL tenants from April 2013 ► The total welfare benefit cap from April 2013 ► Uprating of LHA in line with CPI from April 2013 ► The migration of claims to UC and PC October 2014 to 2017

4. Other Changes not Covered ► Reductions to Tax Credits and child care support with Child Tax Credit and other benefits ► Migration of Incapacity Benefit to ESA ► Introduction of Personal Independence Payments (PIP) ► Changes to Support for Mortgage Interest ► Transfer of adult DLA claims to PIP ► Please see LASA rightsnet site www.rightsnet.org.uk for further information on these areas www.rightsnet.org.uk

5. Drivers for Reform ► Cost – £74 billion on working age benefits in 2009/10. Cost has risen by 25% on the last 15 years ► Simplicity – Over 30 benefits administered by various organisations. Difficult for claimants to understand and prone to fraud and error. £3.5 billion spent on admin p.a. ► Fairness. – Commitment to ensure people are better off in work. ► Work incentives – Current system is seen as too punitive to people who start work/increase their earnings

6. Reform Programme ► 7 year staged programme 2011-2017. ► Abolish several current strands of Benefit ► Replace them with a single unified Benefit – Universal Credit (UC). ► UC to include IS/ESA(IR), JSA(IB), Tax Credits and Housing Benefit. ► UC to be administered by a single organisation – DWP. ► UC normally paid by monthly payment to claimant

7. Staged Reform Highlights 1. ► April 2011 LHA Caps and 30 th percentile rate. Ending of £15.00 LHA top-up for claimants whose rent is below LHA rate. Increase in non dep Charges, (1st Stage). ► January 2012 Shared Room Rate extended 25-34 year olds. ► April 2012 Increase in non dep charges, (2 nd stage).

8. Stage Reform Highlights 2 ► April 2013 Increase in non dep charges, (3 rd stage) Size criteria applied to HB for social sector tenants Total welfare cap (£500 pw for families, £350 pw single claimants). Council Tax Benefit abolished & replace by local scheme. (10% cut in Gov’t funding ) LHA uprated in line with CPI. Abolition of part of Social Fund and replacement with LA welfare assistance ► October 2013 New claims and existing claims who move in and out of work migrate in to Universal Credit. ► April 2014 New claims from pensioners paid housing credit element of Pension Credit ► October 2017 – All remaining HB claims migrate to Universal Credit

9. Non Dependant deductions ► Deductions are made from HB/CTB in respect of adults (other than the claimant’s partner), who live in the Household. ► Separate deductions are made in respect of both HB and CTB ► The amount of deduction depend on the non-dep’s income/circumstances (and sometimes the claimant’s and their partner’s). ► Deductions were frozen at 2001/2002 levels prior to April 2011. ► Inflationary increase phased in over next 3 years

10. Non Dep Deductions HB Non-dependant Circumstances April 2001 – March 2011 April 2011 – March 2012 Aged 25 or over and on Income Support/Jobseekers Allowance (Income Based), or Assessment phase ESA. Aged 18 or over and not in any of the other categories 7.409.40 In receipt of main phase Employment Support Allowance (Income Related) 7.409.40 Under 18, in receipt of Pension Credit, Full Time Students or Prisoners NilNil Aged 18-25 and in receipt of assessment phase ESA(IR), aged under 25 and on income support NilNil Aged 18 or over and in remunerative work - gross income less than £122.00 7.409.40 - gross income not less than £122.00 but less than £180.00 17.0021.55 - gross income not less than £180.00 but less than £234.00 23.3529.60 - gross income not less than £234.00 but less than £310.00 38.2048.45 - gross income not less than £310.00 but less than £387.00 43.5055.20 - gross income not less than £387.00 47.7560.60

11. Non Dep Deductions CTB Non-dependants Circumstances April 2001 – March 2011 April 2011 – March 2012 In receipt of state Pension Credit or in receipt of Income Support, Jobseekers Allowance (Income based), or Employment Support Allowance ( Income Related) full-time students and prisoners. An education leaver under 20. Severely mentally impaired. NilNil Aged 18 or over and in working 16 hours or more per week -gross income greater than £387.00 6.958.60 -gross income not less than £310.00 but less than £387.00 5.807.20 -gross income not less than £180.00 but less an £310.00 4.605.70 -gross income less than £180.00 2.302.85 Others aged 18 or over 2.302.85

12. LHA CAPS ► Affects tenants who rent from private landlords. ► Maximum HB is based on the LHA rate for accommodation which meets the household size requirement. ► Prior to April 2011 LHA was based on median, (50th percentile) of rents charged in the area. ► From April 2011 LHA based on lower of 30 th percentile of rents or national cap. ► In LBTH national cap applies for some households.

13. LHA Caps 2 Accommodation size LHA March 2011 Latest LHA December 2011 (Post Reform) Difference No. current HB claims above LHA caps/30th percentile Shared£101.58£92.31-£9.27858 1 Bed £250.00£240.00-£10.00893 2 Bed £310.00£290.00-£20.00967 3 Bed £365.00£340.00-£25.00264 4 Bed £465.00£400.00-£65.0055 5 Bed £573.46£400.00-£173.46 Total: current claims above new LHA levels 3,037 Total - all live LHA claims 3,927 % above LHA caps/30th percentile Estimated annual loss of HB 77% £4 Million App

14. Transitional Protection ► New Claims affected from 1 April 2011. ► Tenants who change address or whose household composition changes will be affected from the week following the date of change. ► Tenants who claimed prior to April 2011 who do not move and whose household size doesn’t change will be protected at the pre April LHA rate until 9 months following anniversary of their claim. ► For claimants in receipt of LHA top up of up to £15.00 this ends on next anniversary of claim after 01/04/11 ► Maximum protection period – December 2012

15. End of LHA Top Up Payments ► Prior to 91/04/11 LHA claimants whose rent was lower than their LHA entitlement were entitled to LHA up to the LHA level, except that the maximum rent on which their LHA was based could not be more than £15.00 per week above their rent. ► New claimants from 01/04/11 do not get this top- up. ► Existing claimants’ top up will end on the first anniversary of their claim from 01/04/11

16. Extra Room Rate for some claimants with disabilities 1. Private tenants and their partners who get attendance allowance or DLA (CC) at the higher or middle rate (or would be entitled if they claimed) 2. Have a named non-resident carer who regularly stays over night to help with care 3. Have an extra room in their home for the carer. ► The above are entitled to LHA for an extra room from 1 st April 2011. (maximum 4 bedroom rate)

17. Extension of Shared Accommodation Rate ► Currently single tenants aged under 25, who live alone and claim Housing Benefit, have the rent on which housing benefit is paid restricted to the Shared Accommodation Rate ► This provision will be extended to single claimants aged under 35 from 01 Jan 2012. ► New claimants who claim on or after 01 Jan 2012 will be affected immediately. ► Those who claimed prior to 01 Jan 2012 will have transitional protection related to their anniversary date ► Currently SAR-£92.31 pw, One Bed Rate-£240.00 pw. ► 400 claims will be affected. The total benefit loss will be about £2,000,000

18. Transitional Protection ► 25 – 35s claiming continuously since before April 2008 will have their rent referred at SRR at next annual referral after 01/01/12 ► 25-35s claiming LHA before 01/04/11 will be protected up to their next anniversary date plus 9 months ► Claimants who first claimed 01/04/11 to 31/12/11 will be protected up until the anniversary of their claim

19. Exceptions ► Single people under 35 who get DLA(CC) at higher or middle rate and do not have a carer who gets ICA ► 25 – 35s who previously lived in a hostel for the homeless for at least 13 weeks and were rehabilitated to their current home from there ► 25-35s subject to a current multi-agency management order and the Criminal Justice Act.

20. Discretionary Housing Payments ► So a to help mitigate the affects of cuts in Housing Benefit and Council Tax Benefit LAs have been allocated extra funds for DHP ► For the 2011/12 tax year Tower Hamlets have an extra £85k awarded ► As DHP is budget limited and a high level of demand is expected, especially from January 2012, it will only be available for claimants in very exceptional hardship or for short periods.

21. Which claimants will get DHP? ► Each DHP claim will be looked at individually ► Consideration will be taken of disablement needs, needs of carers of the disabled and of children and many other factors. ► Claimants who will benefit from short term provision of DHP, such as single LHA claimants under 35 who are pregnant. ► DHP can not be awarded when there is no entitlement to HB or CTB or for periods with no HB entitlement (e.g. deposits or rent in advance).

22. Payment of LHA to Landlords ► LHA is normally paid to claimants ► Since LHA was introduced payments are made to Landlords when claimants are in 8 wks rent arrears, or are unable or unlikely to pay their rent ► From April 2011 LHA can be paid to landlord if landlord agrees to reduce rent to affordable level on this condition

23. Second Stage of inflationary ND deduction increase ► Effective from April 2012 ► A further inflationary increase of approximately 25% with apply in respect of both HB and CTB

24. Size Criteria for Social Rented Sector ► Effective from April 2013. Only working age families are affected. ► LHA Size criteria applied to social housing. ► HB reduced for claimants who under occupy. ► There will be a percentage deduction of HB. This is expected to be about 15% for under- occupying by 1 room and an extra 10% for each subsequent room

25. Total Welfare cap ► Affective from April 2013 ► Total welfare cap for Working age claimants £500 pw for Families, £350 PW for single claimants. ► War widows and some DLA claimants will be exempt from the total welfare cap ► Includes IS, JSA, ESA, Tax Credits, HB and child benefit ► People most affected will be families and those living in areas where rents are high. ► The benefit cut first will be Housing Benefit

26. Impact of welfare cap for large families The maximum claimants in working age workless households will be able to receive in housing benefits once the cap is introduced will be (assuming current benefit rates) as follows: Two Parents One Parent No. of Children £251.99£290.442 £189.66£228.113 £127.33£165.784 £65.00£103.455 £2.67£41.126

27. Council Tax Benefit Abolished ► Replaced by local scheme – April 2013. ► Will provide work incentives ► Pensioners will remain entitled to same support as in CTB scheme ► LAS need to consider:  Design  IT  Administration  Funding (Only 90% of current CTB funding will be available from central Gov’t).

28. LHA Annual Increase from April 2013 ► LHA uprated by Consumer Price Index, (CPI). ► CPI doesn’t include Housing Costs. ► Move way from principle whereby level of rent predicates maximum HB. ► Disproportionately affects areas where rents are high. ► Paves the way for central administration of HB (i.e. UC/PC).

29. Universal Credit phased In ► Phased in between Oct 2013 and Oct 2017. ► Oct 2013 – New claims, out of borough change of address and any HB claimant who moves out of work will move onto UC. ► Will DWP have the IT and administrative systems in place by Oct 2013? ► Will UC include Housing Costs during phase-in period? ► April 2014 New claims from pensioners go to Pension Credit. HB claimants moving into work claim UC. ► April 2015 to Oct. 2017 – All existing claimants will transfer to UC/PC. All claims in LA area transferred together.

30. Aims of Universal Credit Revisited (1) COST ► Social upheaval, homelessness ► Affordable Rents – These are new RSL tenancies at 80% of market rent. Increases the cost of welfare bill. brings social rents into line with LHA The Total Welfare cap will make them unaffordable for workless working age families

31. Aims of Universal Credit Revisited (2) SIMPLICITY ► Current complicated assessment criteria retained. ► Remains difficult for claimants to determine how changes will affect entitlement ► Limited local service provision. ► IT systems – Build and testing

32. Aims of Universal Credit Revisited (3). FAIRNESS ► LHA Caps - Only 12% of accommodation in LBTH available at LHA levels. ► Affordable Rents could make social housing unaffordable for benefit recipients. ► Caps penalise large and extended families. ► Renders HB “unfit for purpose”. ► 20,000 LA jobs at risk

33. Aims of Universal Credit Revisited (4). WORK INCENTIVES Increased taper eroded by: ► LHA Caps which mean HB will not always be based on the rent charged. ► Childcare element reduced by 10%. Incentive to work further eroded by ► Economic recession + fewer available jobs ► LHA caps encourage claimants to move from areas where jobs are more abundant. ► Help with CTax being outside UC.