Mencap Briefing Benefit changes: the Welfare Reform Act 2012

Transcription

1 Mencap Briefing Benefit changes: the Welfare Reform Act 2012 The UK welfare system has recently seen one of the biggest shake-ups since its introduction, with a government focus on the creation of a fairer [and] more affordable benefits system. The government is seeking savings of 18 billion from the benefits bill by 2014/15. Many of these savings were introduced through the Welfare Reform Act Recently, the Chancellor outlined a further 3.7 billion of benefits savings on top of this. In particular, he announced that most benefits will be increased each year by 1% for the next 3 years. This is below inflation and will mean, as costs of living go up, benefits will be worth less and people may face hardship. Mencap is particularly concerned that this 1% benefit up-rating will also apply to Employment and Support Allowance (ESA), even though this benefit is for sick and disabled people, many of whom are unable to work. This document outlines some of the key benefits changes taking place and the potential impact these will have on people with a learning disability and their families. The Appendix (page 7) includes a summary of the changes outlined here, and their implementation dates. 1. New Size Criteria for Social Housing ( under occupation or bedroom tax ) Housing Benefit is paid to those on a low income to help cover their rent. In social housing, new rules will mean that some Housing Benefit claimants will get a lower amount of benefit if they are judged to have a spare room. Working-age Housing Benefit claimants living in social housing (housing provided by a council or housing association) will face new rules on the number of bedrooms they can have. This will restrict Housing Benefit in some cases. The change brings social housing rules in line with those for people claiming Housing Benefit in the private rented sector. The size criteria in the social rented sector will restrict housing benefit to pay for one bedroom for each person or couple living as part of the household. There are a few different rules around this arrangement for example, children under the age of 16 and of the same gender will be expected to share a bedroom. However, the change will mean that tenants who have one or more spare bedroom(s) will have to pay an average of 14 more per week for this. Alternatively, they can move to a smaller property, where this is available. An exception to the new size criteria exists where a disabled people requires an additional bedroom for a non-resident carer who provides them with overnight care. In this situation the disabled person is entitled to Housing Benefit for an additional spare bedroom. Mencap is concerned that some people with a learning disability will be forced to move home as a result of not being able to cover the additional rent payment and therefore face losing their support networks. Mencap is also worried about families with disabled 1

2 children who have been identified as needing separate bedrooms for their children, but who will now, under the new rules, have to share a bedroom. This change is being introduced from April It is estimated that 670,000 people will be affected by the proposal, 420,000 of whom are estimated to be people with a disability. 2. Introduction of the Personal Independence Payment (PIP) Disability Living Allowance (DLA) is money for disabled people to help cover the costs of living with a disability. It is paid at different rates depending on the amount of help someone needs with care and mobility. The Personal Independence Payment (PIP) will replace the current DLA system, and will be gradually rolled out from April Personal Independence Payment (PIP) will begin to replace Disability Living Allowance (DLA) for new claimants from PIP will continue to be a non-means-tested benefit aimed at recognising the additional costs of living with a disability, but is intended to focus on supporting those with the greatest need. All claimants will have to undergo a new assessment for PIP, including people currently receiving DLA. As part of this assessment process, most people will be required to attend a face-to-face meeting with a healthcare professional. The government has estimated that 600,000 fewer people will be found eligible for PIP by 2018 than under the current DLA system. Mencap is concerned that this means that people with more moderate support needs may not qualify for PIP and will be under financial pressure to cover additional disability related costs themselves. PIP is being rolled out in April 2013 in a number of pilot areas. This will initially be for new claims only. It will then apply to new claims in the rest of Great Britain from June. In October 2013 the reassessment process for existing DLA claimants will begin for some groups, with the rest starting in October The reassessment process is expected to go on until March Introduction of Universal Credit Universal Credit will combine many existing means-tested benefits into one benefit payment. The Severe Disability Premium will not exist in the new system; so many disabled people who live on their own and who do not have a paid carer could lose out. While Disability Additions will take into account the extra needs of disabled children, the amount of support for some will be significantly reduced under the new system. Universal Credit will replace most means-tested benefits, including income-based Employment and Support Allowance (ESA), income-based Jobseekers Allowance (JSA), Income Support, Housing Benefit and tax credits. Many disabled people will gain from the new system but, for others, the change will lead to a reduction in support through the merging of tax credits and disability premiums in Universal Credit. 2

3 The Severe Disability Premium (SDP) currently exists to help with the extra costs facing disabled people who live alone. This will not be available within the Universal Credit. As a result, many disabled people without someone who cares for them will be worse off. This will cost disabled adults with no one who cares for them (or with only a young carer) about 58 per week (over 3,000 per year). Under Universal Credit support for families with a disabled child is to be provided through disability additions to supplement household benefit entitlements. In some cases, financial support is being reduced from 57 to just 28 a week. This will affect all families with a disabled child unless the child is getting the higher rate of the care component of DLA/PIP or is registered blind. The Universal Credit is being rolled out in a number of pilot areas in April From October 2013 it will start to be rolled out elsewhere. 4. Introduction of Household Benefit Cap A Household Benefit Cap will limit the total amount of benefit that people of working age can receive. From April 2013, there will be a cap on the total amount of benefit that people of working age can receive. The cap will be set at 500 per week for a lone parent or a couple (with or without children) and 350 a week for those who are single. It will apply to combined income from benefits including Job Seekers Allowance, Income Support, Employment and Support Allowance, Housing Benefit, Child Benefit, Child Tax Credit and Carer s Allowance. If someone s total benefits are greater than their cap, their local authority will reduce their Housing Benefit payments until overall benefits fall within the limit. Households will be exempt from the cap if they include: a war widow or widower, someone who is claiming Working Tax Credit or the ESA support component, or a claimant, partner or child who is receiving a DLA or a PIP payment. Although the government repeatedly said that households with a disabled person in receipt of DLA or PIP would be exempt from the cap, the cap will still apply to parent carers who are looking after a disabled adult child. In this situation, the parent and child are treated as separate households for benefit purposes, and the parent carer remains subject to the benefit cap. Mencap is very concerned about the impact this will have on family carers, particularly as the parent will continue to be responsible for the housing costs of their child in this context. In addition, Mencap is concerned about those adults with a learning disability who, in the future, will not be eligible for PIP or a member of the support group of ESA, and who will therefore not be exempt from the cap. Around 5,000 carers in receipt of the carers allowance will be hit by the benefit cap. 3

4 5. Introduction of a time-limit for contributory Employment and Support Allowance (ESA) for people in the Work Related Activity Group Employment and Support Allowance offers financial support if you are unable to work because of your illness or disability. An assessment is required to find out whether you can get ESA and what sort of support you will get. You are placed in the Work Related Activity Group if you are found to be able to move towards work. Under the new system, people in this group will be limited to 1 year of receiving the contributory part of ESA. ESA was introduced in It replaced Incapacity Benefit, Income Support (because of a disability) and Severe Disability Allowance. All people on these benefits will be moved across to the ESA system by The Welfare Reform Act introduced a 1 year time limit (from April 2012) to contributory Employment and Support Allowance (ESA) for those who are in the Work- Related Activity Group (WRAG) of ESA. This group of people have been found to have limited capability for work but are deemed to be able to carry out some work-related activity to move towards work. Contributory ESA applies to those people who have paid sufficient tax and National Insurance. Once the time limit applies, claimants will be able to make a claim for income-related ESA instead, but not everyone will be eligible. It is expected that 30% of those affected by the time limit may receive a reduced rate of income-related ESA (depending on their other income), and 40% will not qualify for income-related ESA at all. While lots of people with a learning disability are likely to be eligible for income-related ESA instead, some people may be affected. 6. Localised Schemes for Council Tax Benefit Council Tax Benefit reduces your council tax bill depending on personal circumstances. Under the new system this will be calculated and administered by councils rather than the government. The Welfare Reform Act introduces changes to the way Council Tax Benefit (CTB) is administered, passing decision-making responsibilities and administration to local authorities. Councils will also see a 10% reduction in funding, but have been told that the changes must not affect support for people of pensionable age. Mencap is therefore concerned that this reduction to already-stretched local authority funding will see the cut passed on to working-age claimants including, in some cases, those with disabilities. It is likely that localised decision-making will create a postcode lottery of support, with some councils charging people more than others. The new system will come into effect from April It is difficult to tell at this point how many disabled people will be affected by this change in policy. However, we do know that people in receipt of disability benefits make up 18% of all the people currently receiving Council Tax Benefit. 4

5 7. Changes to Support for Mortgage Interest Scheme The Support for Mortgage Interest (SMI) scheme offers financial help towards mortgage interest payments for some groups of people, including people with a learning disability. Until recently, the Support for Mortgage Interest (SMI) rules enabled some people with a learning disability to buy a home. With the help of organisations such as My Safe Home, around 1,000 people with a learning disability have benefited from this arrangement. Most of the mortgage products available for this kind of arrangement disappeared after changes to the SMI rates were introduced in October However, there were still opportunities becoming available in some parts of the UK. In future, a new zero earnings rule will be introduced. This will mean that SMI will not be paid if the recipient has any earnings. Until now, some people were able to work a small amount of hours and still have SMI paid. The changes will take effect from April Changes to Local Housing Allowance rates private-rented sector Local Housing Allowance is the Housing Benefit entitlement for people who rent from a private landlord. It is paid to those on a low income to help cover their rent. A number of changes had already been made to Local Housing Allowance (LHA) arrangements before the Welfare Reform Act For example, LHA rates were changed to be set at the 30th percentile of all rents in the local area, rather than the median level, meaning that people receiving LHA will only be able to afford the 30 per cent least expensive properties in their area. This means that people living in a privately rented accommodation receive, in most cases, less Housing Benefit than before. In addition, whereas only those under 25 were required to live in a shared house, this has now been extended to all people under 35. However, there are some exceptions. People in receipt of any rate of PIP daily living allowance or DLA care at the middle or higher rate will be exempt from this rule. They will continue to be entitled to the 1-bedroom rate, and therefore able to rent their own one bedroom property, as long as it is not more expensive than what they are entitled to under the LHA. The Welfare Reform Act and associated regulations have introduced further changes to the LHA. Instead of monthly reviews of the LHA, from April 2013 LHA rates will be set annually at either (whichever is lower): o The previous year s LHA rate up-rated by CPI inflation o 30 th percentile of local market rents Furthermore, the LHA rates will be up-rated from April 2013 in line with this policy, but increases will be capped to 1 per cent in most areas in and (or where the 30 th percentile is lower at that). 30 percent of the savings made on this will be used 5

6 to exempt certain high rent increase areas from this measure. Mencap is currently seeking clarification on which areas will be exempt from the 1% increase. 9. Exempt accommodation Many people with a learning disability require some housing related support alongside their housing provision, while others may have very specific housing requirements. This is likely to mean that the property needed to meet the needs of the disabled person in question costs more than general Housing Benefit will cover. The rules of exempt accommodation enable Housing Benefit to meet the additional costs of providing this type of specialist housing. The Government has said that the housing costs of supported exempt accommodation will be met outside the Universal Credit to help ensure that there remains enough flexibility within the system to cover the costs of specialist housing. This means that tenants living in exempt accommodation will not be affected by the size criteria and stricter rules around services charges. Equally, their housing benefit (or housing costs under Universal Credit) will not count towards the overall benefit cap. Whilst Mencap welcomes this move, we are concerned by the continued use of an outdated definition of exempt accommodation by the government. Our concern is that some supported living schemes, which do not meet the current definition, will find it difficult to get funding via the exempt accommodation route. 10. Abolition of the Social Fund The Social Fund is a government scheme to help people with emergency expenses that are difficult to meet on a low income. The Welfare Reform Act abolishes the discretionary Social Fund, which provides Community Care Grants and Crisis Loans, from April The fund currently provides financial support for emergency expenditure and urgently needed items. Instead, an allocation of money will be given to local authorities for local delivery of assistance, but there is no new statutory duty placed on local authorities to deliver this provision, nor is funding to be ring-fenced. The amount that local authorities will receive is also lower than previous payment levels, by almost a third in some areas. The concern is that financially-squeezed local authorities will reduce or cease this support for adults of working age. For more information please contact: Beatrice Barleon, Senior Campaigns and Policy Officer (Housing) , beatrice.barleon@mencap.org.uk, OR Jane Alltimes, Senior Campaigns and Policy Officer (Welfare reform) , jane.alltimes@mencap.org.uk 6

7 APPENDIX Summary of benefit changes and implementation dates Benefit change Bedroom tax New size criteria for social housing Personal Independence Payment Replacing DLA Universal Credit Replacing most means-tested benefits Benefit cap Time-limiting of contributory ESA 365 day limit for those people in the workrelated activity group Council Tax Benefit Date of change From April 2013 applies to tenants of working age living in the social housing sector April 2013 begins in a number of pilot areas, for new claims only June 2013 New claims in the rest of Great Britain will begin October 2013 reassessment process for existing claimants will begin, including those on fixed-term awards October 2015 remaining reassessment will take place March 2018 completion of roll-out April 2013 testing begins in control areas, for new claims only October 2013 roll-out for new claims in rest of Great Britain April 2014 Roll out on Northern Ireland End of 2017 everybody will be on Universal Credit From April 2013 trial in 4 London boroughs (Bromley, Croydon, Enfield and Haringey) Summer 2013 National rollout From April 2012 i.e. those reaching the 365 day limit by and from this date forward From April 2013 local authorities will be able to decide who gets support with council tax. Pensioners will be exempt from the changes and will continue to receive Council Tax Benefit as before Abolition of the Social Fund From April