An overview of welfare reform in London Kate Bell London Campaign - - PowerPoint PPT Presentation

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An overview of welfare reform in London

Kate Bell London Campaign Co-ordinator Kbell@cpag.org.uk

A long list of welfare reforms 1

Change Who will it affect Who will implement this change Date of implementation Migration from Incapacity Benefit to Employment and Support Allowance Incapacity Benefit claimants Jobcentre Plus 2010-2014 National caps on Local Housing Allowance (LHA) depending on property size All LHA claimants Local Authorities who administer Housing Benefit, until the introduction of Universal Credit which includes housing costs From April 2011 – applies to new claimants, and on the anniversary of existing claimants tenancies Increases in non-dependant deductions All LHA claimants with non- dependants living with them Local Authorities who administer Housing Benefit, until the introduction of Universal Credit In April 2011, and again in April 2012. Removing the £15 excess that LHA claimants could keep if their rent was below LHA rates All LHA claimants Local Authorities who administer Housing Benefit, until the introduction of Universal Credit April 2011

A long list of welfare reforms 2

Change Who will it affect Who will implement this change Date of implementation Setting LHA rates at the 30th percentile

• f rents in each Broad Rental Market

Area rather than the median All LHA claimants Local Authorities who administer Housing Benefit, until the introduction of Universal Credit From October 2011 Shared accommodation rate applies to single tenants up to 35 years old (rather than as previously those up to 25 years) All LHA claimants Local Authorities who administer Housing Benefit, until the introduction of Universal Credit From January 2012 Tax credits can only be claimed by couples when they work over 24 hours a

• week. Previously the minimum hours

level was 16. Low income working families claiming tax credits HMRC From April 2012 Uprating LHA by the Consumer Price Index rather than by increases in rents All LHA claimants Local Authorities who administer Housing Benefit, until the introduction of Universal Credit From April 2013 (rents frozen from April 2012 in preparation) Introduction of ‘under-occupation’ penalties in the social rented sector (‘Bedroom tax’ Housing Benefit claimants in the Social Rented Sector Local Authorities who administer Housing Benefit, until the introduction of Universal Credit From April 2013

A long list of welfare reforms 3

Change Who will it affect Who will implement this change Date of implementation Localisation of the Social Fund All local residents Local Authorities April 2013 Localisation of Council Tax Benefit All local residents Local Authorities April 2013 The Benefit Cap (no individual will be able to claim more than £350 benefits a week, and no family will be able to receive more than £500). All benefit claimants Local Authorities who administer Housing Benefit, until the introduction of Universal Credit April 2013 Introduction of Personal Independence Payment (replacing Disability Living Allowance) Disabled people receiving Disability Living Allowance Jobcentre Plus April 2013 until 2016 Introduction of Universal Credit (replacing most other means tested benefits) All benefit and tax credit claimants Department for Work and Pensions, working with Local Authorities October 2014 until 2017

3 major changes to housing for families 1:LHA changes

• LHA is Housing Benefit paid to tenants in Private

Rented Sector.

• Rates now set at 30th percentile of rents, not 50th

and uprated by CPI not rental values.

• + total caps on rents:
• £250 for a one bedroom property
• £290 for a two bedroom property
• £340 for a three bedroom property
• £400 for a four bedroom property.

3 major changes to housing for families: 2 the Benefit Cap

• From April 2013, the total weekly benefits that a

household can receive will be limited to £350 per week for single people or £500 per week for single parents and couples.

• Exemptions if working (nb WTC for couples now
• nly available if working 24 hours).
• Initially applied through Housing Benefit, then

through Universal Credit.

• No exemptions for families in Temporary

Accommodation.

3 major changes to housing for families: 3 The Bedroom Tax

• The size criteria will restrict housing benefit to
• ne bedroom for each person living as part of a

household, with the following exceptions:

• Children aged under 16 of same gender must

share a bedroom;

• Children aged under 10 must share, regardless of

gender;

• Disabled tenants who have a non-resident
• vernight carer can have an extra bedroom.

Impacts in London

• London Councils research: 133,000 workless households in London,

20% of the total will be unable to afford their current rent as a result of either the household or LHA cap

• 11% of workless households, some 73,000 in total, would experience

a shortfall in their benefits against their living and housing costs as a result of the household benefit caps.

• Almost two-thirds of these households will face a shortfall equivalent

to more than 10 per cent of their living cost benefits. Over a third face a shortfall above 20 per cent and one in six, of over 30 per cent.

• The household cap has a disproportionate impact on families and on

larger families in particular: e.g. 1/3 single parents with 3 children unable to afford rent, ½ of couples with 3 children unable to afford rent.

• DWP: 54 per cent of households affected by benefit cap are in

London.

Source: HBAI, 2009/10, IFS 2011

Responses from families?

• Government aims:

−Move people into work −Decrease rents −Tackle overcrowding −Increase ‘fairness’

Responses from families?

− Move people into work? Barriers include childcare costs – 23% higher in London − Decrease rents? No sign yet that rents coming down. Affordability in outer boroughs also decreasing. − Tackle overcrowding? Some families may move into smaller accommodation to stay in borough − Increase ‘fairness’? Families will make trade offs: rent/heating/eating Only practical response may be moves out of London – impact on access to services, social networks, employment?