Proposed Welfare Reform Changes

The effect on Service Users of the June 2010 Budget proposals

1

The Government

• In 2010/11 – Government Spending £697 billion– Government Receipts £548 billion

2

Areas to rebalance the economy

• Deficit reduction– Amounts to £11 billion of Welfare Reform Savings

• Enterprise• Fairness– “seek to build over the longer term a fair tax and

benefit system that rewards work and promotes economic competitiveness”

– Reforms will reduce dependency and promote work

3

Savings / Cuts to be made

• Disability Living Allowance £360 million (13/14)• Child Benefit £365 million (11/12)• Uprating Non-Dependants deductions (£125

million 11/12)• Reduce HB to 90% £100 million (13/14)• Change to CPI £2010 million (11/12)• LHA 30th £365 million (12/13)• Under occupation £490 million (13/14)

4

The Vulnerable in Society

• Child Benefit frozen to “help fund significant increases in Child Tax Credit “

• Basic State Pension will be uprated by :– earnings, or– Prices, or– 2.5% - whichever is higher

5

Disability Living Allowance

• Estimated 20% will fail the new test• What is the new test?• 10% in 1 of our projects on DLA• Would result in a significant reduction in their

income• Could make the difference between work and

not working

6

Tax Credits

• Taper the family element• Remove the baby element• Not introduce £4 supplement for children

aged 1 and 2• Remove 50+ element• Changes to the calculation• Reduce limit for backdates and report

changes to 1 month

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Effect of Tax Credit changes

Income 10/11 March June 12/130 £2850 £2945 £3065 £32005000 £6660 £6865 £6990 £723510000 £6060 £6285 £6340 £661015000 £4110 £4335 £4290 £456020000 £2160 £2385 £2240 £251025000 £545 £545 £545 £460

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Child Benefit

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Lone Parents

• With children over 5 will be moved to JSA from 2011/12

• Government estimates will effect 15,000 Lone Parents

10

Housing Benefit

• Number of changes here• Overall £2 billion will be saved off HB bill• Equates to 9% of HB expenditure

11

Uprating of Non-Dependant deductions

• Estimate will increase deductions by around 50%• Highest deduction could be around £70• 1 deduction could mean nil HB award• Could result in– Increase demand for accommodation– Less willing to care for elderly in their homes– Increased risk of slowly increasing arrears– Higher demand on homelessness and housing options– Private landlords more reluctant to let to families– Higher demand on DHP

12

Restrict HB to 90% after 12 months on JSA

• CIH report suggests around 300 / 400 per area• Will increase with ESA• Could result in–More requests for transfers– Risk of slowly increasing arrears– Additional resources to collect arrears– Private landlords being reluctant to take HB

tenants– Increased demand for DHP

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Changes to uprating method• CPI excludes housing costs• From 1991 rents have increased 2.57% above

CPI• LHA will not keep up to date with inflation• Could be in long term cheapest property could be

more expensive than LHA• Could result in– More requests for transfers ( cheaper rents)– Hardship, homelessness– Landlords reluctant to let to HB claimants

14

LHA restricted to 30th

• Will push down LHA and HB• Worst cases– Shared Flint / South Gwynedd – decrease by £10– 1 bedroom Bridgend - decease by £10– 2 bedroom North West Wales – decrease by £15– 3 bedroom North West Wales – decrease by £16

15

LHA restricted to 30th

• Could result–Move to accommodation with cheaper rents– Struggle to access private tenancies– Increased hardship, homelessness– Increased demand on homelessness, housing

options teams– Landlords reluctant to let to HB claimants– Increased demand for DHP–Move from private to Social Housing?

16

Under-occupation of properties

• Estimated that 1 in 10 Social Tenancies are under occupied

• Blaenau LHA rates– Shared £46– 1 bed £65– 2 bed £81– 3 bed £92– 4 bed £115

17

Under-occupation of properties

• Could result in– Higher demand for smaller properties– Risk of slowly increasing arrears– Additional resources to collect arrears– Homelessness– Increased demand for DHP

18

Cap on LHA

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Improvements

• Additional bedroom for non resident carers• Discretionary Housing Payments– Extra £10 million in 2011/12– Then £40 million each year

• Increase Child element of Child Tax Credit• Triple guarantee for pensioners• Low paid will pay less Tax / NI• Low paid will get more Tax Credits

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Effect on tenants

21

Effect on tenants

• Scenario : Mr Jones has been receiving Jobseekers Allowance for 18 months. His son,aged 26 lives with him and earns £230 per week.There is a £23.35 Non-Dependant deduction on his claim. His rent is £70.00 per week

• Currently receives– Housing Benefit £46.65– Council Tax Benefit £10.40– Rent shortfall £23.55

22

Effect on tenants

• If proposals come in– Eligible rent reduced to £63.00 because of JSA

reduction– Non-Dependant deduction increases to £46.70– HB award would be £16.30 per week– Rent shortfall would be £53.70

23

Effect on tenants

• If son moved out• HB could be restricted to 1 bed rate• Could be a further reduction of £16 HB• Rent shortfall of £47.00

24

What can we do now?

• Find out how many tenants have been on JSA for 12 months +

• Find out how many working age tenants are under occupying properties?

• Find out how many tenants have Non-Dependant deductions?

• Will your procedures cope with more shortfalls in rent?• How does your transfer procedure work for those who

want to downsize?• How will these changes be communicated to tenants

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What can we do now?

• How will we help to get people back to work?• Do you have links to specialist debt advice

agencies?• How will front line staff be trained on these

changes?• More moves could mean more voids – how

will the maintenance team cope with this?

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