Benefits Changes and their Implications - Fabian's commitment to undertanding problems and helping where possible

Fabian's statement dated 26th October 2010

The Tory / Liberal Democrat coalition government has resolved that as part of its strategy to reduce public expenditure and address the level of borrowing it will reduce the level of a large number of benefits. Many of the changes that have now taken place or are in the course of being introduced have profound implications for needy and vulnerable people in the constituency. In addition to reducing levels of support the government is also bringing in a system called Universal Credit in order to combine and simplify many existing benefits. At the foot of this web site page is a summary of the changes together with some of the implications that are most worrying.

The introduction of a fundamental new system of claiming benefits at the same time as reducing the size of the benefits bill means that there is every possibility of some claimants ending up in great distress. Allowances are being lowered, eligibility is being reassessed, there will be some benefits devolved to councils without a statutory obligation for them to be offered and there will be the inevitable teething problems. All these changes together potentially combine to form a minefield of potential misery for some very vulnerable and dependent people. It is inevitable that each of us will come across people we know who will be worried or badly affected as the new arrangements start to bite.

I shall continue to support, as best I can, those constituents who find themselves in difficulty with benefit arrangements. I can challenge those ministers responsible over uncaring administration, where unjust decisions have been made or there has been inefficient delay. I would ask colleague Labour Party members and friends to become increasingly vigilant concerning among the communities you know concerning the changes that are taking place . For constituents who feel that my intervention would be helpful, please ask for a surgery appointment, if you are living in the constituency, I will willingly bring the circumstances to the notice of the appropriate government department or minister.

I am very sure that the changes to benefits will be a high profile issue at the time of the next election. Tories are using UK economic misfortune and the banking crisis as a cover for rolling back the responsibility of the state to care for and support its citizens. If we work together, we can best understand those priorities for change that Labour might be able to introduce when we are next able to form a government.

Yours sincerely.

 

Fabian Hamilton

Labour MP for Leeds North East

Appendix - What the government is doing to benefits

The total number and range of benefits is extensive and it is not possible to cover all the details of each in a short summary. Two good web sites to use for further information are http://www.turn2us.org.uk/ and https://www.gov.uk/browse/benefits Below are summarised the significant changes that will impact on constituents in Leeds North East and which risk causing extensive hardship for already financially disadvantaged families.

Council Tax Benefit: This payment is made in order to meet all or part of the cost of Council tax by people who are eligible for Income Support, Income Related Employment and Support Allowance, Income Based Job Seekers Allowance or the guarantee part of Pension Credit. In many cases all Council Tax costs are met. From April 2013, the government is reducing by10% the money available for Council Tax Benefit and will require individual councils to set up local schemes for issuing it. Pensioners eligible for Council Tax Benefit will be protected from cuts and so the savings will be shouldered disproportionately by people of working age who currently benefit. There will be a post code lottery as councils will not all adopt the same methods for deciding the levels of reimbursement. Many people who have hitherto not made any Council Tax payments for where they are living will be expected to pay something. For these people the amounts could well comprise quite significant sums of money that they will have to find to meet their Council Tax bill. In response to anticipated problems, the government is offering councils some very limited increase in their budget for discretionary housing payments.

Employment and Support Allowance (ESA): This allowance provides support for those who have limited capacity for work due to sickness or disability. From May 1st 2012 claims for the work related or contributory allowance will be limited to one year. Only income related ESA, that is paid to those people with limited or no savings, can be claimed thereafter. Family income and savings will be taken into account. Youth contributory ESA is being abolished.

Housing Benefit: This benefit pays the rent and some service charges for claimants who live in rented housing. The levels of benefit will, in future be based on the Consumer Price Index instead of actual rents. From the 1st January 2012 the amount of housing benefit that can be claimed by all single persons under 35 without dependent children years of age will be limited to that calculated by estimating the cost of renting a room in a shared property. In 2013, working age recipients of housing benefit living in social housing that is larger than their assessed needs will be subject to a reduction in housing benefit. These changes to housing benefit will pressure some claimants in social housing to downsize. Severance of the link to actual rents will mean that claimants will not, in future, necessarily receive sufficient money to meet the cost of their rents.

Tax Credits: Working tax credits provide additional money for those at work but on low incomes. Child tax credits may be claimed by parents who have a low income. Both are means tested. Since April 2012 the income limits for receiving child tax credit have been substantially reduced. The minimum number of hours to be worked in order to be eligible for working tax credit has been increased. Most couples of working age with children must work at least 24 hours per week between them to qualify. Single claimants must be over 25 and working 30 hours each week although this is reduced to 16 hours for a single parent. An expected £110 increase in the child element has been scrapped. The calculation of tax credits will also be changed to ensure that reductions to this allowance are made quickly if a claimants income rises. Backdating of applications is now limited to one month.

Disability Living Allowance (DLA): This benefit helps people with the costs of care and mobility if they are disabled. In April 2013 this allowance is to be replaced with a new benefit called the Personal Independence Payment (PIP). All working age people currently receiving the current benefit will be reassessed and the government is hoping that there will be an eventual 20% reduction in the cost compared to the current expenditure on DLA. All present claimant for DLA will have to reapply for PIP, even if they were receiving an indefinite DLA award. Current DLA arrangements will continue for children under the age of 16 years and for adults over 65 years. The introduction of assessments and the intended reduction in total expenditure will inevitably lead to distress and potential hardship for many people currently receiving DLA.

Crisis Loans and Community Care Grants: Crisis loans made to claimants awaiting the process of their claims are to be replaced by a system of payment on account. At present a crisis loan is not counted as income and does not affect the amount received through other benefits. Presumably the idea of payment on account will mean that any money received is then deducted from the benefits awarded when claims are processed and could mean that a 'crisis' situation is prolonged during the period while benefit is reduced. Community Care Grants which support those people who would otherwise need institutional or residential care are to be abolished. Local authorities will have the discretion, but no obligation, to offer assistance in the future. With pressure on budgets and the possibility of a post code lottery it is likely that many vulnerable adults will experience hardship and distress and may be forced into residential provision with its added costs for the state.

Introduction of the Benefits Cap: This measure will be introduced from April 2013 and will set a ceiling on the amount that some people can expect to receive from their benefits claims. Any income from a large number of individual benefits will be added together and capped if it exceeds the average net (after tax) income of the equivalent working household. Currently this is estimated at £350 per week for a single adult or £500 for a couple or (single parent) irrespective of the number of children at home. Significantly Child Benefit, Child Tax Credit, Income Support and Job Seekers Allowance are included in the totting up. Only households entitled to Working Tax Credit, certain disability benefits and war widows or widowers pensions will be exempt from the cap. The cap will be applied via Council Tax Benefit which will be reduced by the level that received benefits pass the limit of the cap. If a household is not eligible for Council Tax Benefit or the amount paid is insufficient these households will escape the full implications of the cap until Universal Credit arrangements are brought in. The Benefits Cap is likely to have very serious financial implications for very poor families with no means of earning.

Universal Credit: This is the government project to replace the complex array of benefits for working age people with a single simpler system. From 2013 / 2014 it will replace Income Support, Income Based Job Seeker's Allowance, Income Related Employment Support Allowance, Housing Benefit, Child Tax Credit and Working Tax Credit. Council Tax Benefit, Carers Allowance, Disability Living Allowance / Personal Independence Payment will not be included within Universal Credit. However entitlement to such benefits as Free School Meals and Free Prescriptions which are automatically available to those on Income Support may become income related and be lost as a claimant's income rises. The claim for Universal Credit will be made for a household and the income of all members of the household will be taken into account. A basic allowance (with different rates for single people and couples together with reduced rates for younger people) will be supplemented for those with a disability caring responsibilities, housing costs, children and childcare costs. Each household will have a 'disregard'; that is a sum of money which can be earned before the benefit is reduced. Its size will be dependent upon circumstances; for example it will be higher for a couple with children. The benefits received will taper off as income rises. Universal credit and Child Benefit will be together subject to the Benefit Cap. It is anticipated that most recipients of Universal benefit will continue to receive National Insurance credits that determine their future state retirement pension.