The Government’s planned welfare reforms come into force in April this year. To help outline the impact on local authorities we’ve put together a short briefing.
Universal Credit – Universal Credit will be phased in between April 2013 and 2017. It will become the main means-tested benefit for people of working age. This will be a combined payment replacing Housing Benefit, Income Support, Income-related Employment and Support Allowance (ESA), Jobseeker’s Allowance, Working Tax Credit and Child Tax Credit.
Disability Living Allowance – A new Personal Independence Payment will replace Disability Living Allowance for people of working age (with a 20% budget cut). From April 2013 onwards all new and existing DLA claimants will be required to undergo a medical assessment to see if they qualify.
Housing Benefit – Housing Benefit will become part of the new Universal Credit. From April 2013 the Government will introduce a cap on the amount of Housing Benefit that can be paid to tenants of working age in social housing who “under-occupy” their homes. A further £40M per year will be added to the Discretionary Housing Payment budget available to local authorities to help people with financial difficulties who are in receipt of Housing Benefit. The local housing allowance will also change which means that those who have been in receipt of this extra fund to enable them to rent in higher rental markets will see their housing benefit decrease.
Community Care Grants and Social Fund – The Community Care Grants and Crisis loans will be abolished. Instead unitary and upper tier local authorities in England will receive a non ring fenced grant to provide locally administered assistance to vulnerable residents.
Employment and Support Allowance – For most people of working age, the payment of Employment and Support Allowance will be limited to one year from April 2012. (People who are in the ESA ‘Support Group’ are not affected).
Council Tax Benefit – From April 2013 the national system of Council Tax Benefit will be replaced by local schemes funded by a non ring fenced grant paid directly to both billing and precepting authorities in proportion to their share of Council tax (with a 10% budget cut). The Government has said that older people should continue to receive the same level of support that they receive under the current Council Tax benefit system. This means that any future reduction in financial support will most likely be focused on people of working age.
Benefit Caps – There will be an overall limit on the amount of benefit payable to people of working age of £26,000 per year. This represents £500 per week for couples and single parents and £350 per week for single person households.
How will this affect Councils?
• Until Universal Credit is introduced, the benefit cap will be enforced by Councils through Housing Benefit.
• The Universal Credit system aspires to manage 80% of transactions online. As the new system becomes better integrated there may be council staff reductions in local authorities as the benefit teams become less relevant.
• Billing authorities will be responsible for developing localised council tax benefit schemes and for consulting with precepting authorities and the public. This was obliged to be completed by 31 January and the allocations will have to be finalised by the end of each January thereafter.
• Councils will be free to design alternatives to the Community Care Grants and Social fund according to local circumstances – this is a new role and therefore this means increased responsibility for Councils. This grant is not ring fenced so there may be strain in future years if the Government decides to cut it.
• People who formerly were reliant on Disabled Living Allowance and now no longer qualify may need increased support from the Council.
• The government’s desire to move people out of housing which is too large for them and create greater mobility in social housing will put strain on Council housing stock if smaller more appropriate accommodation is not available. Councils may be obliged to house more people in temporary accommodation or bed and breakfasts.