Welfare reform

In April 2013 the Government started introducing a number of major changes to the social security benefits system, under the Welfare Reform Act 2012 and the Pensions Act 2011. This followed on from the changes to Employment and Support Allowance that began in April 2012.

Through these changes to the benefits system the Government is looking to achieve the following aims:

  • make the benefits system less complex
  • lessen welfare dependency
  • improve work incentives by ‘making work pay’
  • reduce Government spending on welfare.

Virtually all benefits for working age people will be affected and there will be changes for those pensioners who are responsible for children or have housing costs. For existing claimants some of these changes may mean they will no longer meet the more restricted eligibility criteria, which will likely result in them adjusting to changes in income and/or benefit payment amounts.

Main changes to benefits system

Generally referred to collectively as Welfare Reform, the main changes to the benefits system are as follows:

Bedroom tax’ – April 2013

Also known as Spare Room Subsidy or Under-occupancy Charge, the Bedroom Tax is a change to Housing Benefit that means lower payments for people living in social housing who are considered to have too large a property for their needs (and, hence, spare room/rooms)

Benefit Cap – April 2013

The Benefit Cap will limit the total amount of benefit that most people aged 16 to 64 can receive

Bereavement Benefit – April 2017

As outlined in clauses 30 and 31 of the Pensions Act, a number of benefits, including Widowed Parent’s Allowance (WPA), will be replaced with a single system of Bereavement Support Payment (BSP) from April 2017. BSP will not be part of Universal Credit or be affected by the Benefit Cap.

Widowed Parents Allowance – April 2016

WPA payments will change for new claims as of April 2016.

Council Tax Benefit reform – April 2013

Council Tax Benefit has been abolished and replaced with support schemes operated and managed by local authorities, and based on criteria developed by them (ie not set at national level)

Employment and Support Allowance – April 2012

Payment of ESA is to be limited to one year for most people

People in the ESA ‘Support Group’ are not affected

People who had been in the Work Related Activity Group more than 12 months had their ESA stopped in April 2012 or after 12 months. Some may have switched to income-related ESA

Pension Credit – October 2014

Pension Credit is to incorporate:

  • help with rent (on an assessed basis) via a ‘housing credit’ in Pension Credit
  • additional amounts for children into the Guarantee Credit element of Pension Credit

Personal Independence Payment – April 2013

PIP will replace the Disability Living Allowance (DLA) for people of working age. Currently PIP will not apply to those under 16 or over 65

Social Fund – April 2013

Parts of the Social Fund have been abolished:

  • Crisis Loans
  • Community Core Grants.

Local authorities have been allocated some funding to provide schemes, but it is not mandatory for them to do so.

Universal Credit – Phased, 2013 to 2021

Universal Credit is the main means-tested security benefit for people of working age and replaces all means-tested benefits and tax credits, namely:

  • Child Tax Credit
  • ESA (income related)
  • Housing Benefit
  • Income Support
  • JSA (income related)
  • Working Tax Credit

State Pension Age

State Pension age was planned to increase to:

  • 66 – between November 2018 and October 2020
  • 67 – between 2026 and 2028
  • 68 – between 2044 and 2046

Other changes

The Government is introducing a range of other changes, some of which are linked with the changes to the benefits system. These are:

  • Appeals reform
  • Child maintenance
  • Data accuracy
  • Owner-occupier housing costs
  • Real Time Information (RTI)
  • Welfare to work