The government is aiming to make the benefit system fairer and more affordable to help reduce poverty, worklessness and welfare dependency.
You may have heard about the welfare reform changes that started in 2013. Many existing benefits are due to be abolished and replaced by a new benefits system.
From our experience of supporting the long-term unemployed, it is often assumed that you will be financially worse off if you move into work, and consequently lose benefits. However once we’ve completed the sums, we find this is not the case, and of course there are a great number of benefits to gaining employment!
If you’re on a low income or struggling to make ends meet, you might need help to sort out your personal budget, and work out how to make your money go further. You can find information and guidance on completing a personal budget from National Debtline. If you’re in debt, you’ll also need to know if you’ve got enough money to start paying your debts off. If you need debt advice, please ensure you approach a free service provider and one that has a Credit License in place. Smart Savings has held a Credit License since 2009 to provide debt counselling and debt adjustment on a non-commercial basis.
For a summary of the welfare benefits reform, please read on.
Universal Credit will replace many existing benefits
Universal Credit (UC) is a single means-tested benefit which is paid to people of working age. It replaces most means-tested benefits including:
• income-based Jobseeker’s Allowance (JSA)
• income-related Employment and Support Allowance (ESA)
• Income Support
• Housing Benefit
• Working Tax Credit
• Child Tax Credit.
Personal Independence Payment replaces Disability Living Allowance
Personal Independence Payment (PIP) is a benefit for people who have a long-term health condition or disability that means they have trouble getting around or need help with daily living activities. It will eventually replace Disability Living Allowance (DLA) for people aged 16 to 64.
If you’re already getting DLA, your claim won’t automatically be transferred to PIP – you’ll have to make a new claim.
In June 2013 new claims for PIP started in the rest of the UK. From October 2015 the Department for Work and Pensions (DWP) will start contacting anyone still getting DLA and invite them to make a new claim for PIP. If you don’t claim or if your claim is unsuccessful, your DLA will stop.
Council Tax Benefit is replaced by local schemes
Before April 2013, the amount you got in Council Tax Benefit was worked out according to a national formula that was the same wherever you lived. From April 2013, local authorities were responsible for running their own Council Tax Reduction Schemes. Older people will be protected from any cuts to the rebate. However, if you’re under the age for getting Pension Credit, you will have to pay some money towards your Council Tax bill.
A Benefit Cap has been introduced
The Benefit Cap means there is a limit on the total amount of money from certain benefits you can get if you’re of working age. To begin with, the cap will only affect you if you’re getting Housing Benefit and you may get less money towards your rent. If you’re not getting Housing Benefit, your benefits won’t be capped.
Benefit appeal rights change
There are changes to the rules about appealing against a benefit decision. You must ask for the decision to be reconsidered before you can appeal to a tribunal.
New conditions about looking for work
When Universal Credit is introduced, if you’re out of work or in work but on a low income, you’ll have to sign a new ‘claimant commitment’. This will set out a number of work-related requirements you’ll have to meet before you can get your benefit.
Parts of the Social Fund are abolished
If you get certain benefits, you may be able to get a payment or loan from the Social Fund to help towards the costs of certain unexpected or one-off expenses.
However, as part of welfare benefit reforms, parts of the Social Fund have been abolished, including Community Care grants and Crisis Loans.
Money has been given to local authorities which they may choose to spend on replacement schemes, but they don’t have to. They could choose to spend the money on other things instead, such as local foodbanks and schemes which provide subsidised furniture and white goods.
Child Benefit stops for high earners
Families where one parent earns £50,000 a year or more will get less money in Child Benefit. Families where one parent earns £60,000 will have to decide whether to stop getting the benefit.
Will your income from benefits be lower after the changes?
To begin with, people getting certain benefits will be protected if their income drops once they move on to Universal Credit. This is called transitional protection. There is no transitional protection for people currently getting Disability Living Allowance or Housing Benefit. This means that, for people getting these benefits, your income may go down as soon as you move on to the new system.
Source: Citizens Advice Bureau http://www.adviceguide.org.uk/england.htm
There are many websites that are dedicated to keeping you up-to-date with the latest changes. For more information, visit: