The Government’s Welfare Reform Programme is the biggest change to the welfare system in at least 60 years. As well as reducing how much is spent on benefits, the Government say that the main aim of the reforms is to reduce reliance on welfare benefits and make work pay.
The changes mainly affect people of working age. Most of the changes do not apply to people who have reached the qualifying age for State Pension Credit.
Some of the ‘welfare reform’ changes have already been introduced for tenants who rent their home from a private landlord. For example, the reduction in the Local Housing Allowance rates and the limit on Housing Benefit for single people under 35 to shared accommodation rates.
The information here is about the main forthcoming changes to Housing Benefit and Council Tax Benefit. There are also changes happening to other benefits such as Disability Living Allowance. You can find more information about all the changes on the Department for Work and Pensions website at www.dwp.gov.uk/policy/welfare-reform.
For details of advice and support available to people affected by the changes please see the factsheet attached to this page.
The Benefit Cap
From April 2013, a ‘cap’ is being introduced on the benefits received by working age households who do not work. At first, the benefit cap will only apply to people living in certain areas in London. However, the cap will start to apply to people in all other areas from 15 July 2013 with everyone affected being capped by the end of September 2013. The benefit cap is being introduced so that people who are not working do not receive more income than the average earnings of people or households in work.
The Department for Work and Pensions will write to all households that it expects to be affected by the benefit cap. The letter will give details of support available to help them find work. A national helpline has also been set up (0845 605 7064).
How the cap will work
The Government will add up how much money you get from a range of benefits including: Housing Benefit, Jobseeker’s Allowance, Employment and Support Allowance, Child Benefit, Child Tax Credit and Carer’s Allowance. If the total comes to more than the maximum amount allowed, your Housing Benefit payments will be reduced. However, if you live in certain supported housing, the amount of Housing Benefit you receive will not count towards the maximum amount allowed.
The maximum amount of benefit you will be able to receive from April 2013 will be:
£500 per week for single parents
£500 per week for couples with or without children
£350 per week for single people without children.
The cap will not apply to you if:
You or your partner get Pension Credit or Working Tax Credit
A member of your household is claiming Disability Living Allowance, Attendance Allowance, War Widow’s/Widower’s Pension, Industrial Injuries Benefit or the support element of Employment and Support Allowance.
There will also be a grace period whereby the cap will not be applied for 39 weeks to those who have been continuously in work for the previous 12 months.
Example of the Benefits Cap
Mr and Mrs Green live with their 5 children, aged 3, 7, 9, 11 and 14 in a council property. They currently receive full Housing Benefit of £60 per week credited direct to their rent account. (Their benefit is based on receiving Employment and Support Allowance or Job Seekers Allowance and Child Benefit, Child Tax Credit).
Mr Green has not been able to secure a job by April 2013. He has received support from the Department of Work and Pensions (DWP) but has been unsuccessful.
The DWP tell us that there is a potential benefit cap amount of £110 per week that they are receiving over the £500 per week from various sources of benefit.
The DWP ask us to apply the cap to their Housing Benefit and ask us to recover as much as possible from their Housing Benefit, leaving them with a minimum of 50p per week. Because of this they may be entitled to apply for a Discretionary Housing Payment.
So the cap we apply in this case would be £59.50 (their weekly Housing Benefit of £60 less 50p that we must continue to pay)
Under the current rules, they would not lose the other £50.50 per week (potential cap amount £110 less actual cap applied £59.50) from their other benefits.
This could change when they move onto Universal Credit.
In this example they would still receive £550.50 per week in benefits from the Department of Work and Pensions and 50p per week in Housing Benefit so that the council could consider a Discretionary Housing payment.
Discretionary Housing Payments are a fixed cash limited pot and are meant as a short term measure only. The intention is to target those who are most vulnerable and those fostering children.
Mr Green then applies for a Discretionary Housing Payment because they say they are unable to pay their rent.
The local authority has a choice of:
Encouraging Mr Green to go to work.
Encouraging Mr Green to pay his rent from the rest of the benefits he receives.
Awarding a Discretionary Housing Payment of up to £59.50 per week.
Please also see our Benefits Cap Frequently Asked Questions attached to this page.
Social Rented Sector Size Criteria (Under-occupation deduction)
Housing Benefit for most people living in private rented accommodation has been limited to the number of bedrooms they need for many years. These rules are now being applied to working age people living in social housing, that is homes let by registered social landlords such as councils and housing associations.
From April 2013, if you rent your home from the council (through St Leger Homes of Doncaster) or a housing association and you have one or more ‘spare’ bedrooms, you are likely to get less Housing Benefit. This change does not apply if you or your partner have reached the qualifying age for State Pension Credit.
What is a ‘spare’ bedroom?
Under the new rules, if you have more bedrooms than the Government say you need, you will lose part of your Housing Benefit. The new rules allow a bedroom for each of the following people in your household:
Each adult couple
Any other person aged 16 or over
Two children of the same sex under the age of 16
Two children under the age of 10 regardless of their sex
Any other child
A carer (who does not normally live with you) if you or your partner need overnight care.
For example, if just you and your partner live in a two bedroom house, you will be treated as only needing one bedroom and having one ‘spare’ bedroom.
People who are approved foster carers will be allowed an additional bedroom even when they are in-between fostering. Also, adult children who are serving in the Armed Forces will be treated as occupying a bedroom even when deployed on operations as long as they intend to return home. The Council also has discretion to treat a child as needing its own bedroom where the rules would normally expect them to share. This would normally apply where the child is disabled or has medical needs requiring them to have their own bedroom.
In all other cases, it does not matter how the ‘spare’ bedroom is used, the new rules will apply even if:
St Leger Homes of Doncaster have a calculator on their website that you can use to work out how many bedrooms you will be treated as needing under the new rules. Visit www.SLHDMoneywise.co.uk and click on the ‘Room Calculator’ page on the left.
How much Housing Benefit will you lose if you have a ‘spare’ bedroom?
If you have one ‘spare’ bedroom, your Housing Benefit will be reduced by 14% of the rent you pay each week. If you have two or more ‘spare’ bedrooms, your Housing Benefit will be reduced by 25% of the rent you pay. You will have to pay your landlord the difference between your Housing Benefit and your rent. Here are some examples to show you how the reductions will work:
Mr and Mrs Smith live in a two-bedroom flat where the rent charge is £70 per week. At the moment, Housing Benefit covers the full cost of their rent. Under the new rules, they will be treated as having one spare bedroom. Their Housing Benefit will be reduced by 14% of their rent (14% of £70 = £9.80). Their Housing Benefit will be reduced by £9.80 to £60.20 per week. They will have to pay £9.80 per week towards their rent.
Mr and Mrs Jones live with her two teenage sons aged 13 and 15, in a three-bedroom house rented from the local authority. Their rent is £70 per week and they receive £9 per week in Housing Benefit due to being in low paid part time work.
Under the new rules, their children will be expected to share a bedroom and so they will be treated as having one spare bedroom. Their Housing Benefit will be reduced by 14% of £70 = £9.80, and so they will lose all their Housing Benefit.
Their rent is not high and they are both in part time work and have tried to increase their hours.
Mrs Jones applies for a mutual transfer to a two bedroom property but there are none available at present. Mrs Jones applies for Discretionary Housing Payment of £9.80 because she is unable to make the additional payment. Her application is refused because she does not receive Housing Benefit.
Mr and Mrs Brown live with their two daughters, aged 9 and 13, in a four bedroom house. Their rent is £110 per week and they receive £80 per week in Housing Benefit. Under the new rules, their children will be expected to share a bedroom and so they will be treated as having two spare bedrooms. Their Housing Benefit will be reduced by 25% of £110 = £27.50. They will have to pay an extra £27.50 per week (on top of the £30 they are already paying).
We have written to all tenants currently receiving Housing Benefit who are affected by these changes. The Government have changed the rules on data sharing so we have also let landlords know which of their tenants will be affected.
Please also see our Social Sector Size Criteria Frequently Asked Questions attached to this page.
Changes to Council Tax Benefit
From April 2013, if you are of working age and claim Council Tax Benefit, the amount of support you receive may be cut. This is because the Government is reducing the amount of money available and asking councils to run their own Council Tax Support Scheme. The schemes may be different from council to council.
The Government will continue to set the rules for pensioners and these rules will provide the same level of support as now.
A meeting of all Doncaster Councillors took place on 17 January 2013 to decide on a Local Council Tax Support scheme for Doncaster.
It was agreed that the local scheme will be mainly the same as the current Council Tax Benefit scheme. However, because the Council will receive less Government grant to run the new scheme, the following changes will be made to the current rules for working age people:
The income taper will be increased from 20% to 25%. (This applies to the rate at which support is withdrawn where someone has more income than they need to live on based on government prescribed amounts.)
Child Benefit for all children after the first child will be treated as income that could be used to help pay Council Tax. (Child Benefit for all children is not taken into account in the current Council Tax Benefit scheme.)
Maintenance received for children or for a former partner will be treated as income that could be used to help pay Council Tax. (Some or all of maintenance received is not taken into account in the current Council Tax Benefit scheme.)
The alternative maximum Council Tax Benefit scheme (known as ‘Second Adult Rebate’) will end.
Anyone who currently receives full Council Tax Benefit because they are also receiving Income Support, income-based Jobseeker’s Allowance or income-related Employment and Support Allowance will not be affected by these changes. These people will continue to receive full support under the new scheme.
Doncaster’s Local Council Tax Support scheme will help to support 32,000 of the poorest households in Doncaster to receive a reduction in their Council Tax so they have a reduced amount or nothing to pay.
Anyone who is currently in receipt of Council Tax Benefit will automatically transfer to the new system of support on 1 April 2013. The Council will write to everyone affected in early April telling them how much support they will receive under the new scheme.
From October 2013, the Government plans to bring together a number of current means tested working age benefits and tax credits into one single benefit to be known as Universal Credit. These benefits include:
It is intended that most people will make a claim for Universal Credit and report changes in their circumstances online.
Universal Credit will be introduced in stages meaning that some people will continue to receive some of their existing benefits until 2017. The latest information on the Government's timetable for claims moving to Universal Credit is shown below:
April 2013: Universal Credit will start to be introduced for people living in certain areas. Also, this will only be for single people who would otherwise have made a new claim for income-based Jobseeker's Allowance
October 2013: Universal Credit will start to be introduced for more people who would otherwise have made a new claim for income-based Jobseeker's Allowance including people with children and couples. This will gradually be rolled out to everyone making a new claim for Jobseeker's Allowance by May 2014.
May 2014: Universal Credit will start to be introduced for people who would otherwise have made a new claim for Tax Credits or Income Support.
October 2014: Universal Credit will start to be introduced for people who would otherwise have made a new claim for Employment and Support Allowance or Housing Benefit.
People who are already claiming current benefits such as Child Tax Credit and Housing Benefit in October 2013 will not start to transfer to Universal Credit until September 2014. People claiming Jobseeker’s Allowance will be the first to transfer and then the other benefits and tax credits in the same order as new claims shown above. Everyone will have transferred to Universal Credit by the end of 2017.
The Government has recently announced that people living in certain supported accommodation such as Foyers and Homeless Hostels will not transfer to Universal Credit. These people will initially continue to claim Housing Benefit, but the Government is still considering how these people will be supported with their housing costs in the longer term.
More information about Universal Credit is available www.dwp.gov.uk/policy/welfare-reform/universal-credit.
Please also see the Universal Credit Frequently Asked Questions document attached to this page.
Housing Support for Pensioners
From April 2014, Housing Benefit for pension-age customers will begin to be paid as a ‘Housing Credit’ as part of their Pension Credit. This ‘Housing Credit’ will be worked out under similar rules to the current Housing Benefit rules so that pensioners should continue to receive the same level of support.
The Government plans to move all pensioners currently receiving Housing Benefit onto the new Housing Credit by the end of 2017.
Advice and Support for people affected by the changes
Please see the factsheet attached to this page for details of advice and support available to people affected by the changes.