the impact of welfare reform in...

The Impact of Welfare Reform in Northumberland

January 2015

2

This report provides an overview of the main changes to the welfare benefits system, and begins to identify their potential implications for the residents of Northumberland. It subsequently identifies the issues for the county and the related consequences for the County Council and its partners. Finally, it summarises the strategic approach that is being taken in Northumberland to support affected residents and to minimise additional pressure on services.

3

Changes to the welfare system

1. The Coalition Government’s ongoing welfare reforms are widely acknowledged as the most fundamental change to the benefits system since the Second World War.

2. The Government’s aims are to incentivise work, simplify the

current system of benefits and tax credit, and to promote personal liability among claimants. The reforms are also intended to deliver substantial savings to the public purse - £18billion within the current spending review to 2014/14, and a further £10billion in projected savings by 2016/17.

3. Given this, the reforms are being introduced incrementally. This

means that the full impact of the welfare reform will not be apparent for some time.

4. The main changes are as follows:

Localised Council Tax Support – From April 2013, the Government ended the national council tax benefit scheme and now requires local councils to implement their own schemes, but with funding reduced by 10% and some allocation restrictions imposed

Under Occupancy – Council and Housing Association tenants who live in a property that is considered to have one or more spare bedrooms have had their housing benefit reduced from April 2013. This applies only to working age tenants, not pensioners. The reduction for one spare bedroom is 14% of eligible rent; for two or more spare bedrooms, it is 25%.

Crisis Assistance – From April 2013, most of the funding for Crisis Loans and Community Care Grants has been devolved to local councils

Personal Independence Payment (PIP) – Disability Living Allowance is gradually being replaced from June 2013 by Personal Independence Payments for disabled people aged 16-64. PIP provides help towards the daily living and mobility costs and is not means tested. People receiving DLA now will have to apply for eligibility before 2017.

Benefit Cap – From July 2013, the Benefit Cap was introduced. There will be a limit on the amount of benefits a non-working household can receive. If the claimant is a single person their benefits (including payment for rent) will be limited to a maximum of £350 per week. A family will be limited to a maximum of £500 per week. Households with someone in work and entitled to working tax credits, or in receipt of certain disability benefits are exempt.

Universal Credit - A single monthly payment will replace a wide range of existing benefits and credits, such as jobseekers allowance, housing benefit, income support, child tax credits, and working tax credits. It will normally be paid monthly directly to one person in the household. Northumberland is not included in the tranche of local authority areas where Universal Credit is expected to be introduced from spring 2015. Currently there is no firm timetable for further roll out of Universal Credit. However the Government has indicated that they expect the roll out to continue through 2015-16 to all areas.

Benefit Rise Increases – Most rises in working age benefits (excluding pensions, disability, and carer’s benefit) will be capped at 1% until April 2016. With inflation rising by around 2.5% per year, this will mean a real term drop in income for anyone claiming benefits.

5

Sanctions on Job Seekers Allowance - If people claiming Jobseeker's Allowance (JSA) do not follow the terms of their Jobseeker's Agreement they may have their benefit reduced or stopped for a set period of time, this ranges from 4weeks to 3 years

7

Assessing the impact of these changes

5. The extent, scale and timing of these changes to the welfare benefits system making it very challenging to understand their cumulative impact on both the county as a whole and on individual households. It is still relatively early days and there will be a continuing need to collect and monitor evidence. It is also difficult to correlate particular impacts to specific reforms, since there are many other issues impacting at any one time.

6. The best picture that’s available regarding the impact is provided

through work done by the Local Government Association where they have modelled the net impact based on where the Government is predicting making savings. There are a number of assumptions In this model so some caution is needed but it is the most robust data that is available at the moment.

7. Key National findings (2015/16 financial year)

• Significant losses – average £1,615 per claimant household per year (£31/ week)

• Regional averages pretty similar – lower incomes in north but higher rents in south...Except for London: £1,965 average

• 60% of losses fall on working households • Coastal towns hit hard – Thanet, Tendering, Yarmouth,

Scarborough, Plymouth and Torbay • Disabled people – particularly out of work –likely to be

affected by multiple reforms 8. The table overleaf sets out the respective projected savings from

each welfare reform (excluding Universal Credit) for Northumberland. This brings out clearly the very large contributions made by reductions in tax credits (predominantly affecting those in work) and reduced uprating (affecting those in

and out of work).By contrast the introduction of the benefit cap and of the new size criteria in the social rented sector – which have been the focus of most attention in recent months – account for less than 5 per cent of the total reform impacts in 2015/16.

7. Comparing this to other local authority areas in England shows

that Northumberland has a higher than average number of households that are likely to be affected by the replacement of the DLA. This reflects the fact that the county’s population is older and has a legacy of former industrial/heavy manual occupations. The county is among the 20% areas most affected by this change.

8. From this, it is clear that two main groups of households are likely

to be most affected by welfare reform are workers on low incomes and individuals currently eligible for DLA.

“We estimate that three fifths (59 per cent) of all welfare reform reductions fall on households where somebody works. Indeed the reductions for working households are greater than the reductions for households where no one works in 314 of the 325 Local authorities in this analysis” The local impacts of welfare reform: An assessment of cumulative impacts and mitigations. LGA 2013

Summary of the Estimated Impact of Welfare Reform in Northumberland: From The local impacts of welfare reform: An assessment of cumulative impacts and mitigations. Authors: Tony Wilson, Gareth Morgan, Afzal

Rahman, Lovedeep Vaid Published: August 2013 by Local Government Association

10

Pick region >

Pick Local Authority >

Rankings are out of 325

LA's in England. 1=higest

loss

Highest 10%

Highest 20%

This model shows the estimated cash impacts in 2015/16 of Government

welfare reforms, and the estimated number of claimant households

affected for each reform.

This allows an estimate to be made of the impact in 2015/16 per household

affected.

Impacts are also shown for working and non-working households.

Local Impacts of Welfare Reform: Impact model

NORTH EAST

Northumberland

Numbers affected 5,925 4,122 1,178 32,500 9,860 44,921 4,548 107 96,664 44,921

Overall impact (£m reduction) 4.3 2.4 0.6 26.7 7.2 13.0 10.4 0.4 65.0 65.0

Average loss (£/ year) 732 592 498 823 734 288 2,286 3,304 673 1,448

Average loss: rank 317 299 N/A 268 180 64 240 N/A N/A 154 277

Numbers affected 1,613 782 256 26,300 887 27,546 1,292 N/A 58,676 27,546

Overall impact (£m reduction) 1.0 0.3 0.1 27.6 0.7 5.5 3.0 N/A 38.1 38.1

Average loss (£/ year) 603 446 498 1,050 734 198 2,286 N/A 650 1,384

Numbers affected 4,312 3,339 922 6,200 8,973 17,375 3,256 107 44,484 17,375

Overall impact (£m reduction) 3.4 2.1 0.5 -0.9 6.6 7.5 7.4 0.4 26.9 26.9

Average loss (£/ year) 780 626 498 -143 734 432 2,286 3,304 605 1,549

Not employed

Estimated impacts of welfare

reforms

Employed

Total

HB social

sector size

criteria

Non-

dependant

deductions

Benefit capCTB

localisation

HB Local

Housing

Allowance

(incl 1%

uprating)

Tax CreditsDLA

replacement1% up rating

ESA Time

Limiting

No. of

working age

households

No. of working

age

households

claiming

benefit

Detailed Breakdown of the Estimated Impact of Welfare Reform in Northumberland

11

9. Therefore when looking at those who are most effected we need to shift the perception that welfare reform is only about those who are out of work. Those on low wages and people with a disability are also significantly adversely affected in Northumberland.

Low income households 10. This information indicates that the average loss to working

residents will be £1,050 per annum. 11. Northumberland’s employers pay less – £437.9 compared to the

National average of £520.5. Some parts of the county are even lower (Alnwick £382). There are more part-time workers (almost 30% compared with 25% nationally) and strong tourism does result in employment seasonality

12. There is concern about the cumulative impact of a variety of

changes particularly on families. Child Poverty Action Group in their most recent policy paper have calculated that a low income family in receipt of both Child Benefit and the full amount of Children’s Tax Credit has seen their children’s benefits eroded by £1,140 over the course of the parliament, while a two-child family has lost to the tune of £2104, simply because of uprating*

decisions 13. Once introduced in late September, Universal Credit will bring a

modest gain of £192 per annum. However it should also be noted that the introduction of Universal Credit will be more complex for

those individuals who work part-time, have more than one job, or work on a seasonal basis. It will be considerably more complex for self-employed claimants. Access will require some digital skills so could be further compounded by an older workforce and a significant lack of online skills – indications are that 42,300 residents lack basic online skills.

People currently receiving DLA 14. Most people currently claiming DLA will remain unaffected by the

introduction of PIP until October 2015 at the earliest. Currently new claims for PIP are taking more than six months to process however the Government hopes to reduce that time to a maximum of 16 weeks by the end of 2014. Nonetheless, it has to be recognised that delays in processing claims, which, even if subsequently awarded and backdated, are causing hardship for many disabled people. People with indefinite awards of DLA (who make up around 70% of all DLA claimants) won’t be reassessed for PIP until October 2015 at the earliest. There is therefore time to look at how we can mitigate and provide adequate support.

Case studies 15. Within this general analysis, there is need to better understand

which type of households are affected and how they are likely to respond to their new circumstances. To help with this, the case studies reproduced at Appendix 1 paint some real life scenarios.

* uprating refers to the process used to determine how the value of benefits is maintained over time

12

Sanctions 16. Members of the current administration are extremely concerned

about the impact of sanctions. Sanctions are supposed to ensure that, in return for the support provided by the state, claimants are held accountable for doing all they can to take on that support and to move back into work. This is a key element of the mutual obligation that underpins both the effectiveness and fairness of the social security system.

17. However, there is evidence that this is a system that can go

wrong and, when that happens, individuals and families can suffer unfairly. An independent review has been carried out which has found that the system is not fundamentally broken but there are a number of areas where improvements need to be made, particularly for more vulnerable individuals. A number of recommendations around communication and process have been made which the Government has accepted.

18. The Northumberland Advice Network (NAN) is currently carrying

out work into the situation of sanctions in Northumberland.

13

The implications of these changes

14

19. The case studies illustrate that:

many households will suffer a real decline to their current income levels and will need to find ways to supplement this by returning to work or working more hours, reducing their mortgage payments/rent or other costs, or taking on a lodger

there is a significant danger that affected individuals will get “lost in the system” and not go through the right processes to claim the benefits and credits they are entitled to

affected individuals may find themselves more often in a temporary state of crisis and need emergency support to cover the supply of basic essentials such as food and fuel

debt levels are generally likely to rise, with the need to access bank accounts and affordable credit a growing issue, together with how arrears and non-payments are gathered

there will be an increasing demand for affordable housing (both social and private) and if this is not met then the use of temporary accommodation and homelessness may rise

existing barriers to work associated with the cost of public transport and childcare will be reinforced

“So the impacts of reforms are likely to be most strongly felt in areas with the highest dependence on benefit – the north east, Lancashire and the central north west, Birmingham and the Black Country, parts of London, and a swathe of coastal towns and cities ..” The local impacts of welfare reform: An assessment of cumulative impacts and mitigations. LGA 2013

20. In addition, there is growing evidence both locally and nationally that such increased financial hardship often leads to:

more ill health, particularly related to stress

increased levels of acquisitive crime and shoplifting

higher incidence of ant-social behaviour and community tension

increased family breakdown and incidence of domestic abuse

increased tensions between tenants and landlords 21. This obviously places greater demands on a whole range of

services supplied by:

the County Council, particularly with respect to revenues and benefits management, customer services, housing, welfare rights, and social care

the voluntary and community sector, particularly the network of Citizen Advice Bureaux, Credit Unions, and debt advice organisations and social care

Job Centre Plus, significant issues arise because of the length of time it can take to process claims and changes

other public sector organisations, such as the Police and local health services

15

The response to the changes

16

22. In responding to welfare reform, a number of principles need to be applied:

Understanding the impact. - there is a common understanding as to the nature of the impacts – who is affected and in what way

Working in Partnership - there is strong local leadership and a shared realisation that no single agency or organisation can address the impacts

Connecting up - there is an open culture of working together and a shared recognition that for responses to be effective they will need to join up across the spectrum of income, jobs, and employability

17

23. With regard to these three principles there is already a range of activity underway in the county.

Understanding the Impact 24. Under Association of North East Council (ANEC) the Regional

Chief Executives Group has commissioned the Institute of Local Governance (ILG) to carry put a programme of work to monitor the continuing impact of welfare reform. It is still early days and there is a clear need to continue to collect information from authorities, housing providers and other partners. There are a set of indicators that have been proposed by ANEC in Appendix 2.

Working in Partnership 25. The County Council and a number of organisations from across

the public, voluntary and community sectors (VCS) are developing and putting in place a specific range of support mechanisms and interventions that aim to support affected individuals through the welfare reform changes.

Connecting Up 24. We need to maximise the incomes and access to additional

resources for those on benefit and low wage working households. The following are responses that are currently in place.

Localisation of Council Tax Benefits 25. For 2013/14 the Government’s ‘default’ scheme was imposed as

the local scheme for working age council tax support. This meant that all claimants continued to receive the same level of support in 2013/14 that was awarded to them under the previous council tax benefit scheme.

26. Following a consultation process for a local scheme for 2014/15

the local scheme that was adopted mirrored the 2013/14 scheme which again meant that claimants were supported at previous levels and suffered no detriment in their council tax support entitlement.

Northumberland Emergency Transition Support

27. In Northumberland the Council has commissioned a local third sector partnership, NETs which supports those in need to address short term issues, whilst tackling long term issues by connecting individuals to wider support networks and services that will help them to develop their own capabilities to manage their own affairs more effectively.

28. NETs has been specifically designed as an intervention to be

responsive and contribute to tackling issues such as fuel and food poverty and financial exclusion, providing access to a range of support for people at a time of crisis or significant unplanned change or transition.

29. NETs has a growing network of Trusted Partners who are able to

support and ensure that people who need help are supported to do so. Through collaboration with Northumberland Advice Network (NAN) there is now online information, advice and directory of support which professionals and members of the public can access.

18

Network of Food Banks 30. In Northumberland there already exists an informal network of

food banks. These have developed locally and organically by communities and in some instances organisations organising themselves to take in and distribute food. Currently, these all work independently of each other, having their own ways of working.

31. Through the NETs delivery model a growing number of food

banks are partners and are resourced to provide food parcels for eligible NETs clients. By working in this way the sustainability of food banks is being supported within their own communities.

32. Data shows that there continues to be significant increase in the

number of people turning to food banks. NETs and TOGETHER Newcastle an organisation which works to Inspire Positive Community Action to Tackle Poverty in Newcastle, North Tyneside and Northumberland are working with food banks in the South East to support a more co-ordinated approach by all the organisations involved in food banks and other food distribution points. Activity is already underway to promote a holistic approach to delivery for example a community transport pilot and growing initiative, training and advice for food banks volunteers.

33. A second strand of activity is the recognition that in

Northumberland we need to consider different approaches to tackling food poverty – including the evolution of the role and scope of food banks. There is evidence that food banks are uniquely placed to assess and address, at least in the first instance, some of the underlying problems that bring people

through their doors. For example could users of all the food banks and other distribution points be offered a ‘professional’ debt advice and support service and/or signposting to local agencies offering these services and other relevant services? Working collaboratively with partners these approaches will be explored to join up provision and ensure people get the support they need at the earliest point.

Support through Housing

34. Many Housing Associations have tenant support teams that are

helping residents with welfare rights, financial inclusion advice and improving access to digital technology. The Councils Housing Options Advice and Homelessness Prevention service has not evidenced any significant changes to date but they anticipate more of an impact once Universal credit arrives in 2015.

Northumberland Advice Network

35. Northumberland Advice Network (NAN) is a network of Voluntary and Community Sector Organisations working together to have accessible benefits advice for all in Northumberland. NAN shares information; updates the sector; and helps connections to be made across the VCS and with statutory partners.

36. In December the website was launched providing a central point

for information and self-help. Work is also underway to strengthen referrals between organisations and encourage the sharing of resources and best practice. NAN members have access to training opportunities to strengthen the sector. An important role for NAN is to collect comprehensive and

19

consistent data from across the sector to evidence need, gaps and outcomes; providing a joint approach to social policy work – e.g. NAN will publicise in the New Year a report from members about the impact of sanctions in Northumberland.

Credit Unions

37. With an estimated 310,000 households in the UK borrowing

from unauthorised lenders (or loan sharks as they are more commonly known), illegal money lending is a significant problem across the country. This equates to 12% of households in the most deprived areas.

38. As part of the response to combat this activity the Council

supports both Credit Unions in the County and is actively working with CUSEN in the South East of the County to further develop financial products for residents most in need that include instant loans and “jam jar accounts”. In addition the Council’s Public Protection work with the England Illegal Money Lending Team to keep an eye on what is happening nationally on this issue. Job Creation

39. The Northumberland Economic Strategy sets out a vision ‘to

deliver a prosperous Northumberland founded on quality local jobs and connected communities’. The long term ambition set out in this strategy is to create 10,000 new jobs in the county up to 2031 by Northumberland providing more and better employment locally as well as continuing and expanding our crucial role in providing highly skilled workers across the Region.

40. The strategic framework to deliver this aspiration is shown in Appendix 3. The full document is available on the Council’s website (page titled Economic Policy and Research).

Living Wage

41. In October 2013, the Council’s Joint Consultative Committee

established a Living Wage Working Group under the chairmanship of Beth Farhat, the Northern Regional Secretary of the Trade Union Congress.

42. The role of the Working Group was to consider the implications

of implementing living wage within the County Council; the impact of the Council becoming a Living Wage employer may have on the practice of partners, commissioned services, and the markets to which they contribute; and the potential costs and benefits to local communities in the context of other significant changes such as welfare reform.

43. The Working Group presented its findings to the Council’s Policy Board on 9 September 2014. In responding, the Leader of the Council confirmed that the Leader of the Council advised that the authority has an aspiration to adopt the living wage but further work had to be done to fully understanding its financial implications, particularly given the Council’s current budget challenges.

Grow Northumberland

44. Grow Northumberland is the council’s commitment to

sustainable procurement. The council spent roughly £362million last financial year (2012/13) on a wide range of goods and services.

20

45. The Grow Northumberland initiative aims to increase the

amount of this council money that is spent locally by 10% over the next two years. This in turn should help boost the local economy and assist in job creation in the county. This will include:

Work with supply partners to establish apprenticeships and work placement schemes with relevant suppliers.

Include clauses in all contracts where appropriate to encourage training and employment of longer term unemployed where suitable

Employability 46. Northumberland County Council’s Employability and Skills

service delivers a range of support for out-of-work benefit claimants to get into work (including Work Programme and the NE Youth Employment Programme).

47. The aim is to move people from welfare dependency into

sustainable employment. Employment Coaches give individualised support to jobseekers and match them with training, work experience and ultimately job opportunities. This includes help with Universal Jobmatch. Financial support for training and additional needs (such as transport, interview costs, tools etc.) is also available where deemed necessary for job search.

48. Support includes advice on in-work benefits and making ‘better

off calculations’ to ensure people do not face financial difficulties when making the transition to work. Referrals to financial inclusion provision are made where necessary. As programmes

such as Work Programme are mandatory, Employment Coaches support claimants to comply with programme requirement to and avoid potential for benefit sanctions. Personal Advisors support young people to make emergency benefit claims where necessary.

49. In addition, Northumberland has the portfolio lead for

Employability, Inclusion and Skills within in the North East Combined Authority and is working with constituent authorities to influence the design and commissioning of future programmes and make sure they meet the needs of our residents and local economies. NECA is currently working with Cabinet Office to pilot a programme improve the support ESA claimants with mental health conditions receive and improve their job outcomes.

Universal Support – delivered locally Pilot Project (previously Local Support Services Framework

50. The Council successfully secured one of 11 national pilot projects

to trial a partnership approach to provide support for residents who will be impacted by the introduction of Universal Credit.

51. The introduction of Universal Credit will represent a major

cultural change in terms of the way that welfare benefits are paid and the expectations on claimants. Universal Credit will require claimants to adjust to monthly budgeting, and to managing their claims online.

52. As Northumberland is amongst the highest ranking areas in the

Country for digital exclusion, and has pockets of considerable financial exclusion, Universal Credit has the potential to

21

adversely affect the lives of some of the most vulnerable people in our communities in its rollout phase.

53. The pilot programme is embedded in the NETs service, to target

some of the most vulnerable people in Northumberland, and aims to learn what support works and where the gaps in provision are, with a view to informing service delivery design in advance of the roll out of Universal Credit.

23

Next Steps

54. Whilst there is a wide range of activity going on there are some areas we need to develop in line with the three key principles.

Understanding the Impact 55. The Council needs to continue to work with ANEC and fully

implement an effective monitoring regime that can inform members and officers and feed into the regional picture. It is recommended that we work with ANEC and ILG to put in place effective indicators. Appendix 2 identifies the indicators proposed by ANEC as a way of capturing this information but this still needs more work.

Working in Partnership 56. It is further recommended that the existing Strategic Group that

oversees the Councils Local Welfare Scheme; which is comprised of cross party members, senior officers and VCS organisations is revised and given a renewed remit to take on the role of overseeing the impact and response to Welfare Reform and provide six monthly reports

Supporting Connecting up 57. Key pieces of learning from existing activity and emerging from

the USLD pilot programme is providing an understanding of the key areas of need for support provision, and any gaps in services. Research to date suggests that gaps in provision are emerging in the realms of financial inclusion, digital skills, and adult basic literacy, all of which could potentially be eligible for funding through the 2014-2020 European Funding streams which will be

looking for positive outcomes for individuals with multiple barriers to employment.

58. The Council is in a strong position to lead this agenda as it is the

lead council for Employability and Inclusion within the Combined Authority.

Appendix 1: Case studies – impact on families and household

26

Case Study 1: Low income working family living in Northumberland

Income before April 2013 April 2013 onwards Cumulative Financial impact

Mike- 32 and Laura- 27, live in a three bedroom house rented from Northumberland Council with daughter Emma- 7 and son Karl- 2. Mike is self-employed and Laura doesn’t work.

Under Occupancy Because the children are under the age of 10, they are now expected to share a bedroom. Mike and Laura rent not only increases but they

Monthly £

Under Occupancy -43.50

1% Rise -8.50

will lose 14% of their eligible rent for having a Monthly Total -52.00

March 2013 Spare bedroom.

April 2013

Annual Total -624.00 Monthly Income £ Rent (14.50) 310.50 3% loss in income Self-employed income 309 Housing Benefit (29.00) 267.00 Child Tax Credits 445

Monthly loss of £43.50

Working Tax Credits 360 Child Benefit 146

Benefit rises capped at 1%

Housing Benefit 296 Council Tax Benefit 84 Elements of Tax credits and Housing benefit Were capped at a 1% rise rather than rising in Total Income 1,640 Line with Consumer Price Index (2.2%)

Monthly loss of £8.50

Monthly Outgoings £

Rent 296 Options

Council Tax 84

Food 400 Look for work Apply for a Discretionary Housing Payment Utility Bills 155 If Laura were to work 16 hours per week their The couple could apply to Northumberland Loan Repayments 175 Earnings would increase and they would be Council for a DHP to help in the short term Other 285 Eligible for child care credits. With housing costs.

Take in a lodger

However Total Outgoings 1,395

Renting out the spare bedroom would exempt the

under occupancy chare and bring in extra incomes Any increase in earnings or income may affect

the amount of benefits and tax credits they receive.

27

Case Study 2 : Single person bedroom tax


Paul lives alone in a three bedroom council house he rents from Northumberland council. He was made redundant and is looking for work. He has a small occupational pension and receives some Jobseeker’s Allowance as a top- up.

Under Occupancy Paul is now classed as under-occupying his home as he has three bedrooms. His eligible rent is reduced by 25% as he has two extra bedrooms and his Housing benefit is calculated using the new lower eligible rent figure.

Monthly £


March 2013

Monthly Total -78.00 Monthly Income £ April 2012 £

Jobseeker’s allowance 117 Rent 69 Annual Total -936.00

Occupational pension 190.70 Eligible rent 69 Housing benefit 299 Housing benefit 69

12% loss in income Council Tax benefit 60.70 April 2013

Total Income 667.4 Rent 72

Eligible rent (72- 25%) 54

Monthly outgoings for housing costs £ Housing benefit

Monthly loss of £78

54

Rent 299

Council Tax benefit 60.70

Total housing costs

359.70

Options

Take in a lodger(s) Renting out the spare rooms would exempt Paul from the under occupancy charge and bring in extra income

However Any increase in income from lodgers over £20 may affect the amount of benefit Paul receives.

Apply for a Discretionary Housing Payment Paul could apply to Northumberland Council for a DHP to help in the short term with housing costs.

Moving to a smaller house Paul could avoid the under occupancy charge by moving to one bedroom accommodation

28

Case Study 3 : Bedroom tax


Susan – 46 lives in a three bedroom council house which she rents from Northumberland Council. Only her daughter Sheila – 13 is still at home and Susan is the carer for Sheila who is severely disabled. Susan’s only incomes are benefits.

Under Occupancy Susan is classed as under- occupying her home as she has three bedrooms. Her eligible rent is reduced by 14% as she has one extra bedroom and her Housing benefit is calculated using the new lower eligible rent figure.

Monthly £


Monthly Total -47.00

March 2013

Annual Total

-567.00 Monthly Income £ April 2012

£

Income Support 546 Rent 68 3% loss in income

Widowed Parent Allowance 502.70 Eligible rent (full) 68 Child Benefit 86.70 Housing benefit 68

Housing Benefit 294.70 Council Tax Benefit 60.70 April 2013 Rent 71 Total Income 1490.70 Eligible Rent (71 – 25%) 61 Housing benefit 61 Monthly Outgoings £ Food 216.70 Monthly loss of £43.30 Utility bills 173.30

Loans 381.30

Rent 294.70 Options

Council Tax 60.70

Moving to a smaller House Susan could avoid the under occupancy charge by moving to two bedroom accommodation

Taking a lodger Renting out the spare room would exempt Susan from the under occupancy charge and bring in extra income

Total outgoings 1213.30

Apply for a Discretionary Housing Payment (DHP) Susan could apply for a DHP to Northumberland Council to help with her housing costs

However Any increase in income from lodgers over £20 may affect the amount of benefit Susan receives.

29

Case Study 4 : Local Housing Allowance ( LHA ) Reduction


Anne- 27 and John- 23 live with sons Corey- 2 and Daniel-8 in Northumberland in a three bedroom privately rented house. John is self-employed as a DJ and Anne doesn’t work.

LHA increase restriction

LHA rates now uprated annually every April rather than monthly in line with local rents. The April 2013 increase is the 2012 LHA rate uprated by lower of CPI or 30th percentile of local rents based on Sep.2012 and then by 1% for 2014 and 2015.

Monthly £

LHA restriction -1.15

Monthly Total -4.98 March 2013

March 2013 £

Annual Total -56.76

Monthly Income £ Rent 110

0.3% loss in income Self-employed income 86.70 LHA 2 bedroom rate 87.69 Child Tax Credits 483.30 Housing Benefit 87.69

Working Tax Credits 402.70 Child Benefit 146.50 April 2013 £ Free school meals 36.40 Rent 110 Housing Benefit 380 LHA 2 bedroom rate 86.54 Council Tax Benefit 83.60 Housing Benefit

86.54

Total Income 1619.20 Their rent remains unchanged at £110 per week and because their sons are under 16 and expected to share they only qualify for the two bedroom rate.

Monthly Outgoings for housing costs £ Monthly loss of £4.98

Council Tax 83.60 Options

Apply for a Discretionary Housing Payment (DHP) Total housing costs 560.30 The couple could apply to Northumberland Council for a DHP to help in the short term with

housing costs.

30

Case Study 5 : Large family and out of work


Louise is a single parent living in a privately rented, four bedroom Band D house in Northumberland with her daughter aged 10 and three sons aged 6, 3 and 1 She doesn’t work, her only income is benefits.

Benefit rises capped at 1% Elements of her Tax credits and Housing benefit were capped at a 1% rise rather than rising in line with CPI (2.2%)

Monthly £

Benefit cap (inc. 1% rise)

-213

Monthly loss of £21

Monthly Total -213

March 2013 Louise’s total annual benefits were capped at £26,000 by reducing the amount of Housing benefit she receives; this total includes the capped rise of 1% in benefits in April.

Annual Total

9% loss in income

-2,556

Monthly Income £

Child Tax Credits 937

Child Benefit 262 April 2013 £

Free school meals 70 Rent 750 Income Support 308 Housing benefit 600

Housing benefit 600 Council Tax Benefit 94 October 2013 Rent 750 Total Income 2,271 Housing benefit 387 Monthly Outgoings £ Monthly Loss £213.00

Options

Rent 750 Louise going to work If Louise works at least 16 hours per week so she gets working tax credits, she will be exempt from the benefit cap and eligible for child care credits

Finding cheaper housing Louise rents a relatively expensive house and has a shortfall to meet even when she receives maximum housing benefit

Utility Bills 155

Other 470 Getting financial advice Louise has large debt to a catalogue and arrears with her utilities, CAB can help to prioritise and reduce these

. Apply for DHP Louise could apply to Northumberland Council for a DHP to help in the short term with housing costs

Total Outgoings 2,134

31

Case Study 6 : Disabled adult living in Northumberland


Darren 60 – lives alone in a one bedroom flat, he rents from a housing association. He is classed as severely mentally impaired (SMI), so has no C.Tax liability. He used to work but had an accident and

Incapacity Benefit Darren was re-assessed for contributions based Employment Support Allowance (ESA) instead of Incapacity benefit and was placed in the

Monthly £

Incapacity Benefit to ESAIR -183.39

Increase in Housing Benefit +124.36 Receives industrial injuries benefit of 20%. Work Related Group with protection to ensure

Net Monthly Loss -59.03 March 2013

His payment remained the same as before.

This protection applies for 12 months and will then be assessed for income related ESA.

Annual Total -708.36 Monthly Income £

6% loss of income Darren will lose his protection of £50.70 and Incapacity Benefit 480.35 His ESA will be reduced by his industrial

Potential loss if DLA care lost Industrial injuries 137.02

Injuries entitlement.

Monthly Loss -150.02 DLA care low 89.05 This loss will be partially offset by an increase Annual Loss -1800.24 DLA mobility low 89.05 in housing benefit entitlement Housing benefit 143.56

Potential loss if DLA care/mobility lost Net monthly loss of £183.39 Total Income 939.03 Monthly Loss -241.02 Disability Living Allowance (DLA) Annual Loss -2892.24

Monthly Outgoings £ The change from DLA to Personal Independence 16%/26% potential additional loss of income

Rent 269.06 the next few years. The rate of DLA care which Options

Food 160.00 So Darren is not assessed as qualifying for the Darren has not been affected by the Utility Bills 137.00 new Daily Living component of PIP he will lose bedroom tax (one bedroom flat) and he is Loan Repayments 57.00 The income he receives from DLA care and if he Exempt from C.Tax liability because he is Other 146.00 doesn’t qualify for the new low level mobility Classed as severely mentally impaired Component then he will lose his DLA mobility

too and their associated benefits such as his blue badge.

Possible monthly loss of £91 / £182

Seek Advice – Darren should seek advice from

Total Outgoings 769.06

CAB because he will be losing his DLA and will get nothing unless he passes the assessment from PIP. He is also classed as work-ready for ESA despite being SMI.

33

Appendix 2: ANEC Welfare Reform Monitoring Programme

Proposed Core Indicator Set

34

1. Numbers seeking housing advice 2. Numbers using advice-services including welfare rights 3. Information on numbers of clients approaching CAB for advice 4. Levels of social housing rent arrears (percentage) net of

outstanding Housing Benefit 5. Number of Households in rent arrears 6. Number of rent arrears eviction court claims 7. Number of landlord rent arrears repossession claims leading to

a court order 8. Number affected by under occupation 9. Number of tenancies failing within first 12 months 10. Numbers waiting for 1 bedroom accommodation 11. Number presenting as homeless 12. Number of voids 13. Discretionary housing payments – number of DHP awards 14. DHP budget, spend in each quarter

15. DHP budget, spend as % of DHP budget 16. Social fund replacement – Total number of applications 17. Social fund replacement – Total number of awards 18. Social fund replacement – spend in each quarter 19. Social fund replacement – spend as a % of total budget 20. Number of awards for crisis support 21. Number of awards for settlement support 22. Number of awards for rent in advance 23. Number of calls answered by Customer Services about Council

Tax or benefits 24. Number of face to face enquiries about Council Tax or Benefits 25. Enforcement activity per thousand dwellings 26. The number of children taken into care

35

Appendix 3: The Northumberland Economic Strategy – Strategic Framework

36

Vision

‘A prosperous Northumberland founded on quality local jobs

and connected communities’

Str

ate

gy

Challenges

Strong Economy Skilled Workforce Entrepreneurial Dynamism

Themes

Business People Place

Attracting investment

Growing key sectors

Productivity and innovation

Enterprise and business growth

Learning to work transition

Workforce skills

Employability

Skills system

Business Locations

Housing quality and choice

Infrastructure and connectivity

Developing communities

Deli

ve

ry P

lan

Economic Programmes

Programme 1 Investment Zone:

Deliver growth including significant urban industrial and housing development integrated with measures that

increase connectivity with Tyneside

Programme 2: Growth Network

Support and facilitate the growth of Northumberland’s network of Market Towns and ensure the rural economy is an

accessible and distinctive place to live, work and visit.

Area Focus

South East and Central Central, North and West

Performance Framework and targets to 2025

38

For further information, contact: Kirsten Francis Principal Inclusion Policy Officer, Northumberland County Council

[email protected]

mailto:[email protected]

the impact of welfare reform in...

Documents