Welfare Reform Measures and cuts to be introduced from April 2013

Below is a summary of the benefit changes that come into force this month   

Benefit cap:  As part of the Welfare Reform Act, from April 15 2013, there will be a cap on the amount of benefits a working-age household can receive, capped at the level of the average earnings of a working family.

Council Tax Benefit:  Council Tax Benefit is to be replaced by localised support for Council Tax. Local authorities will set up new schemes to support people in their own areas within a 10% reduced budget. The Scottish Government has announced that it will provide some protection for local authorities.

Disability Living Allowance (DLA) and Personal Independence Payment: The Government is to start replacing DLA with a new benefit called Personal Independence Payment (PIP) for people of working age. The government is hoping for a 20% reduction in expenditure by 2017 by bringing in this process. All working-age claimants already claiming DLA will eventually be reassessed for PIP.

Housing Benefit: In England, Wales and Scotland: Size criteria will apply in the social rented sector (e.g. council and housing association properties) replicating the size criteria that applies to Housing Benefit claimants in the private rented sector under the Local Housing Allowance rules. This means that people living in houses larger than they need (under-occupiers) will have to move to somewhere smaller or make up the difference in rent because their Housing Benefit will be reduced with a:

·        14% cut in Housing Benefit for those who under-occupy by one bedroom
·        25% cut in Housing Benefit for those who by two or more bedrooms

Local Housing Allowance rates: LHA rates will be increased in line with the Consumer Price Index instead of the market rents in each area. The connection with actual rents will be lost.

Universal Credit: The current complex system of working-age benefits and Tax Credits is to be replaced by a new benefit called Universal Credit. National introduction will start in October 2013. In April 2013, the Department for Work and Pensions, working with HM Revenue and Customs and selected local councils, will launch its Pathfinder project to introduce Universal Credit to claimants within certain areas of the North-West of England. This “pathfinder” stage aims to ensure that Universal Credit is ready to go live across the rest of Great Britain later in 2013 and Northern Ireland in 2014.

Dave Moxham
STUC