Lots of changes are happening to benefits this year - can you explain what it’s all about?
The Government passed a law in March 2012 (the Welfare Reform Act) introducing major changes to the welfare benefits system in England. The changes include a cut to a number of benefits and changes to the way benefits are calculated and paid. It means some of the most vulnerable residents in Lambeth losing hundreds of pounds a year. Up to 1 in 6 Lambeth residents will be affected by cuts to benefits this year.
What are the main changes?
The six main changes this year are:
1. A new cap on Housing Benefit is being introduced later in the year – 667 households in Lambeth will be affected (mostly families) with an average shortfall of £94 per week.
2. Housing Benefit criteria for people living in social housing is being changed in relation to the number of bedrooms that will be paid for in a property. 4000 households in Lambeth will be affected.
3. Council Tax Benefit is being abolished and councils are taking on the job of helping residents meet their council tax costs by setting up local schemes. With substantially less funding from Government to run them the change will mean reductions in financial support for 20,758 Lambeth households.
4. Disability Living Allowance is being replaced by a new benefit called Personal Independence Payment - 9,000 people in Lambeth will be affected.
5. Community care grants and crisis loans are stopping and councils will instead have to provide emergency support for residents. A new Lambeth scheme is being set up.
6. A new monthly benefit called Universal Credit is being introduced which replaces several existing means-tested benefits.
Why are these changes happening now?
The Government’s stated ambition is to “make work pay” and create a benefits system that reflects that. But they also want to drastically reduce the cost of benefits to the public purse to tackle the deficit and these changes have taken billions out of the benefits system.
What do these changes mean for Lambeth?
They will have a significant and largely negative impact on Lambeth residents and leave some of the poorest and most vulnerable with less support. The combined cut in funding to the council and Lambeth residents due to the benefit changes is estimated at about £10 million per year. The council expects to lose between £2.5 million and £3.5 million for lost rent linked to the changes to housing benefit rules.
What is the council doing about it?
We have already put in place a package of new short term mitigation projects totalling over £1 million and expect more intervention and support will be needed in the coming months. We’ve created a fair discount system for council tax so we can continue to help pensioners, many disabled people, war widows and widowers, carers and families to pay their council tax and we are freezing council tax for the next two years to reduce the financial burden on our residents.
What should residents affected by these changes do?
That depends on their specific circumstances and which changes affect them. However there are three common messages which we want to get across to residents:
• Get to grips with your personal finances - encouraging residents to open a bank account and set up direct debits for all regular payments will help prevent debt, arrears and homelessness.
• Try and get work or increase your hours - most working age claimants will see a drop in their income so getting a job or increasing working hours is the best option to cope with a loss in income. But there are also other things to consider such as taking in a lodger to help share living costs, asking others in the household to make a bigger contribution and looking at whether it’s possible to move to a smaller or cheaper home. For more information on jobs, apprenticeships and training visit www.lambeth.gov.uk/morejobs
• Get help and advice now and make sure you are claiming all you are entitled to - it’s really important to get advice from experts who can make sure that residents are claiming everything they are entitled to and supporting people early on will prevent crisis situations such as bad debt, arrears and people losing their homes.
Is it just the council that’s helping residents?
No not at all. We are highly dependent on our voluntary sector and advice network that are out in the community helping people everyday. The range of advice available covers legal, benefits check, housing needs and employment advice. We are all working together with the same objective: to make sure residents are protected as much as we can from the Government’s benefit cuts. If you’d like more information about support and advice go to www.lambeth.gov.uk/benefitchanges
Detail on the changes
1. Benefits cap
What is the benefits cap?
The Government is placing a limit on the total amount of benefits a household can receive - £500 a week for childless couples and families and £350 a week for single adults. In Lambeth, the average loss to household benefit income is an average of £94 per week with some families losing as much as £650 per week. Those affected have been contacted directly by the Department for Work and Pensions (DWP) and the council is also making contact with them to offer help.
How many people in Lambeth will be affected by the benefit cap?
According to government data, this measure is expected to affect about 650 Lambethhouseholds, most of them families.
What happens if a family is currently getting more than this new limit?
In the short-term, if a household is above this limit, a deduction will be taken from housing benefit payments. In the longer term the limit will be enforced through the new Universal Credit system (from October 2013).
What support is available for people affected and will they have to move out of the
borough?
We’ve set up a dedicated team (call 020 7926 3191) to advise and support Lambeth families who will see their income drop because of the benefits cap. Support is available in finding alternative accommodation in London and further afield, gaining employment or taking up benefits that families are entitled to that might make them exempt from the cap.
2. Housing Benefit criteria in social housing
Is it true that Housing Benefit will be cut if you have a spare bedroom?
In most cases, yes. This change is sometimes referred to as the bedroom tax because it’s a new rule which means Housing Benefit will pay for only for the number of bedrooms a household needs. Housing Benefit will be restricted to allow for one bedroom for each person or couple living as part of the household, with the following exceptions:
• Children under 16 of the same gender will be expected to share
• Children under 10 will be expected to share regardless of gender
• A disabled tenant or partner requiring a non-resident overnight carer will be allowed an extra room for use by this carer
Who does it affect?
It affects people of working age in council (Lambeth Living) and housing association homes. If accommodation is larger than needed (as defined by these new rules) tenants will receive less money each week and will be responsible for paying the difference between their rent and the amount of housing benefit they get. Most tenants with at least one spare room will be affected.
How much will Housing Benefit be reduced by?
• 14 per cent for 1 extra bedroom
• 25 per cent for 2 or more extra bedrooms
The average reduction will be £20 per week. People of pension age will not be affected by these changes.
What can tenants do to prevent having their housing benefit reduced?
It’s worthwhile tenants looking into different housing options including downsizing, mutual exchange or getting a lodger. However the reality is there are very few suitable properties that people can move to so not everyone affected will be able to downsize to a smaller place in borough. Gaining employment or asking family members within and outside the household to help make up the shortfall are also options.
What support is available for people affected?
We’ve set up a dedicated team within Lambeth Living (call 020 7926 1952/1953) to advise and support Lambeth families who will see their income drop because of the size criteria. We’ve also funded a local provider to set up a pilot lodgings service to provide options for people with spare rooms to take in a lodger if they wish to make up the income lost as a result of the size criteria.
3. Abolishing Council Tax Benefit (CTB)
What’s happening to Council Tax Benefit?
The Government has abolished the national scheme of CTB and councils have to replace it with their own local council tax discount scheme. This is called Council Tax Support (CTS) and it will help people on low incomes to pay their council tax bills.
When will this local scheme start?
Following consultation with residents we’ve now agreed our own local scheme and it will be in place by April 2013, which means everyone will be assessed for support based on new eligibility from then onwards.
Will it essentially be the same but administered locally by the council?
No. The scheme will help less people because the money given to us by Government for council tax support has been significantly reduced. In Lambeth we have about £2.4 million per year less to help residents meet the costs of their council tax.
What does it mean?
Some people will pay more towards their council tax. The average reduction in support for those who are not protected from these changes is 16 per cent so, on a council tax bill of £900 per year, this means the person claiming council tax support would have to pay approximately £150 per year of their bill themselves.
4. Disability Living Allowance (DLA)
Why is DLA changing?
DLA is being replaced by a new benefit called Personal Independence Payment (PIP) for people aged 16 to 64 (from June 2013). DWP have said they expect to save 20 per cent on the overall budget by making this change and this has led many organisations to believe that the main intention behind PIP is to save money. The new assessment process is stricter and more medicalised.
If you already receive DLA will you just be transferred automatically on to PIP?
No. People currently receiving DLA will not automatically be entitled to PIP. Everyone will need to make a new claim for PIP and it will be based on how your health or disability affects your ability to live independently. See the latest on the timetable for changes at www.lambeth.gov.uk/benefitchanges
5. Changes to emergency fund access
What’s happening to the social fund?
From April 2013 the DWP’s discretionary Social Fund will cease to exist. Among other support this currently provides short term crisis loans and community care grants for people moving into the community; for example, from care or prison. Funding to support crisis loans and community care grants will move to the council for us to create our own local schemes to support people who are most in need. However, the amount transferred is less than is currently spent by the DWP and we expect that demand for support will increase because of all the other benefit cuts. The DWP will still help with people who need an advance on
benefits payment and are also still offering budgeting loans until Universal Credit comes in.
How many people have received these loans and grants in Lambeth?
From DWP data for 2010-11, we know that 8,900 grants and loans were given out to residents in Lambeth at a total value of £2.1 million.
Is Lambeth Council setting up a replacement scheme?
Yes. We’ve now agreed a new local scheme called the Emergency Support Scheme and it will start from April 2013.
Will you be providing the same kind of support?
No. Because the Government has cut funding to this budget (we will have about 24 per cent less for 2013-14 compared to 2010-11) there will now only be a small facility to provide cash grants and most needs will be met by offering ‘in-kind’ support (including second hand furniture and white goods, travel tickets and direct fuel payments to suppliers) or loans offered by the Credit Union on our behalf. Access to support will be for residents on certain meanstested benefits only.
What if a resident needs an emergency loan?
Crisis loans will be part of the support available. They are to cover immediate, very short term needs only. However, we’ve decided that applicants that meet the criteria will be referred to our local credit union – London Mutual - who will administer the loan. As a condition of the loan applicants will have to open a credit union account and pay their benefits into it so that loan repayments can be taken automatically. The interest is 2 per cent per month. For example - a £150 loan paid back over 9 months will see £15 of interest payable.
6. Universal Credit
I’ve heard about Universal Credit – what is it?
It is the name given to a new benefit that is being introduced later this year (October). It replaces several existing means-tested benefits such as income support, housing benefit and tax credits and will be paid monthly, in arrears, directly into a bank account. The aim is to simplify the system, give people more responsibility for managing their money and treat the benefit payment more like a typical monthly salary.
Giving people a monthly lump sum is a big responsibility for some people, will they cope?
For some very vulnerable people the housing element of the Universal Credit can be paid directly to landlords so their rent gets paid. However the group of people eligible for this is very small and there are others who will not be used to managing their money who will have to manage monthly payments and try and find a way to budget so that they pay their rent and their bills.
Won’t this mean more people getting into debt?
This is a concern. The best options are to encourage people to set up bank accounts and direct debits for their main outgoings – especially rent - to ensure they don’t get into debt or into rent arrears.
When is it being introduced?
Gradually from October 2013 and DWP expect all working age claimants to have moved onto Universal Credit by October 2017. The Government’s aspiration is for Universal Credit to become an online claim system for all (digital by default) allowing quicker processing of payments. However, there is concern about this ambitious timescale to get the IT system working in time as well as how people without access to a computer or able to use one will cope.
