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Heat rises on benefits as April 1 looms
8:37am Friday 22nd February 2013 in Features
Sweeping benefits cuts will be introduced from April 1. The Government says the aim is to make sure work pays, but the CAB warns it is the poor who will be hardest hit. STEPHEN LEWIS reports
ALISON Wilcox is worried.
The 41-year-old married mother-of-two is registered disabled: the result partly of a coach accident, and partly of a number of other conditions, including arthritis, tendonitis, swelling of the joints, and water on the legs, or lymphoedema.
She can walk and climb the stairs of the family’s three-bed council house in Clifton, but only with difficulty. She needs sticks when walking and grab rails for the stairs. For longer distances, she uses a wheelchair.
Her husband, Mick, a former bus driver, is her full-time carer. Alison, Mick, and an 11-year-old son live on benefits.
Alison qualifies for the highest level of Disability Living Allowance, including money towards a car; Mick receives a full-time carer’s allowance. They also get income support, child tax credits, child benefit, housing benefit and council tax credit.
In all, the family’s weekly disposable income, once rent and council tax is paid, amounts to about £325, Mrs Wilcox says A little while ago, however, she received a letter from the city council. It told her that from April 1, she would have to pay a ‘bedroom tax’ on the third bedroom and also 30 per cent of the family’s council tax. She reckons that will leave them about £450 a year worse off.
She rang the Citizens Advice Bureau to ask what she should do. “I said ‘We’re on income support. That’s supposed to be the minimum that you need to live on. How can they say I’m being given the minimum amount to live on the one hand, and then say I have to pay 30 per cent of my council tax? What’s the justification?’”
The justification, according to the Department for Work and Pensions (DWP), is fairness: to ensure families don’t live in council homes that are bigger than they need; and to ensure that everybody makes at least some local tax contribution.
The bedroom tax and the requirement for everyone to pay some council tax are among a series of sweeping changes to benefits that will come in from April 1.
Child benefit has already been removed from families in which one parent is earning more than £60,000; and MPs voted last month to cap the annual rise in working age benefits at just 1% – well below inflation – for the next three years.
From April 1, Jobseeker’s Allowance, income support, housing benefit and working tax credits will be scrapped and replaced with a new ‘Universal Credit’ that is supposed to be simpler to administer but may affect entitlement.
Disability Living Allowance will be phased out from April 1 – starting with new claimants – and replaced by Personal Independence Payments, but with the budget being cut by 20 per cent, according to the CAB; and there will be changes to Employment and Support Allowance (ESA).
Perhaps most controversially, from April 1 in four London boroughs and from September everywhere else, there will be a £500 cap on the total amount of benefits a family can receive each week (the cap will be £350 for a single person).
As April 1 draws closer, the changes are provoking heated political exchanges. Last week York central MP Hugh Bayley clashed with Deputy Prime Minister Nick Clegg in the House of Commons.
Mr Bayley claimed the one per cent cap on benefit rises would plunge a further 200,000 children into poverty.
Mr Clegg stressed the idea of the benefits changes was to ensure that ‘work always pays’. “Universal credit… means that even if someone works for only a few hours a week, it always pays to do so,” he said. But the divisions within Government itself were laid bare this week. Several national newspapers reported that the Liberal Democrat chief secretary to the treasury Danny Alexander had written to the Conservative work and pensions secretary Iain Duncan Smith warning that changes to the way housing benefit was to be paid could drag vulnerable people into debt – and even lead to them being evicted from their homes.
In a statement to The Press, the Department for Work and Pensions itself said: “We’re reforming the benefits system so that it better supports the people that need it, and remains sustainable in the longer term. These reforms will make millions of people better off, will incentivise work, and will end the benefits trap.”
Well, maybe. Different people will be affected differently, admits Steve Allitt, an advice supervisor with the Citizens Advice Bureau in York. “But some people will be really struggling,” he said. The CAB expects to see an increase after April 1 in the numbers of people coming to it for advice on how to deal with spiraling debt problems. “That is a concern.”
So what are the key changes? Here is our simplified guide…
Below-inflation rises in benefits payments
MPs voted in January to limit the annual rise in working-age benefits to 1 per cent for the next three years. If approved by the House of Lords, benefits paid to those of working age will therefore increase at well below the rate of inflation in each of the next three years.
In a message on Twitter, Prime Minister David Cameron reputedly said: “The Commons vote to limit benefit rises to one per cent while pay is only rising at one per cent is fair.” But Labour’s shadow work and pensions secretary Liam Byrne said: “I have never seen so much taken from so many, so fast.”
From April 1, a new ‘cap’ on the total amount of benefit any family can claim will be introduced in four London boroughs. The cap will be set at £500 a week for families and £350 a week for single adults. The cap will be rolled out to the rest of the country by September.
The cap will apply to the combined income from Jobseeker’s Allowance, Income Support, Employment and Support Allowance, Child Benefit, child tax credits and other benefits. Some households – including those with someone on Disability Living Allowance or war widows or widowers – will be exempted.
The cap is being introduced, the Department for Work and Pensions says, so that people on benefits cannot receive more than the average income – £500 a week is the equivalent of about £26,000 a year.
But the suggestion that a family can receive more by not working than by working is not true, the CAB says. “The few families who do receive more than £500 when out of work would also receive that level of benefits on top of their wages when in work.”
From April 1, council and housing association tenants under retirement age will have their housing benefit cut if their home is deemed too big.
You will lose 14 per cent of your benefit if you have one bedroom too many, and 25 per cent of benefit if you have two or more extra bedrooms. Couples will be expected to share a room, as will two same-sex children aged below 16 and two children of a different sex aged below ten.
York MP Hugh Bayley says as many as 800 families in York could be affected. But it would be difficult for them to move into smaller properties, he said. “There are not 800 [smaller] houses available in York for them to move into.”
Alison Wilcox pointed out that there would be another problem for her family in moving to a smaller home. Their three-bed council home has been adapted because of her disability. Any new home they moved into would also need to be adapted – which would cost the council money.
Council tax benefit
From April 1, people of working age in York who are on benefits will have to pay 30 per cent of their council tax: at the moment, they pay none.
The reason for the change is that council tax benefit is being replaced by council tax support – but the budget to support this is 10 per cent less than before, meaning those on benefits will have to contribute.
The new council tax support will be administered by local authorities such as City of York Council. Some authorities have decided to absorb the cost of the reduction in Whitehall funding, so people on benefits in those areas will still not pay any council tax.
But other authorities – York among them – have decided they cannot afford to do that. It would cost £10.5 million to ensure no one on benefits had to pay any council tax, the authority says.
Pensioners are protected – so while the budget to pay the council tax of those on benefits has only been cut by ten per cent, working-age benefit claimants in York will have to pay 30 per cent of their council tax so the authority can balance its budget. “York is by no means unique,” a spokesperson said. “(But) we have one of the lowest council tax rates in the country.”
From April 1, all working age benefits (such as Jobseeker’s Allowance, income support and working tax credit) will be replaced by a single Universal Credit. There will be tougher sanctions to require claimants to seek work, and the new benefit will be paid monthly, rather than weekly.
Work and Pensions Secretary Iain Duncan-Smith said last December the new system “will make work pay and protect the people who need it most… Universal Credit will result in up to 300,000 more people moving into work”.
But couples in which one is a pensioner and the other is still of working age will be treated as a working-age household. “This could mean losses in excess of £100 per week for some,” warns the CAB.
Disability Living Allowance
This will be replaced by a new Personal Independent Payment (PIP), for new claims, from April 1 – although Steve Allitt of the York CAB says it will be phased in later for existing claimants.
Entitlement will be based on a new face-to-face medical assessment, with an emphasis on looking at what kinds of work someone with a disability can do, rather than looking at what they can’t do, says Mr Allitt. The budget for the new benefit will be cut by about 20 per cent from its present level, and the CAB estimates that one in six current claimants would not qualify for the new PIP – especially those who currently qualify for lower levels of disability benefit.
Employment Support Allowance
This is paid to people who have a limited ability to work because of a health condition or disability. There are two types of ESA: one based on National Insurance contributions, and one on means-testing.
From April 1, you will only be entitled to claim contributions-based ESA for one year, after which you will be moved onto means-tested ESA. “Around 300,000 people assessed as disabled or too ill to work will lose over £95 each week as a result,” says the CAB.
• Getting advice
If you’re worried about debt or benefits cuts, call the Citizens Advice Bureau on 08444 111444, 9.30am to 4pm weekdays, for free, confidential advice.