Where will the axe fall next?

Some of the reforms put in train by the last government have still to come into effect. We know about others already in the Employment and Welfare Benefits Bill. We are now waiting for the July budget to learn how the Government plans to save a further £12 billion. Charlie Callanan looks at the last five year’s reforms and what can be expected in future.

As we have already had five years of welfare reform, and know that further reforms are coming, this is an opportune time to review what has changed, and to outline what reforms are expected for the future.


The Conservative Party’s election manifesto promised further changes to the welfare benefits and tax credits system. Its main manifesto commitment on welfare was to reduce spending by £12bn by 2017/2018.


The government gave the headlines of its plans for the next welfare reforms in the Queen’s Speech on 27 May.


The Employment and Welfare Benefits Bill is the main plank of planned legislation affecting benefits and tax credits. The Government says that the Bill will ‘ensure that it pays to work rather than to rely on benefits; and deliver fairness to the taxpayer while continuing to provide support for those in greatest need’.


The main elements of the proposed Bill are:


A freeze on working age benefits

The main rates of most working age benefits, tax credits and child benefit will be frozen for two years from 2016/2017. But certain other benefits will not be frozen. These include those relating to the additional costs of disability (ie. Personal Independence Payment (PIP), DLA and Attendance Allowance), and statutory maternity pay, paternity pay and adoption pay. Also, the ‘triple lock’ will apply to the state pension for the duration of the parliament, ie. it will be increased each year by whichever is the higher of inflation, the increase in average earnings, or 2.5 per cent. Winter fuel payments, free bus passes, TV licenses and prescriptions will continue for pensioners.


Lowering the benefit cap

The total maximum annual amount of benefits a ‘non­working’ family can receive will be reduced to £23,000 (currently £26,000), equivalent to gross family earnings of up to £29,000. As before, it is expected that the benefit cap will not apply to certain claimants or households. This includes where the claimant, or his/her partner or a dependent child gets a disability benefit.



Removal of automatic entitlement to housing benefit for 18­-21 year olds

This cut could have potentially serious implications for thousands of young people with learning disabilities who are trying to live independently as they enter adulthood. What, if any, exemptions or protections may be introduced, especially for more vulnerable claimants (eg. those without or unable to stay in a parental home) remains to be seen.


New youth allowance for 18­-21 year olds

This will entail stronger ‘work-­related conditionality’ for young jobseekers from day one of their benefit claim. After six months claimants will be required as a condition of getting benefit to go on an apprenticeship, training or community work placement. Young people with disabilities who are not ‘mandated’ to seek work – such as those claiming Employment & Support Allowance – are not expected to be affected by these rules.


In some ways these proposals look minor in their scope to the welfare reforms already made by the Coalition during 2010­-2015.


Major previous and ongoing reforms

Universal Credit. This will become the main means-tested benefit for working-age claimants, whether in or out of work. It will replace all the old major means-tested benefits such as Income Support. It is currently being rolled out for certain new claimants.


Benefit Cap. This was introduced on the total amount of benefits that working age households can receive. Benefit levels were capped at £500 a week for families and single parents and £350 a week for single people.


Personal Independence Payment (PIP). This replaced Disability Living Allowance (DLA) for new claimants. All existing DLA claimants aged under 65 on 8 April 2013 will have to apply for PIP. Migration from DLA to PIP is currently being introduced across the country.


Housing benefit ‘bedroom tax’. Housing benefit awarded to council and housing association tenants who were ‘under-occupying’ properties was reduced, by 14% where a tenant is under-occupying by one bedroom, and by 25% where two or more bedrooms are unused.


Localisation of council tax support and welfare provision. Council tax benefit was replaced by a system of local support. Community care grants and crisis loans were abolished and replaced by ‘local welfare provision‘. Both schemes are provided and administered by local councils.


Mandatory revision before appeal For most benefits and tax credits the claimant must apply for a revision of a decision before they can submit an appeal to the first­ tier tribunal.


There have been various leaks in the national press about policy ideas within government about how it can achieve cuts totaling £12 billion to the welfare bill. So as well as the existing reforms yet to affect their clients, and the changes already outlined in the above-mentioned Bill, professionals will need to stay aware of any other changes affecting benefits and tax credits that may be proposed to try to achieve these massive savings.


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