Welfare Reform

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By Megan Blake, Director of the MA Food Security and Food Justice, University of Sheffield

UC and PIP have received considerable attention recently. While the specifics of these reforms are causing considerable difficulty for households and communities, welfare reform actually includes a wider suite of changes that are affecting different types of families in very different ways.  This list highlights the range of changes that have been introduced*:

Reforms 2010-2015

Housing Benefit—Local housing allowance
Changes to the rules governing assistance with the cost of housing for low-income households in the private rented sector. The new rules apply to rent levels, ‘excess’ payments, property size, age limits for sole occupancy and indexation for inflation.

Housing Benefit—Under-occupation in the social rented sector (bedroom tax)
New rules governing the size of properties for which payments are made to working age claimants

Non-dependent deductions
Increases in the deductions from Housing Benefit, Council Tax Support and other income-based benefits to reflect the contribution that non-dependent household members are expected to make towards the household’s housing costs (including adult children and lodgers).

Benefits cap
New Ceiling on total payments per household, applying to the sum of a wide range of benefits for working age claimants.

Council Tax Support
Reductions in entitlement of working age claimants arising from a 10% reduction in total payments to local authorities.

Personal Independence Payment
Replaces Disability Living Allowance.  Includes more stringent and frequent medical tests, as the basis for financial support to help offset the additional costs faced by individuals with disabilities.

Employment Support Allowance (ESA)
Replacement of Incapacity Benefit and related benefits by ESA, with more stringent medical tests, greater conditionality and time-limiting of non-means tested entitlement for claimants in the Work-Related Activity Group.

Tax Credits
Reductions in payment rates and eligibility for Child Tax Credit and Working Tax Credit, paid to lower and middle-income households

Child Benefit
Three-year freeze, and withdrawal of benefit from households with a higher earner (not joint household income).

1% up-rating
Limit in annual up-rating of value of most working age benefits.

Reforms 2015 onward

Housing Benefit: 18-21 year olds
End of automatic entitlement for out-of-work 18-21 year olds

Benefits Cap
Lower ceiling per household than previous cap.  Applicable to a total sum of a wide range of working age benefits.

Mortgage interest support
Change from a payment to a loan to be repaid

Universal Credit
Includes tapers and thresholds for withdrawal of benefits.  Includes a reduction in the level of earnings and an increase in the rate at which Universal Credit awards are withdrawn. Universal Credit will replace or include tax credits including those listed above.

Employment Support Allowance (ESA)
Reduction in payment to Job Seekers Allowance rate for new claimants in the Work-Related Activity Group

Tax Credits
A further change to Child Benefit and pre-2015 tax credits. Further, reductions in payments and thresholds, notably the removal for new claims of the ‘family’ element and a limit on the ‘child’ element to two children for children born after March 2017.

Benefit freeze
4 year freeze of the value of most working-age benefits

  • The reforms are being challenged as they are being rolled out, so there may be some recent changes not reflected.
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