May 132012
 

DPAC UNIVERSAL CREDIT CAMPAIGN

 

www.dpac.uk.net

 

Linda Burnip

01926 842253

0771 492 7533

linda_burnip@yahoo.co.uk

 

Debbie Jolly

01572 820546

079461 40765

mail@dpac.uk.net

 

Universal Credit: What it means

The coalition government and New Labour before them agreed that a reform to the current benefits system was long overdue. In November 2010 the Coalition published a white paper on Universal Credit. It is claimed to be the biggest overhaul of the benefits system since the 1940s when what was known as the welfare state began.

The Government White Paper, ‘Universal Credit: welfare that works’ was published on 11 November 2010 laying out the first steps of the overhaul of the welfare process. The Welfare reform Bill through which this will be introduced was forcibly passed through the Commons and Lords earlier this year by the Coalition government.

This paper deals with Universal Credit. It examines what it means, what it may mean for disabled people and what the key changes will be.

What is Universal Credit?

The coalition notes that there are over 30 different social payments or benefit systems in place. They think this is confusing and too complex for people to understand. They believe that by combining social payments/benefits into one universal payment things will be easier and better for people. Universal credit is intended to be a new benefit which will replace:

  • child tax credit
  • housing benefit
  • income related employment and support allowance
  • income based jobseekers allowance
  • income support
  • social fund budgeting loans
  • working tax credit

Universal credit is a proposed system that will see many social payments or benefits merged into one single payment. The coalition claims that nobody will be worse off under this system. However, the rhetoric of a fairer system is coached in terms of welfare dependency which suggests that this strategy main aim is to reduce welfare spending.

The white paper begins by saying:

The Government is committed to reforming the welfare system to make it fairer, more affordable and to tackle poverty and welfare dependency, whilst continuing to support the most vulnerable in society

The scheme is estimated to cost 2 million to set up. First steps towards the coalition’s vision included strategies introduced in the budget and spending review of 2010. These included:

  • capping household benefit payments so that families do not receive more in welfare than median after-tax earnings for working households;
  • withdrawing Child Benefit from families with a higher rate taxpayer;
  • measures to control the cost of Tax Credits, Housing Benefit and Council Tax Benefit; and
  • time-limiting contributory Employment and Support Allowance for those in the Work Related Activity Group.

The capping of housing benefit payments is likely to hit disabled people particularly hard at a time of rent increases in social housing and the private rented sector.

Whilst withdrawing child benefit from families with a higher rate tax payer may suggest making things fairer, it actually undermines the principle of universality in built into child benefit to ensure that it was not means tested but a benefit to aid mothers bringing up children. The removal of higher rate tax payers is in effect removing that safeguard and the first step towards to means testing.

Employment and Support Allowance (ESA) replaces incapacity benefit for all disabled people from 2014. Those in the work related activity group are deemed to be ‘fit for work’ and will have their benefit limited to 12 months retrospectively from the date of the comprehensive spending review or the award if the award was made after the 20 October 2010. There are other categories of the Employment and Support Allowance such as the support group, these will be unaffected by the time –limits. Those in the work related group will be expected to sign up for job seekers allowance a lower amount compared to ESA.

At the time of the White paper Universal credit did not include:

  • bereavement benefits
  • contributory jobseeker’s allowance
  • contributory employment and support allowance
  • disability living allowance
  • child benefit
  • industrial injuries disablement benefit
  • maternity allowance
  • statutory maternity pay
  • statutory sick pay
  • pension credit

However, since this time clear proposals to abolish Disability Living Allowance (DLA) and replace it with Personal Independence Payment (PIP) have been put forward with the reasoning that 20% needs to be cut from the case loads of DLA.

The paper says universal credit ‘will consist of a basic personal amount’ with additional amounts for ‘disability, caring responsibilities, housing costs, and children’.

When will Universal credit begin?

The white paper stated that universal credit would be rolled out in October 2013. Pilots are due to begin in May 2013.

Claiming and accessibility

Claims are set to be made online and on the basis of households, rather than individuals

Claims will be made on the basis of households rather than individuals and both members of a couple will be required to claim Universal Credit. Claims for Universal Credit will normally be made through the internet and we expect that most subsequent contact between recipients and the delivery agency will also be conducted online. People will be able to obtain all elements of Universal Credit through a single application, ending the excessive form filling of the current system, reducing scope for error and reducing administration costs p.25

Two issues arise for disabled people; the first is that claims made on behalf of a household will exacerbate some disabled peoples’ feelings of dependence as opposed to independence and independent living. The second is that access to computers and to the internet is known to be lower for disabled people and those with lower incomes. Although the paper mentions ‘ These changes will enable the targeting of resources to support vulnerable people with additional needs’ (p.25) which we assume is disabled people, no further method of the method or how this will be achieved is given.

Payment Periods

The paper states that the coalition is considering both payment and assessments on a monthly basis. This would seem to suggest that entitlement will need to be re-registered and hence re- assessed on a monthly basis.

Critiques of universal credit

The coalition claim that nobody will be worse off under the new universal credit, however current proposed changes suggest that this may not be the case for disabled people or others on low incomes. Universal credit appears to be focused on getting people into work and away from benefits. It is laudable that the coalition accept that some people may be worse off in work than on benefits and are attempting to adjust the discrepancy.

At the same time as assessment s for ESA have come under constant and increasing criticism for being unfair[i] it is unlikely that disabled people declared as ‘fit for work’ under the Work Capability Assessment will benefit from this change. The WCA shows that ‘target driven’ simplified tests do not work. It is likely to be the same with one single benefit system –how will this be able to address the complexities of different impairments, multiple impairments, and the multitude of disabling barriers that disabled people face?

Sanctions

In addition, the universal credit and welfare reform will bring in ‘a commitment’ for those who fail to ‘apply themselves’ to proper work seeking activities to tougher sanctions. Once again this will not address the complexity of employment related barriers that disabled people face, even if they really are ‘fit for work’.

Page 21 of the white paper states:

We will require every Income Support, Jobseeker’s Allowance and Employment and Support Allowance recipient to have a claimant commitment. The commitment will set out our general expectations of recipients, and the requirements placed upon them; it will also be clear about the consequences for the recipient of failing to meet these agreed standards. This will be carried forward into Universal Credit.

 

 

DPAC say that Disabled People and Disabled Children should not be penalised in this way when £25 billion in unclaimed taxes remains uncollected, bankers continue to receive massive bonuses, and MPs spend £40,000 for trees in Portcullis House plus thousands more for their personal expenses.

 

Summary of key points of the bill

  • The introduction of a Universal Credit to replace existing means-tested benefits and tax credits for people of working age from 2013.

 

  • The introduction of Personal Independence Payments to replace Disability Living Allowance with a stated aim of reducing the number of claimants by 20% and replacing the current 3 bands of the care component with only 2. Half a million disabled people will lose their entitlement to DLA which in many cases is what allows them to work.

 

  • At the moment anyone getting the mobility component of DLA before the age of 65 continues to receive it once they reach 65 but with PIP proposals they will not be able to continue to claim PIP once they reach 65 and there is no mobility component of Attendance Allowance.

 

  • Limiting of contribution based Employment and Support Allowance payments to 12 months for those in the Work Related Activity Group. This is what people think they are paying National Insurance contributions to be entitled to if they need it.  100,000 people will lose out at the beginning of April 2013 and another 100,000 will lose out  the following April after 12 months on the benefit.

 

  • Removal of ESA entitlement from young disabled people under 25 years of age. Non-disabled young adults are treated as such from the age of 18 yet you will no longer be treated as an individual adult if you are disabled. At the same time Income Support is being abolished as well so it remains unclear what if any money younger disabled people will be entitled to.

 

  • Caps on the total amount of benefit any claimant can get, for both housing needs and living expenses. The suggested total amount is £350 for a single person and £500 per week regardless of family size, or costs of housing. This will particularly affect those living in areas such as London where rents are higher than average. Currently 7 out of 8 people who get Housing Benefit are in low paid jobs, so having a living wage might well reduce the overall benefit bill more effectively than demonising benefit claimants further.

 

  • Much has been made of the figure of £26,000 as the maximum annual cap but the vast majority of claimants will in fact get far less then £26,000. Only 1% of claimants will be affected by this cap level but that will still be 67,000 families. In Brent alone 3,300 families are due to lose benefits because of the cap. Social cleansing of poor families has already started in boroughs like Westminster.

 

  • Half of all household affected by the cap on benefits has a disabled person living in them. Moving is often not an option as care packages are not transportable across local authority boundaries, and continuity of other services is often essential.

 

  • Social housing tenants with a spare bedroom will no longer get funding for the extra room. Most will lose £12 a week. The National Housing Federation estimate 180,000 social tenants are underoccupying 2 bedroom homes but there were only 68,000 1 bed social homes to rent in 2009-2010. Even the DWP EIA said there were not enough 1 bedroom properties.

 

  • This is unlikely to reduce housing costs as a couple with one child having to move from a 3 bed social house in Crawley and rent a smaller property in the private sector would be able to get £66 a week more in Housing Benefit.

 

  • It will link Local Housing Allowance rates to CPI index, which excludes housing costs.

 

  • The resulting increase in homelessness will lead to local authorities paying out millions more in costs.

 

  • Not excluding child benefit from the cap levels will mean anyone having a child will not get any extra money to care for them. This will increase child poverty rates and child benefit for a first child is currently about £1,000 per year.

 

  • With the scrapping of Income support single parents with a child over 5 years of age must work or be available for work to receive Job Seekers Allowance.

 

  • The Severe Disability Premium currently part of Income Support will disappear and there are no details about what if anything will replace this. This amount makes up one-third of some severely disabled people’s incomes.

 

  • Claims will be made on the basis of households rather than individuals and both members of a couple will be required to claim Universal Credit. If couples have savings over £6,000 or one of them receives an income then the other will not be able to claim anything else.

 

  • As income support is being abolished carers entitled to benefits will be reduced to 40% of current claimants. Those carers who are also disabled will lose about half of their income as they will only be able to claim one Universal Credit premium either as a carer or a disabled person.

 

  • Removal of the Social Fund which has previously given grants to enable people to buy essential items or to allow women fleeing domestic violence to move. Some of this funding will now go to local authorities but will not be ring-fenced in any way.

 

  • Withdrawing Child Benefit from families with a higher rate taxpayer will affect many families adversely and takes women’s rights backwards.

 

  • Many families with disabled children will face a cut to the financial support they receive from tax credits. The new system will result in these children losing up to £1,400 per year The Government estimates that 100,000 disabled children would lose out under this change.

 

  • Changes to Tax Credits will also affect families caring for disabled children as claimants of these will need to work at least 24 hours rather then 16 hours per week so many families will lose tax credits.

 

  • To access the Child support Agency single parents will have to pay a fee reduced from a suggested £100 down to £20 plus 7-12% of any maintenance collected for them.

 

  • All claims are to be processed via the internet which is not accessible for many disabled people.

 

  • In addition, the universal credit and welfare reform will bring in ‘a commitment’ for those who fail to ‘apply themselves’ to proper work seeking activities to tougher sanctions. Once again this will not address the complexity of employment related barriers that disabled people face, even if they really are ‘fit for work’.

Sanctions proposed include:

  1. a.   Failure to meet a requirement to prepare for work (applicable to jobseekers and those in the Employment and Support Allowance Work-Related Activity Group) will lead to 100 per cent of payments ceasing until the recipient re-complies with requirements and for a fixed period after re-compliance (fixed period sanctions start at one week, rising to two, then four weeks with each subsequent failure to comply).

 

  1. b.   Failure to actively seek employment or be available for work will lead to payment ceasing for four weeks for a first failure and up to three months for a second.

 

  1. c.   The most serious failures that apply only to jobseekers will lead to Jobseeker’s Allowance payment ceasing for a fixed period of at least three months (longer for repeat offences). Actions that could trigger this level of penalty include failure to accept a reasonable job offer, failure to apply for a job or failure to attend unpaid Mandatory Work Activity.

 

  1. d.   Some types of recipient, such as lone parents with young children, are only required to attend work-focused interviews and their failure to attend is more often due to challenging circumstances than wilful evasion of the rules. However, financial sanctions where necessary will be applied.