Welfare reform

The UK Government has been putting in place significant changes to the UK welfare system, which will change both the types of assistance available and the way in which these benefits and entitlements are administered.

This information is intended to give Ministers, Sessions and other Church of Scotland employees some brief background information. At the end there are links to online resources which will give more detail. This is not intended to be an exhaustive description of the changes taking place, and indeed some of the changes have not yet been finalised by the Government.

Changes will begin in 2013, but the main roll-out of changes is scheduled to take place between 2014 and 2017.

Universal Credit

The most significant change is that many of the benefits and entitlements currently administered by the Department for Work and Pensions (DWP) will be rolled up into one single payment, known as the Universal Credit.

Anyone who currently receives any of the following benefits or entitlements will see this payment changing to the Universal Credit: income support (IS), income-based jobseeker’s allowance (JSA) income-related employment and support allowance (ESA), housing benefit, tax credits and social fund budgeting loans.

Rather than claiming multiple benefits, one single payment, the Universal Credit, will be made.

According to the DWP, the new Universal Credit system aims to:

  • Improve claimants’ incentive to work
  • Make it easier for them to move in and out of work
  • Be easier to understand than the existing system
  • Reduce poverty among people on low incomes
  • Cut back on fraud and error
  • Be more cost-effective to run

Universal Credit will be available to people who are in work, subject to a means test, as well as those who are out of work. The Universal Credit will take into account the amount being earned, which will count as a ‘disregard’ towards the money that an individual is entitled to, and so will effectively act as a “top-up”. This should mean that people on a variable income, or who are employed on a short term basis, will have a relatively stable level of income.

Universal Credit will be paid monthly. The UK Government state that this is to emulate monthly salaries. However, this is likely to be a significant change for many people, as most of the benefits and entitlements are currently paid more frequently than monthly. It also assumes that most people are used to being paid monthly, which is not necessarily the case. In addition, changes such as housing benefit no longer being paid directly to landlords and becoming the responsibility of individuals to pay rent from their Universal Credit payment is another major change which will have budgetary implications for many people. The demand for money advice services, particularly advice on budgeting, is likely to be extremely high.

Universal Credit will be paid to one individual per household. This means that in a couple, the assessment for entitlements will be made jointly, and only one person will receive the payment. This will also be a significant change for many people.

Benefits remaining as standalone benefits will include contributory JSA and ESA, child benefit, pension credit, carer’s allowance, disability living allowance (DLA) (which will be replaced by the new personal independence payment (PIP)– although there are some changes to these benefits too, notably changes to disability benefits.

Changes to Disability Benefits

The reform of disability living allowance (DLA) will mean that DLA will be replaced by a personal independence payment (PIP) for those of working age from April 2013. This continues to be non means-tested, and is based on an individual’s ability to carry out a range of key activities necessary to everyday life, rather than classifying the disability itself.

There is no automatic transition from DLA to PIP; people who do not submit a claim for PIP will have their DLA stopped. Between October 2013 and March 2016, DWP will be contacting everyone aged 16 to 64 on 8 April 2013 in receipt of DLA. This applies to everyone, even those who currently are in receipt of indefinite or lifetime DLA. Everyone applying for PIP will be individually assessed. Information will be gathered from the individual, as well as healthcare and other professionals who work with and support them. Most people will also be asked to a face to face consultation with a trained independent assessor as part of the claim process. This is likely to be a stressful process for many people who have to undergo these assessments (particularly those on long-term or lifetime awards).

What about Child Benefit?

Child benefit will continue to be paid separate to Universal Credit, although it may be counted as a ‘deduction’ to the amount of Universal Credit that a household is entitled to.

After 7 January 2013, child benefit will be payable at a reduced rate to households where one or more parents earn over £50,000, while households in which at least one person earns £60,000 or more will not be eligible to claim any child benefit.

Practical Changes to the Welfare System

A shift to online applications

The Universal Credit is intended to be a primarily ‘online’ benefit. Claimants will therefore need access to a computer with an internet connection (Jobcentres will have computers for people to use for this purpose). This is a significant change as most people who are currently in receipt of benefits do not manage their benefits online. There will be a requirement for people who require to improve their computer literacy skills to be supported to do so. Even for people who are comfortable with using the internet for other activities, managing a Universal Credit account online, with no face to face interaction with officials, may cause further anxiety.

Increased sanctions

Currently, Jobseekers Allowance claimants can be subject to their benefit being withheld for up to three months if they fail to comply with the requirements of their benefit, for example missing appointments, not accepting job offers or leaving a job without good reason. Under new rules, the maximum sanction that can be imposed will now be increased to three years. Low level sanctions which are currently penalised with a one week cut in allowance, will now be imposed for a minimum period of one month. Recipients will be required to sign a “claimant commitment” which sets out the responsibilities of individuals in relation to job search activities. This is not only for those who are out of work; in-work claimants of Universal Credit who are in part-time employment will have to commit to prepare, look and be available for more or better paid work. The ability to complete paperwork and manage the new online system, therefore, is vital to avoid unwittingly breaking the “claimant commitment”.

Transitional payments

The DWP has put in place a Transitional Payment scheme to cover any shortfall that claimants may experience in the initial stages of receiving Universal Credit, and which will gradually be reduced over time to mitigate against any immediate loss of income. This is similar to transitional arrangements that were put in place at times when other changes to benefits occurred, e.g when Income Support was introduced in 1988 and in the current move from Incapacity Benefit/Income Support to Employment and Support Allowance.

Impact on volunteering

The Government has stated that claimants of Universal Credit can undertake as many hours undertaking voluntary work as they want but for the purposes of Universal Credit, only up to 50% of their expected hours of work can be counted as voluntary work as a relevant deduction against their work-search activities for the week. Based on the understanding that a working week is 35 hours, claimants would still require to be available for job search activities for at least 17.5 hours a week.

What about crisis loans?

Community care grants and crisis loans from the DWP will be abolished, and the Scottish Government has to take on responsibility for the successor scheme from April 2013.  Scottish local authorities will administer the Scottish Welfare Fund, and it is expected that this will be in place for around 2 years until a more permanent scheme is established in law. The key change is that payments will be grants, or assistance in kind (e.g white goods, fuel cards, food vouchers etc), but not loans. The benefit of a locally administered scheme should be that there is more joined-up assistance available, with advisers being more able to identify local support or relevant services to the claimant.

What can churches do?

Pastoral support

Simply by being aware that there are significant changes about to take place ministers,  district elders and pastoral care teams will be better equipped to respond to the additional stress or strain which some members of your congregation may be feeling.

Be informed

Why not encourage groups who meet in your Church, the Guild, men’s groups, social clubs etc to invite a speaker from a money advice organisation, such as your local Citizen’s Advice Bureau?

Do you have a church newsletter or noticeboard where you could advertise local services such as the Citizens Advice Bureau opening hours? Be proactive about finding out about IT courses at local libraries or community centres, and publicise these too.

Share the load

Do you have volunteers who could…

  • Offer to help people who are lacking in confidence about their computer skills?
  • Offer to accompany someone to a meeting about their new benefit entitlement?

If your office computer is lying unused for much of the week, perhaps you could consider making it available for those who do not have internet access at home?

Useful information