Budget and AS welfare cuts. Sam Lister, Policy & Practice Officer, CIH

Transcription

1 Budget and AS welfare cuts Sam Lister, Policy & Practice Officer, CIH

2 Content Summary and observations Net effect: personal incomes Tax credits and family benefits The revised benefits cap Four year benefits freeze Other measures Conclusions

3 Summary and observations

4 Budget and AS welfare cuts Description April 2016 million April 2017 million Freeze working age benefits and LHA for 4 years Reduce benefit cap to 20, Reduce and simplify UC work allowances Updated UC delivery schedule Limit backdating in HB to four weeks 10 * Reduce social sector rents by 1% for four years Limit child element in TC /UC to two children 315 Limit social sector rates to equivalent LHA rate - - Remove family element/ premium in TC/UC/HB End HB for most out-of-work year olds Abolish WRA component in ESA 55

5 General observations - 1 Designed to not result in direct losses New claims and failure to uprate Existing awards much less harder hit No attempt at external policy justification Target large families Mainly non-housing cost income Applies to in-work and out-of-work families Work does not pay as much but gap between existing benefits and UC is maintained

6 General observations - 2 Some of the smallest savings are likely to cause the biggest disruption End help with housing costs for year olds Benefit cap HB backdating limit four weeks Mainly losses to household income rather than direct help with rent Potential losses to household income far greater than bedroom tax

7 Net effect: personal incomes

8 Tax and pay in 2016 Tax personal allowance: 1.54 National insurance threshold: 0.24 Minimum wage 50p per hour rise ( 6.70 to 7.20) for 35 hour week Social tenant above HB: 1.00 for each 100 of rent

9 Legacy benefits & UC pre-budget HB & TC 2015 UC Couple, two children, one earner, rent Before July 2015 Budget changes

10 Less better off in-work Cuts to child tax credit and HB End of family element (CTC) End of family premium (HB) Universal credit Reduced work allowances Same rate for first child But overall gap between legacy benefits and universal credit is maintained

11 Work allowance 2015 Single (rented housing) Weekly equivalent Lone parent No child but limited capability for work Any other case Couple (rented housing) Weekly equivalent Responsible for one or more child or young person No child but limited capability for work Any other case

12 Work allowances 2017 Household type Monthly Lone parent 192 Couple responsible for at least one child 192 No child but limited capability for work 192 Any other case 0

13 After Budget before AS HB & TC 2015 UC 2015 HB & TC 2017 UC Couple, two children, one earner, rent July 2015 Budget changes

14 After Autumn Statement HB & TC 2015 UC 2015 HB & TC 2017 UC Couple, two children, one earner, rent July 2015 Budget & Autumn Statement changes combined

15 Net change (post AS) Net HB & TC losses Net UC losses Couple, two children, one earner, rent July 2015 Budget & Autumn Statement changes combined

16 Tax credits & family benefits

17 Tax credits caseload Households in Scotland receiving tax credits in 2013/ , 14% , 30% Out-of-work families 63300, 18% In-work families with children receiving WTC and CTC In-work families with children receiving CTC only In-work families no children receiving WTC only , 38%

18 Tax credits: Average awards Average awards in Scotland 2013/ Average weekly tax credit received Out-of work families In work with children receiving WTC and CTC In work receiving CTC only In work no children receiving WTC only

19 Family elements Existing claims (real losses) April 2016: (partial HB only) Larger families any excess via the cap April 2017 onwards: (tax credits only) (tax credits and partial HB) Larger families with existing awards any excess via the cap

20 Family premium: social rented Family premium in Scotland: social rent % In work 16+ hours Other non-passport %

21 Family premium: private rented Family premium in Scotland: private rented % In work 16+ hours Other non passport %

22 Larger families New claims/new born (hypothetical losses) 2017 onwards for new claims/ new born: for each child over two (tax credits) (tax credits and partial HB) Protected: break in claim up to 6 months But if protected more then more likely to be affected by the revised benefit cap

23 The revised benefits cap

24 Benefit Cap: outside London Start April 2016 phased Out of work (under 100 per week) Single: from 350 to 258 per week Couple/lone parent: 500 to 385 per week More affected in early years because benefit income is higher (most TC/HB cuts are new claims only) Housing three child family in private rented becomes difficult

25 per week Current cap Single Couple Couple + 1 Couple + 2 Couple + 3 Couple + 4 JSA Child Benefit Child Tax Credits Maximum Housing Costs

26 per week Cap 2017 for new claims Single Couple Couple + 1 Couple + 2 Couple + 3 Couple + 4 JSA Child Benefit Child Tax Credits Maximum Housing Costs

27 per week Cap 2016 for existing claims Single Couple Couple + 1 Couple + 2 Couple + 3 Couple + 4 JSA Child Benefit Child Tax Credits Maximum Housing Costs

28 Cap 2016 for existing claims 3500 Scotland 2016: social rented capped households Single Couple No Child 1 child 2 children 3 children 4 children

29 Cap 2016 for existing claims 1600 Scotland 2016: private rented capped households Single Couple No Child 1 child 2 children 3 children 4 children

30 PRS cap 2017 system bed Couple 2 child 2 bed Lone parent 2 child 3 bed Couple 2 child 3 bed Lone parent 2 child 3 bed Couple 3 child 3 bed Lone parent 3 child 10 0

31 PRS cap 2016 system bed Couple 2 child 2 bed Lone parent 2 child 3 bed Couple 2 child 3 bed Lone parent 2 child 3 bed Couple 3 child 3 bed Lone parent 3 child 0

32 LHA cap for social rents

33 LHA Cap for social rent Start April 2018 for tenancies from 01/04/16 Applies to supported housing and pensioners Cap on HB/UC eligible rent (not actual rent) Includes shared accommodation rate for single claimants aged under 35 Overall rent limit now four bed LHA rate Most Scottish general needs stock within cap But LHA rates frozen for four years

34 SAR: Central belt Broad Rental Market Area Shared accommodation rate East Dunbartonshire Forth Valley Greater Glasgow Lothian North Lanarkshire Renfrewshire/ Inverclyde South Lanarkshire West Dunbartonshire West Lothian 60.03

35 SAR: Rest of Scotland Broad Rental Market Area Shared accommodation rate Aberdeen and Shire Argyll and Bute Ayrshires Dumfries and Galloway Dundee and Angus Fife Highland and Islands Perth and Kinross Scottish Borders 56.96

36 Four year benefits freeze

37 4 year benefits freeze April 2016 No April uprating for 4 years JSA, ESA, IS, CTC, WTC personal allowances and child benefit affected Private rented LHA rates also frozen in HB Estimated from OBR forecasts (single 25+) Year 1 and 2: 0.20 and 0.95 per week Year 3 and 4: 2.00 and 3.55 per week Each child: 0.15, 0.70, 1.45, 2.60

38 LHA freeze for four years LHA covers bottom 30% of the market If rent inflation outstrips uprating index the available market shrinks If uprating frozen shrinkage rate accelerates Previous uprating restrictions 2013/14 capped at CPI 2014/15 and 2015/16 limited to 1% Rent inflation at 3% for four years will make rent virtually unaffordable (<10% of market)

39 Areas at risk? Property type Local authorities where LQ rent inflation exceeded 3% in period Shared accommodation Aberdeen and Shire (4.8%), Fife (3.6%) One bedroom Aberdeen and Shire (5.7%) Two bedrooms Aberdeen and Shire (7.7%) Three bedrooms Aberdeen and Shire (6.9%) Four or more bedrooms Aberdeen and Shire (9.0%), Renfrewshire / Inverclyde (4.3%)

40 Already less than 25% Property type 2014 LHA rates weekly shortfall to lower quartile Shared accommodation Aberdeen and Shire ( 6.90), Argyll and Bute ( 4.08), Fife ( 5.82), Lothian ( 1.64), North Lanarkshire ( 1.15) One bedroom Aberdeen and Shire ( 21.87), Highland ( 1.41), Lothian ( 3.48), Perth and Kinross ( 1.50) Two bedrooms Aberdeen and Shire ( 27.46), East Dunbartonshire ( 5.77), Fife ( 2.31), Lothian ( 5.54), Perth and Kinross ( 1.26) Three bedrooms Aberdeen and Shire ( 18.32), Fife ( 2.05) Four or more bedrooms Aberdeen and Shire ( 50.03), Argyll and Bute ( 5.19), Dundee and Angus ( 2.82), Greater Glasgow ( 8.43), Renfrewshire /Inverclyde ( 1.16), South Lanarkshire ( 11.54), West Dunbartonshire ( 9.92), West Lothian ( 4.80)

41 Other measures

42 End UC HCE for 18-21s New claims for UC HCE from April 2017 Does not apply to: Housing benefit Dependant children In-work Recent work (39 week grace period) Vulnerable (to be defined shared accommodation rate rules) In scope in Scotland: 3616 (1630 if JSA only) social tenants 979 (424 if JSA only) private sector tenants

43 Other changes to UC Seven UC waiting days (3 August 2015) Revised delivery schedule New claims for legacy benefits extended to June 2018 Transfer of residual legacy caseload by 2021 Align minimum income floor with NLW (April 2016) Lone parent work conditionality once youngest child turns age three years (April 2017)

44 Other measures legacy benefits TA 60 management fee devolved (April 2016) PC savings credit frozen (April 2016) HB backdating limited to four weeks (April 2016) HB/PC outside GB limit four weeks (April 2016) ESA work related activity paid at JSA rate in new claims ESA/UC. Loss (April 2017) Support for mortgage interest Limit maintained at 200,000 (April 2016) Becomes interest bearing loan (April 2018)

45 ESA awards by type 100,000 ESA awards in Scotland February ,000 80,000 70,000 60,000 50,000 40,000 contributions based income based 30,000 20,000 10,000 0 Assessment phase Work related activity group Support group

46 Conclusions

47 Conclusions Cuts mainly to non-housing costs but to money in householders pocket Make 2010 cuts look minor by comparison Smallest cuts are the most damaging LHA caps damaging for under 35s and supported housing The cap and four year LHA freeze make it difficult to certain family types in PRS

48 Any questions?