Changes to Benefit

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The Welfare Reform Bill has started to be introduced in stages starting from January 2012. The bill is expected to be in full force between April 2016 and April 2020.

What will this bill change?

  • It introduces Universal Credit which will be a single streamlined benefit.
  • It sets to replace Disability Living Allowance with Personal Independence Payment.
  • It introduces the Benefit Cap which will cap the amount of benefit that can be claimed.
  • It introduces size criteria framework for people who rent from Housing Associations or renting a council property. This is to stop people from living in properties that are too big for their needs.
  • It has created a new localised scheme for managing Council Tax Benefit.
  • It has changed the Social Fund scheme which was managed by the Department for Work and Pensions.

Benefit Change updates to date

Since the introduction of the Welfare Reform Bill there have been several updates and changes. The most important updates and changes are listed below.

Benefit Cap

There is currently a benefit cap in place restricting the amount in certain benefits that a working age household can receive. Any households receiving more than the cap has their Housing Benefit reduced to bring them back within the limit.  

The benefits included in the cap include:

  • Bereavement Allowance
  • Child Benefit
  • Child Tax Credit
  • Employment and Support Allowance (unless you are in receipt of the ‘support’ component
  • Housing Benefit
  • Incapacity Benefit
  • Income Support
  • Jobseekers Allowance
  • Maternity Allowance
  • Severe Disablement Allowance
  • Widowed Parents Allowance
  • Universal Credit (unless you have had a work capability assessment and aren’t fit for work)

You will not be affected by the cap if you or your partner work and either any of the following apply:

  • Eligible for Working Tax Credit
  • Get Universal Credit and the household income is more than £430.00 a month after tax and national insurance

You will also not be affected by the Benefit Cap if you, or your partner or any dependent child receives one of the following benefits:

  • Disability Living Allowance
  • Personal Independence Payment
  • Attendance Allowance
  • Industrial Injuries Benefits
  • Support component of the Employment and Support Allowance
  • War Widows and War Widowers pension
  • Working Tax Credit
  • Guardians Allowance
  • Carers Allowance
  • Carer element of Universal Credit

Current Benefit Cap

Couples with or without dependent children: £442 a week (living in London) £385 a week (rest of UK)

Lone parent with dependent children: ££442 a week (living in London) £385 a week (rest of UK)

Single person without children: £296 (living in London) £258 a week (rest of UK)

Benefit and Tax Credit rates changes

Working age benefits and tax credits will be frozen in cash terms for 4 years from April 2016.

Benefits included in the freeze are:

  • Jobseekers Allowance
  • Employment and Support Allowance
  • Income Support
  • Child Benefit
  • Applicable amounts for Housing Benefit and Local Housing Allowance rates
  • Child Tax Credit and Working Tax Credit excluding any disability elements which are unaffected by the freeze 

Note: Disability benefits, the disability-related elements of tax credits and statutory payments will increase in line with the Consumer Prices Index.

Benefits excluded from the freeze are:

  • Pensioner benefits
  • Maternity Allowance
  • Statutory Sick Pay
  • Statutory Maternity Pay
  • Statutory Paternity Pay
  • Statutory Shared Parental Pay
  • Statutory Adoption Pay
  • The Employment and Support Allowance Support Group component
  • Any disability, carers or pensioners' elements of benefits, other disability, carer and pensioner benefits, including PIP and DLA (which will continue to be updated in relation to prices or earnings as applicable)

Housing Benefit Changes

Restriction to 2 children in the Child Allowance

From April 2017 families will be restricted to 2 children in their personal allowance for Housing Benefit. This change will apply to all new claims for Housing Benefit on or after 6th April 2017. For existing claims any new children born or moving into the household after this date will also not be included in their allowance.

The only way additional children born or moving into the household after the 6th April 2017 can be included is if they are included on the Child Tax Credit assessment. For that to happen there needs to be an entitlement to Child tax Credit and meet the criteria to have more than 2 children included in the assessment.

Changes to size criteria allowance for disabled child, disabled non-dependent and disabled couples

From 1st April 2017 the regulations have changed to allow an extra bedroom in the size criteria for:

  • When a disabled child or disabled non-dependent adult requires, and has overnight care from a non-resident carer or group of carers
  • When a couple are unable to share a bedroom because of their disabilities

In order to qualify there must be proof that

  • Care has been arranged
  • A spare room is available for the carer
  • An extra bedroom has not already been provided for a non resident overnight carer or team of carers in the same household
  • In the case of couples not being able to share we will need to see proof that there is not enough room for the couple to share, taking into account medical equipment, hospital beds, hoists etc.

In addition one of the following will need to be in payment:

  • Middle or higher rate of Disability Living Allowance (Care Component)
  • Attendance Allowance
  • The daily living component of Personal Independence Payment or the Armed Forces Independence Payment

Other Benefit Changes

Child Tax Credit for 3 or more children

From April 2017 support provided through Child Tax Credit will be limited to 2 children, so that any subsequent children born after April 2017 will not be eligible for this support.

Child Tax Credit – family element

From April 2017 new claims for Child Tax Credit will not be eligible for the ‘family element’ of £545 per year. This will mean that families with one or more children born before April 2017 will continue to get the family element but first children born after this date will not get the family element.

Universal Credit - Housing Costs in Universal Credit for under 21s

A minimum age of 21 will be introduced for new claims for housing element of Universal Credit from April 2017. There will be exceptions for parents, vulnerable groups and people who could previously afford their rent without assistance.

People who fall into the following groups are also excluded from this change:

  • Care leavers
  • Couples where one is over 21 or falls into another exempt group
  • Claimants responsible for a child
  • Claimants living in temporary accommodation
  • Claimants living in specified accommodation, which is any housing that provides care, support, or supervision (as these will continue to be funded by Housing Benefit)
  • Newly unemployed claimants who were continuously in work for the preceding six months (those who do not find work again within six months will no longer be exempt)
  • Claimants already in receipt of housing benefit.

Universal Credit and Child Element

The child element of Universal Credit will be reduced in the same way as Child Tax Credit – from April 2017 new claims will be limited to 2 children and from the same date new claims will not be eligible for the ‘first child premium’.

Universal Credit and Youth Obligation

18-21 year olds claiming Universal Credit will have to participate in an intensive period of support at the start of their claim. After 6 months, if they are not working they will be expected to apply for an apprenticeship, traineeship, gain work place skills or go on a work placement.

Universal Credit and Parent Conditionality

Parents including lone parents will be expected to have work focussed interviews when their youngest child turns 1, start work preparation when their youngest turns 2, all leading up to them being expected to look for work when their youngest child turns 3.

Employment and Support Allowance Changes

From April 2017 new claimants of Employment and Support Allowance who are placed in the Work-Related Activity Group will receive the same rate of benefit as those claiming Jobseeker’s Allowance. This means a reduction of £30.00 per week.

Reduction in help with mortgage interest

If you are in receipt of Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance or Pension Credit you may be entitled to help with your mortgage interest. This help is currently provided in the form of a direct payment to your lender. The Chancellor announced that from April 2018 this help will take the form of a loan to the claimant which they will have to repay when they return to work or when the property is sold.

Reduction in Social Housing Rents

Since April 2016 social landlords have been required to reduce their core rent by 1% for 4 years. Supported and sheltered accommodation was excluded. From April 2017 this too must decrease its core rent by 1% a year.

National Minimum Wages

The national minimum wage used to change each October. From April 2017 it will change in line with the National Living Wage

Free TV licence for over 75 year olds

There will be a change in the way the free TV licence for those 75 or over is funded, with the cost being passed by the government to the BBC. This amounted to £608 million in 2013//2014 and the BBC will need to include it in their own budget from 2017/2018.

For further information about the Welfare changes please see our Related downloads for relevant factsheets.

Page last updated: 20/09/2017