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Benefits and Welfare Reform: Who is affected by the changes?

Written by: Jenny Smith

The Department of Work and Pensions (DWP) have said they want to restructure the welfare benefit system to encourage going out to work and are in the process of bringing in three big changes. The welfare reform will affect a large proportion of benefit claimants.

Welfare Reform benefit cap will be part of the changes

The first is the Benefit Cap which has started to be introduced in certain areas around London. Overtime the changes will cover the whole country. The benefit cap is a fixed amount that is the maximum amount of benefits that a person, couple or family can claim at any one time. The amounts are set at the following rates:

• £500 a week for couples (with or without children living with them)
• £500 a week for single parents whose children live with them
• £350 a week for single adults who don’t have children, or whose children don’t live with them

Which benefits will be affected?

Your current benefits that will be added together to calculate your entitlement are:  Bereavement Allowance, Child Benefit, Carers Allowance, Child Tax Credit, Employment Support Allowance (unless you receive the support component), Guardian Allowance, Housing Benefit, Incapacity Benefit, Income Support, Jobseekers Allowance, Maternity Allowance, Severe Disablement Allowance, Widowed Parents Allowance (or Widowed Mothers Allowance or Widows Pension if you started getting these before 2001) . If the total of these is below the the cap amount then your payments will stay the same. If it comes to more than the cap then your payments will be reduced.

Claimants that will not be affected

You won’t be affected by the cap if anyone in your household receives Working Tax Credit or the following benefits: Disability Living Allowance; Personal Independence Allowance; Attendance Allowance; Industrial Injuries Benefits (and equivalent payments as part of a war disabled pension or the Armed Forces Compensation Scheme); Employment Support Allowance (if you get the support component) and War Widow’s / Widower’s Pension.

 Universal Credit

The second change is the introduction of a new benefit. It is called Universal Credit and will be introduced from October of this year and will take until 2017 to be implemented right across the country. It will be for people who are looking for work or on a low income. It will replace the current benefits:

• Income-based jobseeker’s allowance
  Income-related Employment and Support Allowance
  Child Tax Credit
  Working Tax Credits
  Housing Benefits

The new benefit system of Universal Credit will run as an online system with people managing their own accounts. Payments will be given monthly and if your circumstances change such as increasing your hours or moving into work there may be a period where you continue to get the same financial help. If you want to look at how the system will work in advance, this will help you to get an idea of what amount of benefit you may be entitled to under the new changes, visit Universal Credit Gov.UK to find out more.

Personal Independence Payment (PIP)

The third change is to introduce Personal Independence Payment (PIP). This will eventually replace Disability Living Allowance (DLA)  for people aged 16 to 64. PIP helps towards some of the extra costs arising from a long term ill-health condition or disability. It’s based on how a person’s condition affects them, not the condition they have and is hoped to be an easier and more straightforward benefit to claim than DLA.  For more information on all of these changes visit the Gov.UK website