From April 1st a number of changes to the benefits system are being put in place. These changes will affect more than 25,000 households who live in Hackney – that’s over 1 in 4 of all the households in the borough.
Much has been written about the rights and wrong of these changes – including this article by Tom. This piece is just to outline on a factual basis what the changes are. Apologies for the length of this post, but the changes are complex and difficult to explain simply.
If you believe you are affected by these changes and would like help or advice please contact Hackney Citizens Advice Bureau, Hackney Community Law Centre or contact Hackney Council via the Service Centre or on 020 8356 3399.
The key changes this year are:
- Council Tax Benefit Reform
- Introduction of the Bedroom Tax
- The Benefit Cap (to be introduced in Hackney from July)
- Changes to Local Housing Allowance
- Transition from Disability Living Allowance to Personal Independence Payments
- Replacement of the Social Fund with a Local Assistance Scheme
Further benefit changes – including the introduction of universal credit – will be introduced in 2014.
Changes this year
Council Tax Benefit reform
From 1 April 2013 Council Tax Benefit, a DWP-funded benefit administered by local authorities designed to help people on a low income pay their Council Tax, has been abolished. This has been replaced by a new scheme, Council Tax Reduction.
The funding provided by central government for the new scheme is 12.5% less than the full cost of running the scheme with the criteria as they were prior to April 1st. The Government has mandated that pensioners will be protected from being impacted by this change, and therefore this cut in funding will hit the remaining people who were previously receiving this benefit. Therefore this means all working age people receiving this benefit will now be required to pay at least 15% of their council tax.
You can find the details of Hackney’s scheme here.
More than 25,000 households in Hackney will be affected by this reform.
The Bedroom Tax (or Social Sector Size Criteria) means that people will be charged 14% extra rent for one additional bedroom over size requirement and 25% extra rent for two bedrooms or more over size requirement.
One bedroom will be allowed for each:
- Person over 16
- Two children (under 16) of the same sex
- Two children under 10
- Any other child
- A carer providing overnight care whose normal home is elsewhere
- A Border or Lodger
No rooms will be allowed for children whose main home is elsewhere. Due to a last minute change, rooms will not be allowed for foster children, using the above criteria.
In Hackney, the bedroom tax will affect more than 4000 households.
The benefit cap
The benefit cap restricts total benefits for households to £500 a week for a couple and £350 for a single adult. If benefits exceed those amounts then housing benefit will be reduced. The cut is being trialled now in four London boroughs but it will also hit Hackney residents on 15 July this year.
The Department for Work and Pensions will calculate the weekly income from benefits and inform local authorities who will reduce housing benefit in order to keep below the cap.A household's combined income from job seekers allowance, income support, employment and support allowance, housing benefit, child benefit, child tax credit, carer's allowance and maternity allowance will be added together and tested against the cap. If it exceed the cap, the housing benefit will be cut by the amount it exceeds it.
The following are exempt from this cap:
- Individuals on disability living allowance, personal independence payments or attendance allowance
- War widows or those in receipt of widows pension
- Pensioners - or couples where one is above pension credit age
In addition, the following benefits are not included in the caluation:
- Working tax credits
- The support component of the employment and support allowance
In Hackney, the benefit cap will affect more than 1000 households.
Changes to Local Housing Allowance
From April 2013 the way in which Local Housing Allowance (LHA) is being calculated will change. Local Housing Allowance is the way in which housing benefit is worked out for people who rent from a private landlord.
Historically, LHA rents were calculated in line with the Retail Price Index (RPI) - which includes the cost of housing - but from April 2013 LHA rents will be uprated in line with the Consumer Price Index (CPI), which does not.
Personal Independence Payments
From 8 April 2013 the Government is introducing a new benefit called Personal Independence Payment (PIP) to replace Disability Living Allowance (DLA) for eligible working age people aged 16 to 64.
There are no current plans to replace Disability Living Allowance for children under 16 and people aged 65 and over who are already receiving Disability Living Allowance.
Personal Independence Payment is based on an assessment of individual need. The new assessment will focus on an individual’s ability to carry out a range of key activities necessary to everyday life.
You can find out more about the change here.
Replacement of the Social Fund
From April 2013 Community Care Grants and Crisis Loans for general living expenses, which were administered by the DWP, will be abolished and replaced by new local assistance administered by local authorities.
Hackney Council has been working with representatives of the third sector to create a scheme called “The Discretionary Crisis Support Scheme”. With only a very limited budget the Council will only be able to meet the most urgent needs not met by regular welfare
benefits, tax credits, or other
council/third sector provision, and to ease exceptional pressures on families.