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 0303 123 1702

Allerdale Borough Council,
Allerdale House,
CA14 3YJ


Welfare Reform

The government has targeted social security budgets with cuts in expenditure totalling £18 billion a year by 2014-15. Major changes have been implemented under the Welfare Reform Act 2012, which also set out the future restructure of the whole working age benefits system. The 2012 Budget outlined the wish to generate a further £10 billion of spending reductions, while the Welfare Benefits Uprating will be restricted to a 1% increase to many working age benefits and tax credits for 2014-15 and 2015-16.  A summary of the reforms and the associated impacts is below. You can also find a guide in the downloadable documents. 

Working Age changes

Employment and Support Allowance (ESA)

From 27 October 2008, Employment and Support Allowance (ESA) replaced Incapacity Benefit and Income Support paid on incapacity grounds for new customers. The purpose of this change was to redefine and to categorise claimants not in terms of disability but in terms of work capability.

The change often results in a detrimental impact on the level of claimant income from benefits and sometimes their entitlement to Housing Benefit. There are known to be a substantial number of appeals in respect of ESA waiting to be heard.  In the meantime income levels for those claimants have fallen.

Move from Disabled Living Allowance (DLA) to Personal Independence Payment (PIP)

From 8 April 2013 Personal Independence Payment (PIP) will replace Disability Living Allowance (DLA) for people aged 16 to 64 with a health condition or disability. PIP retains key features of DLA. The approach established by the government with ESA is copied with PIP. It is based on a points system that will depend on the assessment of a claimant's lack of abilities in certain tasks. However, DLA currently has 3 levels; PIP will only have 2 levels. The most signigicant difference being that the lowest rate of care in the present DLA has no equivalent in PIP.

Many disabled people will have significantly lower inomes. Loss of entitlement means loss of extra support in Housing Benefit and Income Support through loss of "premiums". As many current recipients of DLA do not receive full Housing Benefit this will not only mean less money to pay rent but also more rent to pay.

The migration of existing claimants from DLA to PIP will not start until 2015 and is expected to end before 31 December 2016.  Current DLA claimants will have to make a claim for PIP from October 2013 if their health condition changes or if their DLA is due to end. However, new claims will start to be taken for PIP on a geographical basis as from 8 April 2013, new claims in the Allerdale area are scheduled to start from 10 June 2013.

The introduction of this change is targeted to reduce the DLA budget by 20%.

Benefit cap

The Housing Benefit (Benefit Cap) Regulations 2012 come into force on 8 April 2013. In November 2016, the government will be introducing changes which will result in a reduction of the benefit cap.

How will this affect you:

The cap will be reduced and the amount of Housing Benefit you receive will be affected.  The total amount of all benefits you and your household receives will be a maximum of:

  • £257.69 (£13,400 a year) for single people without children, or whose children don't live with them
  • £384.62 (£20,000 a year) for single parents whose children live with them
  • 384.62 (£20,000 a year) for couples with or without children

If you are already receiving Universal Credit, your housing costs will be reduced (no reduction will be made to the childcare element).

If you are a pensioner, you will not be affected.

Benefits affected by the cap:

For Housing Benefit claimants, the following benefits will be taken into account:

  • Bereavement Allowance
  • Child Benefit
  • Child Tax Credit
  • Employment and Support Allowance (contribution-based and income-related), except where the support component has been awarded
  • Housing Benefit (HB)
  • Incapacity Benefit
  • Income Support
  • Jobseeker's Allowance (contribution-based and income-based)
  • Maternity Allowance
  • Severe Disablement Allowance (SDA)
  • Widowed Parent's Allowance (or any Widowed Mother's Allowance or Widow's Pension you started to get before 9 April 2001)

Once households have been transferred to Universal Credit, the cap will apply to their combined income from Universal Credit and benefits, including Child Benefit.  The following benefits will be taken into account:

  • Bereavement Allowance
  • Employment and Support Allowance (contribution-based)
  • Jobseeker's Allowance (contribution-based)
  • Maternity Allowance
  • Universal Credit (before any sanctions are applied)
  • Widowed Parent's Allowance (or any Widowed Mother's Allowance or Widow's Pension you started to get before 9 April 2001)

There are exemptions:

In addition, the following benefits and payments will be disregarded when calculating the cap:

  • Bereavement payment
  • Localised Support for Council Tax (Council Tax Reduction Scheme payments)
  • Discretionary Housing Payments
  • Social Fund Payments - all one off payments
  • Budgeting Loans
  • Cold Weather Payments
  • Community Care Grants
  • Crisis Loans
  • Funeral Payments
  • Sure Start Maternity Grants
  • Pension Credit
  • Residency order payments
  • Statutory Adoption Pay - paid by employers
  • Statutory Maternity Pay - paid by employers
  • Statutory Paternity Pay - paid by employers
  • Statutory Sick Pay - paid by employers
  • Winter Fuel Payment

You will not be affected by the cap if:

  • you are pension age
  • you or your partner work, and either of the following apply:
    • you or your partner are eligible for Working Tax Credit
    • you or your partner get Universal Credit, and you household income is more than £430 a month after tax and National Insurance
    • you are classed as a war widow or widower and receive a pension paid from the War Pension Scheme, Armed Forces Scheme or similar
    • you live in supported accommodation
    • you receive carer's allowance or the carer's element of Universal Credit
    • you receive Guardian's Allowance
    • you, your partner or children for whom you are responsible for and who live with you, are entitled to or are in receipt of any of the following:
      • Attendance Allowance
      • Disability Living Allowance (or its replacement Personal Independence Payments)
      • the support component of Employment and Support Allowance
      • the limited capability for work and work related activity element of Universal Credit

There will be no right of appeal against the decision to apply the benefit cap but claimants will be able to request a review if they think the cap has been calculated incorrectly.

A nine-month "grace period" will operate during which the cap will not apply to claimants who have been in work for the previous 12 months and who lose their job through no fault of their own. If someone loses their job before the cap is applied in April 2013 the grace period will run from when they lost their job. For example, if they lose their job in February 2013 the cap will not apply until November 2013.

The residents of Supported Exempt Accommodation (SAE), as currently defined, will not have their housing costs included in the assessment of Universal Credit but Housing Benefit will continue to be available for the immediate future, both for existing and new claimants. This is not quite the same as an exemption form the benefit cap in that if, excluding the housing support, the total of the claimant's other state benefits are above the cap when they claim or migrate to Universal Credit then the cap will apply and the total of their other benefits will be reduced to the level of the cap. For those existing Housing Benefit claimants who migrate over, there will be transitional protection at the point of change.

If you are affected:

You will receive a letter from the Department for Work and Pensions (DWP) to confirm how this change may affect you.  You should contact the DWP for further advice.

You should also let your landlord know about the change to your benefits.

Benefit Cap Calculator

The calculator will give you an estimate of how much your benefit might be capped.  However, you can't check if you are affected by the cap if you are claiming Universal Credit.

You will need to know the mouths of each benefit you get to use the calculator and the number of people in your household.  Your household includes you, your partner and any children that you are responsible for and who live with you.

Click on this link for the Benefits Cap Calculator

Changes to the Social Fund

As from 1 April 2013 two aspects of the Social Fund, Community Care Grants and Crisis Loans are to be abolished and be replaced within a locally administered scheme. In Cumbria the scheme will be known as the Welfare Assistance Scheme and will be operated by Cumbria County Council. For further information please see

Universal Credit (UC)

Universal Credit (UC) was introduced by the Welfare Reform Act 2012. The Universal Credit Regulations 2013 will contain the details of the scheme and can be accessed via the DWP website. The government feels that the attributes of UC will assist low income households to better manage their money effectively. These attributes can be summarised as follows:

The main simplifications are:

  • Integration of 6 core benefits and tax credits into a single payment.  The claim processes for different benefits will be integrated and households will receive just one payment.
  • A shift away for a mix of payment frequencies to a standard monthly payment.
  • A fixed monthly assessment; payment monthly in arrears
  • Housing costs paid to claimants direct.
  • Single payment directly into a bank account
  • Extension of capital allowance rule, from out of work benefits to all UC recipients
  • It will be payable in and out of work according to income
  • Single withdrawal rate (taper) of 65%
  • Child care support available for any hours worked
  • Claim and administration on line; "Digital by Default"

Universal Credit will replace

  • Job Seekers Allowance (Income Based)
  • Employment and Support Allowance
  • Income Support
  • Child Tax Credit
  • Working Tax Credit
  • Housing Benefit

The first new claims for Universal Credit will commence in October 2013 on a geographical basis. The timetable for migration of existing claims will not be available until the "summer of 2013". The transfer will also be carried out on a geographical basis by council area. The plan is to leave the largest caseloads until later in the process unless there are compelling reasons to do otherwise.

More information on Universal Credit can be obtained from the DWP which includes details on Universal Credit

Single Fraud Investigation Service (SFIS)

SFIS will be introduced to pilot sites as from 1 April 2013. A national rollout is planned for 1 April 2014. SFIS will incorporate the fraud investigation operations for the DWP, HMRC and Local Authorities.

The UK Government wish to introduce a system of Civil Penalties as follows:

  • Minimum of £350 (or 50% of overpayment - whichever is greater) up to £2,000 maximum.  This is in addition to loss of benefits for 4 weeks and repaying the overpayment.
  • £50 for incurring an overpayment caused by:
    • negligently making incorrect statements or taking reasonable steps to correct the error; or
    • failing to provide information or to disclose changes in circumstances

There are four pilot sites:

  • Corby Borough Council
  • Glasgow City Council
  • London Borough of Hillingdon
  • Wrexham Council

The DWP is also looking to toughen up its benefit sanctions to include the withdrawal of benefits such as JSA, ESA and IS for up to 26 weeks where two successful fraud prosecutions take place over five years. Where there is a third successful prosecution within the time period it will result in a suspension of up to three years. It will be the corresponding component parts of UC that will be suspended.


Downloadable Documents

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Contact us

0303 123 1702

Allerdale Borough Council
Allerdale House, Workington, Cumbria,
CA14 3YJ