Changes in the Welfare Reform and Work Act 2016

01 June 2016
Issue 252 (June 2016)

The Welfare Reform and Work Act 2016 received royal assent on 16 March 2016. Mike Spencer summarises the key changes to social security legislation.

Benefit cap reduction

Sections 8 and 9 of the Act will lower the benefit cap to £20,000 per year for couples and lone parents and £13,400 for single claimants, exceptin Greater London where the cap will be £23,000 (for families) and £15,410 (for singles) per year. The government intends to phase in the reduction in the cap over autumn 2016.

During the passage of the Bill, an amendment was passed removing carer’s allowance (CA) from the benefits included within the cap. Lord Freud announced that regulations will be introduced to exempt anyone who has an ‘underlying entitlement’ to CA from the cap entirely. This was in response to the High Court’s decision in R (Hurley) v Secretary of State for Work and Pensions [2015] EWHC 3382 (Admin). The government has also changed the discretionary housing payment guidance to encourage local authorities to prioritise carers affected by the cap.

The Act also allows the Secretary of State to review and adjust the level of the cap by way of regulations passed by affirmative resolution procedure in order to take account of ‘the national economic situation’ and ‘any other matters that the Secretary of State considers relevant’.

Benefit freeze

Sections 11 and 12 of the Act place a freeze on the level of certain working-age social security benefits and tax credit amounts for the next four years. Income support, jobseeker’s allowance, employment and support allowance (ESA), housing benefit, universal credit (UC), the individual child elements of child tax credit (CTC) and most elements of working tax credit have all been frozen.

Two-child limit

Sections 13 and 14 limit entitlement to the child element of CTC and UC to a maximum of two children in each household. For CTC, the limit will only apply to third or subsequent children born after April 2017. For UC, the limit will apply to all new claims made after April 2017, unless a child element was payable for that child within the last six months. The ‘family element’ for CTC and the ‘first child premium’ for UC are also abolished.

Disabled children in receipt of disability living allowance are eligible for a disabled child element in CTC or a severely disabled child element for UC. However, if the disabled child is a third or subsequent child, a reduced element will be paid, reflecting the difference between the existing disabled child element and the child element.

Note that the Act allows the Secretary of State to lay down exceptions in regulations. No regulations have been published, but the government has said that exemptions will be included for children born as a result of rape, multiple births, sibling adoption and kinship carers.

Abolition of the work-related activity component

Sections 15 and 16 abolish the work-related activity component for ESA and the limited capability for work element of UC. The government has said this will be implemented from April 2017, with transitional protection for existing claimants.

Conditionality for responsible carers claiming universal credit

The Act increases conditionality for responsible carers (ie, lone parents and main carers in couples) of children under five. Parents of three- and four-year-olds will be expected to be available for and actively seeking work. Parents of two-year-olds will be required to attend work-focused interviews and will be subject to a work preparation requirement, while parents of one-year-olds will continue to be required to attend work-focused interviews. This will come into effect in April 2017.

The government has announced that 30 hours of free childcare will be available from September 2017.

Under Regulation 88(2)(a) of the Universal Credit Regulations 2013, the Secretary of State can reduce the expected number of hours for which a responsible carer must search for work to a number that is compatible with her/his caring responsibilities.

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