Welfare Reform and Work Bill 2015

27 August 2015
Issue 247 (August 2015)

The Welfare Reform and Work Bill was laid before parliament and given its first reading on 9 July 2015. The second reading took place on 21 July 2015 and CPAG will continue to lobby for amendments to the Bill as it progresses through parliament. Paul Treloar summarises the main points of the Bill.

Full employment and apprenticeships

The Secretary of State for Work and Pensions is obliged to lay an annual report before parliament on the progress towards full employment (clause 1). The Secretary of State must similarly report annually in respect of apprenticeship targets (clause 2).

Troubled families

The Secretary of State must issue a notice before the start of each financial year specifying the descriptions of relevant households in terms of the support offered by local authorities and how progress will be measured (clause 3). Further, an annual report must also be prepared showing the progress of relevant households receiving such support.

Social mobility

The Secretary of State must publish an annual report containing data on the number of children living in workless households and long-term workless households, the educational attainment of children in England at key stage 4, as well as the educational attainment of disadvantaged children (clause 4). The Child Poverty and Social Mobility Commission is to be renamed the Social Mobility Commission (clause 5).

The Child Poverty Act 2010 is to be called the Life Chances Act 2010, with targets related to relative low income, combined low income and material deprivation, absolute low income, and persistent poverty all being repealed (clause 6). Further, duties to meet these targets are removed from the Secretary of State, as are duties related to developing a UK-wide strategy and devolved strategies for Scotland and Northern Ireland. Local authorities are also no longer required to prepare or report on local area plans related to child poverty.

Benefit cap

The annual benefit cap rates will be reduced to:

  • in Greater London, £23,000 for couples and lone parents and £15,410 for single households;
  • elsewhere, £20,000 for couples and lone parents and £13,400 for single households. The link between the benefit cap and national median earnings is removed, with a requirement instead that the Secretary of State review the level at least once in each parliament (clauses 7 and 8). Any such review must take into account the national economic situation and any other matters the Secretary of State considers relevant. Any reduction to the proposed cap levels would need to be agreed by both chambers of parliament, but all other related activity can be carried out through regulations. These changes will not be subject to consultation with representative organisations (clause 25(9)).

Benefit rate freeze

The main rates of income support (IS), jobseeker’s allowance (JSA), employment and support allowance (ESA), housing benefit and universal credit (UC) will be frozen for four years from April 2016 (clauses 9 and 10). Various other elements will also be frozen, including the work-related component of ESA, individual child elements of child tax credit (CTC), and most elements of working tax credit.

Child tax credit

The family element of CTC will be abolished from April 2017 (clause 11). Payments of individual elements for children will be restricted to a maximum of two children or qualifying young people born after April 2017, except in prescribed circumstances. There will be a new disability element created, paid according to whether the child is considered disabled or severely disabled. We understand from contacts in the DWP that families with more than two children, at least one of whom is disabled, will be subject to the two-child restriction, but will be compensated by this ‘new’ disability element (which will pay the same amount as the current disability element).

Universal credit

Similar restrictions will apply to the children elements payable through UC – ie, a maximumof two elements payable at any one time, with prescribed exceptions.

Limited capability for work

The work-related activity component of ESA and the limited capability for work element of UC are abolished, with transitional protection for claimants already entitled to these payments (clauses 13 and 14). It is understood that this change is intended to take effect from 1 April 2017.

Conditionality for universal credit for responsible carers of children

Under UC, the responsible carers who have children aged three or four will be subject to all work-related requirements (currently work preparation only) (clause 15). Those with children aged two years will be subject to work-fo-cused interview requirements and work preparation requirements (currently work-fo-cused interview requirements only). Those with children aged one will be subject to work-focused interview requirements (currently no work-related requirements at all).

Mortgage interest payments

Claimants of IS, income-based JSA, income-related ESA, pension credit (PC) and UC will receive support for eligible mortgage costs through the provision of loans secured against their property (clause 16).

Social housing rents

From April 2016, the levels of social rents must be reduced by 1 per cent compared to the preceding year, every year for the next four years (clause 19).

Summer Budget additions

Additionally, there were a number of key reforms highlighted in the Summer Budget on 8 July which do not appear on the face of this Bill, presumably because they can simply be enacted by way of secondary, rather than primary, legislation – ie, by amending relevant regulations. These include the following:

  • Tax credits threshold and taper rates. The income threshold for working tax credit will be reduced from £6,420 to £3,850 per annum. It is likely this will also lead to equivalent reductions in the current CTC threshold of £16,105 to £12,125 per annum, due to the formula used to calculate the latter being contingent on the former. The taper rate in tax credits will increase from 41 to 48 per cent.
  • UC threshold reduced. The equivalents in UC (work allowances) will be reduced to £4,764 for those without housing costs, £2,304 for those with housing costs, and removed altogether for non-disabled claimants without children.
  • Social housing income limits. Socialhousing tenants with household incomes of £40,000 and above in London, and £30,000 and above in the rest of England, will be required to ‘Pay to Stay’, by paying a market or near market rent for their accommodation. Lifetime tenancies are also to be reviewed.
  • Housing benefit for young people. From April 2017, it is proposed that the Budget will remove the automatic entitlement to housing support for new claims in UC from 18 –21 year olds who are out of work. There will be exemptions, including for vulnerable young people, those who may not be able to return home to live with their parents, and those who have been in work for six months prior to making a claim, who will continue to be able to receive housing support for up to six months while they look for work.
  • Childcare. From September 2017, free childcare entitlement will be doubled from 15 hours to 30 hours a week for working parents of three- and four-year-olds.

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