Welfare Reform

In 2012 the UK Government introduced plans to simplify the benefits system and help people into work. These changes are known as ‘Welfare Reform’. If you currently claim any benefits it is important for you to know about the changes some of which include:

The introduction of Universal Credit

Universal Credit is a means-tested benefit for people of working-age who are on a low income. It replaces six existing means-tested benefits: Income Support, Income-based Jobseeker’s allowance, Income-related Employment and Support Allowance, Housing Benefit, Child Tax Credit, Working Tax Credit, Universal Credit is intended to be simpler than the current system of benefits and tax credits. Universal Credit is paid on a monthly basis. Entitlement is worked out by comparing your basic financial needs, according to government standards, with your financial resources.

Under Occupancy otherwise known as bedroom tax

Bedroom tax is applied to your ‘net rent’ (the rent when things like water charges are removed, as these aren’t covered by housing benefit). The housing benefit office calls this your ‘eligible rent‘ the amount of net rent is cut by 14% if you have one spare bedroom and 25% if you have two or more spare bedrooms. For example, if your net rent is £100 a week, you need to pay the following extra rent yourself: £14 more if you have one spare room £25 more if you have two spare rooms

Four year benefit freeze

Four-year freeze to working age benefits whilst still protecting pensioners, and benefits related to the extra costs of disability

Benefit Cap

Since November 2016 the Benefit Cap for families was reduced to £23,000 in London (£15,410 single claimants) and £20,000 elsewhere (£13,400 single claimants). Exemptions apply for people receiving guardians’ allowance, carers allowance and the carers element of Universal Credit.

No support for housing costs for under 21 year olds

18-21 year olds making new Universal Credit claims in full digital service areas will not be entitled to help with housing costs unless they fall into one of the exempt groups. These include: those with dependent children, people exempt from the Shared Accommodation rate of Local Housing Allowance, people unable to live with their parents and young people who have been working (more than 16 hours per week) for the previous 6 months existing claimants.

Employment and Support Allowance (ESA)

People claiming disability benefit (ESA) will get £29.05 less every week if they’re deemed fit for ‘work-related activity’ (WRAG). They will get £73.10, the same as Jobseekers’ Allowance, instead of £102.15.

Child tax credit cut for third child born after April 2017
Support provided through Child Tax Credit will be limited for some new births – if you already have 2 or more children any subsequent children born on or after 6 April 2017 will not be eligible for further support. You can still receive a child element for more than 2 children if the children were born before 6 April 2017

Bereavement Support

Three different benefits are being replaced with one new Bereavement Support Payment. It’s worth £3,500, plus £350 a month for 18 months, for claimants with dependent children (£2,500 plus £100 a month for other claimants).

Further Changes

Following the recent Budget, there have been a number of changes made to the proposed Welfare Reforms. Make sure you know how these will affect you, and what you need to do.

Local Housing Allowance – Withdrawn

It was proposed that Housing Benefit for social renter homes would be paid at the same rate as the Local Housing Allowance.

For example, the Local Housing Allowance for a one bedroom home is £90. If your gross rent is £100, you would be paid £90 in Housing Benefit and you would have to make up the shortfall, in this case £10, from your income or from other benefits.

This was due to come into force in April 2018, however this proposal has been withdrawn.

This measure would have had an effect on around two thousand One Vision Housing customers, but will no longer be implemented.

Local Housing Allowance for single under 35 year olds – Withdrawn

It was proposed that tenants under the age of 35, who had started their social rented tenancy after April 2016 or are in receipt of Universal Credit, would be paid their Housing Benefit at the Shared Accommodation rate.

For example, the Shared Accommodation rate in Sefton is £63 per week, over 48 weeks. If your gross rent is £100, you would be paid £63 in Housing Benefit and you would have to make up the shortfall, in this case £37, from your income or from other benefits.

This was due to come into force in April 2018, however this proposal has been withdrawn.

This measure would have had an effect on around 400 One Vision Housing customers. Given the shortfall that these customers would have had to pay from another income source, it is likely that many would have been unable to sustain their tenancies. This will no longer be implemented.

Universal Credit – Budgeting Advance terms extended

Currently, new claimants are able to ask for a Budgeting Advance of up to half of their personal element payment. This is a loan that is paid at the discretion of the DWP to cover any immediate bills or household costs that they would otherwise not be able to afford while they wait for their first Universal Credit payment. The loan is paid back, being taken directly from your Universal Credit payments, over 6 months for new claimants or up to 12 months for those transferring from another benefit to Universal Credit.

From January 2018, new claimants will be able to request a Budgeting Advance of up to 100% of your personal element payment. The repayments can be deferred for an agreed period of time and the repayment time has been extended to 12 months for new claimants.

This change will affect all new Universal Credit claimants. It has alleviated some of the pressure that new claimants may have felt while waiting for their first payment, with more money now available for essentials like food and bills, with an extended repayment period available.

Universal Credit – New claimant waiting period reduced

Currently it take 6 to 7 weeks for a new claimant to receive their first Universal Credit payment. This includes a 7 day waiting period after a claim is made for it to be processed.

From February 2018, the time between a new claim being made and the first payment being paid to the claimant will be reduced, with the 7 day waiting period being scrapped. The Department of Work and Pensions is committed to all new Universal Credit claimants receiving their first payment between 4 and 5 weeks after making their claim.

This is a further change being introduced to reduce the pressure on new claimants, as they will have less time without a source of income from Universal Credit. This will affect all new claimants of Universal Credit.

Universal Credit – 2 week Housing Benefit rollover period for new claimants

Currently, there is typically a 2 week shortfall in the housing benefit element of Universal Credit, when a claimant switches to Universal Credit from other benefits. There is a 6 week waiting period, with only 4 weeks of housing benefit being paid for this period. Claimants are expected to pay any shortfall, or subsequent arrears accrued, from other income or from the personal element of their benefit payment.

From April 2018 new Universal Credit claimants will be continued to be paid housing benefit, by the Local Authority, for 2 weeks after the claimant begins their claim for Universal Credit. This rollover period should cover the gap in payment time, meaning that no arrears are accrued in this time.

This change has been done to resolve the issue of a shortfall in housing benefit that would have occurred. This will mean that claimants will not have to pay any rent shortfall from other income or from the personal element of their benefit payment.


Keep up to date with changes by visiting: https://www.gov.uk/