Wincred

Welfare Reforms & Financial Inclusion

Background

• Welfare Reform Act 2012 gained Royal Assent 8th March 2012

• Government purpose is to – Reduce benefit expenditure– Make the benefits system simpler– Encourage claimants into paid employment

Welfare Reforms – what are they?

• Over inflation increases to non-dependant deductions

• Changes to entitlement to Tax Credits• Benefit Caps in line with average working

income• Universal Credit and Direct Payments to

tenants (monthly in arrears)• Working Age Under-occupation cuts

(Bedroom Tax)

Background

From April 2013:

• Cap on overall benefits • Families £500 per week, £26,000 per annum • Single adult household £350 per week, £18,200 per

annum.• Under-occupation penalty in social sector• Social Fund replaced with local authority schemes• LHA uprated by Consumer Price Index (PRS)

From October 2013:

• Introduction of Universal Credit and end to direct payment to landlords.

Under-occupation deductions“The Bedroom Tax”

• Restrict Housing Benefit for working age social tenants based on number of rooms they need

• How will it work?– Cut in housing benefit depending on level of under-

occupation• 14% for one room, DWP average of £11/wk (DWP estimate

530,000 claimants affected)• 25% for 2 or more rooms, DWP average of £20/wk (DWP

estimate 150,000 claimants

affected)

How do you calculate under-occupancy?

• Every adult / couple - 1 room

• Every other adult aged over 16 - 1 room

• Any two children same gender aged 16 and under - 1 room

• Any two children regardless of gender aged under 10 - 1 room

• A non resident carer (overnight care)

Who is this likely to affect?

• Single person on Job Seekers Allowance of £71.00/week, lives in a 3 bed property, rent is £95/wk

• At the moment rent is paid in full

• However there will be:– 25% deduction on Housing Benefit = £23.75/wk– £71.00/wk - £23.75 = £47.25/week

Impact on just one Wincred partner

• 3,300 under-occupiers would be hit by the bedroom tax 2,206 under-occupy by 1 bedroom (average rent is £86.30 per week with average shortfall of £12.05 each week)

• 1,094 under-occupy by 2 or more bedrooms (average rent is £84.82 per week with average shortfall of £21.21 each week)

• Shortfall to be collected each week is £49,850• Shortfall to be collected each year is

£2.5 million

What Next?

The “bedroom tax” comes in on April 1st 2013. National Housing Federation leaflet “what you need to know about changes to Housing Benefits” is useful. http://www.housing.org.uk/publications/find_a_publication/general/housing_benefit_changes.asp

WHAT DO YOU THINK WE SHOULD DO?

Universal Credit

• Replacing all means tested benefits

• New claims from October 2013

• Existing claimants transferred between 2013-2017– Transitional protection as long as

circumstances remain same

What will Universal Credits Replace

• Working tax credits

• Child tax credit

• Housing Benefits

• Income Support

• Jobseeker’s Allowance

• Employment and support allowance

Universal Credit• Who Can Claim?

– Age 18 +– Savings below £16,000– Low / Middle income– In or out of work– Not excluded – eg some people from abroad– Meet conditionality– Not be in education – Accept a claimant commitment– if one member of a couple claim is above state

pension age they will need to apply for universal credit as a couple. People below 18 can also apply: lone parent, or are estranged from their parents.

Universal Credit

• Conditionality• None

– Support group– Lone parent child under 1– Carers – substantial care

• Work Focused interview– Lone parents child between 1 and 3

• Work Preparation– Limited capacity for work– Lone parents child between 3 and 5– Lead member of couple with child under 5

• Full– Everyone else

Universal Credit

• How to claim?– One claim per household– Main claimant– Claim on-line– DWP assess / call centres / limited face to

face

Universal Credit

Payments• Monthly in arrears• To the main claimant • Default to pay housing element directly to

claimant• Limited exceptions when it could be paid

direct to landlord. Pilot projects are currently being carried out when and how payments can be made to the landlord.

Financial Inclusion

Financial inclusion is about ensuring that everyone has access to appropriate financial services & products to: manage their money on a day-to-day basis; plan for the future and deal effectively with financial distress.

– Access to affordable and responsible credit – Access to an appropriate bank account – Access to face to face debt advice – Access to basic home contents insurance – Access to savings facilities– Improved financial education, literacy & capability

What does the credit situation look like today?

• £1,451bn - total UK personal debt at the end of September 2011• £55,795 - average household debt including mortgages• £8,025 – average household debt excluding mortgages. This

increases to £15,432 if the average is based on the number of households who actually have some form of unsecured loan.

• £209bn - total consumer credit lending to individuals at the end of September 2011

• £174m - personal interest paid in UK daily - £63.4bn in the last 12 months or £2,440 per household each year.

• 8,910 - number of new debt problems dealt with by CAB each working day (as at June 2011)

• every 14.6 minutes a property is repossessed• every 4.31 minutes someone will be declared insolvent or bankrupt

(stats courtesy of Credit Action)

How to assist customers move

towards financial inclusion?• Opportunities to promote financial capability (demand side)

– Money Advice Service– Budgeting skills– Money management workshops

• Opportunities to support tenants to access appropriate products (supply side)– Support around opening bank and savings accounts– Promotion of credit unions Walsave’– Ensuring access to appropriate debt and financial advice

wincred

• Wincred website is available to colleagues and customers giving advice and guidance on financial inclusion, where to seek help.

• The website can be used as a tool to help colleagues and customers to manage their finance.

• Cost of Running you home booklet is already available as a basic guide with an opportunity to do simple income and expenditure.

Where can I get help with benefits and debt advice within Walsall?

• Walsall Council, Welfare Rights Service

• Walsall Citizens Advice Bureau

• Walsall Money Advice Project

• Age Concern

• Willenhall Money Advice

• whg Welfare Benefits and Debt Advice for whg tenants only

Action needed?

WHAT DO YOU THINK WE SHOULD DO?