Finally, as we enter 2013, the long forecast changes under the Welfare Reform Act 2012 begin to be implemented; having a significant impact on many benefit claimants between age 16 and State Pension Credit age.
The following guide takes you through the changes as they are rolled out over the year ahead.
Child Benefit becomes means tested from 7th January. Any households where at least one parent earns over £50,000 per annum will have their benefit taxed at 1% for every £100 over the threshold.
Annual Benefit Increase
The majority of benefits and Tax Credits which have previously been increased in line with the Consumer Prices Index will be capped at a 1% increase until 2016. This is well below the rate of inflation and will see many working age claimants lose out in real terms.
Disability Living Allowance (DLA)
The pilot scheme for Personal Independence Payment (PIP) is to be trialled in Cheshire, Cumbria, Merseyside and North East England.
The “Bedroom Tax”
For those who currently rent in the private sector, the rate of Local Housing Allowance (LHA) payable is assessed on the size of the claimant’s household, which will determine the number of bedrooms they require.
Discretionary Housing Payments (DHP)
A DHP is an extra payment administered by Local Authorities for claimants whose Housing Benefit does not cover all of their rent, and who are experiencing hardship as a result.
A new local rebate scheme will be introduced to replace Council Tax Benefit.
The Benefit Cap
A Household cap on benefits will be introduced from April, falling broadly into line with the income of an average working household. A single person with no children will see their benefit payments limited to £350 per week and £500 per week for couples and lone parents.
The Social Fund
Payments from the existing Social Fund are to be scrapped and replaced by local schemes and payment on account. Community Care Grants and Crisis Loans will be administered on a discretionary basis by Local Authorities. Budgeting Loans will continue in their current form until UC is rolled out, when they will be replaced by an advance payment on account.
Universal Credit (UC)
No new claims will be available for Income Support, income based Jobseekers Allowance (JSA) and income related Employment and Support Allowance (ESA) from October.
Personal Independence Payment
From June, PIP will be rolled out nationally for new claims. From October, the migration process will begin for existing claims, starting with those whose DLA claims are due to be reviewed.
Universal Credit (UC)
Existing claims to JSA(IB), ESA(IR) and Income Support will start to be migrated over to UC.
As Housing Benefit is abolished, there will be a housing element introduced into State Pension Credit.