Month: March 2016

Welfare Reform, what’s been and what’s coming

Welfare Reform, what’s been and what’s coming

Some of you may have noticed my deliberate mistake. Turns out it really is a further £30billion that’s still to be saved and not the £25billion that I quoted in my last blog post – at least I can’t be accused of exaggerating the facts. Sadly that’s not even the full picture since the on-going cuts to local authority budgets will inevitably compound the issue by removing resource from services designed to help people who are struggling. Not that I wish to sound overly defeatist – councils across the country are no doubt doing their best to ensure that cuts don’t affect service delivery, but there is, inevitably, a limit.

It’s by no means a pretty picture, though most will agree that there was a need for reform of some description, and the policy makers down in Westminster do have a whole ideology for the future of welfare which the planned changes are supposed to support. The on-going political mudslinging hasn’t helped in keeping track of how welfare reform in its current form has come to be. So, without getting too embroiled in the detail, here’s my attempt at a short synopsis of where we were and how exactly we got from there to here.

If history bores you, or you’re quite clear on how we arrived at today, skip the next 3 paragraphs!

Once upon a time, the banks gave out too many loans to people who would find it hard to pay them back. This put huge pressure on banks, leading to the commonly referred to ‘credit crunch’ of 2007. The effect of this went on to cause serious global issues in the financial industry – remember queues outside the Northern Rock and a £37billion (tax payers money) bailout package to rescue the Royal Bank of Scotland, Lloyds TSB and HBOS? In other parts of the world things were even more dramatic – the result, in 2008, being the worst global banking crisis since 1929.

During the next year the country officially entered recession, our interest rates were reduced to half a percent and in 2010 the new Coalition Government turned the spotlight on public spending as an alternative explanation for the state the country was in. To be fair, the labour government had already introduced the idea of reform by proposing to replace Incapacity Benefit with Employment Support Allowance in 2008. But the budget of 2010 went far further than this, proposing reforms that were designed to “reward work and protect the most vulnerable” whilst making the benefit and tax credit system “fairer and more affordable”.

There followed many months of discussion and consultation and frankly widespread opposition to the proposed plans. But eventually, having invoked a centuries old law to overrule the House of Lords’ rejection of the bill (a law that had only ever been invoked 6 times before), the government passed the bill, which we now know as the Welfare Reform Act 2012.

Since the passing of the bill we’ve seen some big headlines in the media around the Bedroom Tax, the Benefit Cap, cuts to Child Benefit, the demise of Disability Living Allowance and the introduction of Personal Independent Payments, Ian Duncan Smith’s very own ethos changing Universal Credit, and, most recently, the debates about Working Tax Credit. How is it then that so little progress has been made in making the savings that have been planned? £2.5billion amounts to less than a tenth of what’s to come!

On closer inspection it seems that although big new benefits like Universal Credit and Personal Independence Payment have been introduced, they have yet to be rolled out to the majority of those who are likely to be eligible. So the country is, essentially, running a dual benefit system and will continue to do so for several years to come – not the most cost effective approach but possibly inevitable given the extent of the changes.

I should say at this point that changes resulting from the Smith Commission Report are potentially so significant in terms of the additional powers they give to the Scottish Government that it’s difficult at this stage to predict how the passage of welfare reform across Scotland will be affected. But even allowing for this, we’ve got to expect to feel a big change over the next few years. And, as is so often the case, the devil is undoubtedly in the detail.

When I was planning this blog, I had envisaged a timeline providing details of exactly what will happen when. However I now see that this would amount to listing a whole host of adjustments to current payments, each of which would require an additional description to make any sense and which will almost certainly be subject to change – not exactly a riveting read, or of much real use! Age limits are adjusted, taper rates are increased, caps are capped, backdate options are reduced, rates are frozen, eligibility criteria are changing… you get the picture I’m sure.

There are a few big hitters. Universal Credit is one and I think we’ll leave that for another post. It’s still in the very early stages of implementation so we’ve got a bit of time there. Another is Personal Independence Payment – PIP. This has been around for a while now but the transfer of current claimants of Disability Living Allowance (DLA) over to PIP has only just begun.

The transfer is taking place randomly across the UK. So at any time over the next few years, if you currently receive DLA, regardless of whether you have a ‘life time award’, you will receive a letter inviting you to claim PIP. Some may find the content a little misleading – the reality is that if you receive this letter, you must either submit a claim or submit a request for an extension within 4 weeks of the date on the letter, or your benefit will be stopped. So it’s not so much an invitation as an instruction. If you know anyone who receives DLA please pass on the message to keep an eye out for this letter and to seek help from the council or an independent advice agency if they are at all unsure about what they should be doing.

We’ll make sure and flag up any imminent changes on this blog as the details emerge and of course if you have any questions in particular you can comment here, visit our website at northlanarkshire.gov.uk/yourmoney or call our Your Money line on 01698 403170.

Next time we’ll be looking at how to navigate your way round the benefit system – successfully.

Bye for now.

 

 

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