Benefit Changes in the Autumn Statement 2014 – Nestor Comment

Chancellor George Osborne delivered his 2014 autumn statement on 3rd December. Below are some of the “highlights” from Mr. Osborne’s statement. His overarching theme with regards to welfare spending is to “control benefit spending”.

If you would prefer to read this article offline you can download the .pdf here.

Mr.Osborne went on to say that the Government expect to have £1billion less spending on welfare than originally projected.

The Government will also look to freeze working age benefits for two years in order to make further savings from the welfare budget.

Welfare benefit related measures outlined by Mr Osborne, and in accompanying Treasury documents, include –

Universal credit

  • £350m will be invested in increasing the support on offer for childcare costs within universal credit from 70 per cent of eligible costs to 85 per cent from April 2016; and
  • If a claimant leaves universal credit and returns within a 6 month period, they will be able to keep their existing assessment period, simplifying the reclaiming process.

To offset the cost of these policies –

  • universal credit work allowances will be maintained at their current level for a further year, until April 2018; and
  • surplus earnings that are in excess of £100 above a household’s universal credit award threshold will be accounted for in award calculations over a six month period.

Additionally –

  • from October 2015, jobseekers aged 18 to 24 who are not in education, employment or training before claiming universal credit will participate in a period of intensive activity and job search support at the start of their benefit claim; and
  • as previously announced, universal credit will expand nationwide through 2015/2016 to all remaining jobcentres and local authorities, legacy benefits will begin to close to new claims from 2016, and the universal credit caseload will continue to build naturally thereafter.

Migrant access to benefits

  • from February 2015, the Genuine Prospect of Work (GPoW) assessment will apply to all European Economic Area (EEA) migrants who began claiming jobseeker’s allowance (JSA) before these changes were introduced on 1 January 2014, and those who do not have clear job prospects will see their claim ended and their right to reside in the UK as a jobseeker withdrawn; and
  • EEA migrants’ access to JSA will be limited to 3 months, subject to the GPoW assessment.

Fraud, error and debt

  • investment of an additional £6m will be made to increase capacity within DWP fraud and error operations in order to deliver significantly more interventions, targeting claims identified as carrying a risk of fraud, claimant error or official error, to ensure that claimants are not being paid more than they are entitled to;
  • making the tax credits system more responsive to changes in claimants’ circumstances by reducing payments in-year, to prevent the build-up of overpayments that must be repaid at a later stage;
  • establishing a new housing benefit fraud and error local authority incentive scheme, worth up to £35 million over the next 3 years, which will pay financial rewards to local authorities that reduce the amount of money lost through fraud and error in housing benefit; and
  • the government will work with the private sector to improve debt collection in the tax and welfare systems through the ‘Debt Market Integrator’ which will make use of a range of debt collection services across the market.

Employment and support allowance

  • as previously announced, claimants who have been found fit for work at a work capability assessment will be prevented from being paid the employment and support allowance (ESA) assessment rate unless their condition has changed or a new condition has developed;
  • the period of time that claimants may remain on JSA while sick without having to move to ESA will be extended; and
  • starting in 2015/2016, the government will invest a further £3 million to expand existing psychological work and wellbeing pilots to help people return to work.

State retirement pension

  • in line with the triple lock policy, the state pension will rise by 2.5 per cent in April 2015 – a cash increase of £2.85 per week for the full basic state pension; and
  • the benefits of the triple lock uprating will also be passed on to the poorest pensioners through an increase in the standard minimum income guarantee in pension credit to match the cash rise in the basic state pension – this will partly be paid for through a rise in the savings credit threshold by 5.1 per cent.

Tax credits

The government will tighten the eligibility conditions for those claiming tax credits on the basis of self-employment, to prevent abuse of the system. These include a new test to ensure that work being undertaken is genuine and effective, and a requirement that anyone claiming working tax credit as self-employed registers with HMRC and provides their Unique Tax Reference in order to prevent bogus self-employment and abuse of the tax credits system, while allowing HMRC to continue to support those who are genuinely self-employed.

Carers

The carer’s allowance earnings limit will increase in April 2015 from £102 to £110 per week.

Welfare spending cap

The welfare spending cap will increase from £119.7bn in 2015/2016 to £129.8bn in 2019/2020.

New enterprise allowance scheme

Dependent partners in a couple’s JSA or ESA claim will be able to access the new enterprise allowance scheme which supports benefit claimants who want to start their own business.

Bereavement support payment

The bereavement support payment – which will replace the three current benefits paid in respect of bereavement from April 2017 – will be exempt from income tax.

Conclusion

The squeeze on working age benefits continues unabated. EEA workers from the European Union will now find it even harder to claim benefits unless they can evidence a genuine prospect of work. We must wait and see on the make-up of the next Parliament, as this will directly influence further welfare policy from 2015 and beyond.

If you would like to read this article offline you can download the .pdf here.

Personal injury can have a devastating effect, not just on the injured party but also their family and friends. It can also reduce a person’s ability to earn a living. Short or long term financial hardship can then result, meaning individuals and their families are thrust into the welfare benefit system.

With multiple benefits available, administered by several different agencies, the complexities of the benefit system can be daunting. We have the skills and knowledge to manage the benefit process from start to finish, making sure that a claimant gets all the benefits they are entitled to.

Welfare Benefit Health Check

Nestor’s Welfare Benefit Health Check will identify the benefits available to a claimant and their family. All that is required is a short telephone consultation with a specialist Welfare Benefit Consultant. This will be followed up with a comprehensive and clear written report detailing the applicable benefits and how to claim them.

For an experienced, specialist view on entitlement to welfare benefits, please telephone our welfare benefits expert, Lee Ryan on 0161 763 4800 or email at lr@nestor.co.uk We will be happy to have a no obligation discussion.