3 Million Households Set To Benefit From Universal Credit Changes

Three million households across the country, including lone parents and those on the lowest incomes, are set to keep more of what they earn due to a £700 million boost to Universal Credit. From today (10 April) the taper rate, the rate at which a Universal Credit payment reduces as someone moves into work, will be lowered from 65p to 63p. The change means that some households could benefit by £425 a year. Read more on the DWP website.

Changes To Benefit Entitlements From April 2017

·         Employment and Support Allowance work-related activity group - Work Related Activity component is being abolished so those in this group will receive the same rate of benefit as those claiming Jobseeker’s Allowance

·         Families with children - support provided through Child Tax Credit will be limited to two children; Universal Credit will be limited to two children

·         New taper rate - a reduction in the taper rate to 63%, from 65%

·         Universal Credit and the benefit cap - From 1 April 2017 if a claimant is in work they will be exempt from the Benefit Cap if weekly earnings are equal to or greater than the equivalent of 16 times National Minimum/Living Wage rate, rather than a flat rate of £430 per month/£100 per week.

Read more on the NHF website.

Housing: Construction – Parliamentary Written Answer

Justin Tomlinson: To ask the Secretary of State for Communities and Local Government, if his Department will provide transitional loss protection for local authorities affected by the new taper on New Homes Bonus.

What assessment has he made of the potential effect of the new taper on New Homes Bonus on local authorities who approve and build a high volume of houses.

Gavin Barwell: The changes to the scheme are being made to increase the focus of the Bonus on delivery of new homes, to reward those authorities who are really committed to growth whilst also freeing up resources to be recycled within the local government settlement to support authorities with particular pressures, such as adult social care. Those areas who deliver the most housing growth will continue to benefit most from the Bonus under the new scheme. The payments for the Bonus in 2017/18 are £1.2 billion and will still be worth £900 million in 2018/19.

More Bill Amendment Defeats For The Government

The government has suffered more defeats in the Lords during the report stage of the housing and planning bill.  The requirement to instigate pay to stay will now be voluntary for councils as it is for Housing Associations. The government was also defeated over its taper proposals. It wanted a 20 per cent taper but peers opted for a 10 per cent taper.  Another successful amendment resisted by ministers means the pay to stay income threshold will be increased to £50,000 a year in London and £40,000 outside London. The government wanted to have the thresholds set at £31,000 outside London and £40,000 in London. In another move the government has now accepted that the regulation on council house sales to fund the right to buy extension will now be decided by parliament instead of ministers alone. Read more on the Planning Portal.

Government Faces U-Turn Over ‘Pay To Stay’

“Pay to stay”, if implemented, would see tenants charged market rates once they earn over £30,000. Critics say this would result in sharp increases in rent that would force working families out of council homes. Peers voted by 240 to 176 in support of a Labour-led amendment to give local councils the discretion over whether to implement the charge, rather than making it mandatory. They then voted 281-179 to back an amendment to lower the “taper rate” from 20p to 10p in every pound, so lower-paid families would not be hit as hard. The hat-trick of defeats was completed when the Lords voted 266 to 175 to increase the “pay to stay” threshold by £10,000. Read more on the Huffington Post website.

Osborne Abandons Cuts To Universal Credit After IDS Quit Threat

Mr Osborne will now seek deeper cuts in housing benefits as he aims to meet his pre-election pledge of cutting the welfare budget by £12bn. Mr Duncan Smith allegedly threatened to resign as Work and Pensions Secretary if the savings were found through cuts to his Universal Credit system. Claimants currently lose 65p in every extra pound they earn as benefits are withdrawn. Following £2bn cuts to Universal Credit, claimants would have lost 75p in every extra pound. Mr Duncan Smith is reportedly working on a shared ownership scheme in a bid to drive down the housing benefit bill, where tenants living in local authority housing for three years would be granted 70% of the equity in the home and rent the remaining 30%. Read more on the Politics Home website.

UC Cuts 'Would Stop Tenants Looking For Work'

Universal Credit (UC) cuts could remove work incentives social landlords have warned. Unconfirmed reports suggest that George Osborne is considering making savings by changing the taper rate in UC, so that claimants lose more benefit for every £1 they earn. Currently, UC claimants lose 65p in benefit for every £1 they earn over a threshold, however the chancellor would allegedly raise this to 75p in the 25 November Spending Review, in order to pay for measures to soften controversial tax credit cuts. The Chartered Institute of Housing, said the government’s claims that Universal Credit makes people better off in work would “evaporate” if the taper was increased to 75p. Read more on Inside Housing.

Pay To Stay 'Likely To Be Tapered'

Social tenants earning just above the new ‘pay to stay’ threshold are unlikely to be hit by a dramatic increase in their rents, with the government expecting to bring in a ‘tapered’ system. Government sources have told Inside Housing that the policy, which comes into effect in April 2017, is ‘likely’ to contain a taper. This means social tenants earning just above the £30,000 threshold (£40,000 in London) may not immediately have to pay market or near market rent. Instead, rent will be gradually increased as household income rises further above the threshold. Read more on Inside Housing.

Universal Credit Could Make Working Fewer Hours More Attractive

Universal credit is facing significant design problems and needs serious reform if it is to meet its original goal of making work pay for most claimants. A nine-month review, conducted by Resolution Foundation, concluded that for some groups, especially women, universal credit could make reducing the number of hours worked more attractive. It suggests for these groups the fall in their employment earnings would largely be cushioned by the taxpayer.  The report states: “Multiple changes to UC since its conception – some policy-related, some reflecting a lower than originally anticipated budget – have altered both its design and expected impact.” It suggests it would take as much as £3bn to restore the planned UC taper – the rate at which UC is withdrawn as earnings rise – to the level at which tax credits were withdrawn. Read more on the Resolution Foundation website.

Universal Credit Could Cost More Than Planned

Iain Duncan Smith's flagship welfare policy, universal credit, is in danger of costing more than planned as it has a perverse incentive for people to limit their working hours in order to keep receiving benefits, a think-tank has said. The Resolution Foundation said that families lose two-thirds or more of each extra £1 of earnings above the "work allowance" introduced under universal credit, up to 20 to 26 hours on the minimum wage. “This does not represent a significant improvement in work incentives compared to the current system and for significant numbers is, in fact, worse,” it said. Read more on the Resolution Foundation website.

Work Doesn't Pay For Some People after Council Tax Policy Change

Some working people are losing 97p of every £1 earned after being hit by a combination of welfare cuts, a committee of MPs has found.  The public accounts committee warned that cuts to council tax benefit means ‘work does not pay’ for those worse affected by the reforms. In a damning report, the scrutiny group attacked the DWP for ‘not fully understanding’ the impact of council tax benefit cuts when combined with other welfare reforms. Read more on the Parliament website.