housing and welfare reforms: issues for almos steve wilcox university of york
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Housing and Welfare Reforms:Issues for ALMOs
Steve Wilcox University of York
Housing and welfare reforms: Issues for ALMOs
Housing Benefit Reforms
The Maximum Benefit Cap
Universal Credits
The Housing benefit reforms
Private sector reforms
Caps & lower LHA rates
CPI Indexation (& definition)
Increased non dependent deductions
Social sector size limits
Additional bedroom for carers
Discretionary Housing Payments increase
Caps and Lower LHA Rates
Maximum National Caps
Maximum 4 Bed Rate
30th Percentile Rates (5/8% below median)
Removing £15 excess provisions
Increased pressure on social sector
The Maximum Benefit Cap
Based on national average earnings
Applies to all tenures
Only applies to out of work households
Doesn’t apply to disabled or retired
Impact on large families in high rent areas
Likely to be some modifications?
Impact of Maximum Benefit Cap
0
100
200
300
400
500
600
Single Couple Couple + 1 Couple + 2 Couple + 3 Couple + 4
£ pe
r w
eek
Basic Credits Maximum Housing Credits
Universal Credits I
Major Structural Simplification
Based on Dynamic Benefits
Single Integrated Taper
Aims to promote work incentives
Higher initial costs
Long term savings from work impacts ?
Universal Credits II
Transitional protection Future ‘gainers’ and ‘losers’
Integrated ‘real time’ weekly adjustments Challenging IT and Admin Reforms Limited lone parent allowances
Help with housing costs reconfigured
Universal Credits:Help with housing costs
High earnings disregard
But reduced if help with housing costs
Mortgage costs included (?)
Council tax benefit excluded (?)
Many in work claimants better off
But complexity will dilute message
Marginal deductions from gross earnings:Current system and universal credit
0
20
40
60
80
100
Tax N I Taxcredits
Housingbenefit
Counciltax
benefit
Universalcredits
UC (inclCTB)
Per
cen
tag
e d
edu
ctio
n f
rom
g
ross
ear
nin
gs
Tax National insurance Tax credits
Housing benefit Council tax benefit Universal credits
The Earnings Disregard Formula
Earnings disregard for tenants =
Higher earnings disregard
- Rent times 1.5
- Subject to lower earnings disregard floor
But no disregard for a single person
Higher and lower earnings disregards
Household Higher Lower Housing Cost Trigger
Couple £57.70 £10 £31.80
Couple + 1 £109.60 £20 £59.80
Couple + 2 £109.60 £25 £56.40
Lone parent + 1 £148.10 £40 £72.10
Lone parent + 2 £148.10 £45 £68.70
The current benefit poverty trap
0
100
200
300
400
500
600
£ p
er w
eek
Net Earnings Child Benefit Working Tax Credit
Child Tax Credit Housing Benefit Council Tax Benefit
Couple with two children. £80 pw rent. 2010/11 Rates Under £180 pw less than 30 hours
The structure of universal credits
0
100
200
300
400
500
600
£ p
er w
eek
Net Earnings Child Benefit Universl Credit
Housing Costs Council Tax Costs
Couple with two children. £80 pw rent.
Net impact of systems compared
200
250
300
350
400
450
500
Hours worked
£ p
er w
eek
Current benefits Universal credits
Couple + 2 children. Rent £80. Council Tax £15. £5.93 per hour earnings.
Universal Credit Issues
Risks & intermediate rents
The national cap & work
Complexity of earnings disregards
The direct payment issue(s)
The monthly payment norm
Provisions for mortgage costs?
Council tax benefit?