The Impact of Welfare Reform

Bethany EckleyResearch Manager, Church Urban Fund

June 2013

Mission: to transform the lives of the poorest and the most marginalised in England.

Overview

1. It All Adds Up: cumulative, financial impact of welfare reforms.

2. The Human Cost of Welfare Reform: broader impact on people’s everyday lives.

1. Financial impact of reforms

• Case studies simulate tax-benefit changes 2010 – 17

• Methodology:– Figures adjusted using RPI–Gross earnings rise with inflation–Rents rise by 4% pa–Hholds move to Universal Credit in 2016/17

Mark and Sarah

• Mark is a full-time cook, earning £25,000 pa.

• Sarah looks after their three children.

• They live in a private property in east London.

Gain £450 per year – increased tax allowances

Gain £240 per year – freeze in Council Tax charges

Lose £1,470 per year – reductions in tax credits

Lose £1,760 per year – changes to Housing Benefit

Lose £400 per year – changes to Child Benefit

Mark and Sarah:

= loss of £3,000 pa

Mark and Sarah’s annual disposable income (after housing costs), 2010/11 to 2016/17.

- 13%

- 5%

Signifying a 13% reduction in five years.

Sam

• Single man of working-age.

• Disabled, but moves from incapacity benefit to JSA.

• A local authority tenant in the north east.

Continues without earnings

Loses £1,750 per year – the move to JSA

Loses £470 per year – the ‘bedroom tax’

Loses £140 per year – a Council Tax charge

Sam:

= loss of £2,300 pa

Sam’s annual disposable income (after housing costs), 2010/11 to 2016/17

Signifying a 44% reduction in five years.

- 44% - 45%

Representative?

• Mark and Sarah:–5-7% average reduction for families with

children (IFS 2013).

• Sam:–1.5m reassessed by 2014, so far one in

three judged fit for work.–420,000 disabled people affected by

‘bedroom tax’.

2. The human cost of welfare reform

• 19 interviews at ten church or faith-based community organisations.

• To understand impact of reforms on people’s every day lives.

• To reflect on how churches might best support those affected.

Incapacity Benefits

Jobseeker’s Allowance

Work Capability

Assessment

Impact of changes to disability benefits

Employment and Support Allowance

“The biggest change is the move

from ESA onto JSA. Now I would

say personally that in many cases

it is a good thing... But some of

them that are being forced onto

Jobseeker’s aren’t well and they

can’t cope and those are the ones

that we help.”

Those correctly found fit for work: the difficulty of moving into employment.

Those incorrectly found fit for work: appealing the decision.

Impact of changes to Housing Benefit

• From April 2011, a cap on Local Housing Allowance:— £230 per week, one bedroom — £290 per week, two bedroom— £340 per week, three bedroom— £400 per week, four bedroom

• From April 2013, the ‘bedroom tax’:— 14% less eligible rent for one spare bedroom— 25% less for two or more spare bedrooms

“Some of our families from the school

have been completely moved out of

the area because of the housing

benefit changes... They've gone all

over the place, but miles away... And

of course they’re still travelling into

school because their whole network is

here.”

Families moving home, leaving support networks behind.

Families struggling with the ‘bedroom tax’.

“For me, the biggest issue is the lack of compassion in

the changes that are taking effect. Amongst the people

making the decisions, there is either a refusal or an

inability to understand that when you change

something at the top, it is the people at the bottom of

the food chain that it hits the hardest, and it hits

quickest.”

Church-based responses

Three groups affected by specific reforms:

1. Former incapacity benefit claimants who need to move into employment.

2. Former incapacity benefit claimants wrongly judged as fit for work.

3. Households affected by Housing Benefit changes.

Challenges Possible church-based responses

Short-term Reduction or delay in benefit payments. In-kind support

Cash support

Transitional Overcoming barriers to employment:

­ poor CV or job application writing skills;

­ access to computers for job searches;

­ cost or lack of public transport;

­ childcare costs.

Running job clubs

Providing access to computers

Setting up car shares

Increasing availability of childcare

Long-term Lack of self-esteem, qualifications or skills. Confidence building courses

Offering training opportunities

Hosting voluntary placements

Former incapacity benefit claimants who need to move into employment

Together: we can help to transform the lives of the poorest and most marginalised in England.