2012 01 Welfare Benefits

Wednesday 1 February 2012

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The Welfare Reform Bill

On 11 January 2012, the Government lost three votes in the House of Lords onEmployment and Support Allowance (ESA) amendments to the Welfare Reform Bill 2011. Cross-bench peers joined with Labour peers in voting by 234 to 186 in favour of extending the time limit for contributory ESA from one year to two years; by 222 to 166 in favour of exempting cancer patients from the time limit; and by 222 to 166 in favour of overturning the proposed abolition of ESA in youth (click here for link to Hansard). However, the BBC reports the Minister for Employment, Chris Grayling as saying that Ministers will seek to reverse the amendments when the Bill goes back to the House of Commons (click here for link to BBC story).

On 23 January 2012, the Government lost a vote in House of Lords on excluding Child Benefit from the benefit cap. Lords voted in favour of the amendment - introduced by the Bishop of Ripon and Leeds and the Right Reverend John Packer - by 253 votes to 237. However, the DWP said it would seek to overturn the amendment as it will make the cap 'ineffective' as including Child Benefit would raise the cap on the level of income to roughly £50,000. According to a BBC report, Nick Clegg said ministers would seek to overturn the Lords' defeat when the bill returns to the Commons (click here for link).

Social Policy News

The cuts to disability benefits, the benefit cap and the impact of the cuts to Housing Benefit continue to attract adverse comment, and January 2012 saw a series of important publications on the impact of these changes:

1. Chartered Institute of Housing: On 3 January 2012, the Guardian reported that according to a new study by the Chartered Institute of Housing the benefit cuts will make 800,000 homes unaffordable. (Click here for link to Guardian story). The changes to local housing allowance (LHA), which includes caps on the LHA rate and setting it to the 30th (rather than 50th) percentile, will mean, according to the study, that in many towns and cities there will not be enough affordable homes for claimants to rent. Whilst the problem will be most acute in the south east, it will also have a severe impact within other parts of the UK, including Birmingham, Liverpool and Glasgow. Grainia Long, the interim chief executive, is reported to have said:

'The whole of the south east is a sea of high rents punctuated only by a few small isolated low-cost islands … mainly old seaside towns such as Margate and Hastings where the once buoyant tourist trade has long since declined. But if claimants migrate to areas like these then this will create benefit ghettos … the result is likely to be increased social problems and a breakdown in community cohesion.'

2. Family and Parenting Institute (FPI):On 4 January 2012, a new research report, 'The Impact of Austerity Measures on Households with Children', commissioned by the FPI (click here for link to report) examined the prospects for income and poverty rates among households with children between 2010-2011 and 2015-2016 and, in particular, the impact of tax and benefit changes on household incomes. The report concludes that families with children are 'shouldering the burden of austerity'. The report's key findings include: -

  • median income among households with children is set to fall in real terms by 4.2 per cent (or £1,250) which is greater than the projected fall in overall median income of 0.9 per cent;
  • lone parents not in employment will lose more than 12 per cent of their income on average as a result of tax and benefit changes to be introduced between 2010–2011 and 2014–2015, (or £2,000 per year);

Introducing the report, Chief Executive of the Family and Parenting Institute, Dr Katherine Rake said - 'These figures reveal the full extent to which families with children are shouldering the burden of austerity.'

3. The Children's Commissioner: On 12 January 2012, the Children's Commissioner, Dr Maggie Atkinson, published an impact assessment of the Welfare Reform Bill which sets out the potential adverse effects on children including the increase in poverty and homelessness. The report, 'Child Rights Impact Assessment of the Welfare Reform Bill', (click here for link to Report) considers the Bill in the light of the UN Convention on the Rights of the Child, the Human Rights Act 1998 and other international human rights obligations and identified the following risks as being of 'of real concern' -

  • an increase in child poverty as a result of the household benefit cap and housing benefit changes, resulting in poor health and educational outcomes for children;
  • the threat of a potential increase in household rent arrears due to reduced housing benefit payments;
  • families living in poverty diverting money away from necessities for children’s health and wellbeing such as heating, warm clothing and nutritious food in order to cover their housing costs;
  • children becoming homeless as a result of unaffordable housing for their families;
  • a disproportionate impact of some of the Bill’s benefit changes on children from some BME groups, disabled children, and children of disabled parents; and
  • families having no crisis support in the event of flood, fire, or serious illness as a result of the Bill’s abolition of the Social Fund.

4. The DWP: On 23 January 2012, the DWP published a new 'Impact assessment for the Household Benefit Cap', (click here for link to DWP website), in which the DWP says that 220,000 children will be affected by the government's proposed benefit cap. The figures also show that the mean average weekly loss to affected households will be £83 per week, with 17 per cent losing more than £150 per week.

According to the impact assessment, around 67,000 households will have their benefits reduced by the policy in 2013/2014, and 75,000 in 2014/2015. Within these households, the number of adults affected is 90,000, and the number of children will be 220,000 in 2013/2014. In relation to the amount of the benefit reduction for affected households, the impact assessment shows that 17 per cent will have a reduction of more than £150 per week; 12 per cent will have a reduction of £100-£150 per week; 26 per cent will have a reduction of £50-£100 per week; and 45 per cent will have a reduction of up to £50 per week; with the mean average weekly loss being £83 per week.

Other News

In 'Right First Time?', published on 11 January 2012, (click here for link to report) Citizens Advice says that by May 2011 bureaux in England and Wales had given advice on almost 350,000 enquiries about Employment and Support Allowance (ESA) with CAB staff reporting that inaccurate medical assessment reports, finding people with serious illnesses and disabilities fit for work, are creating 'huge difficulties' for clients. The report also expresses concern that assessments finding people with serious illnesses and disabilities fit for work are also being used to determine DLA entitlement The report recommends that WCAs must not be used for deciding a DLA award until the accuracy of the WCA report has been independently verified (or, at the very least, the claimant has had an opportunity to correct any errors).

The 'Quarterly Tribunals - Statistics 1 July to 30 September 2011' published by the HM Courts & Tribunals Service on 13 January 2012 show that receipt of social security and child support (SSCS) appeals between July and September 2011 are down by 20 per cent on the previous year and also show a 20 per cent increase in appeal disposals. There were 90,700 receipts to SSCS between July and September 2011, a decrease of 20 per cent compared to the same quarter of 2010-2011; there were 111,500 disposals made by SSCS - a 20 per cent increase compared to the July to September quarter of 2010-2011. (Click here for link).

According to the latest 'Aviva Family Finances Report 2012' the typical UK family owes £7,944 in unsecured borrowing, which is up by 48% on the previous year. (Clink here for Guardian Report). Research by the insurance company found that the typical UK family owes £7,944 in unsecured borrowing on credit cards, loans, overdrafts and other forms of credit, compared with £5,360 in January 2011. The figure represents 32% of a typical net annual income. Credit card debt was the biggest source of unsecured debt, with those questioned owing an average of £2,314 on plastic, followed by £1,739 on personal debts. The research was based on interviews with 10,000 people aged between 18 and 55. The Guardian report also reveals that debt remains a problem for many into old age, according to separate research by Prudential. It shows that 18% of people planning to retire this year will do so with outstanding debts, owing an average of £38,200, up £5,000 on 2011's figure of £33,100, with outstanding mortgages and credit card bills making up the bulk of the money owed by debtor retirees.

Case law

In CE/2323/2010 [2011] UKUT 454 (AAC): RM v Secretary of State for Work and Pensions (19 October 2011), the Upper Tribunal held that a consideration of mental health descriptors was possible even where there is no specific mental illness. The case concerned an ESA claimant who had ME. As a result of her ME she had difficulty concentrating, poor short term memory and difficulty in making decisions. The tribunal did not award any points under the mental functions part of the Work Capability Assessment ('WCA') saying that there was no evidence of a mental health problem, and she was also on no medication for mental health; and therefore found that her difficulties did not arise from a specific mental illness or disablement. The Upper Tribunal held that the WCA was a functional test and the “Mental, cognitive and mental function assessment” pointed to the nature of the function that is affected, regardless of the underlying cause (CE/1222/2010 applied). The Upper Tribunal observed that there were “sound practical reasons for considering the functional difficulties experienced by a claimant, rather than having to explore elusive questions as to whether the source of that limitation is mental or physical in origin” (para. 12). (Click here for transcript).

CDLA/86/2011 [2011] UKUT 453 (AAC): CG v Secretary of State for Work and Pensions (24 October 2011), considered the application of Rule 36 of the Tribunal Procedure Rules on 'Clerical mistakes and accidental slips or omissions'. The claimant had an award of the higher rate mobility component and lower rate of the care component of DLA from 2004 to 2009. On renewal she was awarded the lower rate of both components, and she appealed against this decision. The first-tier tribunal (FTT) dismissed her appeal, and the claimant applied for permission to appeal. The District Tribunal Judge considering the application referred the case to the judge who had presided over the FTT to consider whether she wished to correct any of the wording in the Statement of Reasons under Rule 36 of the Tribunal Procedure Rules. The Statement of Reasons as first issued consisted of ten paragraphs. The tribunal judge produced a document that added nine additional paragraphs to the Statement, all of which were directed to refuting the points made in the application for permission to appeal. The Upper Tribunal held that the power conferred by rule 36 does not extend to allowing the FTT to amplify or clarify its reasons, which is how the judge had expressly purported to exercise the power in this case (click here for transcript).

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