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Benefits and the budget

Following the budget and other announcements, a number of changes to social security are in the pipeline.

 

Uprating

• The government will adopt the Consumer Price Index for uprating of benefits and tax credits from April 2011.

DLA

• The government will introduce the use of 'objective medical assessments' for all DLA claimants from 2013/2014.

Tax credits

• From April 2011, the second income threshold for the family element of Child Tax Credit will reduce from £50,000 to £40,000 and, from April 2012, the family element of Child Tax Credit will be withdrawn immediately after the child element;
• from April 2011, the first and second withdrawal rates for tax credits will increase to 41 per cent;
• from April 2011, the baby element will be removed from Child Tax Credit and, from April 2012, the 50 plus element will be removed from Working Tax Credit;
• in April 2011, the child element of Child Tax Credit will increase by £150 above Consumer Price Index indexation and, in April 2012, it will increase by £60 above indexation;
• the government will not introduce the £4 supplement in Child Tax Credit for each child aged one and two from April 2012, which was announced in the March 2010 Budget;
• from April 2011, the level of in-year rises of income that will be disregarded from calculations of tax credit entitlement will decrease from £25,000 to £10,000 and, from April 2013, will be reduced further to £5,000;
• from April 2012, the period for which a tax credit claim and certain changes of circumstances can be backdated will be reduced from three months to one month; and
• from April 2011, people aged over 60 will qualify for Working Tax Credit if they work at least sixteen hours a week, rather than 30 as now.

Benefits and children

• From October 2011, lone parents whose youngest child is aged five or above will be eligible for Jobseeker's Allowance rather than Income Support, and existing claimants will be transferred from Income Support to Jobseeker's Allowance from April 2012;
• from April 2011 the government will restrict eligibility to the Sure Start Maternity Grant to the first child (or children where the first is a multiple birth);
• the Health in Pregnancy grant will be abolished from January 2011; and
• Child Benefit will be frozen for three years from April 2011.

Benefits for older people

• State pension will be uprated by a 'triple guarantee' of earnings, prices or 2.5 per cent, whichever is the highest, from April 2011 but the basic state pensions will increase by at least the equivalent of the retail price index;
• the standard minimum income guarantee of Pension Credit will increase in April 2011 by the cash rise in a full basic state pension; and
• the government will review the age at which the state pension age will rise to 66, and will consult shortly on how it will quickly phase out the Default Retirement Age from April 2011.

Housing costs and Housing Benefit

• From October 2010, the standard interest rate used to calculate support for mortgage interest payments will be set at a level equal to the Bank of England's published monthly Average Mortgage Rate, currently this will mean a reduction from a standard interest rate of 6.08 per cent to 3.87 per cent;
• from October 2011, local housing allowance rates will be set at the 30th percentile of local rents;
• from April 2013, housing entitlements for working age people in the social sector will reflect family size;
• deductions for non-dependants will be uprated in April 2011 on the basis of prices, reversing the freeze in these rates since 2001/2002;
• from 2013/2014, local housing allowance rates will be uprated in line with the Consumer Price Index;
• from April 2013, Housing Benefit awards will be reduced to 90 per centre of the initial award after twelve months for claimants receiving Jobseeker's Allowance;
• from April 2011, Housing Benefit claimants with a disability and a non-resident carer will be entitled to funding for an extra bedroom;
• from April 2011, local housing allowance rates will be capped at £250 per week for a one bedroom property, £290 per week for a two bedroom property, £340 per week for a three bedroom property and £400 per week for four bedrooms or more; and
• the government contribution to discretionary housing payments will be increased by £10 million in 2011/2012 and £40 million in each year from 2012/2013.

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