An introduction to Welfare Benefits

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An introduction to Welfare Benefits
HB Training, London Councils
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Objectives for the day

• To provide a background to how the Welfare State
  has developed
• To provide an understanding of the different
  benefit categories
• To provide a basic understanding of the most
  common Social Security benefits

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How the welfare state has developed

• 1908 Old Age Pensions Act Elderly,
  non-contributory pensions introduced.
• 1911 National Insurance Act First
  insurance-based sickness and unemployment benefit
• 1934 Unemployment Assistance Act Replaces local
  outdoor relief with a national scheme for those
  without contributions or whose contributions have
  expired
• 1942 Beveridge Report (Social Insurance and
  Allied Services Report), introduces the Welfare
  State. Assumes a nuclear family with a male
  breadwinner and full employment.

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How the welfare state has developed

• 1946 National Insurance Act - Based on the
  Beveridge report, combines universal provision
  based on compulsory contributions with National
  Assistance for those with insufficient resources.
• 1966 Supplementary Benefit Act - Replaces
  National Assistance. Legal entitlement removes
  the stigma of charity
• 1999 Welfare Reform Pension Act/Tax Credit Act
  Tax Credits replace in-work benefit payments.
  Stakeholder Pensions introduced. Work focused
  interviews introduced.
• 2007 Welfare Reform Bill? Emphasis on the need
  for personal responsibility and independence.

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The historical legacy
Social Security Benefits fall into three
categories

• Contributory Benefits
• Entitlement depends on NI Contributions
• Paid regardless of other resources
• Universal Benefits
• Not based on a contribution record
• Not means tested

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The historical legacy
Social Security Benefits fall into three
categories

• Income-Related Benefits
• Not based on National Insurance
• The Amount paid depends on a means test
• Other income and savings affect the amount paid

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The historical legacy
Overlapping Benefit Rules Some benefits overlap
and cannot be paid together. A claim should be
made for the benefit that pays the most.
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Income Related Benefits
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Means tested benefits
Successive Governments have stated that they want
to target help at those who need it most, moving
away from contributory and universal benefits and
concentrating on means-testing benefit. However,
means-testing has 4 main drawbacks

• They have comparatively low rates of take-up
• They are expensive to administer
• They have complex rules and are prone to errors
• They have a disincentive effect

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Income Support Jobseekers Allowance (IB)
Income Support is the main means-tested benefit
and is intended to provide for the basic living
expenses of the claimant and his/her family.

• To qualify the claimant must
• Be an adult (over 16) but under 60
• Not be in full time work
• Not be in full time education (with some
  exceptions)
• Not have savings in excess of 16,000
• Be habitually resident in Great Britain

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Income Support Jobseekers Allowance (IB)

• In addition, the claimant must be
• Be sick or disabled
• A lone parent
• A carer
• A bereaved person over 55 (claiming as single)
• A refugee

Working age people who do not fit into any of
these categories will have to register as
unemployed, sign a Jobseekers Agreement and
claim JSA(IB).
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Income Support Jobseekers Allowance (IB)
The benefit award is based on a comparison of the
claimants income with a defined assessment of
his/her needs, identified as the Applicable
Amount.

• The Applicable Amount is made up of three
  components
• Personal Allowances - basic allowances based
  on the claimants age and family status
• Premiums - additional amounts payable to cover
  special circumstances
• Certain housing costs - to cover the mortgage
  interest, service charges etc

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Income Support Jobseekers Allowance (IB)
Personal Allowances The amount of a claimants
personal allowance depends upon whether they are
single or a couple. Prior to April 2004 the
personal allowance also included an amount in
respect of dependent children, but these have
been replaced by the Child Tax Credit. The
current rates are as follows Single person/lone
parent under 18 - 35.65/46.85 Single person
18-24 - 46.85 Single 25/lone parent
18 - 59.15 Couple both under
18 - 46.85/70.70 Couple one or both
18 - 92.80
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Income Support Jobseekers Allowance (IB)
Premiums Premiums are added to the basic personal
allowances and are intended to assist with the
extra expenses caused by disability or by caring
for someone or in raising children.
These premiums are not included where the
claimant receives a Child Tax Credit
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Income Support Jobseekers Allowance (IB)
Housing Costs Housing costs can be paid for the
home in which the family normally live and for
which they are responsible.

• Eligible Housing Costs include
• Mortgage interest payments for the property
• Interest on loans used to pay for
  repairs/improvements or to meet a service charge
  for repairs
• Rent or ground rent, if the lease is for more
  than 21 years
• Some service charges

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Income Support Jobseekers Allowance (IB)

• Housing Costs
• In certain circumstances not all the eligible
  costs will be met in full
• Mortgage interest on loans over 100,000
• Payments at the start of a claim
• there may be some deductions from the claimants
  housing costs, if other people normally live in
  the household

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Income Support Jobseekers Allowance (IB)
The Income Support calculation




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Income Support Jobseekers Allowance (IB)
The Income Support calculation




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Income Support Jobseekers Allowance (IB)
Calculating the Income and Capital As a general
rule, all income received by the claimant and his
or her partner (including other benefits) is
taken into account. However, some forms of income
are disregarded, either in part or in full. All
capital assets (savings, stocks and shares,
property other than the home, even premium
bonds) owned by the claimant or his or her
partner are taken into account. Capital under
6,000 does not affect the benefit. Capital in
excess of this lower limit (and below the
threshold) attracts a tariff income.
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Income Support Jobseekers Allowance (IB)

• A passport to other help
• Getting IS/JSA(IB) entitles the claimant and/or
  family to
• Maximum (eligible) HB and CTB
• Travel costs to hospital
• Free school meals
• Free prescriptions
• Free dental treatment and eye tests
• Vouchers towards the costs of glasses

In addition, IS/JSA(IB) claimants are able to
access the discretionary part of the Social
Fund, and the regulated Social Fund.
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Working Tax Credit and Child Tax Credit
Tax Credits are means tested benefits
administered by Her Majesty's Revenue and
Customs. Although similar in many respects to
IS/JSA, there are some significant differences.

• Awards are assessed and paid on a yearly basis in
  line with the tax year.
• Income calculations will be based on the income
  for the previous tax year, unless the income for
  the current year is lower or they have just
  started work.
• They have less stringent rules regarding changes
  in circumstances

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Working Tax Credit and Child Tax Credit

• Child Tax Credit
• To be eligible for CTC the claimant must
• Be responsible for a child under 16 (or under 19
  where the child is in full time non-advanced
  education, or registered with the Careers
  Service/Connexions), and
• Satisfy the residency criteria (present
  ordinarily resident with no restrictions on their
  right to enter/remain in the UK).

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Working Tax Credit and Child Tax Credit

• Working Tax Credit
• To be eligible for WTC the claimant must
• be over 16 working for more than 16 hours per
  week and have a disability or children, or
• be over 25 and working at least 30 hours per
  week, and in either instance,
• Satisfy the residency criteria (present
  ordinarily resident with no restrictions on their
  right to enter/remain in the UK).

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Working Tax Credit and Child Tax Credit

• The Tax Credit Calculation
• As with Income Support, the amount of the award
  is calculated by comparing the income coming into
  the household to a pre-determined assessment of
  needs.
• Firstly, the maximum Tax Credit award is
  calculated, made up of a series of components or
  elements similar to the personal allowances and
  premiums used to calculate IS/JSA(IB).
• The household income is calculated the same way
  as it is for IS/JSA(IB) except,
• Child Benefit is disregarded, and
• the gross income is taken into account.

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Working Tax Credit and Child Tax Credit
The Tax Credit Calculation A threshold figure is
then deducted from the gross income amount and a
taper applied to the balance. This adjusted
amount is then used to calculate the award.
Reporting changes in circumstances Changes in
the household or changes in the childcare costs
in excess of 10 must be reported within three
months. Changes in income are not required to
be reported, as the calculation is based on the
previous years income. However, If the income
increases by more than 25,000 then the award
will be adjusted.
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The Social Fund
The Social Fund is a government fund that exists
to make one-off payments for exceptional
needs. It is divided into two distinct parts The
Regulated Social Fund - makes payments for
maternity expenses, funeral expenses, periods of
cold weather and winter fuel. The fund is
governed by regulations, which means that a
claimant satisfying the qualifying conditions
will be legally entitled to a payment. All
decisions are subject to an appeal. The
Discretionary Social Fund provides grants and
loans to meet a variety of other needs. There is
no legal entitlement to payments, which are
discretionary and budget limited. There is also
no right of appeal, only of review.
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The Social Fund

• The Regulated Social Fund
• The regulated social fund cover 4 areas
• Sure Start Maternity Payments
• Funeral Expenses
• Cold Weather Payments
• Winter Fuel Payments

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The Social Fund

• Sure Start Maternity Payments
• To qualify the claimant (or partner) must
• Be in receipt of a qualifying benefit, and
• Have a member of the family who is pregnant and
  within 11 weeks of the EDC, or
• Have a member of the family who has given birth
  within the last 3 months, or
• Have adopted a child under one within the last 3
  months, or
• Have been granted a parental order for a child
  born to a surrogate mother within the last 3
  months, and
• Have received health welfare advice from a
  health professional

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The Social Fund

• Funeral Payments
• To qualify the claimant (or partner) must
• Be in receipt of a qualifying benefit, and
• Be eligible as someone who can be treated as
  being responsible for the funeral expenses,
• The funeral has or will take place within the UK
  (unless the claimant or partner are covered by
  certain EC regulations, when the funeral can take
  place within an EEA state),
• The deceased was ordinarily resident in the UK
  when he/she died,
• The claim has been submitted within 3 months of
  the funeral

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The Social Fund

• Cold Weather Payments
• To qualify the claimant (or partner) must
• Be in receipt of IS or JSA(IB) or Pension Credit,
  and
• Be responsible for a child under 5, or,
• Be receiving a pensioner or disability related
  premium

A CWP is a fixed payment of 8.50, awarded for
each period of 7 consecutive days when the
temperature drops below freezing.
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The Social Fund

• Winter Fuel Payments
• To qualify the claimant must
• Be aged 60 or over by the 3rd Monday in Sept, and
  in that week
• Be ordinarily resident within the UK,
• Not be in prison,
• Not have been in hospital for 52 weeks or more,
• Not have been in residential care for 13 weeks
  and receiving PC, IS or JSA(IB),
• Not be subject to immigration control.

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The Social Fund

• The Discretionary Social Fund
• The discretionary social fund cover 3 areas
• Community Care Grants
• Budgeting Loans
• Crisis Loans

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The Social Fund
Community Care Grants Community Care Grants
(CCGs) are non-repayable grants to help people
live independently in the community. CCGs are
intended to assist someone to establish
themselves in the community following a stay in
institutional or residential care, or to help
someone remain in the community rather than enter
institutional or residential care. To qualify for
a CCG the claimant must either be in receipt of
IS, JSA(IB) or PC, or expect to be entitled on
leaving institutional or residential
accommodation. If the claimant is still in
institutional or residential care a claim will
not be accepted unless the claimant is due to be
discharged within the next 6 weeks.
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The Social Fund
Budgeting Loans Budgeting loans can only be paid
for certain kinds of expenses. It is not
necessary to specify the item but it must fall
into one of the specified categories. To qualify
the claimant must be in receipt of IS, JSA(IB) or
PC, and have been in continuous receipt for the
last 26 weeks. The amount of any budgeting loan
will be determined by two factors, the claimants
weighting and the local budget. The weighting
given to an application is based on the
claimants personal circumstances, taking into
account the length of time on benefit and the
number of people in the household.
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The Social Fund

• Crisis Loans
• A crisis loan made be paid to meet expenses in
  an emergency, or as a consequence of a disaster,
  provided that the provision of such assistance is
  the only means by which serious damage or serious
  risk to the health and safety of that person, or
  a member of his family may be prevented.
• To be eligible a claimant must satisfy all the
  following conditions
• The claimant must be over 16
• The claimant is not in a residential care home,
  is not a prisoner in custody or released on
  temporary license, is not a member of a religious
  order and is not in full-time education
• The claimant is likely to be able to repay the
  loan

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Contributory Benefits
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Contributory Benefits
Contributory benefits are financed from the
National Insurance fund. Entitlement to these
benefits and in some cases the amount paid -
depends upon the contribution record of the
claimant or, in the case of bereavement benefits
or category B pensions, those of the claimants
spouse.
There are 6 different classes of contribution,
and not all classes of contribution count for
all benefits
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Incapacity Benefit
Incapacity Benefit (IB) is a benefit paid to
people who are incapable of work and who have
paid or been credited with sufficient NI or who
became incapable of work in youth.

• To claim IB the claimant must initially be
• Incapable of work
• Aged over 16
• Within a period of incapacity for work.
• Under pension age
• Present and ordinarily resident
• Not entitled to SSP

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Incapacity Benefit

• In addition, the claimant must either
• Fulfil the contribution conditions
• Condition one - the claimant has, in one of the
  last 3 years, paid contributions equivalent to
  that due on earnings which are at least 25 times
  the lower earnings limit, and
• Condition two The claimant has paid or been
  credited with contributions equivalent to that
  due on earnings which are equal to 50 times the
  lower earnings limit in each of the two years
  immediately prior to the benefit year the claim
  is made, or
• Be aged under 20 at the start of the incapacity
  for work (or under 25 if previously in FTE or
  training), and have been incapable for 28 wks
  immediately prior to the first day of the award.

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Incapacity Benefit
Incapacity Benefit is paid at three rates,
depending on the length of time that the claimant
has been entitled (or treated as being entitled).

• The lower rate of short term IB is paid for the
  first 28 weeks of entitlement
• The higher rate of short term IB is paid after 28
  weeks
• Long term IB is payable after 52 weeks of
  entitlement

Claimants who are terminally ill or are in
receipt of the higher rate of the care component
of DLA move onto the long term rate of IB after
28 weeks. Additional amounts are payable for
dependents and an occupational pension may
affect the amount paid.
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Incapacity Benefit
The Personal Capability Assessment At some
stage almost everybody in receipt of IB will be
required to undergo a personal capability
assessment (PCA). A PCA (previously known as the
all work test) assesses a claimants ability to
perform a range of activities. These activities,
or descriptors, relate to both a physical and a
mental capacity to complete tasks. Some people
are exempt from the assessment, for example those
in receipt of the higher rate care component of
DLA, or assessed as 80 disabled, or terminally
ill, or registered blind. The claimant may also
be exempt if he or she suffers from a listed
severe medical condition.
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Incapacity Benefit

• The Physical descriptors are
• Walking on level ground with a walking stick or
  other aid if normally used,
• Walking up and down stairs,
• Sitting in an upright chair with a back but no
  arms,
• Standing without the support of another person or
  the use of an aid except a walking stick,
• Rising from sitting in an upright chair with a
  back but no arms without the help of another
  person,
• Bending and Kneeling,
• Manual dexterity,

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Incapacity Benefit

• The Physical descriptors are
• Lifting and carrying by the use of the upper body
  and arms,
• Reaching,
• Speech,
• Hearing with a hearing aid or other aid if
  normally worn,
• Vision in normal daylight or bright electric
  light with glasses or other aid to vision if such
  aid is normally worn,
• Continence other than enuresis,
• Remaining conscious without having epileptic or
  similar seizures during waking moments.

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Jobseekers Allowance (contributory based)

• The basic qualifying criteria are
• The claimant is not in full-time work (i.e. 16
  hours or more).
• The claimant is capable of work.
• The claimant is below pensionable age.
• The claimant is ordinarily resident.
• The claimant satisfies the labour market
  conditions.
• The claimant satisfies the contribution
  conditions.

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Jobseekers Allowance (contribution based)
Contribution based JSA is paid for up to six
months only. It is paid for the claimant only,
there is no increase for a partner or dependant
children. If the claimant is in receipt of an
occupational pension in excess of 50.00 per
week, the benefit is reduced by the amount over
this figure
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Retirement Pensions

• There are three main categories of retirement
  pension
• Category A pension, which is payable on the
  claimants own national insurance contribution
  record.
• Category B pension, which is payable by virtue of
  your spouses national insurance record and is
  only available to married women, widows or
  widowers.
• Category D Pension, which is a non-contributory
  pension payable to those over 80.

In addition a claimant may be entitled to a
graduated pension, based on having paid
additional contributions. This can be paid to
increase any of the above pensions or paid in
its own right.
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Universal Benefits
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Universal Benefits
Universal or non-contributory benefits are
intended to meet particular needs which are
generally permanent or long term, e.g. due to a
disability or responsibility for children.
Payments are made for as long as the condition
exists irrespective of a claimants means,
ability to work or their contribution record.
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Disability Living Allowance
Disability Living Allowance (DLA) is a non
means-tested and non-contributory benefit for
people with mobility and/or care needs.

• To qualify the claimant must
• Be under 65
• Be present and ordinarily resident
• Have been resident for a total of at least 26
  weeks in the last 52
• Not be subject to immigration control.

The care and mobility needs must have existed
for the 3 months prior to the claim, and be
expected to last for at least a further six
months (except for the terminally ill).
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Disability Living Allowance
The benefit is split into two components
depending on the nature of the disability, with
separate additional qualifying criteria

• For the care component
• Need personal care or supervision, or
• Be terminally ill
• For the mobility component
• Be at least 3 years old (5 years for the lower
  rate)
• Be treated as virtually unable to walk, or be
  unable to go out without guidance or supervision.

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Attendance Allowance
Attendance Allowance (AA) is a non means-tested
and non-contributory benefit for older people
with care needs.

• To qualify the claimant must
• Be over 65
• Be present and ordinarily resident
• Have been resident for a total of at least 26
  weeks in the last 52
• Not be subject to immigration control.

The care needs must have existed for the 6
months prior to the claim, and be expected to
last for at least a further six months (except
for the terminally ill).
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Disability Living Allowance
Care Component
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Attendance Allowance
Care Component
Lower
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Disability Living Allowance
Mobility Component
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Decision Making and Appeals
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Social Security Benefit Decisions
All Social Security Benefits (with the exception
of the Discretionary Social Fund) are governed by
rules and conditions which have the force of law.
Consequently anyone who makes a claim for
benefit, and fulfils the specified conditions,
has a legal entitlement to that benefit. They
also have a right to receive a notice outlining
how a decision was made. If a claimant is unhappy
with a decision they can challenge it. In July
1999 the decision making rules were amended for
the majority of benefits in order simplify the
process. There is now a uniform procedure that
should be followed.
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Social Security Benefit Decisions
Notification
Explanation
Reconsideration
Appeal Tribunal
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Hierarchy of decisions

• Local Authority/DWP/HMRC/Jobcentre Plus
• Appeal Tribunal
• Commissioners
• Court of Appeal
• House of Lords
• European courts