Will Your Customers Be Better or Worse Off Under Welfare Reforms

Policy in Practice
ANALYSING SR2015: WILL YOUR
CUSTOMERS BE BETTER OR
WORSE OFF UNDER UNIVERSAL
CREDIT?

www.policyinpractice.co.uk
Housekeeping
• Audio check
• Please ask questions
• Polls and a survey
• Finish by 11:30

Agenda
• Introduction
• The national impact of welfare reforms:
• Universal Credit
• Benefit Cap
• Tax Credits
• The local impact of welfare reforms, on each of your residents
• The software that makes it happen
• Questions

Speakers
Deven Ghelani Peter Carter

We make the welfare system
simple to understand, so that
people can make the decisions
that are right for them

SOFTWARE
individual impact
CONSULTANC
local impact
POLICY
national impact

“The mitigation measures, a
higher minimum wage, a higher
tax allowance and free childcare,
will offset the cuts to tax credits.”
Policy in Practice
seeks frontline
feedback to help
shape policy

Policy in Practice
analysis and news
coverage

Leading Lights Network
March 2016

Never mind the U-turn, here comes Universal Credit
• U-turn on tax credits but savings will still be made
• Universal Credit rollout continues
• Even more complex picture now
• Some people gain but some people lose badly
• Understanding the combined impact of all reforms is hard
• But understanding individual circumstances is critical

Focus on two policies

Universal Credit

Work Allowances under Universal Credit have been
cut significantly
2015 2016 Change
Single person £1,332.00 £0.00 1,332.00-£
Lone parent (with housing support) £3,156.00 £2,304.00 852.00-£
Lone parent (no housing costs) £8,808.00 £4,764.00 4,044.00-£
Couple without children £1,332.00 £0.00 1,332.00-£
Couple with children (with housing support) £2,664.00 £2,304.00 360.00-£
Couple with children (no housing costs) £6,432.00 £4,764.00 1,668.00-£
Disabled people (with housing support) £2,304.00 £2,304.00 -£
Disabled people (no housing costs) £7,764.00 £4,764.00 3,000.00-£
Work allowances in Universal Credit have been cut

You have to be in work to lose out
The loss from lower work allowances
depends upon your earnings
Income Loss
on Universal
Credit, below
NI threshold
Income Loss
for NI only
Income Loss at
basic tax rate
Income Loss
individual for
people no
longer on UC
Effective Tax Rate 65.0% 69.2% 76.2% 32.0%
Single person 865.80-£ 921.74-£ 1,014.98-£ 426.24-£
Lone parent (with housing support) 553.80-£ 589.58-£ 649.22-£ 272.64-£
Lone parent (no housing costs) 2,628.60-£ 2,798.45-£ 3,081.53-£ 1,294.08-£
Couple without children 865.80-£ 921.74-£ 1,014.98-£ 426.24-£
Couple with children (with housing support) 234.00-£ 249.12-£ 274.32-£ 115.20-£
Couple with children (no housing costs) 1,084.20-£ 1,154.26-£ 1,271.02-£ 533.76-£
Disabled people (with housing support) -£ -£ -£ -£
Disabled people (no housing costs) 1,950.00-£ 2,076.00-£ 2,286.00-£ 960.00-£
• The amount you stand to lose depends on your earnings, and your effective tax rate
• People on Universal Credit earning below the income tax and NI threshold pay back 65p in every £1 lost through
the work allowance

75,000 people in UK who are in work and on
Universal Credit will be worse off in April 2016
• 141,000 people are on Universal Credit today
• 46,000 (one third) of them are in work
• 20,000 new people move on to Universal Credit
each month
Universal Credit Caseload Statistics

House of Lords debate on tax credits

Mitigation measures in 2020 won’t offset the losses
35%
36%
29%
Worse off
Better off
Same
This chart compares UC in 2020 against tax
credits today.
It takes into account:
• National Living Wage
• Higher personal tax allowance
36% of households in work today will be
better off under UC in 2020
29% of households in work today will stay the
same under UC in 2020
35% of household in work today would be
worse off under Universal Credit in 2020
This figure falls to 30.5% if we take into
account childcare for 3-4 year olds.

Fresh analysis: The behavioural response
• For people who are in work, and worse off under Universal Credit
• The behavioural response required will be:
10.9m
hours /
week
Behavioural change is more
important than ever

52% of households working 16 hours or more will be
worse off under UC
15%
60%
23%
30%
23%
28%
24%
11%
57%
51% 50%
52%
0%
10%
20%
30%
40%
50%
60%
70%
Out of work 1-15 16-23 24-29 30-39 40+
Percentageofhouseholds
Weekly hours worked
Distribution of households per hours worked
Better off under UC in 2020 Worse off under UC in 2020
• People working in mini-jobs will be better off under Universal Credit

“…by not proceeding with the changes to the tax credit threshold and
taper announced at the Summer Budget 2015... …the OBRs
assessment is that the cap is not met in 2016-17, 2017-18 and 2018-
19”
The Chancellor’s Welfare Spending Cap depends partly upon the
rollout of UC
By the 2020 GE more people in work will be on Universal Credit, and
their circumstances will change.
They will be worse off.
The Chancellor is on a new collision course with
backbenchers

It isn’t all about work incentives:
Some rules of thumb for the out of work award...
• Winners and loser vary by both income level and household type. Every household type includes families that
will see a higher entitlement under Universal Credit and families that will see a lower entitlement under Universal
Credit.
• Some household types will see a change in their base level of entitlements under Universal Credit. This will cause
some households to be better off and others to be worse off:
• The simplification of under 25 rates under Universal Credit will mean some household types will have a higher
entitlement while others will have a lower entitlement:
• People under 25 without children are not eligible for Working Tax Credit under the current system. Under
Universal Credit they will be eligible for in-work support, improving pockets and prospects.
• Lone parents between 18 and 25 will no longer be entitled to the over-25 rate of personal allowance as
they do under the current system. This change will mean a loss of around £65 per month and is expected
to impact approximately 240,000 young single parent families.
• Couples where at least one partner is under 18 will have a higher entitlement under Universal Credit.
• Couples where both partners are over 18 but under 25 will have a lower entitlement under Universal
Credit.
• The simplification of disability entitlements
• Disabled children that are not entitled to the highest rate care component of Disability Living Allowance
(DLA) or are registered blind could lose approximately half of the disability element of Child Tax Credit, a
loss of around £128 per month.
• Universal Credit will abolish the Severe Disability (SDP) and Enhanced Disability (EDP) Premiums for
disabled adults in an effort to simplify the system. Those in the ESA Support Group (the Lower Capability
for Work-related Activity element of Universal Credit) will benefit and see their entitlement for this
element rise from £151 to £304 per month.

The impact of the benefit
cap

The Benefit Cap at £26,000:
UK, nationwide level
Number of households affected nationwide:
< 1,000
1,000 - 3,000
3,000 - 6,000
6,000-12,000
> 12,000
Wales, East, E Mids, Yorkshire
SW, W Mids, NE, Scotland
SE, NW
none
London

UK, nationwide level
Number of households affected nationwide:
none
none
Wales
SW, E Mids, NE, Scotland
London, SE, East, W Mids, NW, Yorkshire
< 1,000
1,000 - 3,000
3,000 - 6,000
6,000-12,000
> 12,000

Birmingham, city level
Number of households affected within the city:
ten
three
two
five
fourteen
six
0
1 - 50
51 - 100
101 - 250
251 - 400
401 - 550

Birmingham, ward level
Number of households affected within each
neighbourhood (LSOA) within a ward:
none
five
twelve
five
six
0
1 - 10
11 - 13
14 -18
19 - 30

Birmingham, street level
Individual households can be identified
within a ward, at street level

35,786
153,446
At £26,000 At £20,000 / £23,000
The Benefit Cap
A lower benefit cap will
affect 4x as many
households nationwide

The combined impact on
households is typically
changing, complex and
confusing

How do you decide who
receives what support?

Policy in Practice’s approach
Your SHBE data
Our Universal Benefit
Calculator
A detailed impact
assessment - who is
impacted and how?
1.Use local data and
insights to inform better
decision making
2. See the impact of
specific and cumulative
reforms at an aggregate
and household level
3. Inform targeted and
tailored local welfare
support programmes

Benefit Cap
Under-
occupying
LHA cap
Council Tax
Reduction
CTRS
Lower UC Higher UC
Better off in
Work
# of households affected by
multiple reforms
No impact 1 reform
2
reforms
AA1 0 0 7 20 9 16 32 8 21 7
AA4 1 0 59 38 21 25 55 10 44 25
AA11 1 19 45 99 68 61 143 47 113 47
AA16 0 0 0 0 0 1 1 1 0 0
AB1 0 16 25 74 30 46 99 36 70 34
AB2 2 39 89 224 37 123 246 109 189 96
AB3 0 31 41 140 38 88 134 78 128 55
AB4 0 75 166 341 106 190 456 148 327 163
AB5 3 129 73 336 136 180 432 150 318 155
AB6 14 266 630 1355 406 899 1456 834 1354 575
AB7 17 629 346 1839 780 1038 2235 822 1636 838
AB8 43 442 1083 2662 1140 1306 2786 912 2119 1346
AB9 51 968 979 3466 1481 1614 3103 1411 3085 1676
Who has been
impacted by reforms
to date?
What will be the
impact of
Universal Credit?
Who has been hit by
multiple reforms?
The depth of our analysis goes even
deeper, to household level
Explain a complex picture to Cabinet

If you had these insights
too what would you be
able to do differently?

169 161 115 85 76 114 23 12 1
2,263
951 955
756
1,003
1,153
200
3 1
£0-20 £21-40 £41-60 £61-80 £81-100 £101-150 £151-200 £201-300 £301+
NumberofCases
Weekly Benefit Cap Amount
£26k £20k
Recommendation:
Take proactive steps
• Focus intensive
outreach and
support on those
most severely
impacted
Reduction of the Benefit Cap:
Weekly Benefit Cap Amount

Over to Peter for a live case study

Universal Benefit and Budgeting Calculator

Questions?

Next steps
1. Get a sample impact assessment report for our Welfare Reform
Impact Analysis
2. Get a tailored demo and pricing for our Universal Benefit
Calculator software
3. Visit our website to download:
I. Benefit Cap White Paper
II. Customer case studies
III. Flyers

Thank you
deven@policyinpractice.co.uk
07863 560677
@deven_ghelani
peter@policyinpractice.co.uk
07805 254371
@petersgc_

Will Your Customers Be Better or Worse Off Under Welfare Reforms

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (7)

Similar to Will Your Customers Be Better or Worse Off Under Welfare Reforms

Similar to Will Your Customers Be Better or Worse Off Under Welfare Reforms (20)

More from Policy in Practice

More from Policy in Practice (19)

Recently uploaded

Recently uploaded (20)

Will Your Customers Be Better or Worse Off Under Welfare Reforms

Editor's Notes