20 October 2010

Hands shaking by demolished wallThe first details of cuts to welfare benefits in the spending review are now available.  They are still lacking in detail, however, and we have no further information about the new DLA medicals.

Employment and Support Allowance
Contribution-based ESA will be time-limited to one year for people in the work-related activity group.

This means that many people with savings, pensions or a partner who works will lose their ESA after one year as they may not be eligible for income-related ESA.  As JSA is also means-tested and requires a claimant to meet work-seeking conditions many people who lose their contributory ESA will not be eligible to move onto JSA afterwards.

People who are in the support group will not lose their contribution-based ESA for as long as they manage to remain in the support group.

It is not stated whether this will apply only to new claimants or to existing claimants as well – including incapacity benefit claimants awaiting assessment for ESA.  However, the lack of any mention of transitional relief suggests that it will apply to existing claimants.

The start date is not given.  But the table listing savings at page 12 of the spending review document gives the first savings as coming in 2012-13, suggesting that the 12 month time limit will begin to run from April 2011.

Disability Living Allowance
DLA care component is not payable to people in residential care in most circumstances, but the mobility component is.  However, the chancellor has announced that the mobility component will also cease to be payable from 2012 -2013.

It is hard to imagine an easier – or more shameful - target for spending cuts than people who are so sick or disabled that they are in long-term residential care and who also have limited mobility.

No details of the new points system and universal testing of DLA claimants was given, for this we will have to wait for the white paper later this autumn.

Benefits cap
From 2013 the maximum benefits a household can get will be around £500 a week, whilst for single adults the maximum will be £350 a week, including housing costs.  This will not apply where anyone in the household receives DLA, working tax credit or war widows pension.

Other measures
Other measures include:

  • The age threshold for the shared room rate for housing benefit will rise from 25 to 35.
  • Spending on council tax benefit will be reduced by 10%, though it’s not clear how this is to be achieved.
  • The temporary increase for cold weather payments to £25 for each seven days is to be made permanent.
  • An increase in working hours for eligibility for working tax credit and a reduction in the percentage of childcare costs that can be met from 80% to 70%.
  • The basic state pension will rise by a minimum of 2.5 per cent each year.  But both women and men will reach pension age at 65 from 2016 and the pension age will rise to 66 by 2020.
  • Child benefit will be removed from higher rate tax payers from January 2013.
  • The chancellor also confirmed that the new universal credit will be phased in over the next two parliaments, with £2 billion being set aside to pay for its introduction. 
  • The Work Programme to get the long-term unemployed and the sick and disabled into work will also be introduced, with private and voluntary sector companies being paid according to how much they save the DWP in benefits payments.

We’ll bring you more details as they become available. 

The spending review documents can be downloaded from this page.


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