Changes to Housing Benefit April 2011
The government plans to change the rules on how housing allowance is calculated. If you are claiming housing benefit, the amount you receive in the future is likely to be reduced. If you claim before April 2011 you will usually not be affected straight away. New rules will apply to new claims made after 1st April 2011. If you applied before April 2011 and there are changes in your circumstances that require your claim to be reassessed, you will be affected by the new rules. If you do not have any changes in your circumstances, then your claim will be reassessed on the anniversary of your claim. For example, if you claimed in June 2010 your claim will be re assessed June 2011. Any additional shortfall will have to be made up from other income, savings or you will have to move to a more affordable property.
Changes to Housing Benefit April 2011
Some measures to be implemented in April 2011:
• Instead of being set at the median or the middle value of private rents in the area, it will be set at the 30th percentile. This means, local housing allowance rates will reduce to a lower amount so that about 3 in 10 properties for rent in the area should be affordable to people on Housing Benefit rather than 5 in 10 properties as it is now.
• The introduction of a cap on the amount of LHA payable: where the new 30th percentile rate would exceed the cap, the cap has been applied in the calculations for the table (this only applies to a few areas in London)
• The removal of the 5+ bedroom rate: the top rate will now be the 4 bedroom rate. This is why the drops for those currently on the 5 bedroom rate are higher.
• There will be an end to excess payments. If your rent is lower than the local housing allowance, under the current system you can be paid local housing allowance up to £15 a week more than your rent and keep the difference. This will end as of 1st April 2011. If you are already claiming, this will affect you the next time your claim is reassessed.
You are entitled to housing benefit to assist you to pay your rent if you are a tenant and are receiving welfare benefits or are on low income. Once you have made a claim, the council normally has to make an interim payment of housing benefit within 14 days. This is sometimes called a payment on account.
The only reason that payment can be delayed beyond 14 days is if the delay is caused because you did not provide the council with the information it asked for. An interim payment will allow you to pay off some of the arrears and may stop your landlord from trying to evict you. Contact your council if you don’t get this payment after 14 days and get advice if necessary.
If housing benefit doesn’t pay the full amount of the rent and you cannot afford to pay the difference between your rent and your housing benefit, it may be possible for you to apply for an extra payment from the council. This is called a discretionary housing payment (DHP). The council will decide whether you should get one based on your particular circumstances. Your local Shelter advice centre or Citizens Advice can help you apply and may be able to help you convince the council that you should get a payment.
Below are some of the further cuts that may affect you announced by Chancellor, George Osbourne, in October 2010. Read the full Guardian article.
• Withdrawing the employment and support allowance (ESA), which will eventually replace incapacity benefit, after one year from one million claimants. The ESA is broken into two categories: the support group, which includes the severely disabled and terminally ill who have no expectation of returning to work; and the work related activity group who need time before they can start work. Withdrawing ESA from one million in this group, 60% of whom would return to work within a year anyway, will save £2bn a year by 2014-15.
• Increasing the age threshold for the shared room rate (SRR) claimed by single people. The present maximum housing benefit single people under the age of 25 can receive is limited to the rate for a single room in a shared house. The age limit will be increased to 35 from April 2012, saving £215m a year by 2014-15.
• Council tax benefit spending will be reduced by 10% from 2013-14, saving £490m by 2014-15. Local authorities will be given greater flexibility to tailor the scheme to their needs.
• Ending the mobility component of the disability living allowance (DLA) from residents in care home from October 2012. This will save £135m by 2014-15 and will affect 58,000 people claiming the DLA who receive an average of £33.40 a week.
• Freezing the maximum savings credit award in the pension credit for four years from 2011-12, affecting 1.8m households and saving £330m a year by 2014-15. This will freeze to £20.52 for a single pensioner and to £27.09 for a couple the maximum award paid to people aged over 65 on modest incomes with retirement savings.
• Saving £625m a year by 2014-15 by freezing the basic and 30-hour element of the working tax credit for three years from April 2011 after which they will be uprated by the consumer prices index, rather than by the more generous retail prices index.
• Saving £390m a year by 2014-15 by changing the rules so that couples with children must work 24 hours between them, with one partner working at least 16 hours a week, in order to claim the working tax credit.
• Reducing the percentage of childcare costs parents can claim through the childcare element of the working tax credit from 80% to its previous level of 70%. This will apply from 2011-12 and will save £385m by 2014-15.
The chancellor also confirmed his announcement at the Tory conference of a cap from 2013 to ensure that no family out of work will receive more in benefits – around £500 a week – than the average working family. This will save £270m a year by 2014-15. It will not include war widow pension claimants and those claiming disability living allowance and working tax credit.
Osborne said: “Welfare spending now accounts for one third of all public spending. Benefit bills have soared by 45% under the previous government. In some cases, the benefit bill of a single out-of-work family has amounted to the tax bills of 16 working families put together. This is totally unsustainable and unfair.”
Ian Duncan Smith, the work and pensions secretary, will replace all working age benefits and tax credits with a single universal credit. This will be introduced over two parliaments and will require £2bn in the 2011-15 spending period.
Osborne balanced the cuts by announcing measures to help low-income families with children. These are:
• Increasing the child element of the child tax credit above inflation by a further £30 in 2011-12 and a further £50 above indexation in 2012-13. This will cost £560m by 2014-15 and will, according to Osborne, mean annual increases of £180 and then £110 above the level promised by the last government.
• Increasing cold weather payments to older and disabled people on income related benefits to £25, at an annual cost of £50m from 2011-12.