Policy

Simplifying the welfare system and making sure work pays

Issue

Many people on benefits believe that the financial risks of moving into work are too great. For some, the gains from work, particularly if they work part-time, are small, and any gain can easily be cancelled out by costs such as transport.

The government believes that the current system is too complex and there are insufficient incentives to encourage people on benefits to start paid work or increase their hours.

We are aiming to make the benefit system fairer and more affordable to help reduce poverty, worklessness and welfare dependency and to reduce levels of fraud and error.

Actions

We are reforming the welfare system to help more people to move into and progress in work, while supporting the most vulnerable.

Introducing Universal Credit

We are introducing Universal Credit in 2013 for people who are looking for work or on a low income. Universal Credit brings together a range of working-age benefits into a single payment. It will:

  • encourage people on benefits to start paid work or increase their hours by making sure work pays
  • smooth the transitions into and out of work
  • simplify the system, making it easier for people to understand, and easier and cheaper to administer
  • reduce the number of people who are in work but still living in poverty
  • reduce fraud and error

Introducing Personal Independence Payment

Disability Living Allowance (DLA) is a tax-free benefit for children and adults who need help with personal care or their mobility needs. It was introduced in 1992 and had not been fundamentally reviewed or reformed since. There is confusion about the purpose of the benefit, it is complex to claim and there is no systematic way of checking that awards remain correct.

We have introduced a new benefit called Personal Independence Payment (PIP) from 8 April 2013 that will eventually replace DLA for people aged 16 to 64. PIP helps towards some of the extra costs because of a long term ill-health condition or disability. It’s based on how a person’s condition affects them, not the condition they have. It’s designed to be a more sustainable benefit and make sure support continues to reach those who face the greatest challenges to taking part in everyday life.

Introducing the Jobseeker’s Allowance Claimant Commitment

From 14 October 2013 we are introducing a new Claimant Commitment that outlines what jobseeking actions a claimant must carry out while receiving Jobseeker’s Allowance. The Claimant Commitment is due to be in place across the country by spring 2014 and brings Jobseeker’s Allowance into line with claimants’ responsibilities under Universal Credit.

Introducing a cap on the amount of benefits working age people can receive

In 2013 we introduced a cap on the total amount of benefits that working age people can receive so that households on working age benefits can no longer receive more in benefits than the average wage for working families.

Reassessing incapacity benefits recipients for Employment and Support Allowance

Employment and Support Allowance (ESA) replaced a range of incapacity benefits in 2008 for customers making a new claim because of illness or incapacity.

From October 2010, those people who are still receiving the older style incapacity benefits are being reassessed and moved to ESA or other benefits more appropriate to their circumstances. This exercise will continue until 2014.

Improving the Work Capability Assessment

Anyone claiming ESA will have a Work Capability Assessment to assess their capability for work. To ensure that the Work Capability Assessment is as fair and accurate as possible, we are continuing to review and improve it.

Making sure housing support is fair and affordable

We are creating a fairer approach to the way we pay housing costs to help bring stability to the housing market and improve incentives for people to find work or increase their hours.

From April 2013 we have introduced new rules for the size of accommodation that Housing Benefit, and then Universal Credit, will cover for working age tenants renting in the social sector. This makes the rules consistent with those that apply to tenants renting in the private rented sector.

Increasing penalties for benefit fraud

We introduced tougher penalties for people who commit benefit fraud in the Welfare Reform Act 2012. From April 2013, the changes affect when benefit can be reduced or stopped as a penalty and how penalties increase for persistent offenders.

Background

In the coalition agreement we announced our intention to simplify the benefit system to encourage people to move into work and make sure that those able to work must show a willingness to work as a condition of receiving benefits.

In ‘Universal Credit: welfare that works’, published on 11 November 2010, we set out plans to introduce Universal Credit in 2013 to simplify the benefits system, make work pay and reduce worklessness and poverty.

Reducing the number of days lost to sickness absence

There is information about how we are reducing the number of days lost to sickness absence in our policy about helping people to find and stay in work.

Welfare reform communications toolkit

Our welfare reform communications toolkit helps explain how DWP is changing the welfare system. It covers:

  • what we are changing
  • why we are making the changes
  • when we are making the changes

Who we’ve consulted

We consulted on proposals to simplify the benefits system to improve work incentives in ’21st century welfare’ between 30 July and 1 October 2010.

We consulted on proposals to replace Disability Living Allowance (DLA) with a new benefit – Personal Independence Payment between 6 December 2010 and 18 February 2011.

We sought views on initial proposals for the draft assessment criteria for Personal Independence Payment between 9 May and 31 August 2011.

Following feedback on the initial proposals, we revised the draft assessment criteria for Personal Independence Payment and consulted on the second draft of the assessment criteria for Personal Independence Payment between 16 January and 30 April 2012.

We consulted on proposals on some of the rules for claiming Personal Independence Payment, Disability Living Allowance, Carer’s Allowance and Attendance Allowance between 26 March and 30 June 2012.

From 15 June 2012 to 27 July 2012 the Social Security Advisory Committee (SSAC) consulted on the following draft Universal Credit and related regulations:

  • Universal Credit Regulations 2012
  • Universal Credit, Personal Independence Payment and Working-age Benefits (Claims and Payments) Regulations 2012
  • Housing Benefit (Benefit Cap) Regulations 2012

On 10 December 2012 we published the SSAC’s report on the consultation together with the government’s response.

From Monday 24 June to Monday 5 August, we ran a further consultation on the mobility component of PIP to give everyone the opportunity to contribute their views.

Impact

We have published a number of impact assessments and equality impact assessments covering the measures to simplify the welfare system included in the Welfare Reform Act 2012.

The department continues to carry out analysis of the likely impacts of its policies on groups such as disabled people.

Bills and legislation

The changes to the welfare system are contained in the Welfare Reform Act 2012. The main elements of the act are:

  • the introduction of Universal Credit to provide a single payment that will improve incentives to work
  • a stronger approach to reducing fraud and error with tougher penalties for the most serious offences
  • a new ‘claimant commitment’ showing clearly what is expected of claimants while giving protection to those with the greatest needs
  • reforms to Disability Living Allowance, through the introduction of Personal Independence Payment to meet the needs of disabled people today
  • creating a fairer approach to Housing Benefit to bring stability to the market and improve incentives to work
  • preventing abuse of the Social Fund system by giving greater power to local authorities
  • reforming ESA to make the benefit fairer and to ensure that help goes to those with the greatest need
  • changes to support a new system of child support which puts the interest of the child first

We have published and will continue to publish regulations relating to the Welfare Reform Act 2012.

We have also published policy briefing notes giving more information about the main elements of the act for:

We have published more information about changes to Employment and Support Allowance in 2012 under the Welfare Reform Act and some commonly asked question and answers.

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