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Welfare Reform on the Web (March 2012): Social security - UK

Benefit payments could be set by region

J. Kirkup

Daily Telegraph, Jan. 30th 2012, p. 4

The Labour Party proposed setting a regionalised cap on housing benefits payments which would depend on average local housing costs. It argued that a regionalised cap would ensure that the benefits system always provided the right incentive for people to seek work instead of claiming. In a BBC interview, the work and pensions secretary indicated that he would be willing to discuss setting all benefits payments regionally, meaning lower welfare payments in less expensive parts of the country.

Benefits families could pay off 1m mortgage

T. Whitehead

Daily Telegraph, Feb. 27th 2012, p. 1

Figures released by the Department for Work and Pensions under the Freedom of Information Act showed that 30 families were receiving 1,500 per week in housing benefit while another 60 were raking in 5,000 per month. All the claimants lived in the London boroughs of Kensington and Chelsea or Westminster. Critics said that the figures showed that the system was unfair and punished working families who could not afford such rents.

Cameron uses privilege rule to prevent Lords blocking welfare reform

T. Ross

Daily Telegraph, Feb. 2nd 2012, p. 11

The Welfare Reform Bill suffered a series of defeats in the Lords, including over the proposed 26,000 cap on benefits and limits to payments for cancer patients. Ministers said the defeats would cost the Treasury at least an extra 4bn by 2015 and applied for the Bill to be considered for financial privilege. This meant that the will of the Commons would have to prevail and peers would be denied the chance of another vote when the Bill returned to the Lords.

(See also Guardian, Feb. 2nd 2012, p. 6)

Duncan Smith offers concessions to rescue welfare reform

T. Ross

Daily Telegraph, Feb. 1st 2012, p. 12

Following government defeats in the Lords on seven key parts of the Welfare Reform Bill, Iain Duncan Smith was expected to offer minor concessions to appease Liberal Democrats before the Bill returned to the Commons. It was thought that these would include: 1) a new fund to pay the moving costs of families in large rented houses unable to pay the rent following the imposition of the 26,000 per year cap on benefits; and 2) a 'grace period', meaning that people who had lost their jobs after years of paying national insurance contributions would not be subject to the cap immediately. The Labour Party was expected to table its own amendments to the Bill, proposing that the cap should be set at a local level, reflecting the cost of housing in different parts of the country.

(See also Guardian, Feb. 1st 2012, p. 4)

Lords vote down plan to cut housing benefit

P. Wintour

The Guardian, Feb. 15th 2012, p. 8

Defiant peers narrowly voted to demand once again that the government drop plans to cut housing benefit for claimants in under-occupied homes. The peers voted by 236 to 226, even though the Commons had the previous week rejected a similar amendment from the Lords and then imposed financial privilege, a means of preventing the Lords from tabling the same amendment again. The Lords had opposed the so-called 'spare bedroom' tax a fortnight previously, and reasserted that view by saying housing benefit cuts of 14 a week should not be imposed on claimants in under-occupied homes if they were unemployed, carers, foster carers, disabled or war widows. In a process known as ping-pong, the Commons would have to address the issue again when it returned from its half-term break. The amendment passed was costed by the Department of Work and Pensions at up to 100m annually by 2013-14.

Means testing

Committee of Public Accounts

London: TSO, 2012 (House of Commons papers, session 2010/12; HC 1627)

The Government uses means testing to distribute at least 87 billion of benefits to claimants each year, around 13% of total public spending. The poorest fifth of households rely on means-tested benefits for a third of their net income. The planned introduction of a new means-tested Universal Credit will replace a number of existing means-tested benefits. Currently 30 different means tested benefits are managed by nine departments and 152 local authorities in England. But Departments have a limited understanding of how their design of benefits affects incentives for employment, the burden on claimants, take-up and administrative costs. Departments need to improve their understanding of how all benefits interact and how changes to eligibility rules can affect claimants. Complexity increases the burden on claimants which can harm take-up, and is likely to disadvantage the most vulnerable members of society in particular. The Government expects Universal Credit reforms to simplify the system and improve incentives to find work. The DWP's priority is to focus on the effective delivery of these reforms. However, success will also depend on proper coordination between Universal Credit and other means-tested benefits. In addition, DWP and HMRC are designing a real-time information system for Universal Credit to reduce the risk of overpayments, with benefits being recalculated as soon as circumstances change.

PAYE, tax credit debt and cost reduction

Committee of Public Accounts

London: TSO, 2011 (House of Commons papers, session 2010/12; HC 1565)

The report details the huge challenge facing HM Revenue & Customs (the Department) to resolve longstanding problems with the administration of PAYE (Pay As You Earn) and tax credits, while making substantial reductions to its running costs. The Department needs to stabilise its administration of PAYE following the problems encountered after a new processing system was introduced in 2009. It also needs to recover a significant amount of outstanding tax credit debt while minimising the amount of new debt being accumulated. While an extra 900 million has been allocated to tackle tax avoidance, at the same time, following the 2010 Spending Review, the Department is required to reduce its running costs by 1.6 billion over the next four years. The Department has made progress in improving PAYE administration since the Committee's last examination of this area in 2010. However, as a consequence of the Department's handling of the 2009 transition to the new PAYE Service, it has had to forgo up to 1.2 billion of income tax underpaid from 2004-05 to 2009-10. Under current plans, it will take until 2013 before all processing backlogs are cleared and the new PAYE Service is operating as intended. The Department needs to focus on improving data quality in particular to sustain progress in PAYE administration. Without a clear plan for reducing tax credit debt, the level of uncollected debt will continue to rise to an estimated 7.4 billion by 2014-15. The Department has been forced to acknowledge that much of this debt will never be recovered from tax credit claimants, and recently wrote off some 1.1 billion of debt dating back to the introduction of the scheme.

The pupils are asking teachers to find them a new home

A. Gentleman

The Guardian, Feb. 17th 2012, p. 1

Amelia Gentleman reports from Westminster where primary schools struggled to cope with the disruption caused to children whose parents were being forced out of the borough by the cap on housing benefits. The cap, which applied to people in the private rental sector, was set at 250 per week for a one bedroom flat and a maximum of 400 per week for a four bedroom place. Within Westminster there were almost no three or four bedroom available in that price range.

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