Beyond providing a penny off a pint of beer and a tax freeze on petrol in the recent Budget, the first day of the new financial year saw the UK government’s austerity measures kick in.
On Monday, April 1, whether people receiving housing benefit could stay in their present homes became a pressing question; legal aid became means tested for households with an income between £14,000 and £32,000 a year; Council Tax Benefit began to be administrated by already stretched local councils; and NHS Strategic Health Authorities and Primary Care Trusts disappeared.
In the Housing Benefits portfolio, it is estimated the spare room subsidy, or bedroom tax, will effect 660,000 social housing tenants. A room not used for a stay-over carer or a student away for less than 52 weeks in a year will be designated as underused. There is no measurement of the size of a room.
For one underused bedroom, £14 a week is taken off the residents’ housing benefit. For two or more, it’s £25 a week.
The aim is to free up underused houses for larger families. However, critics have pointed out that there are many unknown quantities, like how many tenants will find the tax prohibitive enough to look for smaller accommodation and how many families there are in cramped conditions to fill those houses made vacant.
The tax will be managed by local councils with a national purse of £370 million for Discretionary Housing Payments to help manage the transition.
The government expects to save £465 million a year.
On April 1, the cut-off point for legal aid was set at a household income of £32,000 a year. For those earning between £14,000 and £32,000 there will be detailed means tests. The government hopes to save £350 million from the £2.2 billion legal aid bill.
Also on April 1, supervision of Council Tax Benefits began being transferred to local councils. Previously administered by the Department for Work and Pensions, tackling this extra work will stretch councils as their incomes have fallen in recent years and there are nearly 6 million low-income families in the UK claiming Council Tax Benefit.
It is impossible to say how much the government will gain from this transfer as different councils will use different criteria to dispense the benefit. However, the government has calculated it will save £480 million a year.
NHS England, formerly the NHS Commissioning Board, begin the day-to-day supervision of the 240 GP-led groups that control their local budgets. These groups will be able to buy routine healthcare from any service provider, private or NHS, so long as they meet NHS standards and costs. But local inexperience and lack of capacity are creating anxiety as each group will have to keep on top of waiting list targets as well as their portion of the £60 billion NHS Budget.
It is estimated £5 billion will be gained in 2015 from the fall in staff numbers. Initially, it is assumed there will be a loss of £1.4 billion, mainly from redundancy payments.
The above changes will be followed over the month of April by the replacement of Disability Living Allowance with the Personal Independence Payment; the limiting of welfare benefits and tax credits rises; the capping of welfare benefits; and the introduction of a Universal Credit to replace many other benefits.
On April 8, Disability Living Allowance (DLA) will begin being replaced by Personal Independence Payment (PIP). PIP will be introduced for new claims in Merseyside, northwest England, Cumbria, Cheshire, and northeast England. DLA will continue for new claimants in all other parts of the country until June 2013 when PIP takes over completely.
For three years from April 8, benefits and tax credits will rise by 1 per cent, not in line with inflation. Many public sector workers have this limitation. Without this new ruling, benefits would have risen by 2.2 per cent.
Disability benefits, however, will keep in line with inflation.
On April 15, a new welfare benefit cap will begin in the London boroughs of Bromley, Croydon, Enfield, and Haringey. Other councils will start to introduce it from July 15 and it will be fully up and running by the end of September.
The aim is for welfare claimants to receive in total no more than the average annual household income after tax and national insurance, estimated at £26,000.
The DWP says nearly 30,000 people who would have been affected by the change have got work or gone onto employment support, where they are helped to move into work. Households with someone who has entitlement to working tax credits will be unaffected.
Universal Credit will begin its long haul of replacing all other benefits on April 28 but only in one job centre at Ashton-under-Lyne in Greater Manchester. A few more job centres will test it out from July until October 2013 when it will go national. Existing benefits and credits will fade out and from April 2014, all new claimants will be applying for Universal Credit with the total adoption expected to have been completed by the end of 2017.
Its aim is to simplify the benefits system by replacing income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Income Support, Child Tax Credits, Working Tax Credits, and Housing Benefit. This should make it easier to understand and administer and cut down fraud and error. It is also intended to reduce in-work poverty.
