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Welfare benefits reform – what do the changes mean?
Starting in 2013, some existing welfare benefits begin to be phased out and replaced by a new benefits system. Means-tested benefits, such as income-based Jobseeker's Allowance, Working Tax Credit and Housing Benefit, will eventually be replaced by one benefit called Universal Credit.
If you're of working age and currently on certain benefits, you will eventually have to move to the new system and may have to agree to more conditions to get benefit.
This page gives you some key facts about how you might be affected by Universal Credit and other changes due to happen in 2013, and what you can do to plan ahead
Changes to Housing Benefit
A Benefit Cap, which sets a limit on the total amount of benefits you can get, means you may lose some of your Housing Benefit. You can't appeal against a decision to cap your benefits. You may have to find the money to make up your rent from other income or consider moving to a cheaper home or area.
If you live in social housing, such as council or housing association accommodation, and you're of working age, your Housing Benefit may be cut. This could happen if you have more bedrooms than are allowed under the new rules.
In future, Housing Benefit will be paid directly to you rather than to your landlord.
Changes to Council Tax Benefit
Council Tax Benefit has been replaced by Council Tax Reduction schemes run by local authorities. Each local authority can set its own rules.
Older people will be protected from any cuts to the rebate. However, if you’re under the age for getting Pension Credit, you're unlikely to get a full rebate and will have to pay some money towards your Council Tax bill.
Changes for people claiming Disability Living Allowance
Disability Living Allowance (DLA) is being replaced by Personal Independence Payment (PIP). Most people currently getting DLA will eventually have to reapply for PIP. Even if you were getting DLA, you may find that you don't qualify for the new payment or that the money you get will be less than it was on DLA.
Changes to claims for Universal Credit where there's a couple
If you're part of a couple, you'll usually have to make a joint claim for Universal Credit. This means signing a new claimant commitment and agreeing to stick to certain work-related requirements about looking for work. This applies to couples who are in work as well as those who are out of work – including people who were previously entitled to Working Tax Credit. If you're in work, you'll have to prove that you're looking for work with better pay or more hours to continue getting Universal Credit.
Couples where one of you is a pensioner
If you are a member of a couple where one of you is a pensioner and the other is of working age, you could be worse off under Universal Credit.
At the moment, 'mixed-age' couples who need to claim means-tested benefits can choose to claim Pension Credit if one of them has reached the age for getting it. Under the new benefit system, they will no longer be able to choose but will have to claim Universal Credit, which will be paid at a much lower rate than Pension Credit. The working-age partner is also likely to have to meet the work-related requirements in order for you to get Universal Credit.
If you're in a mixed-age couple and you're already getting Pension Credit at the changeover date, you won't be affected and will be allowed to carry on getting it.
If you think you might qualify for Pension Credit but aren't getting it, you might want to think about whether to apply for it now.
Will you be worse off under the new scheme?
To begin with, people getting certain benefits will be protected if their income drops once they move onto Universal Credit. This is called transitional protection. It applies to people getting benefits such as income-based Jobseeker's Allowance and income-related Employment and Support Allowance. However, in the future, you may end up getting less money under Universal Credit.
There is no transitional protection for people currently getting Disability Living Allowance or Housing Benefit. This means that your income may go down as soon as you move onto the new system.
There will be some people who will be better off under the new system. This might apply, for example, to an unemployed single person who starts a low-paid job for a few hours a week.
Changes to the way you claim benefits
You will be expected to claim online, although help will be available if this will be a problem for you.
What should you be doing now?
If you're worried that the benefit changes will reduce the money you have coming in, it's a good idea to start thinking ahead. For example, Universal Credit is going to be paid monthly. This may be a big change from what you are used to. Get a benefits check on your current entitlement and see whether there is any transitional protection available. Get some advice about budgeting to see if there are any savings you can make or other ways to top up your income. You could also check what extra help is available locally as many communities have started planning to provide help for people whose income will go down under the new benefits scheme.
There's an online calculator which you can use to estimate how much Housing Benefit you will lose if your total benefit income is more than the cap.