Work and Pensions Committee - Universal Credit implementation: meeting the needs of vulnerable claimantsWritten evidence submitted by Contact a Family

Summary

Contact a Family is concerned that many families with a disabled child could be left worse off under Universal Credit.

Cutting the lower child disability addition by £28 per week, means families with a disabled child are likely to be at greater risk of being worse off under Universal Credit than other families.

Those families whose caring responsibilities1 prevent them from working and who qualify for the lower disability addition appear certain to be worse off. This is because there is no prospect of them seeing their reduced disability addition offset by other features of the Universal Credit designed to make work pay.

It seems likely that some working families with a disabled child will be better off under Universal Credit and some worse off. This will be dependent on individual family circumstances.

No assessment has been published into Universal Credit’s impact on families with a disabled child as a specific group.

About Contact a Family

1. Contact a Family is the only UK-wide charity providing practical and emotional support and information to families with disabled children—regardless of disability or health condition.

2. Our Counting the Costs 20122 survey of over 2,300 families with disabled children across the UK shows that for those in jobs one in seven (14%) is missing meals and one in six (17%) cannot afford to heat their homes. For families not in work due to their caring responsibilities almost a quarter (24%) is going without food and a third (32%) without heating. 58% of all families that responded to the survey fear their financial situation will worsen in the next year—up 15% since 2010. The majority (73%) cited welfare reforms as the main reason for their fear.

Evidence

3. Contact a Family welcomes the government’s determination to create a benefit system that is simpler, easier to understand, and with greater incentives for those who are able to work. However we are also conscious that for some parents with a disabled child work is not necessarily a realistic option. With this in mind we were initially encouraged by assurances that the governments reforms did not intend to reduce the levels of support “for people in the most vulnerable circumstances”3

4. Against this background, Contact a Family had hoped that the government would endeavour to ensure that the introduction of the Universal Credit would not disadvantage families with disabled children. However we have become increasingly concerned that many families with a disabled child will be worse off.

Reduced Disability Additions for Disabled Children under the Universal Credit

5. At present, tax credit claimants with a child on Disability Living Allowance (DLA) can receive an additional disability element for that child, worth £56.63 per week. Children on DLA care component at the highest rate qualify for a further additional payment called the severe disability element—bringing additional disability payments for a child on high rate care component up to £79.52. For those out of work families who have not yet claimed tax credits, there are equivalent additional payments within income support, and certain other means tested benefits.

Child Disability Additions under Universal Credit

6. Like the benefits it is replacing the Universal Credit will also include additional disability payments for children. The government proposes that there will be two rates of child disability addition—a high rate and a low rate. Those children on the highest rate care of DLA or with a severe visual impairment will qualify for the higher addition. This will be paid at a rate equivalent to the current £79.52 per week.

7. All other children on DLA will qualify for the lower disability addition. The government proposes that this will be paid at a rate of £28.15 per week. This amounts to a cut of £28.48 per week, or almost £1,500 per year. Since the addition is paid per child, families with more than one disabled child could see much higher reductions.

8. Even at the current rates of payment many families with disabled children struggle financially. A recent survey carried out by Contact a Family4 found going without essentials and getting into debt to pay for food, heating, clothes and specialist equipment is the norm for most families with disabled children. Parents talk about the harsh choices they constantly face, the unfairness and increasing the stigma they face. This is on top of the practical and emotional challenges of caring for a disabled child not experienced by other families.

9. Against this backdrop a halving in the amount of the basic disability addition is likely to lead to significant financial hardship for large numbers of parents looking after a disabled child. For that we reason Contact a Family is calling on the government to retain child disability additions at least at current rates.

Aligning Payment Rates does not Mean Equality of Treatment

10. The government has justified cutting the lower disability addition, on the grounds that this aligns payments with additions for disabled adults. Presumably this is seen as ensuring that all disabled people receive similar levels of financial support regardless of their age. However the government’s proposals will not result in equity of treatment. This is due to differences that will exist in the eligibility criteria for the higher disability addition.

11. Disabled adults will qualify for the higher addition if they fall into the support group for Employment and Support Allowance. However the test that will apply to children is significantly harder to satisfy—a child will only qualify for the higher addition if they have a severe visual impairment or if they are so severely disabled that they qualify for the highest rate of the care component.

12. In practice this means that the child must require not only substantial amounts of care throughout the day but also care during the night. A child without any visual impairment who doesn’t require help during the night will only ever be eligible for the low rate disability addition—this will remain the case even if he or she has very complex disabilities requiring continual care for the whole time that they are awake. The only exception to this will be where a child has a terminal illness and their death is expected within six months. As a result it is likely that many severely disabled children whose conditions are such they will qualify for the higher addition as an adult will be restricted to lower rate additions until they turn 16.

The numbers of disabled children affected

13. Analysis of tax credits and DWP (Department for Work and Pensions) statistics from 2011 suggest that around 289,000 parents qualify for disability additions under the existing system. Of these around 170,0005 would qualify for the lower rather than higher addition and are consequently at risk of having their disability addition halved if and when they lose transitional protection. However not all of these parents will necessarily be worse off under Universal Credit. Some families will be better off overall, if gains arising from other features of the Universal Credit outweigh the cut in the disability addition.

14. The government estimates that 800,0006 households with a disabled member will be worse off under Universal Credit, with a similar number being better off. However these figures include disabled adults as well as children. The lack of any impact assessment for disabled children as a distinct group means it is not currently possible to predict the number of families with a disabled child who will be worse or better off.

Out of Work Families

15. Nevertheless what seems certain is that families whose caring responsibilities prevent them working at all will be worse off if their son or daughter gets the lower disability addition. Unable to benefit from any of those features of the Universal Credit designed to make work pay, they will inevitably face a loss of almost £1,500 per year once transitional protection is eroded.

16. It is difficult to source reliable figures for the numbers of out of work families who will be worse off in this way. In December 2011 Lord Freud stated that the number of disabled children living in out of work families was 131,000.7 However this includes those who would get a higher disability addition under Universal Credit. The number of children in out of work families claiming tax credits who qualify for the basic disability element was confirmed by HM Revenue and Customs (HMRC) in 2011 as 67,500.8 However a further 25,000 out of work families do not receive tax credits and instead receive a disabled child premium via income support or income based Jobseeker’s Allowance. If we assume that the percentage of families getting the lower rather than higher addition is consistent with tax credits (around 60%), this would suggest another 15,000 children in out of work families who are likely to be worse off ie 83,500 in total.

17. Unfortunately this picture is muddied by uncertainty as to how “out of work” has been defined. The tax credits system tends to categorise out of work families as those who do not work sufficient hours to be eligible for working tax credit, rather than simply those doing no work at all. It is therefore feasible that this 83,500 figure includes some families where a parent is engaged in a small amount of part-time work and who may therefore see all or part of the reduced disability addition offset by gains resulting from other aspects of the Universal Credit design (eg more generous earnings disregards). However even taking this uncertainty into account, it seems likely that tens of thousands of disabled children whose parents are unable to work will be worse off under Universal Credit—simply as a result of the disability addition being halved.

In-work Families

18. Attempting to quantify the number of “in-work families” (eg those working a sufficient number of hours to be eligible for working tax credit) who are likely to lose out is even more problematic. The most recent HMRC statistics state that of 157,900 disabled children within “in-work families”, 59,700 qualified for the higher addition.9 This leaves almost 100,000 children living within in-work families who will see their disability addition halved.

19. Despite a reduction in their disability element, it’s probable that some of these working families will still be better off overall as a result of other features of the Universal Credit system such as more generous earnings disregards or a more flexible carers addition. The chances of a working family being better or worse off will ultimately depend entirely on the individual circumstances of the family in question.

20. For example working families will be at an increased risk of being worse off under Universal Credit if they have more than one disabled child who does not qualify for the higher addition; or if they have only a small amount of earnings (and therefore do not make full use of the enhanced earnings disregards). Other factors that will increase the risk of being worse off are outlined in rest of this submission.

A Disabled Parent Looking after a Disabled Child

21. The government plans to change the rules which currently allow a carer who also has health problems of their own to qualify for a disability addition and a carer addition at the same time. Under Universal Credit a disabled adult who provides care for a disabled child will either get a disability payment as an adult or an additional payment as a carer—but not both. For some families this could mean a loss of up to £34.05 per week, in addition to any reduction in their child’s disability element.

Working Families in Rented Accommodation with Childcare Costs

22. Under Universal Credit the percentage of childcare costs met will be 70%. However tenants in receipt of housing benefit (HB) and council tax benefit (CTB) can currently receive help with up to 95.5% of their childcare costs. For these working families there will be significant cut in help with childcare costs that could end up leaving some worse off. For example a family spending £300 per week on childcare for two or more children, would get £76.50 a week less towards these costs under Universal Credit. It is also worth noting that since these families are receiving help with housing costs they will not be able access the most generous level of earnings disregards under Universal Credit.

Families in Rented Accommodation Affected by the size Criteria Rules

23. Contact a Family is disappointed that the Department for Work and Pensions is seeking permission from the Supreme Court to challenge the Court Of Appeal’s recent decision in the Gorry case.10

24. The current size determination rules (which are to be replicated in Universal Credit) assume that children can share a bedroom even where a disabled child’s condition means that this not possible in practice. The Court of Appeal found that the failure of these rules to allow for an additional bedroom required because of a child’s disability amounted to discrimination.

25. Currently these rules only affect those renting privately under local housing allowance. However they are to be extended to tenants in social housing from April 2013 and this will also be a feature of Universal Credit. If the Court of Appeal’s decision is overturned and the size criteria applied to Universal Credit in its current form, this seems certain to leave some families in social housing worse off.

26. In some cases families will have been allocated a property of a particular size precisely because of the needs of their disabled child. For instance a child with challenging behaviour may present a risk to siblings or a child with complex disabilities may require care during the night which would be disruptive to anyone sharing their room. Parents faced with this reality will have no option but to continue renting a property that allows their severely disabled child to have a room of their own.

27. Under Universal Credit (and housing benefit from April 2013) these families will face a dilemma. Unless they are lucky enough to get discretionary housing payments, they will either have to move to a smaller property that is unsuitable for their disabled child or face a cut in help towards rent. Faced with this choice many will feel they have little option but to remain in their existing tenancy.

28. Contact a Family’s concerns about the extension of size criteria to social housing is not limited to the impact on those cases where a child is unable to share a bedroom. There may be other reasons why a social landlord has decided to house a family with a disabled child in a bigger property than would otherwise have been allocated. Some children may require specialist equipment that is difficult to store, others may require a sensory room or similar therapeutic space. In other cases the fact that a disabled child spends so much of his/her time at home may have been a factor taken into account in allocating a property.

29. Contact a Family is concerned that the capping of rents in the social sector will disproportionately affect families with a disabled child. These families are more likely to be in rented accommodation,11 more likely to be on low incomes and less likely to be able to consider moving tenancy (eg because their current tenancy has been adapted for their child or because they need to live close to a specialist school or college). For these reasons we would like to see families in social housing exempted from the size criteria rules where their child’s disability is a factor in the size of property that they have been allocated.

Disabled Children Living away from Home

30. Contact a Family is concerned financial support may be reduced under Universal Credit if a family has a disabled child living away from home either in a residential setting or elsewhere such as in hospital.

31. Under current Tax Credit regulations a parent can continue to receive payments for a child who is looked after by the local authority in a residential setting solely because of their disability. Contact a Family is worried that no such equivalent concession may exist under Universal Credit. The draft Universal Credit regulations prevent a child from being included in your claim if they are “looked after by the LA”,12 without providing any specific definition of how this is to be interpreted.

32. In addition it seems likely that that payments for disabled children who are temporarily absent from the home may also be restricted. The draft regulations13 only allow for payments for a child to continue during the first 6 months of a temporary absence. Once a child has been absent for a longer period payments will cease. This will impact on children who are absent from home for more than six months because they are in hospital or residential school—children for whom payments can continue to be paid indefinitely under the existing tax credits system.

33. Contact a Family is concerned about this issue as families with a child living away from home in hospital or residential school continue to incur costs in respect of that child.

34. These families not only face the prospect of payments for a child in care or hospital stopping—but also of consequently losing protection from the benefit cap. The draft regulations14 state that the benefit cap will not apply to a household where “a child or qualifying young person for whom a claimant is responsible”, is receiving DLA or the new PIP. However since regulation four suggests that a claimant ceases to be responsible for a child if they are treated as looked after by the local authority or temporarily absent from home for more than six months, these families seem destined to lose that protection.

Transitional Protection

35. The government has promised transitional protection to ensure existing claimants do not lose out when they are moved over onto the Universal Credit. However since these protected payments will be frozen, even those who are transitionally protected will be worse off over time. Transitional protection will also be lost if a claimant loses or gains any of the elements making up a Universal Credit award.15 Transitional protection will be of no assistance to those future generations of disabled children who first start to qualify for disability additions after the introduction of the Universal Credit.

17 August 2012

1 The economic value of the contribution made by carers in the UK is a remarkable £119 billion per year (Carers UK)

2 http://www.cafamily.org.uk/media/381221/counting_the_costs_2012_full_report.pdf

3 “21st Century Welfare” Department of Work and Pensions 2010; para 6 Executive Summary

4 http://www.cafamily.org.uk/media/381221/counting_the_costs_2012_full_report.pdf

5 According to HMRC figures from April 2011 there were 146,400 in -work families receiving an additional disability payment via child tax credit. Of these 87,600 receive the basic (i.e. lower) disability element. There were also 118,300 out of work families receiving a disability payment via child tax credit. Of these 67,500 qualify for the basic disability element.

6 http://www.dwp.gov.uk/docs/eia-universal-credit-wr2011.pdf.

7 Lords Hansard 12 Dec 2011: Column 1054

8 Contact a Family correspondence with HMRC

9 Child and Working Tax Credit statistics – tables 5.2 & 5.4; HMRC April 2012

10 Burnip, Trengove, Gorry v SSWP [2012] EWCA Civ 629,

11 Joseph Rowntree Foundation , Housing and disabled children – reviewing the evidence. 2008

12 Regulation 4 (6)(a) of the draft Universal Credit regulations

13 Regulation 4(7)(b) of the draft Universal Credit regulations

14 Regulation 71(2)(e) of the draft Universal Credit regulations

15 Universal Credit Briefing Note—Transitional Protection July 2012

Prepared 21st November 2012