6 Wider welfare reforms: the Benefit
Cap and the Social Fund
The Benefit Cap
132. The Government has introduced a
Benefit Cap (the Cap) on the total value of a range of working-age
benefits and tax credits which can be received by households.[127]
It has been set at £500 per week for couples and lone parents
and £350 per week for single adults. The policy intentions
of the Cap are:
- To produce savings to the Exchequer;
- To promote fairness by ensuring
that workless households cannot receive more in benefit payments
than the median average income of a working household; and
- To encourage people into at
least 16 hours of employment per week.
133. A phased introduction of the Cap
began in four London local authority areas in April 2013. National
rollout began in July 2013. Official data show that 32,940 households
were capped in the period to 21 November 2013.[128]
134. JCP's role is to "promote
employment support as the best mitigation for the Cap".[129]
Staff in Oldham Jobcentre told us that the 246 local households
expected to be impacted by the Cap had been contacted several
times by telephone and letter well in advance of its introduction.
Claimants likely to be affected were given full access to the
range of local employment provision. JCP staff reported that claimants'
feedback was generally positive and that some claimants had already
moved into employment.
135. There are no data specifically
on the effectiveness of JCP employment support for members of
capped households. DWP has published data which show that, in
the period from when claimants were first notified of the Cap
in April 2012 to 8 November 2013, approximately 35,600 individual
claimants had engaged with JCP employment support. Around 16,500
claimants identified as living in potentially capped households
moved into work. However, the statistics do not establish the
additional numbers entering work as a direct result of
JCP employment support. Nor do they include any information on
the duration of jobs or types of work.[130]
136. Some 47% of capped households are
in London.[131] Councillor
Peter John of London Councils told us that there were examples
of successful employment support for capped claimants in some
areas of the capital, such as in Enfield (one of the pilot boroughs),
where 1,000 households were potentially affected and 25% of affected
claimants had moved into work. However, there were currently insufficient
data to show "whether the focus on employment support for
benefit cap claimants has been successful or what interventions
are working best."[132]
137. Haringey Council recently published
data on the effects of the Cap in its area. Survey responses from
the 737 affected households in Haringey suggest that most claimants
are likely to respond to the Cap by seeking employment. However,
it found that "only a few" affected claimants had so
far managed to move into 16 or more hours of work per week. While
there was evidence that the Cap is "changing attitudes to
work", many claimants were experiencing significant barriers,
particularly a lack of job-seeking skills and the availability
and affordability of childcare. Claimants were likely to require
"intensive and personalised" support to help them move
into employment.[133]
138. There is insufficient information
to establish the causal links between: the Benefit Cap; affected
claimants engaging with employment support; and the likelihood
of affected claimants entering work. We recommend that DWP conducts
and publishes research into these causal links in 2014, in order
to establish whether the Benefit Cap is achieving one of its key
policy aims.
139.
Initial, limited data indicate that the Benefit Cap is having
positive effects in terms of claimants' attitudes to work but
that very few affected claimants have been able to overcome the
significant barriers they face in finding employment. We recommend
that DWP conduct a review of the employment support needs of claimants
affected by the Benefit Cap and the availability of the requisite
support in Jobcentres. The review should be conducted with a view
to identifying and disseminating best practice across the Jobcentre
network.
Localisation of the discretionary
Social Fund
140. From 1 April 2013, under the provisions
of the Welfare Reform Act 2012, elements of the discretionary
Social Fund were abolished. Since 1988 the discretionary Social
Fund had been available, by application through JCP, to support
benefit claimants facing severe short-term financial hardship.
141. The two elements which were abolished
were Crisis Loans (designed to financially assist people facing
unforeseen emergencies) and Community Care Grants (to assist people
leaving institutional or residential care; those dealing with
family breakdown; or provide money to cover travel costs incurred
in attending a family funeral). Other elements of the fund are
still available through JCP, in the form of repayable Benefit
Advances and Budgeting Loans.
142. The Government made funding available
to local authorities in England and to the devolved administrations
to establish their own schemes to replace Crisis Loans and Community
Care Grants. The funding is not ring-fenced for any particular
purpose and some pressure groups and welfare rights organisations
have raised concerns that the level of funding is insufficient
to meet residents' needs.[134]
143. JCP's role in relation to the localised
schemes is in ensuring that claimants in need of emergency assistance
are directed to local authorities where appropriate. London Councils
highlighted a lack of clarity about when it was appropriate for
claimants to apply for the remaining JCP Social Fund schemes and
when it was appropriate for them to be referred to the local authority.
It believed that in some cases JCP was "inappropriately"
referring claimants to the local schemes, when claimants should
have more appropriately been advised to apply for a Benefit Advance
or Budgeting Loan via JCP. Citizens Advice confirmed that in its
experience claimants were not being given information about the
availability of the remaining JCP Social Fund schemes and that
there was some evidence of inappropriate referrals to local authorities.
Kathleen Caper of Citizens Advice believed that JCP staff might
not be sufficiently aware of the new rules and guidance.[135]
144. We recommend that DWP review
the clarity of guidance to JCP staff on the circumstances in which
it is appropriate to refer claimants to local welfare assistance
schemes operated by local authorities, which have replaced elements
of the discretionary Social Fund, and that it take steps to ensure
that the guidance is followed across the Jobcentre network.
127 The working-age benefits included in the Cap are:
Bereavement Allowance; Carer's Allowance; Child Benefit; Child
Tax Credit; ESA WRAG; Guardian's Allowance; Housing Benefit (except
that for Supported Exempt Accommodation); Incapacity Benefit;
Income Support; JSA; Maternity Allowance; Severe Disablement Allowance;
Widowed Parent's Allowance; Widowed Mother's Allowance; and Widow's
Pension. Households claiming Working Tax Credit are exempt from
the cap, as are claimants of a range of disability benefits and
the War Widows and War Widowers pension; and those who have recently
been employed. See, DWP, Benefit Cap Factsheet. Back
128
DWP, Benefit Cap - number of households capped, data to October
2013, GB, January 2014 Back
129
Ev 143 Back
130
DWP, Jobcentre Plus activity regarding claimants who have been
identified as potentially impacted by the benefit cap, October
2013 Back
131
DWP, Benefit Cap - number of households capped, data to October
2013, GB, January 2014 Back
132
Q 311 Back
133
Haringey Council, Experiences and effects of the benefit cap
in Haringey, October 2013 Back
134
Localisation of the Social Fund, House of Commons Research
Paper, SN/06413, November 2012 Back
135
Qq 343-355 Back
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