WELFARE RIGHTS SERVICE

The

Fact Sheet 9: For Residents and Advisers

th www.wolverhampton.gov.uk 20 November 2019

1. Introduction Number of Families Affected: In November 2018 the Benefit Cap affected 432 households in Wolverhampton of which 192 were The Benefit Cap introduced a limit on the Wolverhampton Homes tenants and 240 were maximum amount of benefit some benefit private landlord/housing association tenants.

claimants of ‘working age’ (meaning: people under the qualifying age for ) may receive.

The Benefit Cap was first applied to benefit claimants in Wolverhampton from 15th July 2013. At that time the Benefit Cap was £500 per week for couples/lone parents and £350 per week for single people.

However, the Benefit Cap was lowered in 2016. For people living in Wolverhampton it

was lowered to: Because of the way the Benefit Cap operates,

it impacts on benefit claimants who have high ▪ £384.62 per week for couples and lone rents and/or large families. In Wolverhampton, parents; and where rent levels are reasonable, the Benefit

Cap tends to affect only those with children. ▪ £257.69 per week for single people When first introduced, families living in

Wolverhampton with 5 or more children were When lowered, the new Benefit Cap was affected. However, since the Benefit Cap was applied to those already affected by the lowered, families with 3 or more children are Benefit Cap from 7th November 2016 and from being affected. 2nd January 2017 for anyone else.

When first introduced, the Benefit Cap only Getting Help… affected people claiming . However, it can now affect those getting Housing Benefit and .

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2. Seek Help… 3. How It Operates

Anyone affected by the Benefit Cap should: The Benefit Cap operates by simply reducing the amount of weekly Universal Credit or ▪ seek advice on their options Housing Benefit that would otherwise be payable by the amount someone’s weekly ▪ see if they should be exempt from the benefit income exceeds the weekly Benefit Benefit Cap - see below for more Cap figure. Typically, an unemployed couple information on who is exempt from the can expect to receive the following amounts in Benefit Cap weekly benefit for day-to-day living depending on whether they are getting Universal Credit or ▪ find out if they are eligible for a Income-based JSA: Discretionary Housing Payment - see below

for details on how to apply for a Number of Universal Credit and Jobseeker’s Children Discretionary Housing Payment. Allowance, Child and Child Benefit If you are working with someone affected by

the Benefit Cap and you are not sure how best One: £199.76 £199.31 to proceed then contact the Specialist Support Two: £266.92 £266.32 Team: Three: £334.08 £333.33 Four: £401.24 £400.34  Telephone: (01902) 555351 Five: £468.40 £467.35 Six: £535.56 £534.36  Email: [email protected] Note: The amounts could be lower depending

on the age of the couple and their children and The Specialist Support Team can advise on when they actually claimed benefit. Further, for the options for those affected by the Benefit families who have children born on or after Cap. 6.4.2017 then the amounts could be affected

by the ‘two-child limit’.

From the above table you can calculate the margin for Universal Credit/Housing Benefit before the Benefit Cap bites. For example, under the old level of the Benefit Cap a family getting Universal Credit with three children could have a rent of up to £166.67 per week (£333.33 plus £166.67 = £500.00) before being affected. Under the new, lower Benefit Those actually affected by the Benefit Cap can Cap the same family will only be allowed ring the Department for Work and Pensions £50.54 for their rent (£334.08 plus £50.54 = Benefit Cap helpline for advice and £384.62). information:

 Telephone: 0800 169 0145

People seeking more information about the Benefit Cap may also go to  Website: www.gov.uk/benefit-cap. There is also an on- line Benefit Cap calculator  Website: www.gov.uk/benefit-cap-calculator which people can use to see whether they are likely to be affected and, if so, by what margin.

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In any circumstances the maximum amount K. a Guaranteed Income Payment or that can be deducted under the Benefit Cap is Survivor’s Guaranteed Income Payment under in cases of Universal Credit, the amount of the Armed Forces Compensation Scheme. Universal Credit entitlement less any amount allowed within the Universal Credit Disabled Child/Young Person: The Benefit assessment for childcare costs and in cases of Cap should not be applied in cases where the Housing Benefit, the amount of overall claimant (or their partner) get Disability Living Housing Benefit less 50p. Allowance or Personal Independence Payment paid to them on behalf of a disabled child or young person. It should equally not 4. Exemptions apply where a disabled child or young person for whom they are responsible (e.g. a child or The Benefit Cap does not apply to those who young person for whom they get Child Benefit) do not get Universal Credit or Housing Benefit, receives Disability Living Allowance or irrespective of the overall amount in benefits Personal Independence Payment. paid to them. It should also not apply to those households where the claimant (or their Young Carers: The Benefit Cap should not be partner) receive: applied in cases where the claimant (or their partner) are responsible for a child/young A. Universal Credit which includes an award of person aged 16 or over who gets Carer’s the ‘limited capability for work-related activity’ Allowance in their own right because they are element a carer.

B. Universal Credit and have earnings (or An exemption for those getting Carer’s combined net earnings in the case of a couple) Allowance or Guardian’s Allowance did not of £569.00 or more per month after deductions originally apply. However, the DWP has said for tax and National Insurance contributions that these exempt categories have been introduced as part of the Government’s C. or they have been strategy to “invest in and support carers” and refused Working Tax Credit because their those providing a “stable home” for children earnings are too high whose parents have died or been imprisoned or whose whereabouts are not known. D. Employment and Support Allowance and the award includes the ‘support component’

E. Attendance Allowance, Disability Living Allowance, Personal Independence Payment or Armed Forces Independence Payment

F. Carer’s Allowance

G. Universal Credit which includes an award of the ‘carer element’

H. Guardian’s Allowance

I. Industrial Injuries Disablement Benefit, The Grace Period: The Benefit Cap should Reduced Earnings Allowance, Retirement not be applied in cases of Universal Credit for Allowance or Industrial Death Benefit a nine-month period (the ‘grace period’) where someone has finished work but during the J. a War Pension including a War Disablement previous 12 months, they (and/or their partner) Pension, War Widow’s Pension, War had earnings of at least £569.00 per month Widower’s Pension or similar payment made after deductions for tax and National by an overseas country Insurance.

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A similar exemption period applies in cases of Alternatively, a person may write to: Revenues Housing Benefit where someone has stopped and Benefits Service, PO Box 250, work having previously worked for at least 50 Wolverhampton WV2 1AX. weeks (out of the previous 52 weeks) and when they worked, they did not get Income A person may apply online for a Discretionary Support, Jobseeker’s Allowance or Housing Payment via the following link: Employment and Support Allowance. www.wolverhampton.gov.uk/article/6760/Discr For the purposes of both Universal Credit and etionary-Housing-Payment-DHP Housing Benefit a person would be treated as working whilst receiving Statutory Sick Pay or Only people who get an award of Universal whilst on maternity leave, adoption, paternity Credit (which includes the ‘housing cost or shared parental leave. element’ for rent or service charges) or Housing Benefit may apply for a Discretionary Do seek further information and advice as Housing Payment. necessary.

5. DHP (Discretionary Housing Payment)

Those getting Universal Credit or Housing Benefit who are affected by the Benefit Cap can apply to the City of Wolverhampton Council’s Revenues and Benefits Service for a Discretionary Housing Payment (DHP) if the reduction in their Universal Credit/Housing Benefit causes them financial hardship or other difficulties of an unusual or exceptional nature. 6. Two Case Studies The DHP budget is cash limited. The budget is not sufficient to help everyone who may be in need. Therefore, applicants need to know that Example One: Salima is a lone parent. She any award will most likely be time limited and, has three young children. Salima suffers from in most situations, it will not necessarily cover anxiety and depression. Her rent is £98.50 per the whole of the shortfall in their Universal week. She receives £1,819.61 per month Credit or the shortfall between their rent and (£419.91 per week) in Universal Credit (which the level of Housing Benefit payments. In most includes an award of the ‘limited capability for cases, any award of a DHP will be paid to work element’ because she has been enable the person affected to obtain further assessed as having limited capability for work advice, seek an exemption, adjust their and money towards her rent) and Child finances, deal with a temporary difficulty, find Benefit. employment or make a return to employment. Salima was not affected by the former Benefit A person needs only apply for a DHP once Cap of £500 per week. However, she is they have been made aware that they will be affected by the new lower rate Benefit Cap. As affected by the Benefit Cap. An application a result, her Universal Credit payments will be may be made by either: reduced by £35.29 per week (£419.91 amount of weekly benefits less £384.62 amount of  Telephone: (01902) 551166 weekly Benefit Cap = £35.29 amount of reduction in Universal Credit).  Email: [email protected] This means that Salima is £35.29 per week worse off due to the Benefit Cap.

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Example Two: Jim and Kate live together and have three children. They receive £333.33 per 7. Reasoning… week in Jobseeker’s Allowance, Child Benefit and . The couple live in rented accommodation. Their rent is £115.00 per The aim of the Benefit Cap is to: week which is being met by Housing Benefit. Therefore, the value of the couple’s overall 1. increase incentives to work by limiting the benefit income has been £448.33 per week. amount of benefit that households on out-of- work benefits can receive so that they will be The couple were not affected by the former better off entering work; Benefit Cap of £500 per week. However, they are affected by the new lower £384.62 per 2. introduce greater fairness in the welfare week limit. Under the new Benefit Cap the system between those receiving out-of-work couple’s Housing Benefit will be reduced by benefits and taxpayers in employment by £63.71 per week (£448.33 amount of weekly preventing households on out-of-work benefits benefits less £384.62 amount of weekly from receiving a greater income from benefits Benefit Cap = £63.71 amount of reduction to than the average weekly wage; and Housing Benefit). 3. make financial savings where the benefit Jim and Kate are £63.71 per week worse off cap applies and help make the benefit system due to the Benefit Cap. more affordable by incentivising behaviours that reduce long-term dependency on benefits.

Child Poverty Action Group (CPAG) is taking The Department for Work and Pensions first legal action in the Supreme Court (in R (DS and Others) v SSWP and R (DA and Others) v year report evaluation of the Benefit Cap held SSWP) against the revised lower Benefit Cap. that there was consistent evidence of The argument by CPAG is that the lower Benefit employment-focused behavioural change Cap is unlawful because it discriminates against amongst those affected by the Benefit Cap women and the children of lone parents. It is and that movement into work for those CPAG’s contention that the new lower level cap households affected by the Benefit Cap was disproportionately impacts on lone parents and higher (19%) when compared to the numbers their children, who are far more likely to be moving into work from similar households not capped (nationally approximately 72% of all affected by the Benefit Cap (11%). capped families are lone parents) and are least Source: DWP report The Benefit Cap: A Review of the First Year likely to be able to avoid its effects due to their (December 2014) caring responsibilities. CPAG claims that there is evidence to show that the new lowered cap is The Department for Work and Pensions having a starkly adverse effect on vulnerable (DWP) explained that the new lower Benefit non-working families. A ruling is expected in late Cap was introduced because the Benefit Cap summer / early autumn 2019. “continues to provide a clear incentive to work”

and has helped to “reduce long term” dependency on benefits.

In a report in response to the proposals to reduce the Benefit Cap, the Joseph Rowntree Foundation stated: “The evidence shows that out of 27,000 people affected so far by the Benefit Cap, only 2,000 managed to get work, the vast majority just got poorer.

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Even where the cap does result in small ▪ 30% of households had their Housing numbers of people moving into work, if that Benefit capped by between £50.00 and work is low paid, insecure and unconnected to £100.00 per week a ladder to better-paid work, it may not result in much improvement either in their living ▪ 15% of capped households were getting standards or in the cost to the country. In fact, Employment and Support Allowance. there is evidence that pushing people into poor-quality work can reduce their chances of getting more stable, better-paid work later, meaning that they remain dependent on in- work benefits and are more likely to become unemployed again” and that “Based on the evidence so far, if the Benefit Cap was lowered the majority of people affected wouldn’t get work or move house - they would just get poorer.”

Source: JRF Response to Proposals to Reduce the Benefit Cap 27.1.2015

9. Fact Sheets and Information Guides

The Institute for Fiscal Studies estimated that The City of Wolverhampton Council’s Welfare when the Benefit Cap was first introduced, Rights Service produces the following Benefits 50% of the households subjected to the Fact Sheets and Benefits Information Guides Benefit Cap were made worse off by at least on benefits and welfare reform. £46.00 per week and, in some cases, far more. Benefits Fact Sheets: Source: Institute for Fiscal Studies: Coping with the Cap 15.12.2015 1. Benefits and Work

8. The Numbers… 2. Benefits and Young People

3. Benefits and Older People

A report by the DWP (dated 3.5.2018) 4. Benefits for those who are Unable to Work Due to Ill-health or Disability providing data on the Benefit Cap nationally showed that at February 2018: 5. Benefits for those Affected by Cancer

6. Benefits and Carers ▪ 60,000 households where Housing Benefit was in payment were affected by the 7. Benefits and People from Abroad Benefit Cap (of which 78% were capped 8. The because of the new lower level Benefit Cap) 9. The Benefit Cap ▪ 4,700 households where Universal Credit 10. Local Welfare Assistance was in payment were affected by the Benefit Cap 11. Private Tenants and Universal Credit

▪ 93% of those affected by the Benefit Cap 12. Volunteering and Benefits were households with children

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Benefits Information Guides:

1. Universal Credit

2. Universal Credit - Claims and Payments

3. Universal Credit - The Claimant Commitment

4. Universal Credit - Sanctions and Hardship Payments

5. Universal Credit and Vulnerable People - Claims and Payments

6. Universal Credit - Unable to Work Due to Ill-health or Disability

7. Personal Independence Payment

8. Personal Independence Payment - Toolkit

9. Employment and Support Allowance

10. The Work Capability Assessment - Toolkit

11. Form Filling - PIP2 and ESA50/UC50

12. DWP Social Fund

13. Disputes and Appeals

14. Going to Appeal: First-tier Tribunals

Copies of our Benefit Fact Sheets and Benefits Information Guides may be obtained by visiting our pages on the City of Wolverhampton Council website at:

Benefits and Welfare Reform Information

Benefit Bulletins: Please also watch out for our Benefits Bulletins which provide news on the latest developments surrounding benefits and welfare reform. These are also available on the website.

 Telephone: (01902) 555351

 Email: [email protected]

Note: The details provided in this and our other Fact Sheets and Information Guides is meant to provide an overview on important and topical issues relating to Social Security benefits and welfare reform. The details should not be treated as an authoritative statement of the law. The details may be subject to change by new regulation and/or case law. Do seek further information and advice as necessary.

Welfare Rights Service Specialist Support Team City of Wolverhampton Council

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