On 17th November Chancellor Jeremy Hunt delivered his autumn statement outlining his plans for 2023 and beyond.
The biggest welfare benefit news headlines are:
- Most benefits uprated by 10.1% from April 2023
- Benefit Cap uprated by 10.1% from April 2023
- IR-ESA claimants who are not also receiving Child Tax Credit will not be manage migrated onto UC until 2028 – migration for all other claimants still expected in 2023/4
- Merger of HB into Pension Credit delayed until 2028
- UC claimants with mortgages will be able to claim a loan for help with their mortgage interest after 3 months (rather than 9) and the ‘zero earnings rule’ will be abolished
- More Cost of Living Payments due in 2023
More details on these and the all the other welfare benefit related announcements below.
Benefit amounts
Housing Benefit, Income-Related ESA, Income Support, Income-Based JSA
The main rates for Housing Benefit, Income-Related ESA, Income Support and Income-Based JSA will increase by 10.1% and be rounded to the nearest 5p. The standard fuel cost deductions in HB are frozen and will not increase in April.
Tax Credits
The main rates for Tax Credits will increase by 10.1% and be rounded to the nearest £5 – except the Family Element (abolished in 2017) which is fixed at £545 a year for those who still receive it, and the Childcare Element which is 70% of eligible childcare costs for costs up to £175 a week for one child or £300 a month for two children. The cap on the Childcare Element has been fixed since 2005.
Universal Credit
The main rates for Universal Credit will increase by 10.1% and be rounded to the nearest 1p – except the protected higher rate of the Child Element and the Childcare Element.
Work allowances and Housing Costs Contributions will also increase by 10.1%.
The normal UC Child Element increases by 10.1% but the higher Child Element in UC is set to the sum of the Tax Credit Child and Family Elements. As the Family Element is fixed, the higher Child Element will increase by slightly less than 10.1% - this means that the Child Element will increase by about £5 a month less than it would if increased by 10.1%.
The UC Childcare Element is also tied to Tax Credit. It is fixed to the same cap as the Childcare Element in Working Tax Credit. So, claimants can receive 85% of eligible childcare costs for costs up to £646.35 a month for one child or £1108.04 a month for two children.
The Benefit Cap
For the first time since 2016, the Benefit Cap will increase. It will increase in line with CPI (10.1%) meaning capped households should benefit from the increase to benefit rates.
Local Housing Allowance
LHA rates will not increase in April – this means that many claimants living in private rented accommodation will not see an increase to their Housing Costs Element in Universal Credit or Housing Benefit in April 2023 even though their rent may have increased.
State Pension and Pension Credit
Both State Pension and Guarantee Pension Credit will increase by 10.1% in April.
Other benefits
Other benefits that will increase by 10.1% :
Disability benefits (i.e. PIP/DLA/AA/IIDB).Note ADP and CDP are devolved Scottish disability payments so it is the Scottish parliament who decide the figure for uprating.
Carer’s Allowance
Statutory payments (i.e. Statutory Maternity Pay, Adoption Pay, Sick Pay etc)
Child Benefit
Guardian’s Allowance
Examples:
Karen lives in socially rented accommodation and is the full-time carer of her severely disabled son. She currently receives £1,606.57 Universal Credit – in addition to Carer’s Allowance and DLA for her son. The Housing Association she rents from has chosen to increase her rent by the maximum amount they are allowed (7%) in April 2023. After the uprating and rent increase, she will receive £1,742.25 a month from Universal Credit. This is not an increase of 10.1% because her rent has only increased by 7% (although the other UC Elements (and her Carers Allowance and DLA) have gone up by 10.1%).
Arun and Priya live in privately rented accommodation in London with their three children. They have been claiming Universal Credit, Priya receives PIP and Arun works full-time. Their rent is already £150 over the applicable LHA rate so their Housing Costs Element does not cover their whole rent. Additionally, they pay more in childcare than they can get help with from UC. They receive £2761.43 a month UC (they are excluded from the Benefit Cap). Arun’s wages and the couple’s rent are not expected to increase. From April 2023: they will receive £2919.02 UC a month. This is not an increase of 10.1% because their Housing Costs and Childcare Costs Elements have not increased – and will not increase even if their costs do. More of Arun’s wage will be disregarded as the Work Allowance has increased.
Jack and Claire live in socially rented accommodation with their five children. They claim Universal Credit and are affected by the Benefit Cap. They currently receive £1,321.74 UC a month. From April 2023, they will receive £1,455.20 a month – this is an increase of 10.1% because both the Benefit Cap limit (and Child Benefit) has increased by 10.1%.
Welfare Reform
Managed migration of ESA claimants delayed
The managed migration of Income-Related ESA claimants who are not also receiving Child Tax Credit (i.e. those just on IR-ESA or on both IR-ESA and HB) has been delayed. The budget states that the migration of these claimants will be delayed until 2028.
The migration of all other ‘legacy’ benefit claimants (including those who are receiving IR-ESA and CTC) will continue as planned. We have heard that this will probably rollout by benefit type rather than geographical area, but this is not confirmed.
IMPORTANT: Employment and Support Allowance claimants are still able to make a claim for UC if they believe that they will be better off - they should seek advice from a benefits expert before making a claim.
Housing Benefit to Pension Credit migration delayed
The DWP are continuing with their plans to scrap pension age Housing Benefit* and replace it with a Housing Element in Pension Credit. Given the delay to managed migration, this has now been pushed back to April 2028. This means that state pension age claimants and ‘protected’ mixed age couples' will be able to make new claims for / remain on Housing Benefit.
* May still be available to those living in certain types of supported housing.
DLA to PIP migration delayed
The planned transfer of DLA claimants to PIP has been delayed several times. It was paused in March 2020 due to the Coronavirus pandemic and it has been confirmed that this will not restart until April 2028. The DWP are experiencing a high number of new PIP claims and want to prioritise these assessments. A working age DLA claimant may still need to make a claim for PIP if they reach the end of a fixed period DLA award or have a change in their condition that would affect their rate of payment. They could also choose to make a claim for PIP if they think they will be better off.
Extra support
Loans for mortgage interest for UC claimants
Currently, UC claimants can apply for a loan to help pay their mortgage interest after 9 months on UC and this ends if they have any earned income in a Monthly Assessment Period. From Spring 2023, they will be able to receive the loan (which is paid directly to their lender) after 3 months on UC and this will not end automatically if they have any earned income.
Cost of Living Payments 2023/4
The budget confirmed that another set of Cost-of-Living Payments will be made in 2023/4. This will be £900 for households on means-tested benefits, £300 for pensioners, and £150 for recipients of disability benefits.
Household Support Fund
An extra £1 billion will be provided to enable the extension of the HSF in England over 2023-4. This is discretionary help provided by Local Authorities to help households in need.
Other
Social housing rent increase capped at 7%
Usually, social housing providers can increase their rents by CPI + 1%. However, this would have allowed them to increase their rents by 11.1% in April and the government felt that this would not be fair to tenants, so they have introduced a temporary cap of 7% for 2023/4. However Supported Housing provided by Registered Providers is exempt from this temporary cap.
600,000 more in-work UC claimants will be invited to see a Work Coach
The budget is not clear on how this will be achieved. The nationwide rollout of the ‘In-Work Progression Offer’ will start a phased rollout from September 2023 – but we ave not seen details of exactly what this entails. The Administrative Earnings Threshold will increase in January 2023 bringing more working claimants from the Light Touch regime into the Intensive Work Search regime, meaning they will be expected to actively search for work and meet with a Work Coach. It is possible that the ‘In-Work Progression Offer’ will require claimants in the Light Touch regime to meet periodically with a Work Coach – but this would only affect claimants in the All-Work Related Requirements group. At this point, there is no reason to assume that disabled claimants or those with caring responsibilities will have their work search requirements increased.
Additional funding for the DWP to tackle fraud and error
The increased funding will ‘better equip the DWP to proactively review and correct UC claims’.