The Impact of Welfare Reform in Scotland - Tracking Study - Year 1 Report - Appendices

Appendix 2 Descriptions of Key Welfare Benefits

Note: Unless otherwise stated, the reflected rates cited are taken from the Government's publication of benefits rates for 2014-2015^[1]. These rates are weekly, however they may be paid on a fortnightly basis, dependent upon the benefit.

Attendance Allowance (AA)

AA is paid to people who are physically or mentally disabled, require care and are aged 65 years or over.^[2]

AA is paid at two rates^[3]:

• Lower rate: £54.45
• Higher rate: £81.30

Constant Attendance Allowance (CAA)

CAA is paid to those who are in receipt of Industrial Injuries Disablement Benefit or a War Disablement Pension. CAA is paid at four rates depending on the extent of the disability and the amount of care the claimant requires.^[4]

CAA is paid at the following rates^[5]:

• Exceptional Rate: £132.80
• Intermediate Rate: £99.60
• Full day rate: £66.40
• Part day rate: £33.20

Disability Living Allowance (DLA)

DLA is paid to assist disabled people who have care and mobility requirements. It is paid to adults of working age, and children.

There are two separate components that make up DLA; 'care' and 'mobility'. The 'care' component is payable at one of three rates; low, middle and high, depending on the frequency of an individual's needs for personal care. In order to receive the high rate, a person needs to require frequent help during the day and night.^[6]

The 'mobility' component is awarded over two categories; low and high. The low rate is awarded to those who need guidance or supervision outdoors. The highest rate in general is paid to people who have difficulties walking.^[7]

DLA is also provided for children and the same conditions apply to disabled children, apart from some restrictions on the mobility component. They must show their needs are considerably greater than other children their age.^[8]

DLA is currently paid at the following rates^[9]:

• Higher rate: Care - £81.30 per week / Mobility - £56.75 per week
• Middle rate: Care - £54.45 per week / Mobility N/A
• Lower rate: Care - £21.55 per week / Mobility - £21.55 per week

From 2013 the Government introduced a new benefit called Personal Independence Payment (PIP), which replaced Disability Living Allowance (DLA) for eligible working age people aged 16 to 64. There are no current plans to replace Disability Living Allowance for children under 16, or people aged 65 and over who are already receiving Disability Living Allowance. Reassessment of DLA claimants began in October 2013, but the majority of working age DLA claimants will not be affected until 2015 or later.^[10]

Personal Independence Payments (PIP)

Personal Independence Payments will replace DLA, and is for people between the ages of 16-64 inclusive. The transition began in April 2013.^[11] PIP can be paid regardless of whether the claimant is in work.^[12]

PIP is comprised of two categories; a daily living component, for help participating in everyday life, and a mobility component, for help getting around. A claimant can be paid either component separately, or both at the same time.^[13]

Each component is paid at two different levels; standard and enhanced. The rate awarded is dependent upon whether the claimants' ability to carry out daily living or mobility activities is limited or severely limited.

New PIP claimants must have needed help for 3 months or more (this is known as the qualifying period) and be likely to need help for the next 9 months (this is the prospective test period).^[14]

PIP is paid at the following rates^[15]:

• Daily living component: Standard £54.45 per week / Enhanced £81.30 per week.
• Mobility component: Standard £21.55 per week / Enhanced £56.75 per week.

Children under 16 will continue to claim DLA, and people over 65 can claim Attendance Allowance. As of October 2013, some existing DLA claimants aged between 16 and 65 who report a change in their condition, are approaching age 16 or who have a fixed-term award of DLA will be invited to claim PIP^[16]. Individuals who receive DLA and are aged between 16 and 64 on 8 April 2013, will eventually be invited to make a claim for PIP, even if they have been given an indefinite or lifetime award for DLA.^[17]

Eligibility for PIP will be based on an assessment of individual need. The new assessment will focus on an individual's ability to carry out a range of key activities necessary to everyday life. It will not be related to the current DLA award. Thus, some individuals currently receiving DLA will not be awarded PIP, as it uses different criteria for the award. One of the key changes from DLA to PIP is the move from the current self-assessment to a points-based assessment which, in most cases, will involve a face-to-face meeting with an independent healthcare professional working under contract to DWP^[18]. The new assessment will follow a similar process to the Work Capability Assessment currently used to assess claims for ESA.

Employment and Support Allowance (ESA)

ESA is a benefit that is paid in replacement of earnings for those who are ill and disabled, which offers financial support if the person is unable to work, and personalised help for the person to work if they are able to. People can apply for ESA if they are employed, self-employed or unemployed. People are assessed through the work capability assessment (WCA) to determine the extent to which their ability to perform certain tasks is limited by a health condition or impairment. ^[19]Following the WCA, people assessed as entitled to ESA are placed in either the work-related activity group (must attend regular interviews with an advisor about job goals etc.) or support group (not required to attend regular interviews; usually those in this group have a severely limiting disability).^[20]

There are two different types of ESA. Some people will get 'contribution-based ESA' (CB-ESA) because they have paid enough National Insurance contributions. Payment of contribution-based ESA is limited to 12 months for those in the work-related activity group. There is no time limit on how long CB-ESA can be claimed if the claimant is in the support group. Others will get 'Income-related ESA' (IR-ESA) provided they have little or no income and little if any capital. People may qualify for IR-ESA if they no longer qualify for CB-ESA^[21].

ESA is currently paid at the following rates^[22]:

Personal Allowances

• Single, under 25: £57.35
• Single, 25 or over: £72.40
• Lone parent, under 18: £57.35
• Lone parent, 18 or over: £72.40
• Couple both under 18: £57.35
• Couple, both under 18 with child: £86.65
• Couple both under 18 (main phase): £72.40
• Couple both under 18 with child (main phase): £113.70
• Couple, one 18 or over, one under 18 (certain conditions apply): £113.70
• Couple, Both over 18: £113.70
• Couple, Claimant under 25, partner under 18: £57.35
• Couple, Claimant 25 or over, partner under 18: £72.40
• Couple, Claimant (main phase), partner under 18: £72.40

Premiums

• Enhanced Disability, Single: £15.55
• Enhanced Disability, Couple: £22.35
• Severe Disability, Single: £61.10
• Severe Disability, Couple (lower rate): £61.10
• Severe Disability, Couple (higher rate): £122.20
• Carer: £34.20
• Pensioner, single with WRAC: £47.20
• Pensioner, single with support component: £40.20
• Pensioner, single with no component: £75.95
• Pensioner, couple with WRAC: £84.05
• Pensioner, couple with support component: £77.05
• Pensioner, couple with no component: £112.80

Components

• Work-related Activity: £28.75
• Support: £35.75

Severe Disablement Allowance (SDA)

SDA has been replaced by ESA. SDA is not affected if the claimant engages in the following:^[23]

• Voluntary work
• Work and earn up to £20 a week
• Work for less than 16 hours a week on average and earn up to £101 a week for 52 weeks
• Do 'supported permitted work' and earn up to £101 a week

For those still in receipt of SDA, the benefit is paid at the following rates^[24]:

• Basic rate: £73.75

Age related additions (from Dec 90) are paid at the following rates^[25]:

• Higher rate: £11.00
• Middle rate: £6.15
• Lower rate: £6.15

Carers Allowance (CA)

CA is paid to someone aged over 16 years who cares for someone with substantial caring needs for at least 35 hours a week. CA is taxable.^[26] Young carers are not eligible for this benefit. CA is paid at £61.35 per week^[27].

Incapacity Benefit (IB)

IB is being replaced by ESA. IB is a benefit for people who are unable to work due to being sick and/or disabled. People who currently receive IB will be assessed to see if they are capable of work or eligible for ESA.^[28]

The rates that IB is paid at are currently set at the following levels^[29]:

• Long-term IB: £104.10

Short-term IB (under state pension age)

• Lower rate: £78.50
• Higher rate: £92.95

Short-term IB (over state pension age)

• Lower rate: £99.90
• Higher rate: £104.10

Increase of Long-term IB for age

• Higher rate: £11.00
• Lower rate: £6.15

Invalidity Allowance (Transitional)

• Higher rate: £11.00
• Middle rate: £6.15
• Lower rate: £6.15

Income Support (IS)

IS is a benefit for those who are between the ages of 16 and pension qualifying age and are on a low income. Claimants must work less than 16 hours a week (with any partner working no more than 24 hours a week). Income support can also be received for people who are pregnant, are a lone parent with a child under five, or in some cases are unable to work due to sickness and/or disability. People who do unpaid voluntary work or are on parental leave may also qualify. Furthermore, those who are 19 years old or younger, in full-time secondary education and are a parent, or not living with a parent/guardian, or a refugee learning English qualify may also qualify.^[30]

Those who have savings over £16,000, require permission to enter the UK, are in receipt of JSA or ESA, or are looked after by the local authority do not qualify for IS.^[31]

Current IS rates are^[32]:

Personal Allowances

• Single, under 25: £57.35
• Single, 25 or over: £72.40
• Lone parent, under 18: £57.35
• Lone parent, 18 or over: £72.40
• Couple both under 18: £57.35
• Couple both under 18 - higher rate: £86.65
• Couple one under 18, one under 25: £57.35
• Couple one under 18, one 25 and over: £72.40
• Couple both 18 or over: £113.70
• Dependent children: £66.33

Premiums

• Family / lone parent: £17.45
• Pensioner (applies to couples only): £112.80Disability - Single: £31.85
• Disability - Couple: £45.40Enhanced Disability - Single: £15.55
• Enhanced Disability - Disabled child: £24.08
• Enhanced Disability - Couple: £22.35 Severe Disability - Single: £61.10
• Severe Disability - Couple (lower rate): £ 61.10
• Severe Disability - Couple (higher rate): £122.20
• Disabled Child: £59.50
• Carer: £34.20
• Relevant sum for strikers: £40.00

Job Seeker's Allowance (JSA)

JSA is for people who are not in full-time employment but are capable of working and are looking for a job. This benefit is paid to those between the ages of 16 and state pension age, however for those aged 16/17 there are specific rules for qualification.^[33]

There are two types of JSA; contribution-based and income-based. Contribution-based JSA can be paid for up to six months if the claimant has been in work and has paid enough Class 1 National Insurance contributions over the previous two years. Claimants may be able to get income-based JSA after this period. Income-based JSA is paid to people who have not have paid enough National Insurance contributions (or whose eligibility for contribution-based JSA has ended), and is means tested^[34]. For income- based JSA, if the claimant has a partner they must not be working or be working less than 24 hours a week.^[35]

Current JSA rates are^[36]:

Contribution based JSA

• Under 25: £57.35
• 25 or over: £72.40

Income-based JSA

• Under 25: £57.35
• 25 or over: £72.40
• Lone parent, under 18: £57.35
• Lone parent, 18 or over: £72.40
• Couple, both under 18: £57.35
• Couple, both under 18 - higher rate: £86.65
• One under 18, one under 25: £57.35
• One under 18, one 25 and over: £72.40
• Both 18 or over: £113.70
• Dependent children: £66.33

Premiums

• Family / lone parent: £17.45
• Pensioner - single: £75.95
• Pensioner - couple: £112.80
• Disability - single: £31.85
• Disability - couple: £45.40
• Enhanced disability - single: £15.55
• Enhanced disability - disabled child: £24.08
• Enhanced disability - couple: £22.35
• Severe disability - single: £61.10
• Severe disability - couple (lower rate): £61.10
• Severe disability - couple (higher rate): 122.20
• Disabled child: £59.50
• Carer: £34.20
• Prescribed sum for strikers: £40.00

Child Benefit (CB)

CB is paid to those who are responsible for a child who is under 16, or under 20 if they stay in approved education or training).^[37]

CB is unaffected by National Insurance contributions.

CB Rates are^[38]:

• Eldest or only child: £20.50 per week
• Additional children: £13.55 (per child) per week

Child Tax Credit (CTC)

CTC can be paid to parents / guardians for each child under the age of 16, or under 20 and in education and/or training. The level of CTC depends on household income.^[39]

CTC Rates are:^[40]

• For each child: Up to £2,750 per annum
• For each disabled child: Up to £3,100 per annum
• For each severely disabled child: Up to £1,255 (on top of the disabled child payment) per annum.

Working Tax Credit (WTC)

WTC can be claimed by those: aged 16 or over; working a certain number of hours a week; those who get paid for the work they do (or expect to); and those whose income is below a certain level.^[41] How much a person gets depends on their circumstances and income. The 'basic element', received by all claimants, is up to £1,940 per year. Additional elements are available for a couple applying together (up to £1,990 a year), a single parent (up to £1,990 a year) and for those who work at least 30 hours week (up to £800 a year). Additional elements are also available for those with a disability and those paying for childcare (see below).^[42]

Disability Element of Working Tax Credit

The Disability Element of Working Tax Credit is payable to people who are working at least sixteen hours a week, and whose disability makes it difficult for them to get a job. Claimants must be receiving another benefit related to a disability or illness. For 2013-2014, on top of WTC, claimants could get up to:^[43]

• £2,935 a year for those who qualify for extra payments because they have a disability
• £1,255 a year for those who qualify for extra payments because they have a severe disability
• £4,190 a year for those who qualify for both lots of extra payments
• Those who claim as a couple and where both have a severe disability can qualify for two extra payments of £1,255.

The amount received depends on other sources of household income. Disability Living Allowance or Personal Independence Payment do not count as income, but other benefits such as Carer's Allowance do.

Child Care element of Working Tax Credit

This benefit can be paid to those who have responsibility for a child but are also in work. The claimant must use approved childcare and can be a lone parent working 16 hours or more a week, or part of a couple if both work more than 16 hours a week. Only one of the partners is required to work in the event that one person is either incapacitated, in hospital, in prison or entitled to Carer's Allowance.

Recipients can get help with up to 70% of childcare costs, up to a limit of £175 per week for one child (i.e. a maximum payment of £122.50 per week), and £300 per week for two or more children (i.e. a maximum payment of £210 per week).^[44] However, the amount paid depends on household income.^[45]

Local Housing Allowance (LHA)/Housing Benefit (HB)

HB is paid to people on a low income, to help them to pay their rent.^[46] People who live in the home of a close relative or are a full-time student are not eligible for this benefit (unless the student has a disability or has children).^[47]

Those who rent in the private sector receive LHA. The amount of LHA received depends on the claimant's circumstances and income, and the LHA limit in the claimant's local area. Payments are capped at a weekly rate of^[48]:

• £258.06 for a room in shared accommodation or a 1-bedroom property
• £299.34 for 2-bedroom accommodation
• £350.95 for 3-bedroom accommodation
• £412.89 for 4 or more bedrooms.

Those who rent from a council or a housing association receive Housing Benefit. The amount received depends on the claimant's circumstances and income.

The number of bedrooms that a household is entitled to claim for depends on its composition. Adult couples, children of the same sex under 16, and children under 10 are expected to share a bedroom.^[49]

The 'Applicable amounts' (the maximum amount of income that can be earned before LHA or HB are reduced) are^[50]:

Single

• Under 25: £57.35
• 25 or over: £72.40
• Entitled to main phase ESA: £72.40

Lone parent

• Under 18: £57.35
• 18 or over: £72.40
• Entitled to main phase ESA: £72.40

Couple

• Both under 18: £86.65
• One or both 18 or over: £113.70
• Claimant entitled to main phase ESA: £113.70
• Dependent children: £66.33

Pensioner

• Single/lone parent has attained the qualifying age for Pension Credit but under 65: £148.35
• Couple - one or both has attained the qualifying age for Pension Credit but both under 65: £226.50
• Single / lone parent - 65 and over: £165.15
• Couple - one or both 65 and over: £247.20

Premiums

• Family: £17.45
• Family (lone parent rate): £22.20

Disability

• Single: £31.85
• Couple: £45.40

Enhanced disability

• Single: £15.55
• Disabled child: £24.08
• Couple: £22.35

Severe disability

• Single: £61.10
• Couple (lower rate): £61.10
• Couple (higher rate): £122.20

• Disabled child: £59.50

• Carer: £34.20

ESA components

• Work-related activity: £28.75
• Support: £35.75

HB will be replaced by Universal Credit (UC). UC payments will include eligible housing costs so households will be responsible for managing their own rent payments^[51]. This means that social tenants will be subject to the same method of administration as those renting in the private sector, most of whom currently receive HB and then pay it to their landlord.

Discretionary Housing Payments

These can be paid by the relevant Local Authority to those who are receiving HB, or the housing costs element of Universal Credit, but still require further help with rent or certain other housing costs. This includes help towards specially adapted accommodation, payment of rent in advance or a deposit, or to cover a reduction in HB after the removal of the spare room subsidy in social housing.^[52]

Council Tax Benefit / Reduction

The nationally devised Council Tax Benefit was replaced by Council Tax Reduction from 01 April 2013.^[53] These schemes provide help for people on low incomes or claiming benefits towards their council tax bill. Council Tax Reduction is administered by local authorities.

In-Work Credit

In Work Credit is a financial incentive available to lone parents moving into work. It is paid for a maximum of 52 weeks for those moving into paid employment of 16 hours per week or more, who have had a period of 12 months or more on out-of-work benefits^[54]. In Work Credit stopped on 1 October 2013.^[55]

Universal Credit (UC)

UC is the new means-tested benefit for people of working age that will replace: Income-based Jobseeker's Allowance; Income-related Employment and Support Allowance; Income Support; Working Tax Credit; Child Tax Credit; and Housing Benefit^[56]. The structure of UC is intended to simplify the benefits system and tax credits system.

All recipients of UC will be allocated to one of four categories based on individual circumstances and capability. The groups are^[57]:

• No work-related requirements
• Work-focused interview requirements only
• Work preparation agreement
• All work-related requirements

The monthly rates for UC comprise the following^[58]:

• Single, under 25: £249.28
• Single, 25 or over: £314.67

• Couple, Joint claimants both under 25: £391.29
• Couple, Joint claimants, one or both 25 or over: £493.95

Child element

• First child: £274.58
• Second/ subsequent child: £229.17

Disabled child additions

• Lower rate addition: £124.86
• Higher rate addition: £362.92

• Limited Capability for Work element: £124.86
• Limited Capability for Work and Work-Related Activity element: £311.86
• Carer element: £148.61

Childcare element

• Maximum for one child: £532.29
• Maximum for two or more children: £912.50

• Non-dependents' housing cost contributions: £68.68

Higher work allowance (no housing element)

• Single claimant, no dependent children: £111.00
• Single claimant, one or more children: £734.00
• Single claimant, limited capability for work: £647.00
• Joint claimant, no dependent children: £111.00
• Joint claimant, one or more children: £536.00
• Joint claimant, limited capability for work: £647.00

Lower work allowance

• Single claimant, no dependent children: £111.00
• Single claimant, one or more children: £263.00
• Single claimant, limited capability for work: £192.00
• Joint claimant, no dependent children: £111.00
• Joint claimant, one or more children: £222.00
• Joint claimant, limited capability for work: £192.00

• Assumed income from capital: £4.35

Third Party Deductions at 5% of UC Standard Allowance for:

• Single, under 25: £12.46
• Single, 25 or over: £15.73
• Couple joint claimants, both under 25: £19.56
• Couple joint claimants, one or both 25 or over: £24.70
• Maximum deductions for Fines: £108.35

Overall Maximum Deduction Rate at 40% of UC Standard Allowance:

• Single, under 25: £99.71
• Single, 25 or over: £125.87
• Couple joint claimants, both under 25: £156.52
• Couple joint claimants, one or both 25 or over: £197.58

Fraud Overpayments, Recoverable Hardship Payments and Administrative Penalties at 40% of UC Standard Allowance

• Single, under 25: £99.71
• Single, 25 or over: £125.87
• Couple joint claimants, both under 25: £156.52
• Couple joint claimants, one or both 25 or over: £197.58

Normal Overpayments and Civil Penalties at 15% of UC Standard Allowance

• Single, under 25: £37.39
• Single, 25 or over: £47.20
• Couple joint claimants, both under 25: £58.69
• Couple joint claimants, one or both 25 or over: £74.09

Normal Overpayments and Civil Penalties at 25% of UC Standard Allowance if claimant's and/or partner's earnings are over the Work Allowance

• Single, under 25: £62.32
• Single, 25 or over: £78.67
• Couple joint claimants, both under 25: £97.82
• Couple joint claimants, one or both 25 or over £123.49

Crisis Loans for Living Expenses and Community Care Grants

Those benefits, which were paid as part of the Social Fund administered by DWP, were replaced in Scotland from April 2013 by the Scottish Welfare Fund.^[59]

Scottish Welfare Fund (SWF)

The Scottish Welfare Fund is delivered by Local Authorities, and provides two types of grant; Crisis Grants and Community Care Grants. This replaces Crisis Loans for living expenses and Community Care Grants which were in effect before the introduction of the SWF.

Crisis Grants are provided in case of crisis to meet expenses that have arisen as a result of an emergency or disaster.

Community Care Grants provide assistance to help people establish themselves in the community following a period of care or help people remain in the community rather than going in to care; help people set up home in the community after an unsettled way of life; help families facing exceptional pressures; and help people to care for a prisoner or young offender on release on temporary licence.^[60]

Sure Start Maternity Grant (SSMG)

SSMG is payable to parents who claim IS, IB-JSA, IR-ESA, PC, UC, CTC at a rate higher than the family element, and WTC that includes disability or severe disability element.^[61] The benefit is a one off payment of £500 towards the cost of having a child, and can be only claimed for the first child. Individuals must claim the grant 11 weeks prior to the birth or up to 3 months afterwards.^[62]

Budgeting Loan (BL)

A BL can be applied for to pay for essential items such as rent or furniture. They are interest free and the smallest amount that can be borrowed is £100. The loans are available to those claiming income-related benefits for at least 26 weeks. Borrowers have 104 weeks to repay the loan.^[63]

Funeral Payments (FP)

FP are paid to those on a low income who are responsible for a funeral, and must be applied for within 3 months of the funeral. Individuals must be able to prove their relationship with the deceased, and they or their partner must receive one of the following benefits; IS, IB-JSA, IR-ESA, PC, HB, UC, WTC (severe disability or disability element), or one of the extra elements of CTC. The amount received is dependent upon how much over money is available from sources such as insurance policies or the deceased's estate.^[64]

Guardians Allowance (GA)

GA can be paid to those who are bringing up a child whose parents have died. GA is paid at a rate of £16.35 per week, and is paid on top of CB.^[65]

Statutory Maternity Pay (SMP)

SMP for eligible employees can be paid for up to 39 weeks. The first 6 weeks are paid at 90% of their average weekly earnings before tax. The remaining 33 weeks are paid at £138.18, or 90% of their average weekly earnings, whichever is lower. Tax and National Insurance are deducted.^[66] Qualifying individuals must have been working for at least 26 weeks and earn at least £111 (gross) per week in an 8 week period.^[67]