Welfare Reform (Further Provision) (Scotland) Act 2012: annual report 2017

Annex C - Methodology Summary - Number of Households Affected

This annex outlines the data sources and methodology behind estimates of the number of households affected by welfare reform as outlined in section 3.4.

Benefit Freeze

DWP's impact assessment assumes that 30% of all households in GB will be affected by the benefit freeze ^[166] . Using the NRS 2014-based household projection estimate for 2019 ^[167] , there will be around 2.5 million households in Scotland, which means approximately 750,000 will be affected by the benefit freeze.

UC Work Allowance and UC taper change

The UC work allowance change and the reduction in the taper rate will impact on all in-work households claiming UC. There are around 223,000 in-work households in Scotland claiming Tax Credits ^[168] , therefore once UC has fully rolled out, and assuming no change in the number of households claiming in-work benefits, approximately this number of households would be affected.

The type of household, the number of children, how many hours were worked and the wage of the household would determine whether the household was better off as a result of both of these changes.

Universal Credit and Tax Credit changes - 2 child limit and removal of the family element

DWP estimate that around 640,000 families will be affected by the 2 child limit by 2020/21 and 1.2 million families will be affected by the removal of the family cap by 2020/21 ^[169] . Taking a Scottish share of these figures ^[170] , around 50,000 families in Scotland will lose entitlement to a child element for a third or subsequent child by 2020/21 and 90,000 families in Scotland will lose entitlement to the family element. At this stage, it is not possible to say how many households in total will be affected by both changes. For example, a household in receipt of CTCs that has a third child after April 2016 will be affected by the two child cap but not the removal of the family element. However, a household with three children making a new claim to UC from later this year will be affected by both policies.

Cap to social rents to LHA rate

IFS analysis of the impact of this policy in steady-state suggested that 800,000 households in GB would be affected ^[171] . Using Scotland's share of housing benefit expenditure in the social sector reveals around 70,000 households may be affected in Scotland.

Reduction of payment to ESA WRAG recipients (new claims)

This policy will only affect new claims to Employment Support Allowance in the work related activity group. The number of people affected by 2020/21 depends on on-flows to ESA (data not published). In the long-run, based on the current WRAG caseload, DWP estimate that 500,000 households with be affected at the GB level ^[172] which implies that around 70,000 households could be affected in Scotland (based on current ESA WRAG caseload share).

Support for Mortgage Interest Change

No statistics on SfMI are publically available. A DWP impact assessment stated that across the GB there were around 170,000 households claiming SfMI. Based on Scottish share of home ownership, between 10,000 and 20,000 households may be affected in Scotland. A range is given as there is uncertainty over the share of benefit recipients in Scotland that are home-owners. The change from SfMI from a benefit to a loan will happen in 2018/19 and will apply to both new and existing claims.

Benefit Cap

The lower Benefit Cap was introduced in November 2016. Benefit Cap statistics show that 66,000 households in GB were affected by the cap as of February 2016 and 3,600 were affected in Scotland. There is some uncertainty around the statistics at this early stage in Benefit Cap implementation, so the Scotland figure has been rounded up to 4,000 households.

Removal of Housing Benefit from 18-21 year olds

An explanatory memorandum accompanying the regulations ^[173] for the removal of housing benefit to 18 -21 year olds states that the provision is expected to affect 1,000 young people in the first year rising to 11,000 in steady state ( GB level). Analysis of DWP housing benefit figures (Source: Stat-Xplore) for Scotland suggests that no more than 800 young people could be affected at steady-state when the policy is fully rolled out.

Pension Credit freeze

The savings credit part of Pension Credit closed for people reaching State Pension age on or after 6 April 2016. Currently around 1 million people in GB claim savings credit and 110,000 people claim savings credit in Scotland. If the policy affected all claimants, then around 110,000 people would be affected in Scotland.

UC conditionality

A DWP impact assessment of the policy estimated ^[174] that, in steady state, the policy will affect around 220,000 responsible carers claiming Universal Credit with a youngest child aged 3 or 4. Taking an appropriate Scottish share ( DWP benefit expenditure share 2015/16), around 20,000 households may be affected by this policy.

Tax Credit Income Disregard

The income rise disregard is the amount up to which any increase in a claimant's income within a year is not taken into account in calculating their tax credits entitlement for that year. This measure reduces this limit from £5,000 to £2,500. It is effective from April 2016. There is no publically available estimate of the number of people or households affected by this measure at a GB level.