Welfare Reform Bill – Progress Update

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The Welfare Reform bill reaches the report stage in the House of Lords on January 31st.

Below is a model of the welfare system.  The debate in the Lords and the  amendments proposed are in the political sphere.  However, there is broad agreement over the direction of policy, which is where the Universal Credit legislation rests.  The house is firmly behind the Universal Credit and welfare reforms first proposed by the CSJ.

An Overview of the Welfare System
An overview of the Welfare System


Political Objective: A system of unemployment insurance, and support for the most vulnerable.  

The political debate is focused on eligibility criteria and benefit levels (Who is entitled to support, and how much should they get?).

Policy Objective: Reward work, more work and independence

There is broad cross-party agreement over the direction of welfare policy, and the proposed changes to incentives (Universal Credit), support (Work Programme) and conditionality


The Government has already faced defeat in the Lords.

  • Employment and Support Allowance to be means tested after 24 months (amended from 12)
  • Cancer patients on Employment and Support Allowance not to face means testing (was proposed to be 12 months as above)
  • Young people with a disability to receive contributory ESA upon entering adulthood (it was to be withdrawn)

There are other issues where the Government can expect to be robustly challenged:

  • DLA to PIP (Changes to the disability living allowance to regularly reassess the support needs of claimants, many Lords argue that the assessment regime has not been thought through).
  • The Benefit Cap (capping total benefit income at a median incomes ~£26k net) has widespread support, but the Lords are concerned over the rationale behind the level of the cap and how families facing the cap will transition to a lower income (on average, £93 per week for 50k families expected to face the cap).
  • Fining claimants (for late notification of a change in circumstances, or during application) risks being defeated because of a lack of safeguards over how it will be applied.
  • CPI uprating (from the higher RPI) CPI compounded over many years could mean that benefits continue to fall in real terms over a number of years, many would argue that they are already insufficient to meet living costs.  However, this year claimants benefited as payments rose by 5.2%, significantly more than earnings.
  • Housing entitlement (reduced for under occupancy and single under 35s) has been argued and heavily lobbied against by landlords, it risks forcing some claimants to move.
  • Council tax benefit (should this means tested benefit be left out of Universal Credit?)
  • Social Fund has effectively localising (and reducing the size of) the social fund been properly thought through?

There is debate over broader areas outside of the bill, the use of sanction measures such as mandatory work placements, the crowding out of the voluntary sector in the Work Programme and wider cuts to the welfare budget (which are often confused with the Universal Credit).  There will be more to cover on this as the Lords continue to debate ahead throughout January 2012.

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