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EDITIONS
Wednesday, 21 January, 1998, 07:55 GMT
Social Security factfile
Despite coming under attack for proposing to reform the welfare system, the Government is determined to press ahead with plans to concentrate payments on those who need them most.

This could mean an end to universal benefits and the introduction of means-testing in some areas.

Ministers are considering or planning reform in all major areas including:

  • Child Support
  • Sickness and Disability benefits
  • Welfare-to-Work
  • Pensions
  • Long term care
  • Housing benefit

Child Support

  • Child benefit is paid universally to seven million parents, regardless of income, and costs some 6.7bn a year. The rates are 11.05 a week for the eldest child and 9 a week for subsequent children.

    The Government may decide to tax the benefit or scrap it for 16-18 year olds. This would save 600m for educational allowances.

  • Statutory Maternity Pay costs 485m a year, with 275,000 claimants. Women receive up to 90% of their income for six weeks and then a flat rate of 55.70 for 12 weeks. They must earn at least 62 a week for six months to qualify.

    The benefit could be capped or subject to an "affluence test" where it would be stopped above a certain threshold.

  • Lone parents Around 80% of the 1.1 million lone parents receive income support, which is paid to those on low incomes. All lone parents are also entitled to receive a higher level of child benefit (previously known as one parent benefit).

    A total of 10bn was spent by the state on lone parent benefits in 1996/97.

    Prior to April 1997 lone parents were entitled to two special benefits: lone parent premium and one parent benefit.

    All lone parents received one parent benefit which is a supplement to child benefit and is worth 6.05. In addition, lone parents who received income support could receive an additional 4.95 on top of the family premium (10.80) as lone parent premium (15.75).

    From April 1997 lone parent premium and one parent benefit have been incorporated into the income support family premium and child benefit respectively. Lone parents now effectively receive these benefits in the form of a higher rate of the benefits which are paid to two-parent families.

    The Government could reduce the benefit to the same level as couples.

    The rates of one parent benefit and lone parent premium have been frozen since April 1995. The Government has said that it will continue the freeze when other benefits go up in April 1998.

Sickness and Disability benefits

  • Incapacity benefit is paid to all those incapable of working in their usual occupation for up to 28 weeks, then those incapable of working because of illness or injury.

    With 1.7 million claimants, the benefit costs 7.6bn a year.

    The benefit is already taxed, so proposals are for a means test or rate cut.

  • Disability Living Allowance is estimated to cost 4.95bn in the current financial year, with 1.8 million claimants.

    DLA is a benefit for people who become disabled before the age of 65. It is payable to people who are disabled and need help with personal care or getting around.

    There are two components to DLA - a care component and a mobility component. There are three rates of care component and two rates of mobility component.

    To get DLA the claimant must have needed help for three months and be expected to need help for a further 6 months. Once a claimant has been awarded DLA they get it as long as they continue to meet the conditions.

    The Government may withdraw the allowance for hospital patients and over 65-year-olds and/or it may tax it.

  • Industrial injury benefit is paid to those "at least 14%" disabled by an accident at work and will cost around 660m in the current year.

    Payments vary from 12.38 to 101.10 a week depending the level of injury.

    Ministers may scrap the benefit for pensioners or consider claiming back the first 2,500 compensation from injured people. This would shift the burden of industrial injury payments to private employers.

Welfare-to-Work

The central element of the Government's welfare-to-work plans is the commitment to get 250,000 young people off benefit and into work. In addition, helping the long-term unemployed into work has been identified as a key aim.

The Government has estimated total spending of 3.7bn funded by a one-off windfall levy.

From June, employers will be offered a 75-a-week tax rebate for six months if they take on an employee who has been unemployed for more than two years.

There are special provision to help lone parents back to work. Once the youngest child is in the second term of full-time school lone parents will be offered advice to develop a package of job search, training and after-school care.

Pensions

The state pension is universal, for men over 65 and women over 60.

A total of 10.4m pensioners claim 31.85bn a year at a rate of 62.45 each per week.

The benefit is already taxable so a two-tier system could be introduced with the value protected for poorer pensioners. It could also be integrated into the income support system.

Long term care

A special Royal Commission is being set up to investigate the funding of long-term care for the elderly. It is to report back within 12 months.

The commission is also considering the implications of its recommendations for younger people who have long-term care needs because of illness or disability.

Housing benefit

The Government has said it will not implement the previous government's single room rent restrictions for 25-59 year olds. The restriction will still apply to under 25 year olds.

The reversal of the housing benefit cut for 25-59 year olds will cost 6m in 1997/98, 47m in 1998/99 and 69m in 1999/00.

These costs will have to be met from within the social security budget.

See also:

21 Jan 98 | Welfare Reform
15 Jan 98 | Politics
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