Autumn Statement 2016 confirms no further plans for welfare cuts this parliament but fails to address proposed ESA cuts and social care crisis.
Disability Rights UK is disappointed at the Government’s failure to heed last week’s vote by MPs to postpone the proposed £30-a-week cut for new claimants placed in the ESA Work Related Activity Group from April 2017.
We believe that imposing a £30-a-week cut on those in the Work Related Activity Group will not only produce hardship for disabled people and those with long term health conditions but also acts as a real disincentive to disabled people trying to get back into work.
Further we demand, not a postponement of the cut but that the £30 a week cut be scrapped altogether and replaced by personalised, targeted and effective support into work, which is the best way of achieving the Government’s stated aims of halving the disability employment gap.
In relation to social care, Deputy CEO Sue Bott said:
“I am more than disappointed by the lack of even an acknowledgement in the Chancellor’s Autumn Statement of the crisis in social care.
It would seem that building an expressway between the universities of Oxford and Cambridge is far more important than tackling the issue that thousands of disabled people who rely on care support are confined in their own homes, living isolated lives, unable to join in with their local community, or realise their ambitions as equal citizens.”
Autumn statement highlights
Download Autumn Statement 2016: documents
This will be the last autumn statement. Following the spring 2017 Budget and Finance Bill, Budgets will be delivered in the autumn, with the first one taking place in autumn 2017.
“The OBR will produce a spring forecast from spring 2018 and the government will make a Spring Statement responding to that forecast. The Statement will review wider economic and fiscal challenges and launch consultations. The government will retain the option to make changes to fiscal policy at the Spring Statement if the economic circumstances require it.”
Welfare benefits and tax credits
Welfare cap margin of 3%
The government introduced the welfare cap on all benefit spending at Budget 2014. To manage unavoidable fluctuations in welfare spending there will be an allowed margin rising to 3% above the cap; the cap will only be breached if spending exceeds the cap plus the margin at the point of assessment.
Universal Credit
Universal Credit earnings taper will be reduced from 65% to 63%, from April 2017, to allow individuals keep more of what they earn.
Welfare changes previously announced
- Refugees and their family members will be exempted from the Past Presence Test, meaning that they will no longer have to be resident in the UK for 2 years before they can receive disability benefits
- Local Housing Allowance (LHA) rates in social housing – the implementation of the cap on Housing Benefit and LHA rates in the social rented sector will be delayed by 1 year, to April 2019. The cap will be applied to all supported housing tenancies from April 2019, and the government will provide additional funding to Local Authorities, so that they can meet the additional costs of supported housing in their area. For general needs housing, the cap will now apply from April 2019 for all tenants on Universal Credit, and to Housing Benefit tenants whose tenancies began or were renewed since April 2016
- Social rent downrating – refuges, almshouses, Community Land Trusts and co-operatives will be exempt from the policy to reduce social sector rents by 1% a year for 4 years from 2016-17
Personal Independence Payment (PIP) – The Autumn Statement accounts for the government’s previously announced decision not to go ahead with changes proposed at Budget 2016 to PIP regarding the scoring for the use of aids and adaptations.
Pay to Stay – As announced by DCLG on 21 November 2016, the government has decided not to implement Pay to Stay, under which local authority tenants with taxable incomes over £31,000 (or £40,000 in London) would have been required to pay a market, or near market, rent. The government will work to deliver its commitment to ensure that social housing is occupied by those who need it most through other measures.
Tax Credits Digital services – HMRC will allow new Tax Credit claims to be made using digital devices from April 2017.
Child Tax Credit – HMRC will make in-year award adjustments so the disability elements of Child Tax Credit will be paid to a group of recipients who are eligible, but not currently receiving this entitlement.
Employment
The National Living Wage (NLW) will rise from £7.20 to £7.50 from April 2017.
National Minimum Wage (NMW) will rise from April 2017 for the following:
- increase the rate for 21 to 24 year olds from £6.95 to £7.05 per hour
- increase the rate for 18 to 20 year olds from £5.55 to £5.60 per hour
- increase the rate for 16 to 17 year olds from £4.00 to £4.05 per hour
- increase the rate for apprentices from £3.40 to £3.50 per hour
National Minimum Wage enforcement – The government will invest an additional £4.3 million per year to strengthen NMW enforcement.
Tax-Free Childcare will be introduced gradually from early 2017, with roll out beginning upon completion of the trial. Once the scheme is fully rolled out, the government will review its operation to ensure it is delivering as intended and to assess the benefit it is delivering for working parents.
Tax and National Insurance
Next year, the personal tax allowance will rise to £11,500 and the higher rate threshold to £45,000.
National Insurance secondary (employer) threshold and the National Insurance primary (employee) threshold will be aligned from April 2017, meaning that both employees and employers will start paying National Insurance on weekly earnings above £157.
Self-employed Class 2 NI Contributions (previously announced) will be abolished from April 2018, simplifying National Insurance for the self-employed. The self-employed contributory benefit entitlement will then be accessed through Class 3 and Class 4 NICs.
All self-employed women will continue to be able to access the standard rate of Maternity Allowance. Self-employed people with profits below the Small Profits Limit will be able to access Contributory Employment and Support Allowance through Class 3 NICs. There will be provision to support self-employed individuals with low profits during the transition.
VAT relief
The government will clarify the application of the VAT zero-rating for adapted motor vehicles to stop the abuse of this legislation, while continuing to provide help for disabled wheelchair users.