The Welfare Reform and Pensions Bill 1999

Feature

posted 1 Nov 1999 in Volume 5 Issue 1

The Welfare Reform and Pensions Bill 1999

The next stage in the Government's reform of Social Security is to be found in the Welfare Reform and Pensions Bill which is about to complete its passage through Parliament. There are four main issues which are likely to be of interest to readers of this publication.

The first of these is the framework for stakeholder pension schemes which is contained in clauses 1 to 7 of the Bill. The main purpose of this framework is to provide a further state pension for those whose incomes are at present in the region of £9,000 to £20,000 a year. It is by no means clear from the Bill exactly how the new stakeholder pension is to work, as the Bill concentrates on introducing the framework. Details of the new scheme will be included in a future article as soon as they are available.

The second major change is the change to benefits for bereaved spouses. As readers will no doubt be aware, whereas there are currently available benefits for widows, there are no equivalent benefits for widowers. That will change under the proposals with effect from April 2001.

Benefits currently available to widows under the age of 60 consist firstly of a lump sum widow's payment of £1,000, and thereafter of a weekly benefit for a widow who either has dependent children or alternatively who meets the age requirement. If the widow has dependent children, widowed mother's allowance is paid to her for as long as the children remain dependent. If she has no dependent children, or if her widowed mother's allowance has run out as the children have grown up, she will be able to claim a widow's pension instead. This, however, is only available to her if she is aged at least 45 when her husband dies, or when her widowed mother's allowance runs out. The full rate of widows pension is payable only to a widow who is 55 at this time; if she is between 45 and 55, benefit is reduced on a sliding scale.

Under the Bill, new benefits will be available to both widows and widowers who are under retirement age. In both cases there will be a 'bereavement payment' of £2,000 on the death of the spouse, replacing the widow's payment of £1000. Thereafter, if either the widow or the widower has dependent children, a widowed parent's allowance will be paid to them for as long as any child remains dependent. This will be available to fathers who are already widowed on the day when the new scheme comes into force. £10.00 of the widowed parent's allowance will be disregarded in calculating income support and other income related benefits; at present there is no such disregard.

For widows and widowers aged 45 and over with no dependent children, or whose entitlement to widowed parent's allowance has run out, there will be a weekly benefit known as a bereavement allowance. This will be the equivalent of the current widow's pension, and will be introduced on a sliding scale, depending on the age of the widower or widow when he or she first becomes entitled. The full benefit will only be payable to those who are aged 55 or over.

Most significantly, this benefit will only be paid for six months. A widow's pension at present continues until retirement age. A widow or widower whose entitlement to bereavement allowance has run out will need to claim a means tested benefit if he or she has no paid employment.

The third issue of significance in the Bill is contained in a single clause, with wide implications. This is the introduction of the single work-focused gateway known as 'One'. The intention behind One is to arrange for almost all benefit claimants to have a single point of contact with the benefits system, which should include an interview at the time of claim, to examine the claimant's prospects of gaining employment and becoming independent of the benefits system. This new system will not simply be limited to those who claim jobseekers allowance, as at present. It will extend to all people of working age.

The benefits to which the scheme will apply, or 'gateway benefits', are jobseekers allowance, income support for those of working age, incapacity benefit, severe disablement allowance, invalid care allowance, housing benefit, council tax benefit and bereavement benefits. Note that not every claim or renewal claim for housing or council tax benefit will attract a gateway interview; the intention is to interview those who might become independent, so pensioners and those in fulltime work will be excluded.

The new scheme is already operating as a pilot in four areas of the country (Clyde Coast and Renfrew; South East Essex; Warwickshire; and Lea Roding). With effect from November 1999, eight more pilot areas will be introduced. The first four of these areas will operate on the basis of a 'call centre approach' . These are Calderdale and Kirklees, South East Gwent, Somerset and Buckinghamshire. In four more areas, parts of a gateway will be delivered by a consortia of private and voluntary organisations. These four areas are Leeds, Suffolk, North Nottinghamshire and North Cheshire.

The intention is that, when someone first claims benefit, they will be directed to a Registration and Orientation Adviser (for a personal interview or, in call centre areas, by telephone). It is this person's responsibility to gather information, to discuss employment, to determine the right benefits for the claimant and to decide whether this is one of the exceptional cases in which an immediate interview with a personal adviser would not be appropriate. The Government has emphasised that it is not their intention to exclude people from interview on the basis of the category to which they belong. They will be excluded as individuals, if at all.

On the assumption that a person is not excluded, they will be invited for an interview with a personal adviser. This should take place within 3 days of the registration and orientation stage. The personal adviser is expected to help the claimant to find work where appropriate, and also to ensure that claimants get all the necessary support that they need, including specialist help or advice, in particular with benefit issues. At a conference at which the writer was present, the Chief Executive of the Employment Service said that this support would include the completion of claim forms for Disability Living Allowance.

Under the pilot scheme, the claimants of benefits other than JSA can refuse to attend or to take part in a work focused interview without being penalised. However, once the provisions in the Welfare Reform Bill become law, attendance will become compulsory.

Penalties for non attendance will be extremely harsh. It is not merely the case that the claimant will be expected to attend the interview. The claimant is also required to participate. Failure to participate may lead to a sanction being imposed on the claimant's benefits. For those who do not participate in the process the consequence will be the termination of their benefit claim.

The fourth and final issue addressed by the Bill is that of benefits for disability, where the new provisions have attracted particular interest in the press. Originally the Bill contained three particular proposals - to limit entitlement to incapacity benefit to recent contributors (i.e. those who have recently been in work): to introduce an element of means testing into incapacity benefit by taking into account occupational pensions above a certain amount (£50 per week was proposed); and thirdly to abolish severe disablement allowance. The House of Lords took exception to these proposals, and all have disappeared from the latest version of the Bill. However, the Bill is still before the Lords at the time of writing; it may yet be amended again, either in the Lords or on its return to the Commons.

In a future article these changes will be updated and, where necessary, explained in more detail.

Alan Robinson, Legal and Welfare Rights Training, Tel: 01724 710819.