Evidence for the impact of UK recession and welfare reform on mental health

Appendix 1

As at 10 October 2014

Summary of Welfare Reform

1. Introduction of Universal Credit (UC) for people seeking work or on low income.  It will bring together the current complex range of working-age benefits  (including Income Support, Job Seeker’s Allowance, housing benefit and tax credits) into a single payment.  Taken alone, UC is thought to be progressive and likely to reduce poverty but when taken alongside all other tax and benefit reforms, poverty is expected to increase significantly more across the UK by 2015-16 than it would were the reforms not implemented (1) .
2. Change from Disability Living Allowance to Personal Independent Payment.  Disability Living Allowance is a tax-free benefit for children and adults who need help with personal care or their mobility needs.  The change will mean people are in future, assessed and receive support according to how their condition affects them, not the condition they have. 
3. Department for Work and Pensions (DWP) impact assessment suggests 35% of those eligible for DLA will lose out under the PIP system.
   All on Incapacity Benefit will move to Employment Support Allowance and will have a work capability assessment to assess their fitness for work.

Changes to benefits one can receive:

• Benefit cap – the maximum a working-age household can receive in benefits will be capped at the level of the average earnings of a working family.
• Housing benefit –the so called “bedroom tax” whereby those under-occupying a property by one bedroom will see their housing benefit cut by 14% and those under-occupying by two or more bedrooms will see their housing benefit cut by 25%.  Department for Work and Pensions (DWP) impact assessments indicate 66% of those affected have a disabled person in the house and 41% have children.
• From April 2013, benefits will only be uprated by 1% a year until 2016 so benefits will not rise in line with the full cost of living.  It is estimated that a single unemployed person will lose £2.85 a week as a result of this policy.  The Scottish Government expects this policy to affect 2.5 times more people in work than those out of work.

Reference:

Browne J, Brewer M, Joyce R (2011) Child and Working Age Poverty and Inequality in UK: 2010. London: Institute for Fiscal Studies.