Tax Credits: a battle won but the war goes on

Government fury over Lords revolt

Chancellor George Osborne has said he will act on concerns about the impact of tax credit cuts after peers forced the Westminster government to think again last night – but he has vowed to press on with changes designed to slash billions from the country’s welfare bill.

In a dramatic night the House of Lords defeated the government in two votes over the controversial legislation, forcing the government climbdown.

The Chancellor has now agreed to offer ‘transitional help’ for those hundreds of thousands of people affected by cuts – but the government was angered by the defeats in the unelected ‘other place’ is now considering a review of Lords conventions to address what is sees as ‘constitutional issues’.

The proposed cut to tax credits is the most controversial piece of legislation introduced since the Conservative government’s election in May.

Tax credits were introduced by the last Labour government to help low-paid families. There are two types: Working Tax Credit for those in work, and Child Tax Credit for those with children.

Tax credits are gradually being included within Universal Credit, which is currently being rolled out across the country. Under the government’s plans, the income threshold for receiving Working Tax Credits and Child Tax Credit is due to be cut from April next year.

4.5 million people are currently eligible to claim tax credits.

Campaigners and respected think-tanks argue that the proposed tax credit cuts would deprive low-income workers of up to £1,300 a year but the Westminster government says the cuts are essential to tackle the UK’s massive deficit. It says most claimants will be better off when other changes, such as the introduction of the new national living wage, are taken into account.

Tax credits were worth around £2 billion to Scottish households in 2013/14, with two thirds of support directed at low income working families.

Scotland’s Social Justice Secretary Alex Neil called for for the UK Government proposals to be ditched in a letter to the Secretary of State for Work and Pensions earlier this week.

Me Neil said the UK Government should urgently rethink tax credit changes which will punish families and push even more children into poverty and urged the UK Government to rethink its plans to cut tax credits which mean households with the least money will face the biggest losses.

Mr Neil said: “Cutting tax credits is a thoughtless approach which may save the Treasury money in the short term but will have heart-breaking long-term consequences that could rebound on other public and charitable services.

“Tax credits can be a lifeline for families on low incomes that rely on them to get through daily life, put food on the table, heat their home and pay their bills.

“Removing this vital support from thousands of families will widen the gap in inequalities and push even more people into poverty.

“The UK Government’s plans are a clear attack on low income working families and those families must be protected as a matter of urgency.

“The Scottish Government has made clear its opposition to these changes and I urge the UK Government to reconsider the severity and timing of these changes and make changes before the Welfare and Work Bill reaches its next legislative stage, so that the poorest households in receipt of tax credits can be protected from this fall in their incomes.

“This shows why we need more social security powers through the Scotland Bill and why, we will ensure our approach to social security will be based on fairness and that people are treated with dignity and respect.”

Benefits: respect and dignity at the heart of new Scottish system

Scottish Government plans a fairer approach to social security

Scotland’s new social security powers will make it fairer and simpler for people to access benefits, Social Justice Secretary Alex Neil has said.

Launching a paper today on government conversations with the public and stakeholders on how new social security powers should be used, Mr Neil said Scotland’s new social security system will treat people with respect and dignity.

More than 70 organisations working with children, carers, disabled people, ethnic minority representative groups and older people have taken part in discussions around the new powers.

A wide range of responses has been received on what we could do with these powers – and the consistent view is that that we need to take a fairer approach, one that does not stigmatise or punish people who receive benefits.

Mr Neil said: “The new social security powers are part of the conversation on what will make a fairer Scotland. This feedback is helping us develop our own social security system which we will ensure treats individuals with respect and removes the barriers that cause confusion and anxiety for some of the most vulnerable people in our society.

“The new system will have at its heart a set of principles and values. This will include ensuring people are treated with respect and dignity when applying for, being assessed for, and receiving disability-related benefits.

“It is clear we must provide people with relevant information so they are aware of how the system will work for them and how long decisions will take.

“It is also important that the system is fair and efficient – that the investment we all make in social security is well managed and is directed at the people who need it, in the way that will support them best.

“Through the current system many people, including carers, young people, families and those who can’t work because of disabilities or mental health, have all faced cuts and discrimination as a result of the UK Government welfare reform programme.

“Just last month we announced we will abolish the UK Government ‘84-day rule’ which means families who face higher living costs due to their child’s illness or disability will not be penalised when their child goes into hospital or has necessary medical treatment.

“We also announced last week that the needs of carers will be placed at the heart of the devolved carers’ allowance. We are determined to ensure that the allowance – like our new social security system as a whole – meets people’s needs, addresses their priorities and respects their rights.

“This is an early signal of our refusal to take an approach that punishes the vulnerable and instead focuses on fairness, accessibility and stability.”

The Scottish Government will publish a further paper by the end of the year setting out its outline vision for social security in Scotland.

The paper outlining the conversation so far is available to view at http://www.gov.scot/Publications/2015/10/3498

You can find out more on social security work at http://www.gov.scot/Topics/People/fairerscotland/future-powers/powers

Crisis? What crisis? Fifty thousand families receive emergency help as austerity bites

150,000 households aided by Scottish Welfare Fund

More than 150,000 vulnerable households, including around 50,000 families with children, have received essential help to buy everyday products like nappies, food and cookers through the Scottish Welfare Fund.

The Scottish Welfare Fund consists of Crisis Grants – which provide a safety net to low income households in a disaster or emergency – and Community Care Grants, which help people to live independently.

Since the scheme began in April 2013, £65 million has been spent, with 105,000 households receiving Crisis Grants and 72,000 households receiving Community Care Grants.

The latest statistics, which break down grants between April 2014 to March 2015, show:

• Over the year 69,000 households received Crisis Grants averaging around £70, they were mostly for food and energy costs and were claimed because of an emergency. They included:
o Almost £3.9 million of grants were given out for food – up from £2.4 million in 2013/14;
o £23,000 was spent on nappies, an increase from £17,200 in 2013/14;
o Nearly £1.3 million was spent on energy costs, up from £826,000 the previous year.

• 43,000 households received Community Care Grants averaging around £600. These awards were most likely to be claimed by people looking for help to stay in or set up their own home, or families facing exceptional pressures. They included:
o Nearly £7.2 million in grants awarded for the refit of carpets, up from £5.5 million in 2013/14;
o Almost £8.2 million spent on cookers, washing machines and fridges, compared to £6.9 million in 2013/14;
o Around £630,000 was spent on clothing and shoes, an increase of £90,000 from the previous year.

Over a third of the grants were made to vulnerable households such as people with mental health problems, lone parents, disabled people, or those suffering from a chronic illness.

Welfare Minister Margaret Burgess said: “These grants are a vital lifeline for people in crisis with more than 150,000 households benefitting from a share of the £65 million Scottish Welfare Fund.

“It is helping people in desperate situations buy everyday items like food, shoes and beds, and keeping them afloat during worrying times.

“The Scottish Government will continue to work with councils to publicise this scheme and reach those who are struggling to be able to afford items that many of us take for granted.

“While the UK Government presses ahead with its austerity agenda and continues to widen the gap in inequalities, the Scottish Government will continue to try to militate against the worst of the impacts of the UK cuts, including investing £296 million in mitigation schemes, extending our free childcare and encouraging employers to pay the Living Wage.

“As part of our drive to tackle inequalities we are also asking people for ideas on how we can create a fairer, healthier, happier Scotland where opportunities, wealth and power are spread more equally.”

Councillor Harry McGuigan, COSLA’s Community and Well-Being spokesperson, said: “There is a growing number of people using the fund to buy the most basic of items like food, beds and cookers.

“Councils and the advice sector make sure those in need know where to get this vital help. Given the planned social security cuts, the fund will come under considerable pressure as more people require help over the next few years.

“Councils are committed to providing the best support to those in need that we can, both direct financial help, as well as advice and referrals.”

Sturgeon: UK Budget will hit Scotland’s poorest children

Scottish Government figures give ‘frightening indication’ of potential impact of expected tax credit cuts

Expected cuts to the value of tax credits by the Westminster Government in tomorrow’s budget will impact most on the poorest children in Scotland, First Minister Nicola Sturgeon said this morning.

Figures due to be published tomorrow (Wednesday) by Scottish Government analysts show that, if the Chancellor cuts child tax credits back to 2003 levels in real terms as has been reported, the poorest 20 per cent of Scottish families with children will lose on average nearly 8 per cent of their income – a total impact of £425 million lost across the country – with 60% of Scottish children affected by the changes.

First Minister Nicola Sturgeon described the research as “a frightening indication” of the impact of the expected cuts and warned that the UK Government’s approach will “hit Scotland’s poorest children and families hard”.

The First Minister said: “The UK Government has already warned that tomorrow’s budget will continue their austerity approach, which we are clear is not just unfair but damaging to the economy – undermining attempts to stimulate growth.

“Tax credits form an important part of the tax and welfare system, designed particularly to support working families on low incomes.

“More than 500,000 children in Scotland benefit from tax credits. Two-thirds of the £2 billion expenditure on tax credits in 2013-14 went to low-income working families with children and only 5 per cent to households without children.

“If, as we expect, the UK Government targets tax credits for cuts in tomorrow’s budget, it will hit Scotland’s poorest children and families hard. It is a frightening indication of the potential impact of the expected cuts in tomorrow’s UK budget.”

The First Minister went on to describe the austerity approach as ‘economically counter-productive’:

“We want to support people to get into work and to stay in work and the tax credit system provides important practical help to families on low pay.

“These are people who are in jobs and often working very hard for relatively little pay. It is unfair that their children are the people made to pay for the mistakes of the austerity approach – not to mention economically counter-productive.

“When people are in work, they spend their wages in the local economy, leading to a virtuous circle. Cutting child tax credits back to 2003 levels, as we expect the UK Government to do tomorrow, will risk threatening Scotland’s economic recovery.

“The deficit needs to be reduced but this should be done in a more gradual manner with more resources allocated to a programme of additional investment in our economy, rather than risking a financial body-blow to hard-working parents and their children.”

Sharp rise in applications for welfare

New figures show 135,000 households have received help

The number of applications to councils for welfare assistance rose by 13 per cent in the last year, according to the latest statistics.

Scottish Welfare Fund statistics to 31 December 2014 show that during the most recent quarter (October to December 2014):

23,715 Crisis Grants were awarded, 10 per cent more than the same quarter last year. These were predominantly for food, heating costs and other living expenses, with an average award value of just over £70;
12,290 Community Care Grants were awarded, 15 per cent more than the same quarter last year. These were predominantly for home furnishings and white goods, with an average value of just under £600.

Welfare Minister Margaret Burgess said: “Scottish Welfare Fund grants are a vital lifeline for people in crisis. Since the Fund launched in April 2013, 135,000 households have received help to buy everyday items and with basic living costs including eating and heating. It’s so important that we continue to reach out and that’s why we are making £33 million available this year to the Scottish Welfare Fund to help low income households.”

In April 2013, the Department for Work and Pensions (DWP) abolished two elements of the Social Fund – Community Care Grants and Crisis Loans – and transferred funds previously spent on them to Scottish Ministers. In its place, the Scottish Government established the Scottish Welfare Fund (SWF). The Scottish Welfare Fund is a national scheme run by local authorities, based on guidance from Scottish Ministers. The guidance has been developed in partnership with COSLA, local authorities and other stakeholders.

Since the scheme began in April 2013 nearly 135,000 households have received at least one award from the Scottish Welfare Fund. Around 55 per cent of households in receipt of funds were single person households with no children. Around one third were households containing children. During the first nine months of 2014/15, 72 per cent of Scottish Welfare Fund budget has been awarded.

Demonstrators set to ‘besiege’ Edinburgh Jobcentre

‘We are fighting back’ – Ethel MacDonald, ECAP

Demonstrators will descend on High Riggs Jobcentre today to declare their resistance to benefits sanctions and workfare.

The protest at the Jobcentre near Tollcross will continue over lunchtime and organisers Edinburgh Coalition Against Poverty say: ‘We aim to send a strong message that cutting people’s benefits and forcing them to rely on foodbanks is not acceptable. Sanctions and workfare not only attack the claimants directly affected, they undermine all workers’ wages and conditions.’

Ethel MacDonald of ECAP said: “An increasing number of benefit claimants are being sanctioned under the DWP’s increasingly repressive measures and more than ever the Job Centre is aggressively pushing the Workfare programmes.

“Just consider the barbaric numbers: according to Corporate Watch, 139,000 sanctions were handed out to Jobseeker’s Allowance claimants in 2009 but this more than tripled to 508,000 in 2011, the coalition’s first full year in government. And the Child Poverty Action Group state that since 2010 sanctions have increased by 126%.”

Sanctions can be from a period of four weeks to up to 3 years.

ECAP support claimants to contest sanctions and resist being sent on workfare. Ethel MacDonald explained: “Claimants are not prepared to remain passive victims – we are fighting back. With the support of ECAP, Edinburgh Jobseeker Jimmy recently overturned a four week sanction imposed after the Oxgangs Neighbourhood Centre refused to take him on a Community Work Programme workfare placement. Workfare provider Learndirect falsely alleged to the DWP that Jimmy had been ‘very intimidating’ to the placement manager – in fact he had just politely informed him that it was disgraceful that a community resource was participating in such exploiting schemes.

“ECAP and Jimmy met the Scotland area manager of Learndirect, insisted that Learndirect withdraw the sanction referral, and also wrote to the DWP explaining that it was Jimmy’s democratic right to express his views on workfare to the placement boss. The DWP have now overturned the sanction and are repaying Jimmy his benefits.”

542 voluntary organisations have declared they will not take part in workfare and signed the Keep Volunteering Voluntary agreement.

The decreasing number of organisations still participating in the schemes are under pressure to pull out of programmes which lead to benefit cuts and sanctions. ECAP regularly blockade and occupy workfare users such as the Salvation Army and DEBRA, and workfare providers like Learndirect. And this week Brian Tannerhill denounced that the organisation he founded, McSence, were using workfare and called on the communities of Mayfield and Easthouses to tell the directors of the Midlothian social enterprise this was unacceptable.

The Edinburgh action is supported by Edinburgh Anti Cuts Alliance, Greater Leith Against the Cuts, Edinburgh Industrial Workers of the World and Edinburgh Anarchist Federation, and is part of a Britain-wide Week of Action in the run-up to the General Election. Co-ordinated via Boycott Workfare, demonstrations are taking place Britain-wide.

Smith Agreement: call for halt to Work Programme extension

Holyrood Ministers have called on the UK Government to keep its promises on devolving further welfare powers and reverse the extension of new Work Programme contracts.

The move came at yesterday’s Joint Ministerial Working Group on Welfare, where Social Justice Secretary Alex Neil and Fair Work Secretary Roseanna Cunningham met Scotland Office Undersecretary of State David Mundell and Department for Work and Pensions Minister of State Mark Harper to discuss progress on implementing the welfare elements of the Smith Agreement.

The UK Government agreed to consider revised wording from Scottish Ministers on its planned Scotland Bill in three areas – the power to create new benefits in devolved areas, the ability to make discretionary payments on reserved areas and clauses on support programmes for unemployed people.

Ms Cunningham said: “UK Ministers took a conscious decision to extend the Work Programme in Scotland until 2017, despite Smith recommending its devolution on expiry of the current contract. Despite successive requests, vital information on the cost and impact of existing services that would enable us to move forward quickly in re-designing support, has not been provided.

“So in order to build more effective, targeted and fairer employment support services in Scotland, I have asked the UK Government to cancel the Work Programme contract extension and for the transfer of the necessary resources and legal powers to deliver an alternative service to meet the needs of unemployed Scots from April next year.”

Mr Neil said: “We are committed to supporting a Bill that implements the Smith Agreement and commands broad support, but UK Ministers have watered down the proposals, given us mixed messages and stalled on progress.

“So I welcome today’s new offer to consider our proposed changes to the wording of the Bill, which we will supply as quickly as possible. I do however want to see decisions taken by UK Ministers before the election, to enable the Bill to be introduced as early in May as possible. As ever, the UK Government will be judged by its actions and how seriously they’re taking the Smith Agreement process.”

Welfare powers: get a move on!

Scottish government says swift action is needed on welfare

Scottish ministers have urged the UK government to deliver Lord Smith’s recommendations for new powers on welfare almost four months after the report’s publication .

The call comes ahead of the Joint Ministerial Working Group on Welfare in Edinburgh later today (March 11) that will be attended by Social Justice Secretary Alex Neil and Fair Work Secretary Roseanna Cunningham, and which will focus on future delivery of welfare and employment support services in Scotland .

Mr Neil said: “It has been over a month since the Working Group met for the first time and weeks since the Smith Commission delivered its recommendations. Over that period of time there has been a frustrating lack of progress from the UK government in recognising that its current proposals do not meet Lord Smith’s recommendations.

“We want to see early progress on flexibilities around Universal Credit as well as assurances that the UK Government will deliver the Smith report in full. It’s really frustrating that the UK has refused to make early progress on those flexibilities, although these are technically feasible now. And they have refused to change their draft clauses which fall short of the Smith proposals.

“Just last week both the Welfare Reform Committee and the Joseph Rowntree Foundation highlighted the scale of the damage inflicted by Westminster’s austerity agenda on people across Scotland.

“With more powers in our own we hands we could build a system better suited to our needs. The Scottish Parliament is best placed to make decisions about welfare policies that affect the people of Scotland.”

Ms Cunningham added: “This Government’s commitment to Fair Work means we believe people should be supported into work, instead of being punished for being unable to secure employment. The UK Government’s current conditionality and sanctions regime isn’t working and the UK Government needs to adopt a positive and proportionate approach to support people, rather than cutting their incomes and having to deal with misguided policies such as the ‘bedroom tax’.

“We await vital information on employment services, such as the Work Programme, to enable the Scottish Government to move forward quickly in re-designing this type of support for Scotland. We are determined to use these powers to deliver seamless, effective support in Scotland that helps unemployed people in Scotland into work and delivers sustainable and inclusive economic growth.

“As we move towards the UK pre-election period, we call upon the UK government to act swiftly on the Smith recommendations to ensure we can bring forward a Bill that is fit for purpose and allows us to take a new approach to tackling inequality.”

Recovery? What recovery?

Latest statistics show sharp rise in number of hard-pressed households receiving help

The experts tell us the recovery’s underway, but many ordinary Scots families are still feeling the economic pain – the number of households applying for welfare assistance has risen by a third in the last year, according to the latest statistics.

Scottish Welfare Fund Statistics to 30 September 2014 show that during the most recent quarter (July to September 2014):

52,400 applications were made to the Scottish Welfare Fund, an increase of 33 per cent on the same quarter last year;
25,800 Crisis Grants were awarded, 32 per cent more than the same quarter last year. These were predominantly for food, heating costs and other living expenses, with an average award value of just over £70;
11,200 Community Care Grants were awarded, 51 per cent more than the same quarter last year. These were predominantly for home furnishings and white goods, with an average value of just under £600.

Cabinet Secretary for Social Justice Alex Neil said: “That anyone should be live in poverty in a wealthy country is completely unacceptable and we’ll continue to tackle poverty and inequality to create a more prosperous and fairer society.

“Scottish Welfare Fund grants are a lifeline for people in crisis to buy the everyday items, or cover basic living costs that so many of us take for granted. This is why we are taking steps to establish the Fund in law through the Welfare Funds (Scotland) Bill.

“120,000 households in Scotland, one in twenty, have now been helped by the Scottish Welfare Fund in its first 18 months of operation. The increase in applications over the last year is due, in part, to work done by local authorities and advice services to raise awareness of the Fund.

“We have allocated £33 million a year to the Scottish Welfare Fund to make sure that we continue to reach out to households in the most deprived areas – around half of awards are made to applicants in the 20 per cent most deprived areas of Scotland. Many families are paying a heavy price for the UK Government’s welfare reforms and this investment will help to mitigate the effects of these cuts on some of our most vulnerable households.”

Citizens Advice Scotland calls for halt to benefit changes

Citizens Advice Scotland’s Chief Executive Margaret Lynch has written to the Secretaries of State for Scotland and Work and Pensions calling for a halt to the introduction of the new Personal Independence Payments (PIP) to claimants in Scotland, as PIP is a benefit that will be devolved to the Scottish Government.

Speaking days before the draft legislation based on Smith Commission is due to be published, Margaret Lynch said: “PIP is the replacement benefit for Disability Living Allowance (DLA) and is an area that will be devolved to the Scottish Government following the Smith Commission recommendations. However it will take to October 2017 to be fully rolled out to all DLA claimants – and that is if there are no further delays to its introduction.

“As we know that the Scottish Government will be developing and introducing its own PIP equivalent, we don’t want to see disabled claimants having to go through changes in their payments, how they are paid, and how much they are paid, twice in a short period of time. I think this will be of major detriment to claimants and is unnecessary and possibly very distressing. In addition it seems a waste of resources to pay for the assessments of tens of thousands of disabled people to transfer them onto a system that they will not be staying on.

“Therefore I’m calling on the DWP to halt the migration of all existing DLA claimants to PIP and I hope this will be backed by the Scotland Office and the Scottish Government.

“CAS has already detailed the massive delays that new claimants are seeing in getting a PIP assessment and then having a decision made. Whilst these delays continue, sick and disabled clients are facing severe hardship, unable to meet the costs of living, and getting into debt.

“The DWP should concentrate on getting the process right for these new claimants and let current DLA claimants stay on their current award until such times as new Scottish system is in place.

“I had very much hoped that issues like these, and the halt to Universal Credit that has also been called for, could be raised and discussed with relevant stakeholders before draft legislation is published but it has been a disappointing process. The very short time scales we have been hampered by has led to a short sightedness of being able to look at all the complex and inter-related issues that need discussed and debated.

“This is not the first time I’ve pointed to process and timescales hampering the need for full and frank discussion and debate. This has to be taken seriously. All parties and stakeholders must have time and forums to bring out issues such as these and look for a way forward. The migration of DLA claimants to PIP is just one example of an area we would like to influence on behalf of the 330,000 clients we deal with every year.

“Whilst I recognise that the Scotland Office has tried to bring people together, it’s clear that we need to have all UK government departments playing their part in the processes that are required following the Smith Commission.”

However the Department for Work and Pensions says a delay in implementing PIP north of the border would ‘disadvantage’ disabled people in Scotland.

A DWP spokesman said: “Under the Personal Independence Payment, claimants receive a face-to-face assessment and regular reviews to ensure support is directed according to need.

“Latest figures show just that, with over 22% of people getting the highest level of support under PIP, compared to 16% under the outgoing DLA system. To halt this progress now would be to disadvantage disabled people across Scotland.”