Urgent action needed to address welfare reform

The Cliff Edge Coalition NI urgently calls for loopholes in welfare mitigations to be closed and the mitigations package to be strengthened

The coalition welcomes Minister Carál Ní Chuilín’s announcement that she intends to introduce legislation to provide for an extension of welfare mitigation payments for those affected by the Bedroom Tax and to bring forward regulations to extend other mitigations. The announcement also recognised the need to protect families impacted by the "two-child" policy.

Legislation for welfare reform mitigations must be fit for purpose

However, the coalition has ongoing concerns and is urgently calling for the NI Assembly to pass legislation to extend the existing mitigations and to ensure the legislation:

• closes the current loopholes in the bedroom tax and the benefit cap mitigations
• extends the mitigations indefinitely to avoid another ‘cliff-edge’
• earmarks any underspend in the extended mitigations package for specific anti-poverty initiatives

Addressing the benefit cap "loophole"

Although mitigations are in place to reduce the impact of the benefit cap, there are limits on who can access this specific mitigation payment. You can only access this mitigating payment if you were receiving a relevant benefit in 2016, when the mitigations were first introduced. This means that people who were not claiming benefits in 2016 but who have ended up on benefits and subject to the benefit cap since then do not benefit from this specific mitigation payment.

The number of households relying on Universal Credit to boost their income will only increase as the COVID-19 pandemic continues to devastate the economy and the furlough scheme begins winding down. In turn, greater numbers of people will see their entitlement reduced by the benefit cap. The average cap is £50 per week with lone parents and bigger families the hardest hit — 23% of the total capped households were couples with children while 77% were single parent households.

One family whom Housing Rights have been assisting face losing £800 per month due to the benefit cap when they move out of temporary housing and into a permanent home. This family doesn't get the mitigation payment as they only started to claim benefits in 2019. The family's excitement and joy at finally moving into a home of their own is heavily tempered by the knowledge that their income will be 68% below the poverty line once they've paid the rent.

Bedroom tax loophole

The bedroom tax is the common name for the policy of reducing a person's entitlement to benefits to help with housing costs if their home has more bedrooms than they are seen to need. In Northern Ireland, this reduction is normally offset by a mitigating payment. But, entitlement to this extra payment stops if a person moves to another social tenancy which also has more bedrooms than they need. By March 2020 over 300 households had lost this important protection, losing an average of £50 per month and heightening their risk of housing stress and homelessness.

It is crucial that legislation is passed as soon as possible to close these loopholes and to make sure that supplementary payments are giving adequate protection. This need is even more pressing, given the additional financial hardship many households are facing due to COVID-19.

Strengthening the mitigations package to address new challenges

The coalition has also welcomed the commitment from the Minister for Communities to review the mitigations package through a co-design process, and is calling for this review to be progressed in a timely manner in order to:

• Meaningfully involve people who are directly impacted by welfare reform, as well as organisations working to support them;
• Identify mechanisms to strengthen the current mitigation package to address new challenges as more people move onto Universal Credit, specifically to protect them from the hardship of the five-week wait and the two-child limit, as well as to support low-income households living in the private rented sector.

For further information, please see the Cliff Edge Coalition’s most recent briefing paper.