Q&A: Welfare changes row

The government is coming under pressure in the House of Lords to reverse some of its proposals in its Welfare Reform Bill.

What is the Welfare Reform Bill?

It's one of the government's key flagship policies, which it says will mark the biggest overhaul of the benefits system since the 1940s. It introduces the Universal Credit - a single benefit to replace six income-related, work-based benefits. Work and Pensions Secretary Iain Duncan Smith says it will simplify the benefits system and ensure that people are always better off in work. But other changes in the bill have proved controversial and the government has suffered a series of defeats in the Lords.

What are the main flashpoints?

Ministers are seeking to reduce entitlements to other benefits:

A cap on the total amount of benefits - excluding one-off payments - that one family can receive. This will mean a single household could not get more than the median working income of £500 a week - equivalent to about £26,000 a year.
Recipients of contributory employment support allowance (ESA), including people recovering from serious illnesses like cancer, to be means-tested for the benefit after one year.

A 12-month limit on payment of ESA to people judged able to work some time in the future. Young people who have never worked due to disabilities no longer be able to claim the contributory element of ESA.
Disability Living Allowance (DLA), introduced in 1992 to help disabled people cope with their extra daily costs, to be replaced with a Personal Independence Payment (PIP). Upfront medical tests and regular assessments introduced.

Who is unhappy with the changes?

In the Lords, cross-bench peers - who are not affiliated to any party - have been among the most vocal critics. They have joined forces with Labour peers to propose amendments and have defeated the government on four occasions so far. On DLA, they want guarantees that assessment tests will be piloted first and those doing them must consult healthcare professionals.
Opposition among Conservative peers has been limited although a former cabinet minister, Lord Newton, voted against plans to cap housing benefit for social housing tenants

A number of Lib Dem members have either defied the government and opposed certain measures or abstained in key votes - making it harder for the plans to pass. Senior Lib Dem MPs broadly back the plans but have stressed they must be handled "sensitively".
Outside Parliament, a coalition of pressure groups - including housing and disability charities - have urged that the proposals be revised, while some have called for a halt for further consultation.
Public figures to express concerns have included the Archbishop of Canterbury and Conservative London Mayor Boris Johnson - on the specific issue of housing benefit.

Has the government made any concessions?

Yes. No 10 says the government has listened to these concerns and amended its plans in certain areas:

The qualifying period for receiving DLA - the length of time recipients have to show they will be eligible - has been cut from six to three months
The mobility component of DLA - which pays for transport and travel costs - will be retained for those in residential care homes
Ministers to consider their proposed changes to ESA after recent Lords defeats but have said they will seek to reinstate them when MPs debate the bill.
Housing benefit caps delayed for existing claimants from April 2011 to January 2012.

Any other benefit controversies?

Yes. It's not part of the bill but the government also plans to reduce the amount of people who receive child benefit - currently paid regardless of income. From January 2013, higher-rate taxpayers earning more than about £42,000 will no longer be able to claim child benefit - an announcement made in the 2010 Spending Review. David Cameron has suggested the government is prepared to look at how the plan is implemented amid concerns over potential anomalies hitting families with one person earning just over the threshold. Many Conservative backbenchers have concerns about the plan.

What are the stakes for the government?

Ministers want the welfare reform bill to become law by the end of this parliamentary session in May. Ministers are targeting a total of £18bn in welfare savings by 2015. Introducing time limits for ESA is expected to save £2bn a year while the benefit cap will save an estimated £270m a year. Plans to remove the "mobility component" of DLA from people in residential care - which have already been abandoned - were meant to save £135m a year. However the bill has already made much progress through Parliament so is unlikely to run out of time before May.

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