Continuing the implementation of reforms started by the previous Labour government

The previous government had committed to reassessing all current Incapacity Benefit (IB) claimants and migrating them onto Employment and Support Allowance (ESA) or Jobseekers Allowance (JSA).

This reassessment, the Work Capability Assessment (WCA), is being undertaken by a private company, Atos Origin, on behalf of the Department for Work and Pensions. Depending on the outcome of the assessment, claimants are migrated onto three possible benefits:

• JSA – claimants must look for work

• ESA (Work Related Activity Group) – claimants must undertake work related activity 

• ESA (Support Group) – claimants will continue to receive benefits and not are required to look for work

The timetable is for all IB claimants to have been reassessed by 2014. There is controversy surrounding the WCA, and while the government has accepted recommendations on reforming the test – which stemmed from a review by Professor Harrington – it is proceeding with the national reassessment before these have been implemented in full.

2010 Budget and Spending Review changes to make savings to the benefits bill by 2014-15

A major part of the government’s deficit reduction strategy was to make significant cuts to the benefits bill, with projected savings of £18bn by 2014-15.

The main savings announced in the 2010 Budget (June) and Spending Review (November) were:

• £5.8bn by linking benefit increases to the Consumer Prices Index, rather than the Retail Prices Index

• £3.6bn from a freeze on Child Benefit and removing the entitlement for higher-rate tax payers

• £2.6bn from changes to Tax Credits

• £1.9bn from Housing Benefit reforms

• £1.2bn from Disability Living Allowance (DLA) reforms

• £1.2bn from time-limiting contributory ESA

The Welfare Reform Bill and Universal Credit

Inclusion’s response to the Welfare Reform Bill sets out the main amendments to the welfare and benefits system. These include changes to housing benefit, social housing, ESA, DLA, child maintenance and includes a cap on household benefits and the introduction of more severe sanctions.

The most significant element of reform is the introduction of the Universal Credit, which will restructure the benefits system, to create one single income-replacement benefit for working age adults. This will bring together the current system of means-tested out of work benefits, Tax Credits and support for housing. It will be introduced in October 2013, with a phased four year roll out. Inclusion’s response to Universal Credit set outs the main issues.

Welfare earnings change is a bandaid: mum

A federal government plan to allow welfare recipients to earn an extra $19 a week has been described as a "bandaid solution".

Under the $300 million measure to be announced in Tuesday's budget, those on the Newstart Allowance, Parenting Payment, Widow, Sickness or Partner Allowance will be able to earn $100 per fortnight, up from $62, before their income support starts to be reduced.

The new threshold will apply to people on Newstart and other work-based allowances from March 2014.

From January next year an education supplement will also be reinstated for single parents.

But the federal government ruled out a $50 increase to lift the fortnightly Newstart allowance of $497 for a single person.

Employment Minister Bill Shorten said lifting the allowance would cost $8 billion over four years.

"The government can't meet everyone's needs and expectations," he told ABC radio on Monday.

But introducing the higher threshold was "a sensible step".

"What we are doing is saying to people that if you get work you can keep a bit more of your Newstart or your allowance," he said.

But Adelaide single mother Kathy Lee said she was left $210 a week worse off after January's welfare cuts and described the new plan as a "bandaid solution aimed at keeping single mums quiet".

Ms Lee, has a 15-year-old vision impaired son living at home.

Since being moved off parenting payments and onto the Newstart Allowance she says she can't afford to buy him a new set of glasses, she said.

"I don't have that money," she told AAP on Monday.

Australian Greens senator Rachel Siewert dismissed Labor's plan as a "face saving" exercise and the Australian Council of Social Service said it would do nothing for the four out of five people on Newstart who couldn't get into paid work and had no other earnings.

After rent, Ms Lee says she has $55 a week left to buy food, cover her son's school bus fares and any emergencies.

Ms Lee's education supplement was also stopped as part of the welfare changes and she says she can no longer afford the fees to complete a course to qualify her to teach information technology at TAFE.

"Second semester is coming up. Why can't they reintroduce (the supplement) in July?" she said.

Ms Lee is setting up a Single Parents Party and hopes it will attract enough people to run candidates at the next federal election in September.

Mr Shorten stopped short of acknowledging the harshness of shifting single parents from the parenting payment onto unemployment benefits once their youngest child turned eight.

He admitted it was a difficult issue.

But getting people into work was ultimately the best chance children and parents had in life, he said.