Introduction

State Benefits and Tax Credits 2013 is the revised edition of the Labour Research Department’s annual guide to the benefits system. It concentrates on the benefits and rates of benefit available for people in work effective from 6 April 2013, and includes changes to the rules for claiming benefits and tax credits from this date.

This year’s edition covers a further tranche of welfare reforms set to revolutionise welfare payments in the UK as a result of the Welfare Reform Act 2012. The reforms are complex and wide ranging and are set out in detail in Chapter 1.

Trade unions can play an important role in helping their members and their families claim the benefits to which they are entitled. As such it is crucial for union reps to be aware of the latest reforms in order to give accurate initial advice on benefit entitlements. This guide is designed for that purpose. It is not intended to be a definitive guide to welfare benefits, which is a complex, specialised area requiring specialist advice. Organisations and publications giving this specialist advice are listed in the last chapter and web references for downloading application forms and other relevant information relating to different benefits are listed throughout.

State Benefits and Tax Credits 2013 enables reps to access the current benefit rates and basic rules for qualification in order to indicate to members whether or not they are eligible to apply for them. Thousands of low-paid workers are unaware of their entitlements and subsequently these are not taken up.

The latest Department for Work and Pensions (DWP) figures for unclaimed benefits cover the period 2009-10. These show that between £7,520 million and £12,310 million was left unclaimed in key income-related benefits over that period; representing a take-up of around 77% to 84%.

As well as entitlements for those on a low income, this booklet covers benefits and tax credits for parents and children, help for those sick or injured at work, the basic state pension and pension credits, help with housing costs and help for someone whose husband, wife or civil partner dies.

Are you/your members entitled?

Rights to some benefits and credits may be based on payment of National Insurance contributions or level of income. In some cases, the rules relate to length of time in employment and level of earnings, or length of residence in the UK. However, some benefits do not depend on any of these criteria.

National Insurance contributions are paid on earnings above the lower earnings limit (LEL). In the year commencing 6 April 2013, the LEL is £109.00 a week. In fact, you only start paying National Insurance contributions if you earn over £149.00 a week (up from £139 last year); for earnings between £109.00 and £149.00 you are credited with contributions.

For most benefits, the relevant National Insurance contributions are Class 1 contributions — those paid by employees. Class 2 contributions are those paid by self-employed people.

Entitlement to Contribution-based Jobseeker’s Allowance, which you can receive for up to six months, is based on how much National Insurance you have paid in the last two tax years. The tax year starts on 6 April and finishes on 5 April (12 months).

Income-based Jobseeker’s Allowance is based on your income and savings. You may get this if you have not paid enough National Insurance contributions, or you have only paid contributions for self-employment and you’re on a low income.

The level of your retirement pension will depend on your National Insurance contributions over your working life (see Chapter 6). Entitlement to Statutory Sick Pay and maternity benefits depends on your being in employment and earning more than the lower earnings limit (see Chapters 3 and 4).

There are also means-tested benefits including Income-based Jobseeker’s Allowance, Income Support, Pension Credit, Housing Benefit/Local Housing Allowance and Council Tax Benefit. These are not tied to National Insurance contributions, but you can only get them if your income is less than what is called your “applicable amount”. From January 2013 Child Benefit is means tested for the first time (see chapter 4).

Benefit increases 2013

The Welfare Benefits Up-rating Bill proposes to cap the annual increases in most working-age benefits at 1% in cash terms in 2014–15 and 2015–16, in addition to the 1% cap on increases already confirmed for 2013–14.

Because the proposed uprating changes apply to almost all benefits and tax credits, both in-work and out-of-work households are affected.

By default, working-age benefits and tax credits are up-rated each April in line with the Consumer Prices Index (CPI) in the preceding September. CPI inflation was 2.2% in September 2012 and is forecast to be 2.6% and 2.2% in the Septembers of 2013 and 2014 respectively. The government plans instead to uprate the majority of these benefits by 1% for the next three years. According to the Institute for Fiscal Studies, given the current forecasts of inflation, this implies a cumulative 4% real cut in the benefits affected. Full details of the effect on benefit levels in 2013 are detailed in the box below.

Claiming benefits

You should be able to claim most working age benefits from your local Jobcentre, Benefits Agency or Jobcentre Plus office (which combines the two). To find out where your nearest office is look under Jobcentres in your local telephone directory or enter your postcode on the Directgov website at: http://los.direct.gov.uk/default.aspx?type=1&lang=en

You can get an estimate of what benefits and tax credits you could get, and find out about claiming specific benefits, from the Benefits Adviser website at: www.gov.uk/benefits-adviser