Unit 3 Topic 2 Flashcards
Review the history of welfare in the UK.
From the days of the Elizabethan Poor Laws in the early 1600s, the government, at both national and local levels, has accepted some responsibility for providing relief to the poor. The Poor Law Act of 1601 established the principle that money raised through taxation should be used to provide food and clothing to the ‘deserving’ poor (those who were sick, disabled or elderly).
The indolent poor - those deemed to have caused their own poverty by being too lazy to get a job - received little or no help.
What did the Poor Law Act of 1601 establish?
The Poor Law Act of 1601 established the principle that money raised through taxation should be used to provide food and clothing to the ‘deserving’ poor (those who were sick, disabled or elderly).
The indolent poor - those deemed to have caused their own poverty by being too lazy to get a job - received little or no help.
Define the indolent poor.
Those deemed to have caused their own poverty by being too lazy to get a job.
What did state welfare develop further with?
State welfare provision developed further with the introduction of Old-Age Pensions Act 1908 and the National Insurance Act 1911.
What did the Old-Age Pensions Act of 1908 introduce?
The 1908 Act introduced a national state pension - paid for out of general taxation - which was paid to those over the age of 70 who were ‘of good character’, had lived in the UK for at least 20 years and had worked throughout their lives.
Was the Old-Age Pensions Act of 1908 affordable?
The eligibility criteria (those over the age of 70 who were ‘of good character’, had lived in the UK for at least 20 years and had worked throughout their lives) taken with the fact that the average life expectancy in the UK at the time was less than 60, led politicians to believe that the new pension scheme would not be too costly and could easily be funded from general taxation.
How was the National Insurance Act 1911 funded?
The national insurance act 1911 did not rely only on taxpayers to fund the welfare benefits that it made available. Instead, it introduced the idea of compelling workers and employers to pay fixed weekly contributions: the worker contributed 4d (4 old pence) and the employer contributed 3d into a ‘national insurance fund’ (equivalent to around £6 and £4.50 a week in today’s terms). The government also paid 2d per week per worker into the fund, which it paid out of general taxation.
What did paying contributions into the National Insurance Act 1911 allow workers?
Paying contributions into the fund gave workers the right to a basic level of free medical care and also entitled them to draw a weekly employment benefit (known as ‘dole money’ or ‘the dole’) for up to 15 weeks in each year.
What did the principle of contributing towards the cost of welfare benefits later extend into?
The principle of contributing towards the cost of welfare benefits was later extended to state pensions under the Pensions Act 1925.
How was the welfare state reformed after the Second World War?
The whole welfare system was radically reformed after the Second World War (1939 - 45) by the Labour government. In 1948, two new pieces of legislation - the National Insurance Act and the National Assistance Act - brought in what became known as the ‘welfare state’, which was based on a promise that the state would take care of people ‘from the cradle to the grave’.
What does the term welfare system refer to?
The term welfare system refers to the state provision of a package of health care and education, low-cost social housing, and a comprehensive system of contributory and non-contributory pensions and social security benefits.
What was the most radical change in the welfare system?
The establishment of the National Health Service (NHS) was perhaps the most radical change, meaning that people no longer had to pay for medical treatment when they needed it: as taxpayers, they had already paid for it.
Is the welfare system expensive for the UK?
Although the financial crisis of 2007 - 08 and the economic recession that followed it led to widespread cuts in state welfare spending, the UK still has one of the most extensive welfare systems in the world. In terms of its expenditure on welfare services and benefits as a percentage of its national income - as measured by gross domestic product (GDP) - the UK ranks among the top 20 countries in the world.
List the top 20 countries with the highest spending on social welfare.
List their expenditure as a percentage of GDP as well.
- France - 31.2%
- Belgium - 28.9%
- Finland - 28.7%
- Denmark - 28.0%
- Italy - 27.9%
- Austria - 26.6%
- Sweden - 26.1%
- Germany - 25.1%
- Norway - 25.0%
- Spain - 23.7%
- Greece - 23.5%
- Portugal - 22.6%
- Luxembourg - 22.4%
- Slovenia - 21.2%
- Poland - 21.1%
- UK - 20.6%
- Hungary - 19.4%
- Czech Republic - 18.7%
- Netherlands - 16.7%
- Switzerland - 16.0%
Why has state welfare remained?
The personal, social and financial problems that state welfare provision is designed to address today have not fundamentally changed over the past 400 years. Despite the fact that, since the 1600s, the UK has enjoyed huge growth in national wealth and standards of living - and despite it now being one of the richest countries in the world - there are still many people of working age who rely on state benefits as the source of all, or part, of their income.
Many more of those over the age of 65 have no private income and are consequently wholly dependent on basic state pension and other benefits.
How is state welfare related to sustainable personal finances?
The provision of state benefits and pensions is very much integral to understanding how individuals can maintain sustainable personal finances even when affected by adverse circumstances.
Define sustainable personal finances.
Sustainable personal finances means achieving and maintaining a balance between personal income and expenditure - for the short, medium and long terms - so that an individual can satisfy their needs and achieve as many of their wants and aspirations as they can afford within their budget.
Who is the benefit system designed to help?
The system of benefits payable to people who are temporarily or permanently in need of financial help is designed to be a financial ‘safety net’ to help those who:
- have unexpectedly lost their main source of income
- have a low level of income
- are not able to earn an income at all
How do people typically find themselves in situations where they may have reduced income or no income?
People typically find themselves in these situations because they have been made redundant, or because they do not have the skills, experience or qualifications that they need to get a well-paid, full-time job, or because ill-health or disability prevents them from working, or because they have stopped work after retiring.
How is the UK’s benefits system divided?
The UK’s benefit system today - as it has been since the National Insurance Act 1911 - is divided into two types of benefit, contributory and non-contributory.
Describe contributory benefits.
Contributory benefits are paid to eligible claimants provided that they have paid the required number of National Insurance contributions.
Employers automatically deduct NICs (and income tax) from employees’ salaries, but self-employed workers have to make arrangements to pay their own NICs.
Describe non-contributory benefits.
Non-contributory benefits are paid to those eligible claimants who either have not paid enough NICs to claim contributory benefits or who need a ‘top-up’ payment because the contributory benefits that they receive do not meet their income needs.
What is the principle behind contributory benefits?
The principle behind contributory benefits is that the contributions that each person pays give them the right to receive a set, flat-rate benefit when they need it.
The creators of the National Insurance system made it compulsory partly as a way of funding the benefits, but also because the believed that some people would be too proud to accept the benefits unless they felt that they were fully entitled to them because they had contributed to them when they were able to.
Why are some benefits compulsory?
The creators of the National Insurance system made it compulsory partly as a way of funding the benefits, but also because the believed that some people would be too proud to accept the benefits unless they felt that they were fully entitled to them because they had contributed to them when they were able to.
Why are benefits paid at a flat rate?
Benefits are paid at a flat rate rather than being varied according to the claimant’s income because this helps to keep the costs of the system in check and also avoids the problems involved with ‘means testing’.
What is ‘means testing’?
In relation to benefits
When benefits are income-related, claimants have to undergo a means test - a detailed examination of their income - to which some people object, because they feel that it pries into their private lives.
What help is there for people out of work or unable to work full-time?
Jobseeker’s Allowance (JSA)
- contribution-based JSA
- Income-based JSA
What sickness and disability benefits are there?
Statutory sick pay SSP
Employment and support allowance ESA
Employment and support allowance (cont’d)
Disability and carer benefits
What housing benefits are there?
Housing benefit
Support for Mortgage Interest (SMI)
What additional benefits are there?
Income support
Help for those in retirement
What is Jobseeker’s Allowance (JSA)?
Job seeker’s allowance is the main benefit for those of working age who are not working full-time, but who are able to work, available for work and making every effort to find work.
There are contributory (contributions-based) and non-contributory (income-based) JSA benefits, but eligible claimants receive the same weekly cash benefit - with a higher rate paid to those aged 25 and over - regardless of which type of JSA they are claiming.
Describe contribution-based JSA.
If you were employed (not self-employed) for the two tax years (6 April - 5 April) before you claim and you paid NICs throughout that period, you might be entitled to claim contributions-based JSA if you are out of work.
You will get it, however, only if you are:
- aged between 18 and retirement age
- not a full-time student
- work on average less than 16 hours a week
- able to work and fully available to work
- able to demonstrate that you are actively seeking work
- willing and able to attend a JSA interview every two weeks (or when asked) to show what you have been doing to find work.
Describe income-based JSA.
Income-based JSA is available to unemployed people who have not paid the required amount of NICs. The main differences between this and contributions-based JSA are that:
- while contributions-based JSA is paid only for 6 months, income-based JSA is not subject to a time limit.
- to be eligible for income-based JSA, you (and your partner, if you have one) must have less than £16,000 in savings)
- your partner (if you have one) should be working less than 24 hours a week (on average).
Income-based JSA is also means-tested, which means that the amount of benefit you receive may be reduced if your household income is above a certain level or if you have more than £16,000 in savings.
The benefit can also be claimed by those who were previously self-employed if they can show that the business is no longer trading.
If a claimant for JSA is also eligible to claim Universal Credit, the JSA element may be added to the Universal Credit payment.
Can students claim JSA?
Full-time students cannot normally claim JSA; the exception is students who have children, who may be able to claim JSA during the summer break.
Part-time students may be able to claim JSA provided that they fulfil the eligibility requirements listed above, including being willing to give up the part-time course of they find a full-time job.
What are sickness and disability benefits designed for?
There are a number of sickness and disability benefits designed to provide an income when short-term sickness, long-term illness or disability prevents someone from working.
Describe statutory sick pay (SSP).
If you are employed, your employer has to pay you at least SSP if you have been off sick for four or more days. The benefit is a fixed weekly amount that is paid for a max of 28 weeks (although many employers build much more generous sick pay arrangements into their contracts of employment, such as six months’ full pay, followed by six months’ half pay).
If you are self-employed or not working at all, you cannot claim SSP.
Describe employment and support allowance (ESA).
If you have been getting SSP for the maximum 28 weeks or if you are self-employed, you may be eligible to claim ESA in the event that illness or disability prevents you from working. Like JSA, ESA is either contributions-based (for those who paid sufficient NICs) or income-based. It is paid at a standard weekly benefit for the first 13 weeks for all claimants aged 25 or over and at a lower rate for those under the age of 25. After 13 weeks, claimants are assessed and allocated to one of two categories.
- The work-related activity
- The support group
What are the two categories of the employment and support allowance?
- The work-related activity
- The support group
Describe the work-related activity group in the employment and support allowance benefits.
The work-related activity group includes those whose illness or disability is not considered too severe to prevent them from returning to work (although the work may not be the same work as that which they did before they became ill). These claimants have to attend regular meetings with advisers, who offer help and advice, and who arrange work-related activities. The benefit can be temporarily reduced (known as ‘sanctioned’) if a claimant fails to attend a meeting with an adviser. Claimants are allowed to work part-time (for no more than 16 hours per week) and yet still claim, provided that their earnings are below a weekly limit.
Describe the support group in the employment and support allowance benefits.
The support group includes those whose illness or disability seriously limits the work that they can do. They are not required to attend adviser interviews, but can talk to an adviser if they need to. Claimants in this group are also allowed to work for up to 16 hours a week, but doing only ‘supported permitted work’, supervised by someone from the local council or one of the voluntary organisations that arrange work for people with disabilities.
Describe the employment and support allowance (cont’d).
The weekly amount that ESA claimants receive may be affected by any income or savings that they or their partners might have: it will not be paid at all if savings are more than £16,000.
Claimants have to complete a ‘limited capability for work’ questionnaire and are likely also to have to attend a ‘work capability assessment’ to determine how much their illness or disability affects their ability to work.
Describe disability and carer benefits.
An additional benefit - Personal Independence Payment (PIP) - is payable to those aged between 16 and 64 who have a long-term illness or disability that means they are unable to perform basic daily living activities or have limited mobility.
Anyone over the age of 65 who is in a similar situation can claim attendance allowance instead, attendance allowance helps to pay for older people to be looked after in their own home, instead of going into residential care.
What is the purpose of disability and carer benefits?
The purpose of these benefits is to allow claimants to pay for things such as home help, cleaning services, mobility aids and taxis, so that they can remain independent for as long as possible, rather than having to move into a residential care home. The amount of benefit paid out will depend on how much help the claimant requires (which decision is made by an independent health professional).
Who can claim carer’s allowance?
Anyone over the age of 16 who spends 35 hours per week or more looking after someone who has ‘substantial caring needs’ can also claim a carer’s allowance, although this is taxable and may affect other benefits.
Who is eligible for housing benefits?
If they pay rent, they may be eligible for Housing Benefit, but single people under the age of 35 will be able to claim Housing benefit only if they live in a ‘bedsit’ or a single room within a house or flat that they share with other people.
What does housing benefit cover?
Why is it reduced?
Housing benefit will often cover the full monthly rent, but it can be reduced if:
- you are paying an unreasonably high rent to a private landlord
- you are in social housing (housing supplied by a council or housing association) and are assessed as having more bedrooms than you need
- you household income is above a certain threshold
- you have savings of more than £6,000.
Other factors that may affect how much housing benefit you receive include your age, the number and ages of any children that you may have, and whether any family members are disabled.
When may claimants not receive housing benefit?
Claimants may receive no housing benefit if their savings are over £16,000.