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BENEFITS FOR WIDOWS AND CHILDREN SLASHED

New widows and their children will get thousands of pounds less benefit from April as the Government reorganises the way they are paid. ...

Friday, 24 March 2017

BENEFITS FOR WIDOWS AND CHILDREN SLASHED

New widows and their children will get thousands of pounds less benefit from April as the Government reorganises the way they are paid.

Benefits for people whose spouse or civil partner dies on or after 6 April will be cut substantially. 

This major change in bereavement benefits will save the Government £100 million a year. 

A spouse (or civil partner) of someone who dies from 6 April 2017 will get a new benefit called Bereavement Support Payment. People without dependent children will get £2500 and then up to 18 monthly payments of £100. Those who are entitled to child benefit for dependent children will get £3500 plus up to 18 monthly payments of £350.

This payment will replace three existing benefits – a one off Bereavement Payment of £2000, a weekly Bereavement Allowance of up to £113.70 depending on their age for 52 weeks for those without children, and for those with children a weekly Widowed Parent’s Allowance of £113.70 a week until the youngest reaches 18. All rates are for 2017/18.

The arithmetic means that from April 6 new widows without children will get £4300 over 18 months instead of a maximum £7912 over 12 months. And widows with children will get £9800 over 18 months instead of a possible maximum if the old system had continued of more than £108,000 over 18 years.

The changes will not affect anyone already on bereavement benefits or who is widowed before 6 April 2017.

The Government estimates that three out of four bereaved parents with children will be worse off under the new system and that grows to nearly nine out of ten - 88% - among those who work. The Child Bereavement Network says a typical working widowed parent will be worse off by more than £12,000 compared with the old system. 

Other concerns were raised about the new payment during the consultation but the Government rejected them.

First, unlike the current weekly allowances the new Payment is not linked to inflation. Campaigners fear it will be treated like the old £2000 Bereavement Payment which has not been increased since its introduction in 2001. If it had risen with inflation it would have been around £3000 today. They fear the new Payment will also be frozen.

Second, the Government has not extended the Payment to long-term partners who are not married or civil partners. Campaigners say that penalises the children of unmarried partners.

Third, by limiting support to eighteen months it is estimated that 91% of parents will get help for a shorter time than in the present system. That could leave the children of widows in poverty and their parent relying on means-tested benefits. 

On the other hand it comes with a much simpler single National Insurance condition – the deceased must just have paid one year’s contributions in their lifetime. And it is paid to childless widows under 45 who at the moment only get the £2000 payment. Childless widows under the age of 47 will be better off under the new scheme.

None of the new or old benefits are paid to widowed people over state pension age. 

The Government insists the purpose is not to save money but to focus help where it is most needed. In other words those who are left in hardship can claim means-tested benefits. Unlike the old allowances the whole Bereavement Support Payment will be ignored when entitlement to those is worked out. 

Although the long-term savings will be £100m a year there will be extra costs in the first year will be £40m as the new Payment is paid over a shorter period than the weekly allowances. The Department for Work and Pensions tells me those figures, produced in 2014, are out of date and that it expects to spend £70m a year more on Universal Credit for widowed people. A revised impact assessment will be published in April after the change begins.

The last time benefits for the bereaved were changed the excuse of the Labour Government in 2001 was that it had to be done to equalise benefits for men and women. However, it also saved £500m a year. Over the following 12 months many newly widowed women complained to me that there had been no publicity about the cuts that were now affecting them. 

The DWP has told me there will be no paid advertising campaign for the new Bereavement Support Payment. It was relying on statements to Parliament and expected 'stakeholders' to inform people. Plus ├ža change!

Based on my weekly Money Box newsletter 24 March 2017. Subscribe here.

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25 March 2017