Welfare Reform (Further Provision) (Scotland) Act 2012: annual report 2017

Report on the impacts of the Welfare Reform Act 2012 on the people of Scotland and other welfare measures passed since 2010.

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Annex B - Methodology Summary - Local Authority Impacts

The methodology employed to derive local authority level impacts financial impact relies on published data of relevant benefit/tax credit caseloads at local authority level. These are sourced primarily from DWP's Stat-Xplore tool [161] , the Office of National Statistics' NOMIS tool [162] and Personalised Tax Credit statistics [163] . Once an appropriate local authority share (%) is derived for each policy measure this is multiplied through by the Scottish level financial impact derived in Annex A to get a central estimate of the likely impact. The following provides a an overview of the data used to derive these shares for each policy measure in table 7 (see page 37)

Universal Credit and Tax Credit Changes

Provisional personal tax credit statistics [164] to December 2016 have breakdowns of the number of families claiming tax credits at a local authority level, as well as an in-work/out-of-work split. For the removal of the family element and the 2 child limit in tax credits and UC, the proportion of households claiming child tax credits in a local authority is used as a proxy for the financial impact of the change at a LA level. It is implicitly assumed that the distribution of families claiming CTCs with more/less than 2 children is similar across local authorities.

The change to Universal Credit work allowances, the taper rate change and the change to income disregards (tax credits) will only affect households in work. Therefore, the distribution of the number of in-work families receiving tax credits (with or without children) is used to derive appropriate shares to calculate the impact of these measures.

Benefit Freeze

The benefit freeze affects a large number of households claiming various in-work benefits and tax credits. To calculate the local authority impact of the freeze, the sum of the claimant count (Source: NOMIS), families claiming child benefit (Source: gov.uk), ESA caseload (Source: Stat-Xplore) and working tax credit caseload with no children (Source: gov.uk) is taken to determine the impact of the freeze in a given area. This method does not take into account overlapping benefits, so is not appropriate for determining the number of households affected, but it does give an indication of the relative impact of the freeze across different local authorities.

Cap social rents to LHA

The cap to social rents will affect single people aged under 35 who are renting in the social rented sector. National Housing Federation ( NHF) analysis [165] suggested around 88% of all affected claimants will be from this group. Therefore, financial impact is calculated by using DWP housing benefit data on the number of households in this group by local authority, adjusted for the 'rent gap', defined as the difference between average SRS rents and the relevant LHA shared accommodation rate. A further adjustment is made to reflect the impact on other tenant groups using a similar methodology which is weighted by 12% in the final calculation of shares.

ESA WRAG Reduction

The local authority impact of this policy is based on the share of ESA WRAG caseload in each local authority using DWP data. The removal of ESA WRAG component will affect new claimants only, therefore it is assumed that the distribution of WRAG caseload and new claims to ESA will be approximate.

Support for Mortgage Interest

The financial loss from changes to support to mortgage interest is allocated to local authorities in proportion to working-age benefit claimant numbers in each authority adjusted for the share of people over 16 in a home ownership household (Source: National Records of Scotland).

Pension Credit Freeze

This policy sets the level of the Savings Credit maximum in Pension Credit so that Pension Credit awards for those receiving Savings Credit are frozen where income is unchanged. The financial loss from this policy is allocated to local authorities in proportion to Pension Credit (savings credit) caseload in each local authority.

Benefit Cap

Benefit Cap statistics for February 2017 (available from DWP Stat-Xplore) show the impact of the lower Benefit Cap at a local authority level (see table 14 on page 69).

UC conditionality

The measure extends full conditionality in Universal Credit to lone parents and responsible carers with a youngest child aged 3 or 4 years. The local authority impacts are based on the number of lone parent households claiming Income Support, the main legacy benefit for this claimant group.


Email: Philip Duffy, Philip.Duffy@gov.scot

Phone: 0300 244 4000 – Central Enquiry Unit

The Scottish Government
St Andrew's House
Regent Road

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