Benefits changes that could affect us all Q Sounds complicated. What is the Welfare Reform Bill all about? A The headline figure is £26,000. That's the maximum amount that the Government wants a family to be able to receive from the state. They will receive that under something called the universal credit, a single benefit to replace six income-related and work-based benefits. Income-related jobseeker's allowance, housing benefit, child tax credit, working tax credit, income support and income-related employment support allowance have all been rolled into the universal credit. The figure of £26,000 represents the average salary of a working family. Iain Duncan-Smith, who has been in charge of benefits reform, doesn't want anyone on benefits to end up with more than this. QI am disabled and currently receive Disability Living Allowance (DLA). Will that change? A Disability Living Allowance (DLA) is not means-tested, and is intended to help with the extra costs that disabled people face in their everyday life, for example getting around and preparing meals. The benefit kicks in at three levels, and currently pays up to £73.60 a week. The Bill replaces this with a new allowance called Personal Independence Payments (PIP). These payments are likely to be introduced in 2013 for working people aged 16-64 and will involve medical tests and regular assessments. Lord Freud, the Works and Pensions Minister, wants these assessments to begin next April. Q I receive Employment and Support Allowance (ESA). How will that change? A ESA is a benefit paid to those who are unable to work because of illness or disability. The Welfare Bill changes this, too, although amendments in the House of Lords have watered down these changes a little. ESA comes in two types. The first is "contributory ESA," given only to those who have paid enough National Insurance to receive it. The other is "income-related ESA," which is means-tested. The Government wanted to limit the amount of time that people could receive contributory ESA before it is means-tested to a year (it is currently indefinite and not based on income or savings). However, amendments in the House of Lords extended this to 24 months and exempted cancer patients from the changes. The Lords' amendments also removed a plan to stop young disabled people who have never been able to work from receiving contributory ESA. Q Which benefits are included in the consideration for the £26,000 cap? A When the Government tots up everything you receive, it does not include all benefits. Those mentioned above are all included, but the Government wants to include child benefit in the cap. This was overturned in the Lords, but ministers have said they will seek to have it reinstated. Q These are a lot of changes to hit people's incomes. Is this all going to happen at once? The new regime will start for new claimants in October 2013, with people migrating over from existing benefits during the following four years. However, given the extent of the changes, the whole thing could take 10 years to come into effect fully. Q How will people claim? A Universal credit will be administered by the Department of Work and Pensions, and most claims will be made online. Payments may change from current fortnightly payments to monthly. Q What is happening to child benefit - will I have it removed as a higher-rate taxpayer? A From April next year, 680,000 families will lose their child benefit. The cut will apply to any family in which a parent earns enough to qualify for the 40 per cent tax rate, which is currently set at £42,475 a year. However, two parents who each earn less than £42,475 annually will be allowed to keep the benefit, which is worth £1,752.40 a year for a family with two eligible children (as long as their salaries remain below the cap). One way to counter this is to make extra contributions to your pension, or use "salary sacrifice" schemes such as taking child-care vouchers in lieu of salary, to take your earnings below the cap. Sean McCann, from NFU Mutual, has calculated that 143,000 families would be better off if they paid more into their pension, allowing them to dip below the higher rate threshold. "The result for these families is that the extra pension contribution required would be less than they would get back in child benefit," he said. Q I am a pensioner, does this affect me? A Universal credit is only for working-age people. This means that pensioners who have to pay rent and have dependent children will need to be supported in a different way, with planned changes to pension credit. Q I am still confused. Where can I go for help? A The DirectGov website (www.direct.gov.uk) has information on benefits eligibility. There's also a benefits inquiry line on 0800 882 200, and a disability benefits helpline on 08457 123 456. Those who need more help could consider using the Citizens Advice Bureau (either look up your local bureau in the phone book, or ring 08444 111 444 in England or 08444 772 020 in Wales). For anyone worried about the effect on their housing needs, the Shelter helpline is on 0808 800 4444