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Autumn Budget 2017 Universal Credit changes: what next for welfare?

What Philip Hammond’s Universal Credit changes mean, and more. 

In his Autumn Budget 2017 speech, Chancellor Philip Hammond promised to “help families to cope with the cost of living”. Many families include recipients of welfare in one form or another, including low-paid working families who receive tax credits or housing benefit.

So what’s in it for them?

Here’s what you need to know about the changes made to Universal Credit, housing benefit and other forms of welfare in the Autumn Budget 2017.

Universal Credit

There are many problems with the new “streamlined” benefit called Universal Credit, which is currently being rolled out across the country. In particular, a six week waiting period before the first payment has led to huge hardship, and rent arrears.

Hammond announced the scrapping of an initial seven day waiting period, meaning that the wait for Universal Credit should be reduced to five weeks from February 2018.

Claimants can also ask for up to a month’s worth of Universal Credit paid in advance. This amounts to an interest-free loan, which the claimant will have to pay back over the next 12 months.

From April 2018, claimants already receiving housing benefit can keep on doing so for two weeks after their Universal Credit claim, which should make it easier to cover the rent in the transition period.

Housing benefit

Hammond promised to increase targeted affordability funding, which will allow certain local authorities to increase housing benefit for tenants rising for private landlords.

This is designed to increase support where rents are least affordable - although it may also have the opposite effect, in that landlords realise they can charge more. 

Pensions

When Hammond became Chancellor there were rumours he might scrap the “triple lock” – the guarantee that the state pension will rise by 2.5 per cent, the rate of inflation, or average earnings, whichever is highest.

This has not happened. In April 2018, the state pension will rise by 3 per cent. There is however, a tinkering with pension and savings credit, an income-related benefit for pensioners. After the adjustment, there will be less reward for savings and more for those on the lowest incomes.

Working-age benefits

Unlike pensions, working-age benefits remain frozen. With prices rising, this means that working-age people will be able to purchase less and less with their payments. 

Hammond had nothing specific to say about other important benefits, including personal independence payments, jobseekers' allowance, or employment and support allowance. In other words, the harsh policies introduced by his predecessor, George Osborne, continue, as Anoosh Chakelian documented back in March, here.

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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Can Britain’s new powers to investigate unexplained wealth prevent real-life McMafias?

The government is waking up to the fact that global criminals are fond of London. 

The BBC’s McMafia, a story of high-flying Russian mobsters and international money launderers woven into the fabric of London, ended this month. Despite the dramatic TV twists, the subject matter has its basis in reality. As a barrister dealing with cases that involve Russia and former Soviet states, my experience is that politicians and business people use the apparatus of the state to put rivals out of business by any means possible.

In McMafia, previously straight-laced fund manager Alex Godman (played by James Norton) begins transferring money under the cover of a new investment fund. With a click of a button, he can transfer a shady partner’s money around the world. As the Paradise Papers underlined, money can indeed be hidden through the use of complex company structures registered in different countries, many of which do not easily disclose the names of owners and beneficiaries. One company can be owned by another, so the owner of Company A (in Panama) might be Company B (in the Cayman Islands) which is owned by Company C (in the Seychelles) which owns property in London. To find out who owns the property, at least three separate jurisdictions must be contacted and international co-operation arranged – and that’s a simple structure. Many companies will have multiple owners, making it even more difficult to work out who the actual beneficiary is.

I represent individuals before the UK extradition and immigration courts. They are bankers, business people and politicians who have fled persecution in Russia and Ukraine or face fabricated charges in their home country and face extradition or deportation and will often be tortured or put on show trial if we lose. Their opponents will deploy spies, who may pay visits to co-defendants in Russia for “psychological work” (aka torture). Sometimes the threat of torture or ruin against a person’s family is enough to make them confess to crimes they didn’t commit. I have seen family members of my clients issued with threats of explicit violence and the implicit destruction of their life. Outside their close relatives’ homes in Russia, cars have been set on fire. Violence and intimidation are part of the creed that permeates the country’s business and political rivalries.

As in McMafia, London has long played a bit part in these rivalries, but the UK government has been slow to act. In 2006, Alexander Litvinenko, a former Russian security agent turned defector, was killed in London using Polonium 210 – a radioactive substance put into a cup of tea. Although Russian state involvement was suspected from the beginning, the UK government tried to block certain material being released into the public domain, leading his family to complain that the UK’s relations with Russia were being put before the truth. In 2016, a decade after his death, the inquiry finally delivered its verdict: there was a “strong probability” Litvinenko was murdered on the personal orders of Vladimir Putin. Yet in the same breath as condemning the act, David Cameron’s spokeswoman said the UK would have to “weigh carefully” the incident against “the broader need to work with Russia on certain issues”.

The government of Cameron’s successor has however been quick to use McMafia as a spring-board to publicise its new Unexplained Wealth Orders (UWO). These new investigatory powers are purportedly to be used to stop the likes of Alex from hiding money from the authorities. Anyone with over £50,000 of property who is politically exposed or suspected of a serious crime, will be forced to disclose the source of their wealth on request. While most British homeowners would own more than £50,000, the individuals are likely to be high profile politicians or under investigation already by the authorities. If they fail to respond punctually, they risk forfeiting their property.

The anti-corruption organisation Transparency International has long campaigned for such measures, highlighting cases such as the first family of Azerbaijan owning property in Hampstead or senior Russian politicians believed to own flats in Whitehall. Previously, confiscating hidden assets has been a lengthy and complex process: when the High Court confiscated an £11m London house belonging to a Kazakh dissident, the legal process took seven years.

The new Unexplained Wealth Orders mean that the onus is shifted to the owner of the property to prove legitimacy and the origin of the wealth. The authorities will have much greater power to investigate where finance and investment originated. But in order for them to work effectively, they will have to be backed up by expert prosecutors. The government still has a long way to go before it makes London a less attractive place to hide money.

Ben Keith is a barrister at 5 St Andrew’s Hill specialising in extradition, immigration, serious fraud, human rights and public law.