Memorandum submitted by
the Disability Benefits Consortium (TAB 64)
1. SUMMARY
Disabled Person's Tax Credit (DPTC) will replace
Disability Working Allowance (DWA) from October 1999. DWA failed
to become the work incentive for disabled people as envisaged
and does not readily assist with job retention.
The DBC is concerned that difficulties that
beset DWA may be transferred across into DPTC.
DPTC will be outside the social security system.
Therefore, the DBC is concerned that the review and appeal procedures
and mechanisms for consultation on regulations for DPTC are unclear.
The DBC hopes that DPTC will be included in the mechanisms for
consultation on other disability benefits such as the disability
benefits forum.
The Child Care Credit (CCC) element in both
DPTC and WFTC may discriminate against parents/carers of disabled
children.
2. SUMMARY OF
RECOMMENDATIONS
2.1 DPTC should be publicised effectively. DBC
would welcome the opportunity to be consulted on ways of reaching
disabled people.
2.2 DBC recommends that the eligibility criteria
for new claims is broadened to include those who meet the disability
test for renewal of DWA. This would give DPTC a role in job retention
as more claimants could become eligible without having to leave
work.
2.3 DBC recommends a phased entry into DPTC
by allowing claimants to gain a foothold by working less than
16 hours a week for a limited period.
2.4 DBC recommends that consideration is given
to only means testing the disabled person unless the spouse or
partner's income is low enough for the household to access DPTC.
The capital limit of £16,000 for DWA appears to be irrelevant
for a tax credit.
2.5 DBC recommends changes to Housing Benefit
to reduce the poverty trap for DPTC recipients with rent costs.
2.6 Consideration should also be given to allow
help with mortgage payments for DPTC recipients who move across
from Income Support.
2.7 DBC recommends that the linking rules in
place for DWA enabling disabled people to try out work or undertake
training courses should remain for DPTC.
2.8 DBC recommends that mechanisms for consultation
with bodies such as the Social Security Advisory Committee and
the Disability Benefits Forum over the implementation and regulations
governing DPTC are established.
2.9 DBC recommends that mechanisms along the
lines of the existing review and appeal procedures for DWA remain
for DPTC.
2.10 DBC recommends that the child care needs
of parents with disabled children is investigated to ensure that
the CCC for DPTC and WFTC does not discriminate against parents/carers
of disabled children.
2.11 In April 1995 a disabled child's premium
was introduced do DWA which we assume will be imported to DPTC.
DBC recommend that an equivalent provision should be made for
disabled children in WFTC.
3. PROBLEMS WITH
DWA THAT MAY
MOVE ACROSS
INTO DPTC
3.1 DWA has been of tremendous benefit to those
who receive it. It has been particularly successful for people
with severe learning disabilities, many of whom live with their
parents and have no housing costs. DPTC will replace DWA and appears
to be a straight transfer of the benefit into the tax system.
With its higher thresholds, rates, child care credit and a lower
taper, DPTC will be more generous than DWA. This is to be welcomed.
3.2 DWA was introduced in 1992. It is a means
tested benefit to top up low earnings and was modelled on Family
Credit. It was expected to reach 50 thousand disabled people.
It was hoped that DWA would be an incentive to move off benefit
and into work for about 2-3 of that number.
3.3 DWA has reached about 14 thousand people
(Source DWA Statistics Quarterly Enquiry October 1997). Most claimants
had not heard of it until they had started employment and were
not influenced by DWA in their decision to work. (Rowlinson, K
and Berthoud, R, 1996, "Disability benefits and employment",
DSS research report 54.)
3.4 Given this lack of awareness, consideration
should be given to effective ways of publicising DPTC to encourage
take up. For example as Incapacity Benefit is taxable, the Inland
revenue should be able to identify potential DPTC claimants. Potential
claimants could be encouraged to register an underlying entitlement
to the benefit before they start work. DBC would welcome the opportunity
to be involved in ways of encouraging take up of DPTC.
3.5 However, lack of awareness was not the only
reason for the failure of DWA. The main problem with DWA is the
restrictive qualifying conditions. Eligibility is limited to those
who were either receiving DLA or a benefit for incapacity eight
weeks prior to claiming DWA. The All Work test introduced in 1995
is a stricter test of incapacity for work affecting eligibility
onto the qualifying routes to DWA. Any further tightening of the
conditions of entitlement to incapacity benefits and possibly
to DLA itself, will limit the scope of those eligible for DWA
and to DPTC.
3.6 The assumption behind DWA is that the claimant
would be given an incentive to find work after a period on an
incapacity benefit. People who become disabled while they are
still in work cannot easily access DWA. Again, the qualifying
criteria act as a barrier. The claimant has to have been in receipt
of an incapacity benefit for at least eight weeks prior to their
claim or receive DLA, which itself has a three month qualifying
perid. The qualifying criteria must be broadened if DPTC is to
assist in job retention.
3.7 DWA statics show that over a third of the
people disallowed benefit had failed the qualifying benefits test.
At least 2-3 of those on DWA qualify because they are in receipt
of DLA (paid to people whether they work or not). This suggests
that DWA has not had much of an impact as a welfare to work incentive.
3.8 At the renewal stage, DWA claimants have
to pass a further disability test by showing they meet one of
20 areas of difficulty such as "cannot normally sustain an
eight hour day or a five day working week due to intermittent
or continuous severe pain or a medical condition." The disability
test is broader than the All Work Test.
3.9 The Disablement Income Group (Howard, M,
"Investing in disabled people: a strategy from welfare to
work" DIG 1997) suggest that the disability test used at
renewal stage could be added to the list of qualifying conditions.
3.10 Broadening the qualifying conditions in
this way, would open up DPTC to those in work to help them retain
jobs. It would also assist those who fail the All Work Test, or
its replacement. Many claimants who fail the All Work Test have
difficulty working due to the effects of disability or ill health
and may well fall under the provisions of the Disability Discrimination
Act.
3.11 The further major reason for disallowance
of DWA is because the claimant is not actually in paid work of
at least 16 hours a week. A phased entry into DWA and DPTC, for
example allowing claimants to start off by working eight hours
a week for a limited period should be considered.
3.12 Around one in seven DWA claims were disallowed
due to the means test. The assessment unit for the DWA means test
includes the spouse or partner. DBC recommends that consideration
is given to only means testing the disabled person if the spouse
or partner's income results in a failure to qualify. Unless this
is done DPTC will be positioned as a low wage top up for the whole
family rather than a work incentive for the disabled person on
benefit. DBC questions the relevance of the capital limit of £16,000
for a tax credit.
3.13 People claiming DWA face loss of help with
mortgage interest payments once they stop claiming Income Support.
They also face the withdrawal of other means tested benefits such
as Housing and Council Tax Benefits. DWA claimants who claim Housing
Benefit gain just 4p from a £1 increase in income (DIG report
above). Unless changes are made to Housing Benefit, the same sort
of poverty trap will remain for DPTC recipients with rent costs.
3.14 Possible solutions to consider would affect
Housing Benefit and Council Tax Benefit. These could include a
higher earnings disregard, a DPTC disregard and higher applicable
amount for disability. It may also be possible to maintain Housing
Benefit until a certain tax level is reached.
3.15 Consideration should also be given to allow
help with mortgage payments for DPTC recipients who move across
from Income Support.
3.16 DBC recommends that the linking rules in
place for DWA enabling disabled people to try out work or undertake
training courses should remain for DPTC. The Committee should
be aware that the benefit system still provides disincentives
to training especially the non payability DLA care component for
those on residential training or rehabilitation courses funded
under employment, education or disability legislation.
4. THE TRANSFER
OF THE
BENEFIT INTO
THE TAX
SYSTEM
4.1 DBC are concerned that regulations governing
DPTC may not be subject to scrutiny from bodies such as the Social
Security Advisory Committee or the Disability Benefits Forum if
DPTC is outside the social security system. The DBC would like
clarification on the consultation process for DPTC regulations
and implementation.
4.2 The detail of the review and appeal procedures
for DPTC are not clear. Will they remain in the social security
system which has expertise to adjudicate on issues such as the
disability or means tests, or will these functions transfer to
the Inland Revenue? The DBC recommends that mechanisms along the
lines of the existing review and appeal procedures remain.
5. CHILD CARE
CREDIT (CCC)
5.1 In order to receive a credit towards child
care costs for both WFTC and DPTC the child care must be from
an eligible provider such as nurseries, registered child minders
or a local authority run after school scheme. These do not include
informal networks of friends and family which may be even more
important to parents/carers of disabled children.
5.2 Parent/carers of disabled children have
enormous difficulties securing child care as higher staff ratios
and accessible buildings may be needed. The child may need to
be cared for in their own home which may have been specially adapted.
The proposed child care credit does not cater for children who
need to be cared for in their own home.
5.3 Child care needs of children over age 11
are excluded. Consideration should be given as to whether the
age bar is appropriate for disabled children.
The DBC suggest the child care needs of parents
with disabled children is investigated to ensure that the CCC
as it stands does not discriminate against parents/carers of disabled
children.
5.4 In April 1995 a disabled child's premium
was introduced to DWA which we assume will be imported to DPTC.
An equivalent provision should be made for disabled children in
WFTC.
1 July 1998
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