180. Right.
(Ms Howard) So for people whose disabilities are
invisible or they are managing their disabilities——
Mr Roy: Thank you
very much.
Chairman: May we turn
to the aspects of reform affecting the Child Care Tax proposal
and invite Julie Kirkbride to ask some questions about that.
Miss Kirkbride
181. May I slightly pick up on what Frank
was saying. By the time you take into account the problem of confidentiality
and the potential disincentive of employing somebody who will
be an administrative burden, are we not better off staying where
we are with the DWA benefit? What is the value at this point,
with these very significant disadvantages, in changing the system?
(Ms Thompson) DWA is capable of very substantial
reform. If it was going to continue to exist, it would have to
be reformed anyway, very significantly, along the lines that we
have already discussed. The decision to move to a tax credit is
obviously the decision of the Government because it chimes with
Government policy elsewhere. But, if you notice, at the very end
of our submission on this subject we do say there are both arguments
for and arguments against moving to a tax credit.
182. Given the tax credit per se,
what is the argument for? What is the positive argument for?
(Ms Thompson) The argument for: the reason why
we support it is that it may eventually improve take-up.
183. Is that just a value judgment you have
made that this is likely to happen? What evidence do you have
to suggest that this might be the case?
(Ms Thompson) Hope and anticipation, I think,
rather than anything else at this stage. Certainly a belief that
we must improve on the situation that we have now, where take-up
has been very low and we think more could be done.
184. You were smiling when I put that.
(Mr McGinnis) My answer is more of a personal
one than a Disability Benefits Consortium one, in that if your
prime objective is to enable more disabled people without work
to get into work and to have an overall income which enables them
to maintain that situation, you are much better sticking with
DWA. That is also true if you do not believe that in the longer
term dramatically extended tax benefit integration is realistic.
If you take the view that where disability is concerned you cannot
simply integrate tax and benefits on a simple basis because you
have the additional dimension of disability, as soon as you have
that you have something that looks more like a benefit than it
looks like taxation. The argument for tax credit is simply and
solely in relation to that quite important and large area of helping
people who are already paying tax, of having their disability
recognised within that taxation framework with which they are
already familiar. Where you start depends an awful lot on what
advantages and disadvantages you see in a switch from benefits
to tax credits.
185. To go back to the child care proposals,
whether or not the new Child Care Allowance will be a problem
for people with disabled children because of the way it has been
structured with registered childminders and things, could you
take us through your views on that.
(Ms Howard) As we mentioned earlier on, the Disability
Working Allowance itself has been far more successful for single
people without children, so clearly now is an opportunity to look
at some of the issues for disabled people who have children, particularly
if they have the disabled child. DWA does that a bit with having
the Disabled Child's Allowance as part of the calculation. That
is something that we would want to see carried over into the new
tax credit. You are right to point out the difficulties with accessing
child care. We already know the problems that parents have when
their children are not disabled in terms of finding accessible,
affordable, appropriate child care. Those problems are magnified
when you have a disabled child who even over the age of 11 may
well have greater needs than a child without that particular disability.
Formal child care may not be an option if the parents prefer to
have somebody looking after the child who is known to them—a
friend or a relative—or formal child care may simply not
be an option. It is important that some assistance is given through
tax credit to tackle at least the issue of affordability. So there
is an area there where the tax credit could be an improvement
upon DWA, particularly if it does go further up the age range
for disabled children. It would be a very small thing to do—in
fact, it would be for a small number of people—but, nonetheless,
would be a very worthwhile thing to do.
186. Do you have any specific proposals
about what should happen with the informal child care arrangements,
which may not be recognised under the scheme that is proposed
at the moment? Are you making any recommendations? Have you any
views on that?
(Ms Howard) One way to do that would be to look
at families who claim Disability Working Allowance, or the tax
credit where the Disabled Child Allowance is in payment, and maybe
give further recognition there to people who also need to use
child care.
(Mr McGinnis) It is just a comment in terms of
the case on which I spent yesterday, supporting a family where
the normal pattern for the child is to get to bed eventually at
about 11 o'clock and to get up again at 3; who has worked his
way through three different family placements for short-term breaks,
each and every one of which has failed; but because he is severely
autistic would find a group situation for care away from the family
unacceptable. So it means that if you are going to cater within
the new care arrangements for children with severe disabilities,
particularly some of that group, either the State is going to
have to fund a high level of cost; or if the parents are meeting
it as a cost out of their own pockets, on top of all the other
costs they are meeting, you simply have to reflect that within
the allowances that are made. Most of what is being done and said
about child care is fine, it is fine for the generality of children,
but this is not true for that minority for whom the normal child
care arrangements are simply not tenable.
Chairman
187. Can I ask you this, one of the inevitable
consequences of moving the whole benefit to a tax credit will
be you will be moving into the hands of the Inland Revenue and
we all understand that there is a whole intricate edifice of appeals
that are built in to the benefit system. I notice your paper talks
about moving to DFEE in terms of some of those changes, are you
comfortable with that? Personally I am very nervous about that
because there is a body of law established in Benefit Appeal Tribunals
and the rest. How do you propose to get some equivalent protection
for people who feel they have to appeal in the new system within
the Department for Education and Employment?
(Ms Howard) It is a real problem because at the
moment people on Disability Working Allowance can appeal to a
Social Security Appeals Tribunal or a Disability Appeals Tribunal
if it is to do with disability appeals rather than income appeals
but, of course, that option will no longer exist if it is a tax
credit because that will then become part of the Inland Revenue.
We were not terribly confident about the ability of tax law to
deal with complex disability issues either. The tax commissioners
at the moment, there are Special Commissioners dealing with issues
like valuation of shares as well as General Commissioners dealing
with issues to do with tax allowance and so on but neither of
those seem to be particularly good routes to go down when you
are talking about disability issues. It may be that appeals to
do with forms of income will be appropriately dealt with down
that route but in a sense what we feel is that if we are talking
about disability people in employment, particularly in retention
situations, it will be so bound up with what the employer does,
what support is from the Employment Service, that it makes more
sense to have a structure that is within the current Department
for Education and Employment, which is after all the Department
with overall responsibility for disability issues across all Departments,
to have some kind of structures to build on what is already there
in relation to employment. So we thought it might also be an opportunity
to bring together some of the areas of complaints and so on around
something like access to work so that people could actually look
at the support they receive through the Employment Service, through
tax and so on, actually as a whole. So that is certainly a suggestion
that we would make for further discussion.
188. Do I understand you to mean that you
are going to suggest the Employment Appeals Tribunals as they
currently stand should extend their remit to these kinds of questions?
(Ms Howard) No, I do not think we felt that.
189. Is it free standing?
(Ms Howard) There would have to be another system.
190. A completely new system to deal with
it. My guess would be that there will not be thousands and thousands
of cases because the take up of DWA is so small. It would be interesting
to know, maybe we could make some inquiries of the Department
as to how many appeals come through, generated from current recipients
of Disability Working Allowance. Then again you would then have
the problem of setting up a unique set of institutions simply
to deal with it properly and we have to deal with some of the
appeals that might come from this new tax credit?
(Ms Howard) I think something is going to have
to happen anyway because the current system will not be sustainable
if it moves from Social Security to Inland Revenue. The option
is either bolting something else on to the Inland Revenue like
a Disability Appeals Tribunal or bolting something else on say
to the Employment Service. We thought, particularly given the
close links to do with disability in work that the DFEE has, it
might on balance be preferable to do it through DFEE rather than
through the Inland Revenue. It is not ideal.
191. As you say. That must be the understatement
of the week.
(Mr McGinnis) Could I cloud the issue, Chairman.
It seems to me your ideal system is one which has three bridges.
192. Bridges?
(Mr McGinnis) Yes. It is quite possible that disability
benefits will be relevant to entitlement to the new tax credit.
There is a sense in which you need a system which links benefits
issues with tax issues. As Marilyn said, there is a clear link
with things like the access to work arrangements so you need something
which bridges in to the Disability Discrimination Act, Access
to Work and so on. Also, as soon as you talk about somebody's
tax liability, you are talking about their general tax affairs,
you need something which bridges into the normal tax adjudication
system. I have not got an answer. I think the one message that
comes from me is that the Inland Revenue are going to have to
adjust to dealing with some very vulnerable people who do not
have accountants. The way the tax system is geared is to the supposition
that if your affairs are rather complicated your accountant will
sort them out for you. When you are dealing with individual disabled
people who may be struggling to maintain themselves or get into
the workforce, the system has as far as possible to be intelligible
and workable by them without an accountant. I have not got a good
answer but the problems are very obvious.
Mr Wicks
193. Could I ask a question which takes
us outside the immediate DWA agenda, supported employment. One
of the objectives is to enable people with disability or learning
difficulties who wish to seek work to find work. I know an organisation
Status Employment in Croydon that helps people with very serious
learning difficulties and it seems to be doing remarkable work
with for example younger adults with Down's Syndrome who are not
in the 90 per cent living at home, as it were, with parents but
living in a residential care setting. Although I was very impressed
by the work they were able to do I was also perplexed by the social
security tangle people get into and poverty trap and all the rest
of it because being in residential care they need to stay on Income
Support to get that paid and therefore the hours they work are
very restrictive. Can you help us with that? Does DWA affect that?
(Mr McGinnis) Let me attempt that, I am not going
to take it very far I am afraid. I do not think DWA will make
an awful lot of difference because at the end of the day as you
said what we are talking about is the ability to fund £250,
£300, or £400 worth of residential care.
194. Yes.
(Mr McGinnis) Now the reason that price is so
high and the reason, therefore, that dependence on Income Support
is so important is because that is the only way in which, together
with the local authority, you are going to pay that sort of bill.
It is not the accommodation is costly, it is because the support
is costly. Community care housing is no more expense than any
other housing in housing terms, it is the support costs that cost
money. In a way I think the only way through this is biting on
the bullet and saying that if somebody with a severe disability
who therefore needs to be supported in residential care, or something
at that end of the support spectrum, wants to and is able to work,
what you charge them for is their housing costs because with housing
benefit you have got a means of addressing that, what you do not
charge them for is their care cost. In some cases we are talking
about people who under an earlier system had actually been maintained
free of charge in hospital. Some of those who were in that situation
were living in hospital free and working outside and getting paid.
Now I know it is not going to be easy for any government and combination
of departments to do that but I do not see any other way of solving
that problem of somebody with very high support costs but with
the ability and willingness to work.
195. At the moment in that situation in
a sense you have the person's desire to work and often the employers
are urging them to work full-time rather than part-time so we
are trying to see how the existing welfare state makes sense of
that situation rather than starting with a situation and saying
"What policies do we need"?
(Mr McGinnis) If I may again resort to telling
a story because it is a real case. There was a young gentlemen
with learning disability who wanted to live away from his family,
got the opportunity, and then having done that got the opportunity
of a job. He was not able to reconcile those two things. He could
not have both the job and his independence from his parents so
he moved back home feeling the job was the thing he valued most,
at which point, because of the economic cycle or whatever, he
lost the job. That is pretty devastating.
Chairman
196. Where do we go from here? I am getting
slightly nervous, I have to say—I do not know about my colleagues—about
firstly the complexity. I am grateful for the memorandum personally.
I did not realise there was so much to this, perhaps I should
have done. As I say the Committee is on a very tight schedule
in terms of other subjects it is studying and how it wants to
take the Tax and Benefits Inquiry and bring it to a conclusion.
Have the Government been making any approaches to organisations
like your own? We have seen in the past that they can get things
really quite badly wrong if they do not get proper advice and
consult fully with organisations like yourselves who have much
more experience of practical problems. Have you got arrangements
in hand to get some meaningful discussion and dialogue with departments
involved in this over the summer months—it is never ideal
doing that over the summer months—before the Department
starts hardening up and firming up its own proposals in a way
which might be difficult to undo once they are printed in cold
print? Persuade me you are confident this is happening because
otherwise I shall go home worried?
(Ms Thompson) Chairman, I will try. The answer
is broadly no to most of those questions. What we are hoping to
do, having had this valuable opportunity to present this memorandum
and clarify our thinking a bit doing it and talking to you today,
is actually to build on this and go along and say: "These
are some of the issues that we need to talk about" and run
them past the Inland Revenue if we get a chance. We need to be
talking both to the DSS and to the Inland Revenue if we can but,
as Brian has said already, our links with the Inland Revenue historically
have been non existent so we have got some bridge building to
do there. We feel now we are much more aware of the issues involved
and in a way it is a journey of revelation to us also. It is something
that sounds a tremendously good idea on paper but when you sit
down and start to unpick it a bit you can see potential problems
and then suddenly you begin to question the whole thing. We are
still broadly in support. We do want to take it forward. You are
absolutely right to alert us to the need to do so. I would hope
perhaps, if I may have the temerity to suggest it, that maybe
we could have the way paved for us a little bit in that respect
in that we would like someone to open the odd door or two, certainly
in so far as the Inland Revenue is concerned.
Mr Wicks
197. It seems to me that given our experience
with Benefit Integrity Projects and so on, the need for consultation
between relevant departments and organisations is absolutely clear.
(Ms Thompson) Yes.
Mr Wicks: We are meeting
Treasury officials on 28 October when we will discuss with them
the discussions they will have had with you by then about these
matters. We would be disappointed if those discussions had not
taken place.
Chairman
198. I think that would be the very least.
Bear in mind we would have the opportunity to ask some questions
and we are not above being prompted in the right direction if
you get my drift.
(Ms Thompson) Chairman, this is very helpful.
Thank you very much.
Chairman: Can I say
thank you very much to you. It has been a journey for us. The
temptation is to go off and do a whole inquiry into this. The
way I feel at the moment I think that is a temptation. We have
not really got the time to do that properly. If by 28 October
or whenever we meet the Treasury you yourselves and ourselves
are not a good deal more confident that this has been thought
through in a wee bit more detail to everybody's satisfaction then
I think maybe there will be some pretty robust questions to ask
then. Thank you very much for both your submissions which have
been very informative and very instructive. It is exactly this
kind of issue in the third phase of our implementation, part of
our tax and benefit project, that we are hoping to smoke out.
At least if we know there are problems we have still got a wee
bit of time to address them. You have been very helpful in that
direction this morning. Thank you very much.
