Select Committee on Deregulation and Regulatory Reform Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1. Mr Ramsden, can I welcome you and your colleagues to the Committee. For the sake of the record, can you introduce yourself and your team to us and then I will put to you what the purpose of the meeting is.

  (Mr Ramsden) My name is Charles Ramsden; I am head of the Disability and Carers Branch in the Department for Work and Pensions and I am responsible for policy on disability and carers' benefits. On my right is Marion Hutt who is the section head in the branch concerned with carers' issues and specifically with invalid care allowance. On my left is Vicky Fox from our legal department.

  2. At our session last Thursday, there were a couple of points on one particular aspect which I think you are aware of and, rather than communicate in letter form, particularly because of the time left to finalise our report on this, we thought it would be easier if we sat here rather than perhaps send letters backwards and forwards. I would ask you to explain why you propose to withdraw the over 65 concession and what effect it will have and then one or two of my colleagues may wish to ask you questions on that.
  (Mr Ramsden) Obviously, as you say, Chairman, we understood that the main interest of the Committee this morning would be, within the Order as a whole, the Government's proposal to end the concession under Section 70(6) of the Social Security Contributions and Benefits Act, 1992 whereby an invalid care allowance recipient remains eligible for that benefit and indeed potentially for other benefits even where the basic conditions of ICA entitlement, the individual status as a carer, cease to be fulfilled. We have therefore prepared our evidence primarily on this aspect of the Order but of course we are happy to answer any questions on any other aspects of the Order if Members of the Committee wish to put those. Inevitably perhaps questions can sometimes be complex in this area of social security benefits as with others and obviously if there is any issue which cannot be satisfactorily dealt with from our part this morning, then we would be very happy to send the Committee an early note setting out our views on the answer. The position on the proposed change to Section 70(6) is set out at some lengths in paragraphs 35 to 41 of the Government's statement accompanying the Order and also in Marion Hutt's letter of 8 February to the Committee Clerk. I will invite Marion to say a few words about the details of the proposal in a moment. It may just be helpful to make a couple of more general points on the overall approach before Marion explains why we feel that it is reasonable and proportionate within the Order as a whole. Firstly, the Government have been clear that extension of the facility to claim invalid care allowance to the over 65s is a key desirable outcome of its review of financial support for carers and this was an issue that was raised repeatedly during the review and by the lobby groups acting on behalf of carers. In doing so, it became clear that Section 70(6) could not continue, at any rate in anything like its present legislative form, if this change were to be made viable. In the first instance, it is conceivable that the actual effect of Section 70(6) might be to enable everyone over 65 to claim ICA, invalid care allowance, since they would not have had to demonstrate any particular status as a carer to retain it. Even assuming that that was not the case, it is clear that the ability to claim ICA over 65 and then to retain it irrespective of condition would run completely contrary to the original intention of the unconditional run-on which was helping long-term carers with very disrupted contribution records by making the continued benefit available unconditionally to numbers of people who had only just started claiming it in the first place.

Brian White

  3. Could you say that again. I did not understand what you just said.
  (Mr Ramsden) The effect of what I was saying was that the original idea in allowing entitlement to ICA to continue even where the primary conditions of caring were no longer being fulfilled, was to enable people, normally women, with broken national insurance contribution records, access to additional income through the benefits system, which they would not have been able to receive through pension. If a situation arose following the order, where individuals were able to claim invalid care allowance over 65 and then quite possibly within not much more than a few weeks or months retain entitlement to that benefit potentially for the rest of their lives even though they no longer had the status of carer . . . The point I am trying to make is that this would run contrary to, and be a completely different issue to the sort of reason that the unconditional run-on was made available in the first place. Continuing Section 70(6) for people claiming under 65 but making it unavailable to older claimants, if this were another approach taken, would exacerbate a cliff-edge cut-off point and maximise administrative complexity and confusion. Far from making the conditions of state support for carers fairer and simpler, which was an aim the Government hoped to achieve as a result of the review of financial support for carers, the Government would risk making them pretty well incomprehensible. What it would be saying is that providing someone claimed ICA shortly before age 65, they would be likely to be able to stay entitled to it forever.

  4. So what?
  (Mr Ramsden) That would be contrasted with the position of those who might claim it significantly before age 65 and who would be likely to find that entitlement had ceased in the interim because the claim had been broken, the disabled person had died or there was a break in the claim for some other reason. Claim it after 65 and the protection under Section 70(6) would not apply anyway. So you would end up with in effect quite a small group of people who happened to claim at the right moment and whose circumstances had happened to fall into a particular pattern who would have continued entitlement over many years to a benefit no longer available to all the other claimants. Although it is hard to be definitive, I would suggest that the attempt to perpetuate Section 70(6) as such in any form once the benefit could be claimed at over 65 would be likely to lead to a very difficult situation. This is not perhaps surprising since, as one might expect, concessions which enable benefit entitlement to continue once the key entitling conditions no longer exist create various kinds of difficult and unexpected anomalies. The question of expectation leads on to the possible expectations of claimants which is my second point. We very much doubt that expectations of the kind that might require long transitional protection exist among younger carers, always possibly excepting a very tiny number who will actually be familiar with the terms of the 1992 Act. Indeed, in my branch, we have no recollection of ever having been involved in correspondence on this particular question with ICA claimants or recipients. To expect a benefit to continue past a certain age is one thing, to expect it to continue past a certain age as the result of a series of unpredictable events falling into a specific sequence and despite no longer fulfilling the most basic conditions on which the benefit was awarded, in this case having someone to care for, seems quite different. If we acknowledge that Section 70(6) cannot viably continue under the revised benefit rules, the question does become primarily one of transitional protection. The Government is of course providing transitional protection so that nobody will actually lose money and become worse off than they were before. Consultation on the Order has raised the possibility of much deeper transitional protection lasting for perhaps 20 years. In the Department's view, this degree of protection cannot be appropriate as it will be based on expectations of benefit continuing from a point many years ahead to be paid for no reason connected with the need to care but instead on the wider grounds of former governments' pension policy and this does not seem realistic. Could I now just hand over to Marion on some of the more specific aspects of the issue.
  (Ms Hutt) Rather than go through all the points raised in my letter, I want to just draw attention to a few points that I would ask you to bear in mind when you are looking at the proposal. First of all, the changes we are talking about today are part of a targeted package of help for carers. It is a finite amount of money and there are various different avenues in which it has been spent. Some of it has been spent already on increase in carer premium and increasing the ICA earnings limit. One of the most frequently requested changes to the benefit rules for all the lobby groups, MPs such as yourselves and all sorts of people, has been extension of ICA to the over 65s and I do not think anyone has a problem with that. Where the difficulty comes in is removal of this concession. Just to repeat partly something that Mr Ramsden explained. The reason for the concession in the first place was to protect those who had no means of protecting their retirement pension qualifying contributions back in 1976. These were people who claimed for the first time a brand new benefit; they had perhaps spent many years looking after a family member, had no way of working and there were no national insurance credits at that time. So, this was a much needed concession for those people. In 1978, national insurance credits came in. Therefore, as soon as you were on the benefit, you started to be credited with contributions towards your RP, eventually for each week that you were getting the benefit, and it removed a whole area of anxiety for carers thereby. Nowadays, those people are working through the system and in the main people are now qualifying for a retirement pension when they reach pension age. Apparently, it is round about 90 per cent of people.


  5. They would have lost qualification for SERPS, would they not?
  (Ms Hutt) Yes and I am not qualified to advise you about SERPS. Nobody would argue that people who have not been in the employment field do lose out; they do not have the opportunity for occupational pension, promotion prospects and all sorts of things are lost. The benefit system is not claiming that it can recompense them for those losses over a lost career, if you like. There is no way that invalid care allowance can do that. It can help towards their retirement pension, and the benefit system is going to provide the state second pension which will be coming in shortly, and it also provides a safety net in the form of the minimum income guarantee. For all those reasons, the concession is, if you like, no longer valid; it is no longer needed; people have other means of providing for themselves or the benefit system provides for them in other ways. That is the first point. I do not want to go through all the figures that I put in the letter—it is a little tedious—suffice it to say that the best estimate I can give you is that very few people will lose out under the concessions; very few people will have less money than they would have done otherwise. That is because most people reaching retirement age have a retirement pension. Their invalid care allowance is overlapped, they do not get both. We are not proposing to change those rules; they are underpinning rules of the social security system and they are going to stay in place with these proposals. So, as you chop down the figures from the number of people reaching 65 each year, the numbers of carers on ICA, we think it boils down to a few hundred people who will lose carer premium or a very small amount of ICA. They lose it because they no longer meet the conditions of entitlement, and that seems ultimately quite reasonable. No other benefit allows you to continue getting the benefit even when you cease to qualify. If you become unemployed, you get a job seeker's allowance, you get a job and then you lose the benefit. I think people would see that as being proper use of public money. So that is one point. On the Section 70(6) question of what it means—and Mr Ramsden has outlined three different scenarios—if it is left untouched, which I think is one of the questions that you are raising in your minds—let us leave things as they are, let us let people have the concession—at the moment, that concession applies to people who established entitlement to ICA before the age of 65. It will not apply to the new claimers over the age of 65. That way you end up with two groups. The ones over 65 have a legitimate grievance. Why should they not have something that somebody who claimed a week before their 65th birthday has? One of the side-effects, if you like, of this targeted package which is for carers, I would stress, is that we iron out such anomalies. We want to provide fairness and equity, insofar as is possible within the benefit system, and this is the way to do it. Everyone will be subject to the same rules. For those whose carer premium ceases or their ICA ceases, they still have the safety net of the minimum income guarantee. Nobody will be plunged into hardship as a result. I do not want to go on too much longer but want finally to mention the transitional protection. There has been a suggestion, which I believe you are familiar with, that the transitional protection should start at a much younger age, at age 45 rather than 65. This came to our attention only yesterday. I think I ought to make the point in order that, when you are thinking about it, you can bear it in mind. Transitional protection attaches to the claim not to the person. What are the chances of a 45 year old who is claiming ICA still being a carer at 65? We know that the median rather than the average length of claim is three-and-a-half years. We are not saying that everybody's claim ceases at that time, but that is the median. We think there will be a handful of 45 year olds granted transitional protection on a claim left at age 65 who will still be able to make use of that concession should they ever cease caring and it is important to remember that the concession is only of use when you cease to be a carer. It does not help carers, it only helps ex-carers. We think the number of 45 year olds caring for 20 years in order to make use of the concession who would benefit is going to turn out to be a very small number of people. I think I will leave it there and we will do our best to answer your questions.

  6. The point that I raised just now was because you several times referred to the "small number". The Committee may feel that the number is not really the crucial thing because, at the end of the day, if you keep emphasising the number, if it were a couple of hundred thousand, are you saying that you would take a different view? Do you understand the point that I am making? If it is on the merit of a thing, it is very different from saying that we are not bothered because it is only a small number.
  (Ms Hutt) It is not on the numbers. It is on the principle that, by keeping Section 70(6), you are going to end up with two distinct groups.

  7. So it is on the principle?
  (Ms Hutt) It is on the principle but I think people will also be concerned about how many people would be affected because that is the issue being raised.
  (Mr Ramsden) We wonder, Chairman, just looking at the numbers for a moment but obviously bearing in mind what you have said, if Ms Hutt, in terms of trying to strike a fair balance and the proportionality of what the Government is seeking to achieve here, could indicate the actual number of people who might potentially, statistically projected , lose the ICA entitlement under this proposal compared with the number of potential gainers.
  (Ms Hutt) The potential gainers from extending ICA to over 65s—and again it is an estimate—are about 40,000 people over three years; they will stand to gain not just notional entitlement but real entitlement and real money. The number of people estimated to lose what can be a very small amount of ICA because they have a low rate of retirement pension or it might be just the carer premium is about 230 a year. That is our estimate. So, we are looking at proportionality.

Brian White

  8. So, we have 230 people likely to lose, what is the cost of that?
  (Ms Hutt) Negligible. It is not a question of cost. What we are looking at is fairness and equity and proportionality. We want to remove anomalies whereby some people can continue the benefit even when they are not carers and some people will not be able to continue.

  9. How many people in your department actually have experience of having lived on what you are proposing these people should have to live on once that £24 has been withdrawn?
  (Mr Ramsden) I think the point that Ms Hutt was making there was that this is not seen as a savings issue and the amount of money saved to the Exchequer is not in some way being scored up. It is in aggregate very small. We do not have a note that we can read from directly to indicate the aggregate amount but we would be obviously happy to provide that later to the Committee.

  10. That is not an answer to the question that I asked. How many people in your department have experience of caring for people and having to live on these amounts of money?
  (Mr Ramsden) As to the latter part of that question, I do not know the answer. With the benefits that my particular branch administer, which are disability living allowance, attendance allowance as well as invalid care allowance, one does from time to time meet people within the department who have direct experience, both themselves and through their close relatives, of making claims for those benefits.

  11. Are they involved in making policy?
  (Mr Ramsden) That may be the case.
  (Ms Hutt) May I add something to that? When you are talking about living on these small amounts of money, the underpinning safety net is the minimum income guarantee. That applies to carers and non-carers. That is the Government safety net for pensioners. We are not suggesting that anybody falls below that. That is £92.15 for single people.

  12. But people get less cash than that. People who exist in this country actually get less money in their hands than £92 per week.
  (Ms Hutt) That is the underpinning minimum to which income should be brought up by the MIG.

  13. There is other small print which actually stop people. I have examples of people in my constituency who actually get less money than that.
  (Ms Hutt) Their overall income should be brought up to that level. If they have difficulties with that benefit, then they should be seeing the district office about it because that is the minimum.

  14. And they find other small print to reduce that money and what you are doing here is planning more small print to reduce the money again. Is that not correct?
  (Ms Hutt) No, we are not. What we are doing is we are putting ex-carers in exactly the same position as other people with that underpinning minimum. If your constituents are having trouble with the minimum income guarantee, that is not something that we can address here but —

  15. But the point I am making is that there are people who have less than the minimum income guarantee from benefits and contributions and other things in their past who do not actually get it but what you are doing is assuming that they will get it and yet they do not.
  (Ms Hutt) I do not know why contributions have anything to do with the minimum income guarantee. It is not a contributory benefit.

  Brian White: There is small print which actually means that they get less money than that and I have brought that to the attention of the relevant department. It is not your department. The point I am making is that if they are in the same position, they are not going to get the £92, they are getting less, and therefore that £24 is a major part of their income for 300 people.

  Chairman: We have to keep to the issue we are actually discussing and whilst you are raising points that may be of concern to a number of Members, we have to try and keep to the one issue that we do have before us today.

Brian White

  16. We are talking about a few hundred people to whom £24 is a major difference and you do not seem to be taking that into account.
  (Ms Hutt) I hear what you are saying.
  (Mr Ramsden) The argument that we are trying to put is not one that ignores the fact that, let us say on a projection of years ahead, there will be a smallish number of people who are potentially less well off as a result of this particular proposal than would otherwise be the case. That is not something that we are trying to ignore or conceal. The argument that we are trying to advance here is that, in terms of the overall aims of the Order, the package of enhancements for carers, the number of potential gainers and actual gainers, this is a legislative anomaly which needs to be addressed and which the Ministers say can be addressed while striking a fair balance between the public interest and individual needs overall.

  17. What is the estimate of the costs of administering this?
  (Mr Ramsden) This particular aspect of the package?

  18. Yes.
  (Ms Hutt) It has never been costed out separately. The carer package will be, if it is approved, implemented as a whole; it has not been chopped out.
  (Mr Ramsden) We have some quite detailed material on the administrative cost of the whole package. As Ms Hutt says, I am not aware of this particular aspect having been costed out separately for administrative purposes but I expect that it could be and we could let the Committee have an indication of that if that would be helpful.

  19. My last question is with regard to the Social Security Advisory Committee; why did you not consult with them?
  (Mr Ramsden) The consultation with the Social Security Advisory Committee is on regulations which are made pursuant to specified acts. The act under which this Order is coming forward is not one of those acts so specified and there is an issue of whether the level of legislation is in fact primary, in which case we would not expect the Advisory Committee to be involved. My legal colleague has pointed out that the instrument we are talking about here is an order and not regulations and that the Regulatory Reform Act is not a relevant enactment for the purposes of the Social Security Advisory Committee.

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