Examination of Witnesses (Questions 1
- 19)
TUESDAY 5 MARCH 2002
MR CHARLES
RAMSDEN, MS
MARION HUTT
AND MRS
VICKY FOX
Chairman
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.
Chairman
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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