Select Committee on Work and Pensions Written Evidence

Memorandum submitted by Hertfordshire County Council (Money Advice Unit)


  This submission is being made by Gary Vaux, Head of Advice (Benefits and Work) at Hertfordshire County Council. I have 29 years experience in advice work, write for Community Care magazine and chair the Local Government Association's social security advisers group.

  I currently work in a local authority unit that conducts large scale take up campaigns with targeted groups like the elderly, people with disabilities, carers, and families of children with disabilities. The unit also provides a comprehensive training programme on benefits and debt to staff and volunteers, including local CAB, and a daily welfare benefits advice line.


  The current benefit system that has grown up since Beveridge demonstrates the following features:

    —    the system retains inherent features which act as a disincentive to work;

    —    there are complicated interactions between benefits for young persons and family benefits;

    —    there is a lack of smooth transition between benefits due to administrative problems and poor communication between different parts of the system; and

    —    there is a complex interplay between benefits but the current organisation of administration mean that systems and staff often do not recognise these.


  3.1  My unit provides "better off" calculations to clients of Work Solutions, a county council organisation which provides back-to-work advice to lone parents and people with disabilities. The unit also participated recently in an ESF-funded project providing benefits advice to carers who wanted to return to work. The project found that the complexity of the benefits system and the disincentives built into the various benefits were major obstacles in returning to work for some people, particularly carers. The following case study from April 2006 helps to illustrate these points.

  3.2  The carer, aged 39, lives with her partner of the same age who gets DLA "middle rate" care and "lower rate" mobility component. They have two children aged four and eight. Their eligible rent is £73.33 per week and council tax £21 per week. The carer currently works four hours a week at £5.05 per hour (National Minimum Wage at the time). They also receive income support, child benefit, child tax credit, carer's allowance, housing benefit and council tax benefit.

  Carer wanted to increase her hours of work. Better off calculations (see appendix 1) show that the family income would be as follows:

    —    Working 4 hours £431.29.

    —    Working 15 hours £431.29.

    —    Working 16 hours £446.94.

    —    Working 20 hours £420.40.

  Illustrates following disincentives:

    —    earnings disregard on income support;

    —    earnings limit on carer's allowance and loss of carer premium;

    —    working tax credit (WTC)—no incentives for carers eg carer element, disregard of carer's allowance etc; and

    —    restrictive free school meals rules.

  There is very little incentive for the client to increase her hours. If she works 15 hours, she will be no better off as only £20 is disregarded from her income support, so she loses all the extra earnings. If she works 16 hours she will be only £15.65 better off. If she increases to 20 hours she will be at least £10.89 worse off. This is partly accounted for by the loss of carer premium and the lack of any extra payment for carers in tax credits. She will also lose entitlement to free school meals for her children in the 16 and 20 hour scenarios.

3.3  Tax Credits remunerative work rule

  The 30 hour rule for those without children, or a disability, or aged 50+, means that certain people who can only work part time are excluded from WTC support. Carers without children who wish to take part time work to help balance caring and work responsibilities cannot access WTC unless they work 30 or more hours a week.

  Illustrates: disincentive for certain carers to undertake part time work of between 16-30 hours.


  The following case studies demonstrate the complexity of the current benefits landscape, particularly the interrelationship of family and young persons' benefits.

  4.1  Single parent, cares for two disabled teenage boys, aged 18 and 19, both with learning difficulties. She is the appointee for them and gets carers allowance and income support (IS). The boys get DLA and incapacity benefit (IBY). When the sons had been on IB(Y) for 28 weeks, they went on to the short term higher rate of £70.05 per week, which was 5 pence per week more than the £70.00 per week IS level. As they were floated off IS, they both counted as non-dependants for housing benefit (HB), and client's HB claim attracted two non-dependant deductions. The sons gained 10 pence per week IB(Y) and the client lost £14.80 per week on HB. Our intervention managed to get client a Discretionary Housing Payment from the LA, but this is not a right, is difficult to get and needs to be reclaimed periodically.

  4.2  Client cares for her daughter, aged 17, who gets DLA for mental health problems. Her partner and a dependant son are also at home. The daughter claimed IS and IB(Y) on her 16th birthday. There were huge delays and problems in getting payment. She finally got IB, but the family was actually worse off overall due to loss of child benefit and child tax credit.

  When IB(Y) was claimed initially it was disallowed in error but paid after appeal. This took until August 2006. As soon as the mother got notice of the IB(Y) award, she contacted the tax credit office. They ceased payments of tax credits and said she should have informed them in June at the daughter's 16th birthday. They backdated the change to June and created a large overpayment.

  4.3  Young man of 16 leaves school at end of June 2007, the official school leaving-date. His parents are entitled to child benefit for him until 31 August 2007, the normal "terminal date" for summer school-leavers. If he doesn't obtain a job or training place by 31 August, child benefit can be extended for up to 20 weeks from the date he ceased education, which logically should be the day he can leave school, so long as he registers for work or training with Connexions and the Jobcentre. This is to ensure that families do not suffer hardship in these circumstances.

  However, guidance from Revenue and Customs says that the 20 weeks extension period begins when the child ceases education. If he was excluded from school at Easter 2007, Revenue and Customs would say that he ceased education in April 2007. Counting 20 weeks from then means that his "extension period" would actually end before the normal child benefit period has ended. So the family receive no child benefit after 31 August.

  The same rule applies if the young person has to live independently of his family, when job seekers allowance is due during the child benefit extension period. Revenue and Customs guidance is followed by the DWP, so the young person will be denied JSA because his extension period will have expired before he has even officially left school.


    (a)  complicated interaction between parent's CTC and income support and young person claiming benefit in their own right. It is very difficult for low income people to work out if they are better off in short or long term.

    (b)  overpayment of CTC built into the system and lack of facility for offsetting young person's IB award against Tax Credits.

    (c)  lack of liaison between Revenue and Customs and the DWP over child benefit extension periods, and a lack of understanding of the impact of rule changes.


  The following is an example of the delay people experience when trying to move from one earnings-replacement benefit to another.

  5.1  Client, on income-based JSA, looking for work when his elderly mother's health deteriorated to the extent that he had full time caring responsibilities. He was advised to claim income support and carers allowance via the Jobcentre Plus contact centre. Once he did this, his JSA immediately stopped. Client was left without money for two months due to backlog at processing centre and was extremely frustrated due to difficulties trying to get through to the Benefit Delivery Centre (BDC) to find out what had gone wrong. Situation only finally resolved with assistance from a welfare rights adviser with direct access to BDC and knowledge of the need to liaise between three benefit departments.

  Illustrates: problems of communication and delivery between different benefit offices.


  The following examples show the problems of delivery and interplay of different types of benefits and tax credits.

  6.1  Client with partner and three dependant children—off sick from work to receive cancer treatment. He gets SSP for the first 28 weeks and then applies for incapacity benefit and income support. He had notified tax credit office when he first went off sick but was unable to accurately estimate his new reduced annual income for the rest of the tax year as his prognosis was unclear. Payment of WTC continued erroneously after 28 weeks as he did not realise that, at this point, he ceased to be treated as in full time remunerative work and needed to contact the TCO again. This WTC income disentitles him to IS and is taken into account for HB/CTB. WTC is eventually stopped, and TCO start recovering "in year overpayment" from CTC. Claimant needs to claim IS again and notify HB of change of circumstances. At the end of the tax year there was not such a large overpayment once actual income figure was taken into account.

  Illustrates: complex interplay between tax credits, contributory and means tested benefits which often means that people no longer get the correct amount of money when they need it. Tax credits situation may be rectified later on by tax credit office but people on low income need to get correct payments at correct time. HB can be based on a tax credit figure which subsequently can be changed and recovered.

  6.2  New four week "run-on" of WTC when a claimant moves from work to unemployment appears, at first sight, a positive step. However, it could cause problems for income support/JSA claimants who might find that the WTC they continue to get for four weeks will bar them from claiming those benefits for those weeks. This will affect certain client groups in particular—for example, lone parents may be getting a substantial WTC payment, especially if it includes child care costs. If they give up work and claim IS, their IS personal allowance will not include the elements for children so the WTC may be high enough to bar them from claiming. This then affects their right to free school meals, social fund payments and possibly prescriptions. Housing and council tax benefit, which will already need recalculating for the loss of wages, will need to be reassessed for the four week period when the only income is WTC and again when the income support kicks in. A four week delay in the start date of the IS claim will also cause problems for claimants who want to claim IS for help with mortgage interest, as it may delay the start of the "waiting period".

  Claimants who leave WTC and claim income based JSA will also face problems. Again, the WTC may be higher than their JSA entitlement for those four weeks, especially If they are sanctioned for giving up work voluntarily. As well as the problems listed above re HB/CTB, passported benefits and mortgage interest, an unemployed claimant may not be aware of the need to sign-on for four weeks even if benefit isn't awarded, in order to protect their NI record.

  Illustrates: complex interplay between tax credits and means tested benefits. Measures introduced to create an easement by and for Revenue and Customs can cause problems in other areas of the benefit system unless approached holistically.

  6.3  Clients are a disabled pensioner and their partner. They each have a full retirement pension. With the small occupational pensions that they have, they are just above the threshold for getting pension credit but they get partial help with rent and council tax. The disabled person claims attendance allowance which is successfully awarded.

  The carer is then told about carer's allowance and makes a claim. It then has to be explained to the carer that they will get a letter disallowing their claim, as their retirement pension is higher than the carer's allowance. Armed with that letter, they then have to reapply for pension credit and may now qualify because of the inclusion of a carer premium in the calculation. If pension credit is awarded, they will get additional housing and council tax benefit. If pension credit is not awarded, the carer should still get some additional housing benefit and council tax benefit on application.

  It is almost impossible to explain this sequence of events to a lay person. Advisers are telling them that, if their income goes up, by virtue of the attendance allowance, they have to claim an additional benefit that we know in advance they will not get, in order to get fresh or higher entitlement to other benefits that were previously refused or reduced because their income was too high!

  Illustrates: Complex interplay between carer's allowance, pension credit, housing/council tax benefit and retirement pensions, where a person has to claim a benefit that they are certain not to be eligible for in order to trigger the "correct" entitlement to other benefits.

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