Select Committee on Work and Pensions Written Evidence


Supplementary memorandum submitted by DWP

BUDGET 2007: BENEFIT SIMPLIFICATION PACKAGE

MEASURE 1—TREATMENT OF PAYMENTS MADE ON TERMINATION OF EMPLOYMENT

Proposal

  At present, the date of the first payment of several benefits is affected by the customer's final earnings.

  For example, the working age income-related benefits[12] generally ignore last wages, but take termination payments such as holiday pay and pay in lieu of notice into account when deciding the date from which benefit can be paid. In contrast all final earnings over a certain limit, including last wages, may affect Carer's Allowance and, exceptionally, adult/child dependency increases.

  We propose to drop these time-consuming and complex procedures. The date of the first payment on new claims to benefit will no longer be affected by any form of payment within the final pay packet.

Background

  Ignoring all final earnings will greatly simplify the new claims process for employers, customers and staff alike. This aligns with the treatment of final earnings in the pension-age income-related benefits (State Pension Credit and Housing Benefit and Council Tax Benefit for customers over pension age), and will introduce consistent rules across the benefits system. In cases where final earnings bring a customer's capital above £6,000, income-related benefits will still be reduced as now in accordance with the tariff income rules.

Rationale/why we are doing this?

    —    Makes it easier for customers to claim benefit by decreasing the amount of evidence required to process a new claim.

    —    Eases burdens on business by removing the need for the Department to make some 1.7 million enquiries to employers to seek details of last payments received or due to be received.

    —    Simplifies and speeds up the new claims process by reducing the administrative burden; in particular reduces the time taken to process a claim for an income-related benefit.

    —    Helps reduce levels of error as it removes the need for staff to determine final earnings.

    —    Introduces consistent rules for new claims across the benefits system.

Timing

  From April 2008 at the latest.

MEASURE 2—PAYING ALL JOBCENTRE PLUS WORKING AGE BENEFITS A MINIMUM OF TWO WEEKLY IN ARREARS ON A COMMON PAY DAY

Proposal

  We will align most of the working age benefits so they are paid a minimum of two weekly in arrears and simplify further by allocating a common payday assigned to each customer based on the last two digits of their National Insurance number.

Taken together, these changes will remove the current mix of different pay periods and the confusion caused when customers change from one benefit to another.

Background

  Currently working age customers can be paid a minimum of either weekly or two weekly in arrears, and some are still paid in advance (ie, bereavement benefits and industrial injuries benefits). These variations lead to confusion for staff and customers as to when payments are due and for what period. This measure will simplify the process of paying Jobcentre Plus working age benefits and help reduce complexity in the benefits system.

Rationale/why we are doing this?

    —    Introduces, as far as possible, consistent payment methods across the working age benefits payment system and makes progress towards the introduction of a single system of Jobcentre Plus working age benefits.

    —    Simplifies the existing process by aligning rules and makes it easier for staff to administer and for customers to understand, which in turn should reduce levels of error and resulting overpayments.

    —    Makes it easier for customers as in most cases they would retain the same payday and pay period irrespective of which Jobcentre Plus benefit they were receiving.

    —    Aids the transition from benefits to work by moving towards a common pay period which is transferable between being in work and claiming benefits.

    —    Advance payments will be available to ease the transition to fortnightly pay for existing customers.

    —    Customers will be advised in good time to allow them to prepare for the change.

Timing

  From April 2009 subject to Jobcentre Plus capacity.

MEASURE 3—REMOVE DOUBLE DATING PROVISION FOR DISABILITY LIVING ALLOWANCE AND ATTENDANCE ALLOWANCE

Proposal

  We will remove the different and discriminatory rules for determining the date when Disability Living Allowance and Attendance Allowance entitlement starts, depending on where a customer gets their claim form. In future there will be a single rule which will allow two weeks backdating for all successful claims. The current two-tier process disadvantages those customers who use the services of the Department's external partners when claiming benefits.

Background

   Entitlement to benefit can only be considered once a claim has been made. In most cases there is some flexibility in determining the date on which a claim is made or for allowing a prescribed time for claiming. When Disability Living Allowance and Attendance Allowance were first introduced, legislation did not permit claims to be backdated. However, in 1992 the Government introduced the concession of double dated claim packs for Disability Living Allowance and Attendance Allowance, for claims sent out by an approved office.

  Double date claim forms have two spaces for dates to be inserted. The first is the date the form was issued by the approved office and the second is a date six weeks later. If the customer returns the claim form before the second date, benefit is paid from the first date. If not, they are paid from the date the form is received in the approved office. Claim forms provided by other sources do not have the date-spaces and benefit will only be paid when the completed form arrives in the Disability and Carers Service office. These customers have no opportunity to benefit from the six week time limit for returning completed forms enjoyed by people who get their claim forms directly from an approved office.

Rationale/why we are doing this?

    —    Ensures equal treatment for all the Department's customers regardless of where they obtain their claim form.

    —    Simplifies claims processing and removes an unjustifiable unfairness that may give rise to litigation.

    —    Provides a uniform backdating system that supports the Government's commitment to working equitably with partner organisations in modernising welfare delivery.

    —    Sends a powerful message that the Government is committed to joined-up services, across society.

Timing

  This change requires primary legislation, so timing depends on availability of a suitable legislative vehicle.

MEASURE 4—ALIGN THE TREATMENT OF INCOME FROM SUB-TENANTS ACROSS THE BENEFITS SYSTEM BY INTRODUCING A FLAT RATE £20 DISREGARD FROM APRIL 2008 TO MIRROR THE DISREGARD IN STATE PENSION CREDIT AND PENSION AGE HOUSING BENEFIT AND COUNCIL TAX BENEFIT

Proposal

  This measure simplifies the treatment of income from sub-tenants in, mainly, Income Support, income-based Jobseeker's Allowance and working age Housing Benefit and Council Tax Benefit by applying a standard disregard of £20 in line with State Pension Credit and pension age Housing Benefit and Council Tax Benefit. This replaces the existing disregard of £4 plus an extra £15.45 (from April 2007) if heating is provided.

Background

  The structure of this disregard has remained unchanged since the introduction of Income Support and Housing Benefit in April 1988 and was carried forward when Council Tax Benefit and Jobseeker's Allowance were introduced in April 1993 and October 1996 respectively. The basic £4 disregard has remained unchanged but an additional disregard is allowed where the rent includes heating. This increases every year in line with the Retail Price Index for fuel and from April 2007 is £15.45 a week. On the introduction of State Pension Credit in October 2003, the sub-tenant disregard was set at a fixed rate of £20 and this was mirrored in pension age Housing Benefit and Council Tax Benefit from the same date.

Rationale/why we are doing this?

    —    Simplifies the treatment of income from sub-tenants by aligning the standard disregard rule across all benefits.

    —    Makes it easier for staff to administer and for customers to understand and reduces the potential for fraud and error by removing an obsolete question on the claim form.

Timing

  From April 2008.

5 April 2007







12   Income Support, income-based Jobseeker's Allowance and working age Housing Benefit and Council Tax Benefit. Back


 
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