Select Committee on Work and Pensions Written Evidence


Supplementary memorandum from Every Disabled Child Matters

INTRODUCTION

  Every Disabled Child Matters is a campaign by four leading organisations working with disabled children and their families—Contact a family, Council for Disabled Children, Mencap and the Special Educational Consortium.

  The committee asked for examples of situations in which it is not economically viable for families to return to work, because of the loss of benefits which would follow from that decision. Below are two examples from the Contact a Family helpline of parents who found themselves in just that situation.

CASE STUDIES

  Please note that the following examples calculate benefit entitlement in work, once any initial run-on in HB/CTB/mortgage interest and the carer premium ends. Family Income and help available with housing costs is likely to be higher in the initial 8 weeks after starting work.

Case Study 1

  Mrs A lives with her partner and two children aged 12 and 7. Both children receive DLA at the high rate for both components. Mrs A and her husband both receive Carer's Allowance of £48.65 per week. They also receive Child Benefit, Child Tax credit of £213 per week and Income Support of £49.80 per week (not including housing costs). The family live in a shared ownership property and receive a full council tax rebate (£15pw) and full rent rebate (£70pw) towards their share of the rent. They also qualify for additional income support payments of £50 per week towards mortgage interest.


Current income (DLA disregard)
Help with housing costs

£48.65 CA
£15.00 CTB
£48.65 CA
£70.00 HB
£30.20 CB
£50.00 mortgage interest
£213.00 CTC
£135.00
£49.80 IS
£390.30


  Mrs A has been offered a job working 18 hours a week and earning £125 per week net. She will have no childcare costs. If she takes up this opportunity the family income will increase as a result of her earnings and the fact that she will qualify for working tax credit of £65.96. However on the other hand she will no longer qualify for Carers Allowance or income support (including payments towards mortgage interest). In addition she would lose all of her council tax rebate and have to pay the first £60 of her weekly rent charge.


Prospective income
Help with housing costs

£48.65 CA
£8.18 HB
£30.20 CB
£213.00 CTC
£65.90 WTC
£125.00 earnings
£482.75


  Although Mrs A's income will increase by £92.45 per week, she will have to pay an extra £126.82 per week in housing costs and council tax. This will leave her almost £35 per week worse off. In addition she will no longer qualify for help with free school meals for her children.


Full Income Support calculation
Applicable Amount
Income

£92.80 personal allowance
£99.55 earnings (after disregards of £10 + £15.45)
£27.15 carer premium (husband)
£65.96 WTC
£50.00 mortgage interest
£48.65 CA
£169.95
£214.16
No IS entitlement
Full HB/CTB calculation
Applicable Amount
Income
£92.80 Personal allowance
£99.55 earnings (after disregards of £10 + £15.45)
£27.15 carer premium (husband)
£278.90 WTC + CTC
£94.90 2 children
£48.65 CA
£16.43 family premium
£30.20 CB
£93.38 disabled child premium x2
£457.30
£37.52 enhanced disability premium x2
£362.18
£457.30—£362.18 = £95.12
£95.12 x 65% = £61.82 per week rent to be paid
£95.12 x 20% = £19.02, so pays full council tax of £15pw


Case Study 2

  Ms B is a lone parent with 3 children all aged between 2-4yrs. One of her 2 year old twins receives DLA middle rate care component. Ms B's weekly benefit payments are Child Benefit of £42.30, Child Tax Credit of £163, Carers Allowance of £48.65, and income support of £37.65. She also receives full rent (£140) per week and council tax (£18.75pw) rebates. Does not receive maintenance.


Current income
Help with Housing
Childcare costs incurred

£48.65 CA
£140.00 HB
£0.00
£37.65 IS
£18.75 CTB
£163.85 CTC
£158.75
£42.30 CB
£292.45


  Ms B is offered employment working 35 hours a week and receiving £200 per week net. She is keen to take up this post but this will mean incurring childcare costs of £360 a week for her three children.

  If she starts to work, Ms B will lose her Carer's Allowance and income support. However she will have additional income in the form of earnings and working tax credit. She can expect to receive working tax credit of £319.51 per week. This includes a childcare element of £240 per week, the maximum amount of help allowable with childcare costs. Although she will lose all help with council tax benefit she will still get a partial rent rebate of £61.61, leaving her to pay £78.39 of her weekly rent charge.


Prospective income
Help with Housing
Childcare costs incurred

£200 earnings
£61.61 HB
£360
£319.51 WTC
£163.85 CTC
£42.30 CB
£725.66


  Although Mrs B's income would increase by £433.21, she would incur substantial new costs of £360 towards childcare and £97.14 towards rent/ council tax. As a consequence she would be left £23.93 per week worse off.


Full HB/CTB calculation
Applicable Amount
Income

£59.15 personal allowance
£200.00 earnings
£142.35 3 children
£483.36 WTC + CTC
£16.43 family premium
£42.30 CB
£46.69 disabled child premium
£725.66 Total
£264.62
minus
£25.00 earnings disregard
£15.45 30 hour disregard
£385.23
£385.23—264.62 = £120.61
£120.61 x 65% = £78.39 rent to pay; £140—78.39 = 61.61 HB
£120.61 x 20% = £24.12, so pays full council tax of £18.75pw

CONCLUSIONS

  The above examples, which are representative of calls to the Contact a Family helpline, illustrate some problem areas within the benefits system.

  Firstly, the only help with mortgage interest payments is through the Income Support system for people not in work. The Housing Benefit system, which does help those in work on low incomes, only covers rent and not mortgage costs.

  Secondly, there is a standard allowance for childcare costs in the tax credit system. Childcare for disabled children costs up to five times as much. Many families with disabled children therefore cannot afford to take lower paid employment.





 
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