Right hand gives, left hand takes

A reader asks: “If social services makes payments to young
people in or leaving care under sections 17 or 24 of the Children
Act 1989, can they legally ask for some or all of the money to be
paid back?”

Local authority powers to make cash payments and the
relationship these payments have with the benefit system is
something that we keep coming back to in this column. And with more
changes due in October, with the Children (Leaving Care) Act 2000
coming into force, it is something that we will inevitably be
covering again.

But lets look at the current position first.

The social worker who wrote to me went on with their query: “Can
we pay the equivalent of the young person’s personal allowance
until their claim for benefit is processed, then ask for them to
pay the money back once their benefit (and backdated amounts) has
been received? Does it make a difference if the young person is in
receipt of benefits or working? Which legislation would cover
this?”

Payments of cash can only be made at present under certain parts
of the Children Act such as section 17 (for children in need) or 24
(for care-leavers).

The law is quite clear about whether such payments should be
loans or grants. Section 17(9) of the Act says:”No person shall be
liable to make any repayment of assistance or of its value at any
time when he is in receipt of income support or family credit under
the Social Security Act 1986.” This piece of the Children Act has
been subsequently amended to include income-based jobseeker’s
allowance, working families tax credit and disabled persons tax
credit.

Section 24 (10), which empowers local authorities to make cash
payments to care-leavers, also says quite clearly “Subsections (7)
to (9) of Section 17 shall apply in relation to assistance given
under this section (24)”. In other words, no liability to make
repayments exists if a person is getting any of those means-tested
benefits. This is not ambiguous or open to interpretation!

The issue about repayment covers all situations. A family who
are “loaned” section 17 money by social services on a Friday
afternoon, on the promise that they repay it on Monday when their
new order book or giro finally arrives, is being treated
unlawfully.

This may not be welcome news to many frontline workers or
finance staff – or even particularly logical, but it is what the
law says. So “loans” under Section 17 or 24 to people on any of the
means-tested benefits listed are not lawful – payments would have
to be by way of a non-refundable grant instead. The young person or
family featured in the question and example above could end up with
double-payment – once from the social services department while the
claim is being sorted out, and then again when the backdated
benefit finally arrives.

One other related issue. The social services departments often
find themselves paying the young person’s rent while housing
benefit is being sorted out. If they are also getting income
support or JSA, money cannot be loaned to them to do this. So what
we are paying is therefore a grant. As such, it calls into question
whether the young person has any liability to pay rent in those
weeks. Without rent liability, housing benefit cannot be paid.

If the young person is still looked after, there is the strong
probability that housing benefit will be refused anyway. This is
because the Department of Social Security maintains that the young
person has no liability to pay rent because they are in care.

One way round it is to give the young person the money, rather
than pay the landlord direct. You are then giving them general
living expenses under Section 24 rather than specifically meeting
the rent. But the dangers of that are rather obvious!

Gary Vaux is head of money advice, Hertfordshire
Council. He regrets that he is unable to answer queries in person,
either by post or telephone. If you have a question to be answered
in Welfare Rights please write to him c/o Community
Care.