Credits and Debits

Some of the changes to claiming benefits have addressed inconsistencies in the system and are undoubtedly positive but other adjustments have exposed inefficiencies.

● The national minimum wage went up in October to £5.35 an hour for adult workers (and there was a 10 per cent leap from £3 to £3.30 for 16 to 17-year-olds). But thisincrease could cause problems for those who are receiving carer’s allowance. Carers are allowed to earn £84 a week and keep their entitlement to carer’s allowance. So a carer who is on the minimum wage will have carefully worked out they could do 16 hours a week at the old rate of £5.05 per hour and stay within that limit. But the new minimum wage increase means that those 16 hours now bring in £85.60 – above the earnings limit; which means the full £46.95 a week carer’s allowance would be lost unless the carer reduces their hours. The same problem would have occurred with the “permitted work” that incapacity benefit claimants are allowed to do – but the Department for Work and Pensions recognised the problem in advance and increased the earnings limit to £86 a week when the new minimum wage was increased. Unfortunately, it didn’t show the same prescience with carer’s allowance.

● There are also signs of DWP inactivity in relation to housing benefit for people in supported accommodation. A recent  commissioners’ decision about whether such properties are subject to rent restrictions has led to massive cuts in housing benefit  payments in some cases. In the test case, housing benefit was reduced from £238 to just £45 a week, making the scheme  economically unviable. There is a danger that other councils follow suit and cut benefits but, as yet, the DWP has not given any advice as to how future claims should be decided.

● The “linking rule” has been extended from 52 weeks to two years. This will help disabled people who go back into work and who then return to benefits.

● In response to the damning evidence on how difficult it is to make a claim for benefit since Jobcentre Plus introduced tele-claiming, the DWP has changed the rules on backdating a claim. New regulations allow one month’s backdating of an income support or jobseeker’s allowance claim where the claimant was unable to make telephone contact with the right office. That is  welcome but it is also an admission of failure.

● The tax credit system is also still working at less than full efficiency. There have been several changes of circumstances that the claimant must tell the tax credit office about or risk a benefit penalty These include changes in work status and the number of children claimed for. It is no longer good enough to leave it to the end of the year.

● The Healthy Start scheme has also been introduced. Instead of milk tokens, pregnant women, breastfeeding mothers and children under five in low-income families will receive fixed-value vouchers that can be exchanged for fruit and vegetables as well as milk and infant formula. “Low income” means receiving income support, incomebased jobseeker’s allowance or child tax credit with an annual family income of below £14,155. The scheme is also open to pregnant women under 18.

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