Welfare Rights: A botched extension

If you built an extension on your house, would you put it in the middle of your living home or add it on to the back of the house? The answer is obvious (I hope).

Yet in benefit terms, the Department for Work and Pensions and Revenue and Customs have done the equivalent of building in the living room, by creating an “extension” to benefit entitlement that isn’t an extension at all.

The problem relates to a horrible piece of benefit terminology called the child ­benefit extension period (CBEP). This is ­significant for both low-income families and unemployed young people who are ­living away from home.

The CBEP was created when the government of the day took the majority of 16- and 17-year-olds out of the benefit system. The idea was that young people who left school and lived at home would receive child benefit until the end of the school holidays. After that, they were supposed to be in education, work or training.

But because not all 16- to 17-year-olds could be fixed up in time, the government created a 16-week concession – the CBEP, to give the young person and their family some extra breathing space before their child benefit was withdrawn. In practice, this meant that for summer school-leavers, child benefit (and increases in income support for children or child tax credit) could be paid until early January.

In a further concession, the government then recognised that some unemployed young people were not living with their families either. As a result, the jobseeker’s allowance rules were changed so that this group of 16- to 17-year-olds became ­eligible to claim the allowance during the CBEP.

This system worked reasonably well until April 2006. Then, in order to fit with other changes to the benefit system, the definition of the CBEP changed. It was extended from 16 to 20 weeks but the start date changed. Instead of being counted from when child benefit ended, it began from when the young person left education. This was assumed to be the official school-leaving date at the end of June.

The effect was that families lost their child benefit and child tax credit in mid-November instead of early January. Jobseeker’s allowance claimants living independently had to switch, if they could, to discretionary “severe hardship” payments of JSA at the same point.

If that wasn’t bad enough, the DWP has sent out fresh guidance saying that the CBEP begins on the day after the last day that the young person attends school or college.

This means that a person doing GCSEs might not go into school after their last exam in late May. So the CBEP would end in mid-October, not November. Worse still, if a young person drops out of education in March, for example, or is excluded, their CBEP will end in July. This means that their parent will only be entitled to child benefit and child tax credit for them until the end of the summer holidays and then nothing.

The “extension” is no longer an extension and the DWP has further marginalised families and young people who are already struggling. What a neat piece of joined-up policy.

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