Pay it by the book

User involvement is all very well, writes Gary
Vaux, but payments by councils must be above board.

Involving service users and carers in local
authority planning processes, training sessions and consultation
exercises is now widespread. But how should these people be paid
for their work?

Recently, I heard about a carer
who, over a three-week period, attended three half-days of
“consultation” with a local authority that agreed to pay her
£180. The carer, who is on income support, was told that she
should submit nine invoices for £20 each (rather than three
invoices for £60), over a nine-week period, in order to avoid
the £180 impacting on her benefits. This advice actually left
the carer (and the person who advised them) open to accusations of
fraud.

People
on income support can earn up to £20 per week – any more than
that and benefit is lost pound for pound. If the carer had been
getting invalid care allowance and not getting any means-tested
benefits, the rules are slightly better – earnings have to be below
£75 per week.

The
main issue is what the payment is for, not when it gets paid. If
properly declared, the social security office would treat her as
receiving £60 in each week that she worked. To present
invoices as suggested, and not for three occasions over three
weeks, would indeed be fraudulent. Social workers and others need
to be very careful that they are not seen to be colluding with that
approach.

As the
“fees” in this case are effectively earnings from self-employment,
the social security office could allow “reasonable expenses” on top
of the allowable £20. The downside is that the £180 is
also taxable income for the same reason. Many benefits, such as
invalid care allowance and job seekers allowance, are taxable.
Therefore, the overall income figure may be higher than the
person’s tax allowance, so tax could be due.

This
is not an isolated incident – there are many occasions where
councils are asking (or are even required to ask) users to assist
in consultation exercises, training sessions and so on. Some
councils have tried to get round the rules by paying “expenses” and
describing users as “volunteers”. This is not legitimate either of
course, if the payments are unrelated to out-goings.

It is
possible to pay people in kind – but payment by way of goods,
although acceptable within the benefit system, can be demeaning.
Vouchers that don’t have a monetary value (that is, can’t be
exchanged for cash) are just about all right but sailing close to
the wind. For example, a £10 Tesco voucher can be used to buy
a box of matches, and you get £9.90 change in cash. There is
also what is known as the “notional income” rule – social security
offices treat you as possessing income if you have done work for
“free” that is normally done in the expectation of payment –
training for local authorities would fall into that category, so
this is yet another problem.

If we
are asking people on means-tested benefits to help develop our
services, we also have a duty to advise them properly about the
possible benefit implications. It may mean reimbursing people at a
rate where loss of benefit becomes irrelevant.

However, if you pay enough to
take someone off benefits for a week or two, you must also be aware
of the difficulties that the person may encounter when re-applying
for benefits again. Overall, there may be nothing to do other than
accept the rules as they are.

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