Children in credit

The
government’s drive to beat child poverty will be buttressed by benefits
changes, writes Gary Vaux.

Combating
childhood poverty is one of the government’s more clear-cut policies. As a
consequence, in April 2003, there will be a massive change in the means-tested
benefit system. Child tax credits are to be introduced and benefits such as
working families tax credit (WFTC) and children rates for income support will
be abolished. In the meantime, there are other significant changes taking place
that will affect many social work clients.

Since 8 April 2002, for example, lone parents
who make fresh claims for income support have to attend a "work-focused
interview" once their youngest child reaches the age of three. Existing
claimants will be required to attend an interview once their youngest child
reaches the age of five years and three months. Further interviews will take
place six months after the lone parent has taken part in the initial interview.
This forms part of the government’s strategy to "make work the best form
of welfare".

However, these plans are being undermined, in
part, by failures within the welfare system. For example, the government has
now indicated that the commencement of the new child support assessment, due in
April 2002, is to be held back because of undefined "computer
problems". This means that plans for a £10 child support
"disregard" within income support have had to be shelved.

There is better news for disabled children,
however. The disabled child premium within income support and all other
means-tested benefits has gone up from £30 weekly to £35.50 weekly.

The rules governing entitlement to guardian’s
allowance have also been changed. From 1 April 2002, entitlement is extended to
those looking after a child on behalf of a surviving parent who is:

– In prison for a minimum of two years. (It
used to be five years.)

– Ordered by a court to be detained in a
hospital under, for example, certain sections of the Mental Health Act 1983.

Claimants who have children after 16 June 2002
will also fare better. Following the abolition of the capital limit in 2001,
the amount of the Sure Start maternity grant is increased from £300 to £500.

Once the child is born, the children’s tax
credit (CTC) – introduced in 2001 – can be claimed. This has gone up to £529
per year (£1,049 for the year in which a new baby is born). The earnings limit
for this bonus will be £50,000 a year, which is higher than the usual £34,000
threshold for CTC.

The bonus CTC will be paid for the full tax
year in which the baby is born. For example, if a baby is born in September,
the payment will be backdated to April and then paid until the end of the tax
year.

Don’t get too attached to CTC though – it is
due to be abolished in April 2003. It will be replaced by a brand new allowance
calledÉ the child tax credit (or CTC for short). This new tax credit is
designed to give a seamless transition for families between in-work benefits,
such as working families tax credit, and out-of-work benefits, such as income
support. As a result WFTC will become working tax credit (WTC) from April 2003.
In other words, it can be claimed by anyone in low-paid work, not just people
who have children.

And finally, coming too late to be included
in many benefit rate cards and leaflets, the chancellor has announced increases
to tax credits and income support for families from June 2002. There will be a
weekly increase of £2.50 in the basic credit for working families tax credit,
and the couple and lone parent credits in disabled persons tax credit.

Gary Vaux is head of money advice,
Hertfordshire Council. He cannot answer queries in person, by post or by phone.
If you have a question to be answered in Welfare Rights, please write to him
c/o Community Care.