A capital offence

A recent letter I received highlights the way that the benefit system often obstructs social work goals.

“A couple who foster, who also have two young children of their own, have had their council tax benefit stopped because of a row over the way fostering allowances are treated. The family now relies solely on the father’s incapacity benefit and child benefit.

They are still approved as foster carers but aren’t actively fostering at the moment. Because they fostered up to five children at once, their weekly income from fostering allowances was considerable and they held around £10,000 in their bank account as a reserve. Council tax benefit (CTB) staff say carers are not allowed to hold any unspent fostering allowance for longer than three weeks – otherwise it becomes regarded as “capital”.

The couple then spent some £8,500 of that reserve to buy a bigger car, a bigger caravan and paying off some of the loan that had been needed to extend their home. The couple say that all of these facilities were necessary for the benefit of fostered children.

The CTB staff have now accused the carers of deliberately spending this accumulated “capital” in order to have less than the £8,000 limit, so they have had their CTB withdrawn totally.”

This is quite tricky but the main issue is that they should appeal against the refusal of CTB. If they are out of time for that (usually 28 days after getting the decision) they should re-apply, then appeal if turned down.

There are two grounds for appeal: first, the council is wrong to treat the sums as capital; and second, they are wrong to accuse them of deprivation in order to get benefit. Neither will be easy to win, however. There are no set rules as to when income becomes capital. However, because they have had the money for foster children and those children are not there anymore, they don’t have a strong case for saying that the money is effectively “transient”. The amount also militates against this – a “float” of up to £3,000 might have been acceptable, but £10,000 is quite a large sum to keep back for contingencies.

The second line of argument might be more fruitful – accepting that the money was capital but then arguing that it was spent on legitimate expenses connected with fostering “as a whole” rather than linked to individual children.

A letter from a social worker confirming they took out a loan to make the house bigger in order to foster would be a start, as with having a bigger car and caravan – but tactically this might be better presented once they have resumed fostering. A tribunal may query why they got the bigger car and caravan after they were needed to meet the needs of previous foster children. If the carers can show that they are needed now or in the near future when fostering resumes, it will counterbalance that view.

Incidentally, the CTB savings limit is £16,000 (not £8,000) although tariff income kicks in at £3,000 for people aged under 60. There is also a diminishing capital rule. This means CTB staff have to accept that, if CTB has been stopped, the family will be running down their capital through the year anyway; so the assumed capital at the end of year should be less than it was at the beginning.

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.