Winners and losers

Young people have been treated as a “special case” by the benefit system for more than 20 years. Taken out of the mainstream scheme, most 16 and 17-year-olds who claim benefits have to cope with discretionary payments, peculiar rules about “estrangement” and have to understand the metaphysical concepts behind child benefit extension periods even when no one gets child benefit for them.

So it’s good to see that the Department for Work and Pensions is reforming the present system of financial support for young people and there are some changes planned for April 2006 which might affect choices that young people are making now.

First, child benefit is being extended to the parents of young people aged 16-18 who are in training. This mirrors the payment that those in education currently receive. In addition, child benefit will be paid to the parents of 19-year-olds still in non-advanced education or training.

Also from April 2006, the training allowance paid to 16 to 19-year-old unwaged trainees in England who are on the specific Learning & Skills Council funded work-based learning programmes of Entry to Employment (E2E) and Programme Led Apprenticeship Pathways will cease to get a training allowance (currently £40 per week). Instead, they will get the education maintenance allowance (EMA).

EMA payments are means-tested and are a maximum of £30 per week; so on the face of it, young people will lose out. However, their parents or carers will have an entitlement to child benefit and child tax credit that they don’t currently get. So the overall package of financial support is likely to be greater than at present for unwaged trainees from families with a low or middle range income. E2E trainees from wealthier families will lose out considerably as they will have no independent income from a training allowance, only the parents’ child benefit.

If the young person is living independently and claims EMA they will get income support in full as well, whereas the training allowance would be deducted from their benefit. However, looked-after 16-17 year olds will lose out, gaining £30 EMA instead of the £40 training allowance, as no one can get child benefit or child tax credit for them.

The final change concerns young people aged 16-18 who are in non-advanced education and “estranged” from parents. Currently, they can qualify for income support but this stops when they reach 19.

From 10 April 2006, the age range will be extended to 16-19, so income support will be payable for a year longer and only stop on the young person’s 20th birthday. However, it appears that the change will only apply to young people who turn 19 after 10 April 2006.

This is bizarre. A young person who turns 19 on 10 April will lose their income support and not be able to get it back but someone who turns 19 on 11 April, on the same course and in the same circumstances, will have benefit entitlement for another year.

It is crucial that young people making further education or training choices understand what the benefit rules are and what is planned from next April, as the new rules create some winners and a few losers.

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