Welfare Rights: There are benefit implications for foster carers and care leavers in Care Matters, says Gary Vaux

The government green paper Care Matters sets out a series of proposals for assisting children and young people who are in care or on the edge of being in care.

Personally, I found it disappointing that the link between family poverty and children coming into the care system was not more closely examined. There is considerable evidence that the looked-after population is largely drawn from families who are on low incomes, which the green paper does not address adequately.

Some of the proposals in Care Matters have a direct link to the benefit system nevertheless and some of them seem to have been written without fully thinking through what the full implications might be.

● Introduction of a “tiered” approach to foster caring, effectively creating “career foster carers” in some instances, and leading to a revised framework for fees. However, the green paper fails to address the long-standing problem of the employment and benefit status of such “professional” carers.

At present, foster carers are largely self-employed in respect of the fostering they undertake. A relatively generous tax relief scheme and a full disregard within the benefit system means that foster allowances rarely cause tax or benefit problems.

If some foster carers are moved to an employed status, however, the fostering allowance takes on the appearance of a wage or salary. Benefit and tax rules are much less generous when income is derived from employment – those “top tier” foster carers on income support would find themselves classed as in employment and therefore ineligible for that benefit for example. Others would find that their fostering allowance becomes a taxable wage.

If some foster carers are given employee status, then there are also complicated employment law matters that would need resolving, such as rights to paid holidays and sickness leave, protection from unfair dismissal and other contractual matters.

● Second, care leavers are to continue to live with foster families up to the age of 21. Payments made to carers in relation to young people who have legally left care are being taken into account in calculating the carers’ entitlement to benefits and that this can act as a disincentive to fostering older children in care. We will ensure such payments are not taken into account in calculating the carers’ entitlement to benefits.

Care-leavers can already continue to live with former foster carers beyond 18, with no upper age limit. However, the fostering payment ceases. Instead, the young person is often charged “rent” and claims housing benefit. The local authority may supplement this with payments made under the Children Act. But the relatively generous tax and benefit rules that apply to fostering allowances do not apply to payments towards rent.

At present, young people in care aged 16-17 are generally excluded from means-tested benefits but they become entitled once they reach 18. Is the government proposing that this exclusion should be extended to the young person’s 21st birthday?

It is to be hoped that the new “solutions” in Care Matters don’t cause fresh problems of their own.

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