Income Support – Report of the Minister of Social Security
Income Support ( Jersey ) Regulations 200-
Income Support (Special Payments) ( Jersey ) Regulations 200-
Income Support (General Provisions) ( Jersey ) Order 200- (Draft appended)
Income Support (Transitional Provisions) ( Jersey ) Order 200-
Introduction
The States are being asked to approve the Regulations to be made under the draft Income Support (Jersey) Law 200-. The Regulations form part of the sub-ordinate legislation that drives the new Income Support system and consists of two sets of Regulations and two Orders and this report sets out an overview of how this sub-ordinate legislation fits together with the principal Law to define the Income Support system.
The rates included in the Regulations are rates that would have been used if Income Support had become operational before benefit uprating on October 1st, 2007. Income Support will be operational in January 2008. An amendment to the Regulations will therefore be lodged in early September which will specify the actual uprated rates for 2008. It will be possible to calculate the actual rates when the Earnings and RPI indices on which the increases in the components are based are available at the beginning of September`.
Backgound
On the 10th October 2006, the States approved the draft Income Support (Jersey) Law 200- which set out the legal framework for a single integrated means tested benefit. This followed a previous decision of the States approving a proposition “Income Support System (P86/2005)” of the Employment and Social Security Committee for the introduction of a new integrated income support benefit. In summary the States agreed that –
· The existing system of non contributory benefits administered through the Social Security, Education and Housing Departments and the Parishes be discontinued;
· Most of these benefits be replaced by a single system based on a single and current evaluation of income;
· The new system be comprised of a series of components;
· The Health Insurance system be amended to target more help to individuals and thereby allow more flexibility in the delivery of benefit; and
· Special arrangements be made to deal with exceptional and one-off payments.
The States also agreed that the Minister of Social Security be politically accountable for the system, its development co-ordination and administration and be charged with making arrangements to bring the system into effect. It was also agreed by the States that all the costs of development and administration of the system be funded from the general revenues of the States. The States also decided that financial protection be afforded from general revenues to those households who may be affected by the removal of existing benefits.
Reasons for change
Currently over £60 million (2007) is spent annually in Jersey on means-tested benefits to support over 20% of households (circa 8,000). Available research suggests that even though the total estimated sum spent on social protection in Jersey is less than the European average, the incidence of poverty is about the same but the severity or depth of poverty is less.
The existing benefit systems
Are often not easy for residents in Jersey to understand,
do not always target money to best effect,
cause duplication of effort by officials and customers which leads to frustration amongst those trying to get support at difficult times of their lives.
The combined effect of the current benefits is an uneven distribution of assistance and, in some instances, the creation of disincentives conspiring to make people worse off as they earn more.
Redesigning the current systems to create one benefit with one consistent income assessment will create a fairer, more transparent and accessible system which will be a major step in the drive to minimize the impact of poverty in Jersey.
The new system will help and enable people to both avoid poverty and to take appropriate actions and life decisions to get out of poverty. The system will do this by effectively tackling real needs whilst promoting work and encouraging self-reliance. It will be equitable, consistent, sustainable, easily understood and accessible whilst taking account of the whole needs of the family.
The Law
The Law is essentially a short enabling piece of legislation that sets out a fundamental framework on which powers are given to the States and the Minister to develop the details of the system through Regulations and Orders. The basic criteria for eligibility are set out in Part 2 of the Law, which in simple terms confirms eligibility for income support on adults of households on relatively low income who are working or have a genuine reason why they are not working and have also satisfied the requirement for residency in the Island. The Law allows subordinate legislation to define ordinarily resident, and the constitution of a household, as well as definitions for full-time work, remunerative work and the availability for and actively seeking work. This is a fundamental principle of the Law, which seeks to promote self-reliance through work.
Part 2 of the Law also describes the components and the difference between the basic components (relating to the constitution of the household) and special components which relate to housing cost, impairment, caring and child care. The States has the power to set the level of component rates by Regulations as well as the criteria to be used when determining the components. Finally, this part of the Law describes how the specific benefit rate for each household is to be calculated by comparison with the determined components and the income of the household, the assessment of which is to be defined by Order.
Part 3 of the Law is concerned with special payments which will cater for exceptional as well as one-off needs which will include those that are currently met by discretionary payments through the Parish Welfare system. This part of the Law is inherently more flexible than Part 2 of the Law which deals with the regular payments currently seen through benefits such as rent abatement/rebate, family allowance and disability allowances.
The requirement for a discretionary element to the Income Support System is to allow instances of exceptional need, which fall outside of the entitlements under Part 2 of the Law, to be addressed.
Part 4 of the Law relates to the determination of claims through “determining officers”, and appeals to Tribunals which are Human Rights compliant, which is not the case with certain of the existing benefits.
Amongst minor and other consequential matters addressed in the Schedule to the Law, an important change to the Health Insurance (Jersey) Law 1967 is made. The Health Insurance system will become a system based upon individual entitlement, allowing the focussing of benefits to individuals rather than head of households and will allow further changes to be made to target the treatment of chronic illnesses. This change will be essential in subsequent changes that may follow from the development of the Island’s health care system in “New Directions”.
The Law and sub-ordinate legislation will be backed up by accessible documentation including leaflets which will give a description of the system and importantly published guidelines which will explain to claimants and the public at large the interpretation of the system and what they might expect from the system in terms of rights and responsibilities.
Income Support ( Jersey ) Regulations 200-
One of the fundamental principles of the system is that those people who can work should work and be given every encouragement to work if their circumstances allow. Work is proven to be of benefit to individuals in creating physical and mental well-being, and gives an individual a sense of purpose when considering their place in society. A person with a genuine reason for not working will not be denied Income Support nor will a person whose circumstances dictate that they can only maintain part time work. This principle is reflected in Article 2 of the principal Law which requires that all adult members in a household should be in full time remunerative work unless exempted by Article 3 (Persons eligible despite not being engaged in full time remunerative work). The list of exemptions includes people over the age of 65, carers, people suffering from a physical or mental impairment, people with young children, people in training or people genuinely looking for a job.
The principal Law gives the States the power to make Regulations to amend the list of exemptions and to prescribe what is meant by full time remunerative work and what is meant by available for, and actively seeking work. Regulations 2 to 5 of the Income Support (Jersey) Regulations define these work requirement terms. The other main aspect of the Regulations is the Schedule which defines the criteria and the rates for the components that make up the Income Support system.
Regulation 2 defines the term “full time” as a minimum of 35 hours a week. There was some debate about this figure, with suggestions that it should be lower as well as higher. The Minister decided that the figure would be 35 hours, as being a generally widespread understanding of a full time working week. This does not mean that a person working less than 35 hours a week will be denied Income Support. It will mean that a person working under this 35 hour threshold will be interviewed to establish a reason why this may be the case. The Regulation also sets out what work absences are allowed without breaching the 35 hour rule. Finally it makes provision for calculating weekly hours for those people who may have abnormal patterns of work.
Regulation 3 defines the term “remunerative work” in terms of the rate of the minimum wage with no lower limit on the number of hours worked. For self-employed people, it is recognised that remuneration is more difficult to determine accurately so special provisions are made to calculate the average hours worked and the equivalent wage net of reasonable and necessary business expenses. The Department has a wealth of experience in the determination of self-employed earnings but the principal Law does allow the determining officer to refer to experts for examination and report back to the determining officer on questions of special difficulty which would include problems in evaluating self-employed income.
Regulation 4 refers to a focus on working wherever possible, as a person should not be able to declare himself unavailable for work unreasonably. This regulation ensures that a person is willing and able to take up work immediately if it is suitable work and is available. The definition of suitable work is found in Regulation 1 which lists the definitions. In simple terms, a person who is seeking work should not turn down opportunities for work that match his skills, qualifications and abilities. However it is recognised that in some instances, a qualified and able person may be out of work for a period of time trying to match his skills based on his previous employment when other jobs, perhaps requiring lower qualifications are available. Whilst giving this person time to look for the higher opportunity, the Minister believes that this should be carefully monitored and after a reasonable length of time, the person should be expected to accept employment at a lower level
Regulation 5 defines the term “actively seeking work” by referencing activities to the past 28 day period. This means that the person is currently seeking work and maintains a rolling period of qualification. During that period a person is expected not to turn down suitable work and to attend interviews with staff at the Department. They would also be required to take reasonable steps to find work (including training) which may or may not involve the Department. Some people find work without the intervention of the Department, but in difficult cases the officers would provide a plan, or “job seekers agreement” negotiated with the person in question as to the appropriate way to get back into work.
The new Income Support system will lead to more people using Employment services at the Social Security Department and the interactions will be monitored to provide more data on both the Income Support system and unemployment. Changes to the organisational structure and computer systems are being made to help meet these expected increases.
As Part 2 of the Regulations deals with work requirements, it is appropriate to mention Regulation 7 here. During development of the sub-ordinate legislation the position of people in custody was found to be unclear. Using the powers in the principal Law, this Regulation adds to the list of people exempt from full time remunerative work. Clearly people in custody cannot be in full time work but need to be maintained in the household definition for income and asset calculations as well as reflecting an appropriate size of accommodation for the housing component. This will ensure that payments can continue to be made to the rest of the family members in that household
Regulation 6 merely refers to Schedule 1 of the Regulations which sets out the criteria and rates of the components of Income Support. The rates of the components are weekly rates except for the Child Day Care Component which relates to the hourly cost of child care and the number of hours of child care during the week. Standard weekly rates are a simplification on existing benefits which can be weekly, monthly, or variable depending on the number of actual payment days in a month. The principal Law requires that the rates of the components be set by the States through Regulations.
The purposes of the specific components are set out below;
Schedule 1 Part 1: Basic components
The basic components are those amounts of benefit paid on behalf of each of the members of the household to meet their individual needs, such as food, clothing, travel, energy and basic medical costs. A specific household component is also paid to each separate household reflecting reasonable fixed costs in a household. There are therefore four rates:
a rate for each adult in the household,
a rate for each child in the household,
a rate for the household
and an enhanced rate for a single parent in a household.
Research and experience suggests that single parents require more benefit than single householders without children and are generally the most vulnerable to issues of poverty.
The Law is permissive in that an eligible household is entitled to the appropriate basic components. Part 1 of the schedule sets out the criteria which exclude a household to any basic component. In general terms a member of a household is not entitled to a basic component for periods where they are being maintained by another authority, at University, in custody, in hospital (but not in residential care) or indeed in the case of a foster child where a fostering allowance is paid. The Schedule (1.1.d.) also sets out that a member of the household would not continue to be entitled to any basic component whilst residing outside of Jersey for periods of longer than four weeks.
The basic household component is only paid to people who occupy property as the owner or under the terms of a lease.
Schedule 1 Part 2: Special Components A: Housing Component
Part 2 of the schedule describes the components that are paid for specific reasons. The first is the housing component which covers rental costs for those living in rented accommodation. For owner/occupiers, a different rate of component covers the cost of foncier rates and building insurance. It does not cover the costs of having a mortgage but in exceptional circumstances the interest charges might be met through a special payment for a limited time through Ministerial discretion exercised under Article 8(2) of the Income Support Law.. For those in rented accommodation, the component is different to the existing rent rebate/abatement system but does still refer to the fair rent set by the Housing Minister. However as the Housing Department (and Housing Trusts) effectively become like any other landlord, mechanisms will be agreed between the relevant Ministers to ensure co-ordination between the level of the Income Support Housing Component and the Housing Department’s fair rent levels..
The criteria that attach to the housing component fall into two categories; those that attach to the claimant and those that attach to the household and its members. Obviously to qualify for this component, a member of the household is the owner of the dwelling or occupies the dwelling under the terms of a lease or licence and the dwelling must be the main residence. Income Support cannot be paid to support a second home. If the household is occupying a dwelling that is too large for the needs of the household, the housing component will be restricted to the level for a dwelling that would be appropriate.
In order to receive a housing component the claimant must be over the age of 25. However, support will be provided to claimants below 25 in some circumstances, for example young families with children, young people moving out on their own from Social Service Care or simply those young people who cannot reasonably be expected to live with parents or other family members. The latter group may simply be those that have lived away from their parents for a length of time, and having set up a home and then falling on difficult circumstances would not be able to move back to the family home because circumstances in the family home may have changed to prevent this.
Schedule 1 Part 2: Special Components B: Impairment Component
The impairment component replaces existing non contributory disability benefits (such as Attendance Allowance and Disability Transport Allowance) but also brings in a component for the cost of visiting a general practitioner. This not only replaces the Health Insurance Exemption scheme but also effectively widens it to more people on relatively low incomes who may have chronic health problems. The component acknowledges the extra costs of disability and long term illness.
However the fundamental principle in this benefit replacement is a move from effectively a “universal” system of benefits to a targeted “means tested” system. The States agreed to this in P178 /2003. Current disability benefits are effectively universal in that the income limit is over £53,000 a year with no capital limit at all. This means for example that a household with an income of £50,000 a year and capital in excess of £100,000 would receive the same lump sum disability benefits as a household with income of £20,000 a year and no capital at all. In a means tested system there are no lump sums paid regardless of income and instead benefit decreases from a maximum figure as income rises until no benefit is received at all.
The impairment component actually consists of three elements; a personal care element, a mobility element and a clinical cost element. As with other components the legislation is permissive but a person cannot qualify for any element of the impairment component unless his medical circumstances have lasted, or are likely to last for a period of not less than 6 months (unless the individual is terminally ill). Clearly the basic principle here is to ensure that the condition is not transient but likely to affect the person over a protracted period. The criteria also link back to the eligibility for basic components which relate to maintenance by another authority and presence on the Island. A child attending a school outside of Jersey catering for special needs would not be disqualified from being eligible for impairment component whereas a person in custody would be.
Assessments of existing non contributory benefits have periodically been criticised as being secretive, inequitable and often subjective. The assessments of impairment components, and therefore the rates of the components have been devised to be transparent and more equitable. The Minister is grateful for the assistance of Dr R. Thomas from the Department of Work and Pensions, local professionals and the officers of the Health and Social Services Department who have helped devise and test the mechanism for assessing the personal care and mobility elements of this component. A report is made by the person suffering from a chronic disability or illness by answering a series of statements about how their lives are affected by their condition. The statements are cross checked against medical evidence from the person’s doctor and a set of standard guidelines. Valid statements are allocated a point’s score and from the accumulation of that score four rates for the personal care element and two rates for the mobility component can be determined. The statements are set out in Schedule 2 of the Regulations which fulfils one principle of transparency. However it should be borne in mind that the statements are not benign but relate to medical conditions and symptomology that would be difficult to circumvent. Evidence from medical practitioners and other health workers would be invited to ensure that each person achieves the correct level of personal care and mobility component. In difficult cases the Department can also call in experts or consultants to assist in the determination.
The clinical cost element seeks to direct more money to those people on low income who have chronic medical conditions that warrant higher than average visits to a general practitioner. The basic adult and child components allow for the average number of visits to a doctor per year (4) but those people with a chronic or progressive condition will be paid enough to cover an extra 4 visits a year ( 8 in all). Those people who have conditions that clinical guidelines recognise need at least a further 4 consultations a year will be given enough benefit to cover 12 visits to the doctor a year (12 in all or one a month).
The current system of HIE has some perverse incentives for both patient and general practitioner. For some HIE patients there appear to be excessive visits yet the general practitioner effectively subsidises the visit as the consultation fee is less than he could claim from a non HIE patient. In discussing this and the new Income Support system with representatives of the general practitioners, both parties felt that all patients should pay a user charge of, say £5. The new Income Support system follows the principle of self-dependence where benefit is paid in advance including the clinical cost component. This could lead to a position where benefit had already been spent when it might be needed for a visit to a general practitioner. There could also be instances where different members of the household need to see a general practitioner in a short space of time and even if the benefit had been set aside, the cost could become a barrier to visiting a doctor. To avoid this scenario, the administration of this element will give the household the option of opening a Household Medical Account, through an agreed proportion of benefit being withheld and maintained for the purpose of meeting medical bills. The account will be allowed to go overdrawn to cater for incidences of chronic or family illnesses but this would be monitored and reviewed with the general practitioner and the family.
This means that a household on Income Support has two options to consider for meeting medical costs. It can receive the benefit and pay the general practitioner in the normal way or it could opt to open a Household Medical Account, where the payment to the general practitioner would be £5 at the time of the consultation and the Household Medical Account would meet the difference. In both cases the Health Fund would release the same amount of Medical Benefit Refund (currently £15) to the general practitioner. There would be no more stigmas attached to those people who may be on low income visiting a general practitioner and the general practitioner would not be “subsidising” health care to those on low income.
For all its faults the system of HIE has been operational in Jersey since 1968. Many recipients and professionals are used to it and the change to the income support system will require changes in behaviour that may take some time. The use of the Household Medical Account may help in that change but during the transition careful monitoring will take place to ensure that those who genuinely need general practitioner services are not denied them purely because of cost. This may entail payments through the Income Support (Special Payments) (Jersey) Regulations 200-. On the other hand, those who might have made excessive and unnecessary claims to general practitioner services will be carefully reviewed.
Schedule 1 Part 2: Special Components C: Child Day Care Component
The child day care component again supports the concept of work by helping with the cost of childcare. It is paid to a household with a child under the age of 12 who is receiving child care provided that the adult member responsible for the child has earnings greater than the cost of the day care. Unlike the existing childcare allowance however, it is widened to incorporate those people who cannot work full time because of some impairment and to those who are in education or training that is likely to lead to better earning opportunities. Foster children are exempt from this component because of the fostering allowance. The rate of the component is set at the lower of the average weekly cost of the day care or the combination of the appropriate hourly rate multiplied by the number of hours of care needed. The number of hours needed will be determined by reviewing alternative options for child care and the education or training commitments or the level of impairment of the adult responsible for the child.
During the development of the sub-ordinate legislation, a view was expressed by certain childcare providers and others that the system should provide the child day care component to those residents in Jersey for less than 5 years. This is impossible within the framework of the system and the integrated calculation. It is felt economically that the provision of assistance for childcare is worthwhile for this group of residents so work is under way to introduce a small scheme at the same time as income support is introduced. Discussions with the Jersey Child Care Trust and the main providers will be undertaken.
Schedule 1 Part 2: Special Components D: Carer’s Component
The carer’s component is an additional benefit to the Invalid Care Allowance which has not been subsumed into the Income Support scheme. Invalid Care Allowance, which is subject to a separate Law, is paid to a person who cares for a very severely impaired person in the community and the carer’s component serves the same purpose. In order to qualify, the carer must be resident in Jersey and not severely impaired themselves. The person being cared for must be assessed under the criteria for impairment component and meet either of the top two tiers of assessment. As with the other components, the person being cared for should not be maintained by another authority, and must be present in Jersey unless absent for medical treatment.
Income Support (Special Payments) ( Jersey ) Regulations 200-
The components described in the Income Support (Jersey) Regulations form the basis of regular payments to reasonably settled households which satisfy the work, income and residency criteria. In any income support system there is also a need to provide “one off” payments to cover extraordinary expenses that might make the financial position of low income households worse or indeed push some households into poverty. The UK uses a system of crisis loans, community grants and emergency payments through the Social Fund and the existing Parish Welfare system operates a similar emergency payment system. Article 8 of the principal Law allows the States to make Regulations to provide for the Minister to make special payments to defray expenses to eligible households or people ordinarily resident in Jersey in exceptional circumstances. The Law also allows the Minister to provide assistance up to a specified limit to those temporarily in Jersey but not ordinarily resident (for example “the ship wrecked mariner”).
These powers are wide and discretionary. However through the Regulations, and the published guidelines to be approved by the Minister, it should be reasonably clear to whom and for what purpose special payments can be claimed and paid.
Regulation 2 essentially defines that special payments are to defray expenses and then defines the households that may benefit from a special payment. These households are those that are already in receipt of income support, those households who satisfy all other criteria (remunerative work and income) and who do not meet the 5 year residence condition but will do so in up to 6 months time, and those households who meet the remunerative work and residence criteria and fail the income criteria but are within 10% of the sum of the components to which they would have been entitled. In summary the households covered are those on income support, those nearly qualified by residence and those who are just over the income assessment for income support.
Regulation 3 whilst this Regulation defines the expenses that can be met by special payments, it is qualified in terms of there being an “urgent need for the goods or services” and that there is “no other reasonable means of meeting the cost”. The list of goods and services is fairly self explanatory; furniture and household equipment; deposits and removal costs ( but only where the dwelling is appropriate to the needs of the household), the essential costs in securing remunerative work and the exceptional costs of medical items and services. A special payment can also be made to protect a household from a serious risk to the health and safety of that household.
There are unfortunate occasions when the costs of funerals in Jersey cannot be met by the household, or indeed a body has to be moved into or out of Jersey and again the cost cannot be met. A special payment can be made in these circumstances and it can also be paid to repatriate a person from Jersey.
Regulation 4 the amount of the special payment is specified as the lower of the full cost or a reasonable price for the goods and services provided. In administrative terms, the Department will hold a list of preferred suppliers, as some Parishes do now, but will always allow the claimant to be self sufficient provided the cost is not excessive. Certain items will have to be supplied new, particularly electrical goods, but with good quality second hand purchases available in Jersey these may be supplied rather than new.
Regulation 5 this Regulation serves a specific purpose in the circumstances where an adult member of the household refuses to actively seek remunerative work. The Income Support (Jersey) Regulations 200- require that an adult member of a household must work if at all possible and must demonstrate that he has been actively seeking work in the past 28 days if he is not working. In cases where the person does not attempt to seek work the individual will be advised that the regular income support claim will be disallowed unless they demonstrate that they are actively seeking work. Disqualification of the regular claim could lead to greater hardship for other members of the household, so the regular Income Support payment is replaced by a special payment where the basic component of the adult member refusing to work is withdrawn at a rate of 25% a week over four weeks (the 28 day period). The rest of the components and thereby the support to the rest of the household remains intact.
Regulation 6 again this Regulation serves a specific purpose where an individual in a household has a chronic condition but prefers not to disclose this through the normal claim process. This regulation allows the individual to make a claim in their own name without reference to others members of the household.
Regulation 7 this limits the amount that can be paid to a person temporarily resident but not ordinarily resident in Jersey to £500.
Special payments is an area that the Minister believes will need very careful monitoring and adjustment as experience is gained, recognising that there is a finite amount of money available. In many instances, whilst the need might be urgent it is not often immediate and it is likely that cases will be referred to determining officers as a “case conference” to ensure that consistency of approach and equity is paramount. There are likely to be issues that arise that will cause the guidelines and the Regulations to be amended over the coming years.
Conclusion
The States over the past 10 years and over several debates has committed itself and the Social Security Department to the development of an integrated means tested benefits system. This development would have been impossible without the time, knowledge and experience of the officers of the Health, Housing and Education Departments and especially without the comments and commitment of those people who took part in the various consultations that have taken place. The experience, knowledge and support of the Connetables and their Parish Officers has been crucial. The basic principles and key objectives of this change have been rehearsed on many occasions. There have been no fundamental disagreements to either the concept or the reasons for this change. In fact there has been a call to review benefits, to target them more accurately and above all to remove the inequity in some of the systems which promote a culture of dependence that in some instances gives less assistance to those who really need it. Disability Transport Allowance and Rent Rebate and Abatement are often cited as examples with perhaps good reason. Disability Transport Allowance is currently paid to people in households with substantial capital assets. Rent Rebate and Abatement is obviously geared to rental costs and a single person obtains the same level of benefit as a couple within that system and subsidy is paid to those with above average incomes.
There has also been criticism from certain quarters of the current safety net system in Jersey; the Parish Welfare system. There is little doubt however, that the Parish welfare system has served the Island well and that the Parishes provide local communities a sense of identity and local knowledge, both geographically and figuratively. It would be a shame not to use these features in the Income Support system whilst always recognising the need for equity and fairness. The income support system will be driven by a central administration based on existing IT structures but local access through Parishes will be allowed subject to agreements being made between the Connétables and the Minister. However it should be absolutely clear to all that the responsibility for all aspects of the income support system rest with the Minister for Social Security and that any access to it has to be carefully controlled and monitored. The arguments for and against centralisation or de-centralisation often forget the customer. The customer needs easy access to the system without stigma or artificial barriers intervening. This can be provided by offering choice to the customer which is exactly the route that the administration of income support offers. The household can choose to visit either the Social Security offices, the Parish or indeed request a home visit by an officer.
Implementing a new integrated income support system in a green field situation would not be easy but implementing it from a position of existing well established benefits simply adds to the difficulty. It was evident early in the development of the system that evolution from the existing benefit system was impossible and a single transition to the new system had to be undertaken. Because of the fragmented and perhaps generous nature of some existing benefits this raised the issue of those people who might experience a lower rate of income support compared to the total amount of existing benefits received. It was also evident with the income support budget being maintained at the same overall level as the total of existing benefits that increasing rates of benefit to those on very low incomes could not be achieved. The Minister believes that having highlighted circumstances where low income households require additional assistance, it would be unfair to deny them this help whilst perpetuating some of the inequities in the system by protecting those on higher incomes. Nevertheless the Minister also recognises that some households, especially pensioner households might find it difficult to adjust to a different income immediately. The remedy for this was found with the help of the Treasury and Resources Minister, and has been approved by the States ,who has earmarked £22 million to protect existing beneficiaries who would not see any extra benefit under the income support system. This protection will be phased out over time and is outlined in the description of the Income Support (Transitional Provisions) (Jersey) Order 200-.
The income support system provides financial support tailored to the needs, circumstances and income of individual households. In reality every family has different needs and circumstances so it is impossible to detail in a report the effect of income support in each family. The publication of the rates of the components does not show how families might be affected. However during the data collection process, it has been possible to model the effect of the new benefit for average income beneficiaries in each family type from the information supplied. It has to be stressed that these examples are based on the average income of those existing beneficiaries and is not a measure of average income for the Island as a whole. This average figure is a good representation of the average household in each category who is currently receiving one or more of the existing benefits.
Household Type | Average Weekly Income Before Benefit | Income with Existing Benefit | Income with New Income Support Benefit | Weekly Difference |
Single Pensioner | £173 | £283.90 | £288.25 | +£4.35 |
Pensioner Couple | £300 | £378.65 | £383.92 | +£5.27 |
Lone Parent-1 Child | £224 | £378.95 | £415.90 | +£36.95 |
Couple -2 children | £484 | £564.25 | £574.82 | +£10.57 |
The new income support system shows an increase in benefit for these categories of family at the relevant average income who currently receive existing benefits. Clearly therefore some families will see an increase in benefit from the new system. Other families might see a fall in benefit due to the income support system but will receive protection from the effects. A third category of family would not receive any benefit under the new system although they might be receiving existing benefits. These families will also receive protection if they make a claim to income support.
Research undertaken by the University of Nottingham (Stella Hart with Robert Walker-Social Protection in Jersey: a Comparative Study) suggested that the level of relative poverty in Jersey is on par with the European average but the severity of poverty is noticeably less. The report also suggests that the money spent on social protection in Jersey whilst lower than European levels performs well but this does not mean that it could not perform better. The income support system starts this process. It does not finish it. The system will be able to draw information from beneficiaries to better inform policy makers on the social support framework that prevails in Jersey. It will have a unique place in highlighting issues and problems and allow better targeting of resources. In a similar vein, the information from beneficiaries will rest in one place rather than spread inconsistently across different Departments and agencies. This will make the development of strategies to monitor and combat benefit fraud that much more effective.
The development of the income support system has taken a good deal of time and effort. In more recent years it has been portrayed by some as a panacea, a system that will cure all difficulties such as childcare, residential care costs and the impact of GST for the whole community. It is not the absolute answer to all these issues. It is also not a perfect benefit system as such a system does not exist anywhere in the world. These proposals whilst being a major change, are the first steps on the way to an improved, equitable and sustainable social support system. Further changes in the future to the structure, Law and administration will be required as experience is gained, time moves on and changes in society occur. Indeed there are parts that I as Minister would wish to see improved over time particularly in the area of work incentives and pension premium disregards. Any change has to be carefully considered against the evidence and obviously against budgets but the point to be made is that this system cannot stand still. It must not be allowed to stagnate. It must mature and grow to meet the needs of the people of Jersey.
Financial and Manpower
Other than the transfer of budgets and manpower from other Departments identified in the States Business Plan, there are no manpower or financial implications.
Annex
These draft orders are being attached for ease of reference. They are still subject to final revision.
Income Support (General Provisions) ( Jersey ) Order 200-
The Income Support (Jersey) Law 200- provides that Orders be made to provide the mechanism of making claims to the benefit, how the claims are to be determined and the process for dealing with disputes about the determination of any claim. The provision also extends to certain definitions and eligibility criteria which are important features of the income support system.
Part 2 of the Order describes residence conditions applicable to income support as well as defining those people who are to be treated as being members of a household.
Article 2 the simple residence criteria for income support is 5 years immediately prior to the application for income support or 10 years continuous residence at any time. Whilst simplicity and ease of understanding is a key objective of the new system, equity and lack of discrimination were also basic principles on which the scheme was built and debated in the in principle decisions made by the States. In developing the system, the situation of a person who satisfies the 5 year condition of residence in Jersey who then leaves for a relatively short period of time was considered and it was felt that 5 years might be a harsh condition to apply. The Article therefore contains a provision that where a person who satisfies the 5 year condition leaves Jersey and resides abroad, the residence condition should be the same period as the absence from Jersey, or 5 years whichever is the shorter.
Article 3 sets out the position of a person currently resident outside of Jersey when the principal or main residence continues to be in Jersey. Such periods would count as ordinarily resident periods.
Article 4 describes two situations where periods of residence do not count towards the qualifying criteria for income support. The first is where a person is detained in custody under a sentence of imprisonment where the length of the sentence does not count as a period of ordinarily residence but time resident in Jersey immediately prior to the sentence would count. The second circumstance is the relatively rare situation of a “detached worker” or somebody working in Jersey in continuation of employment with an employer outside of Jersey. These situations are covered in the various reciprocal agreements between Jersey and other countries.
Article 5 the basic unit in the income support system is the household. Experience with other benefits over recent years has proved that this is not always easy to determine in particular circumstances. The examples of co-habitation and same sex relationships may be obvious but legally separated people living in the same dwelling and adults with disabilities living with siblings, or other relatives are not uncommon. Article 5, after a great deal of deliberation, sets out a simple set of rules for determining which people should be regarded as belonging to a household. The test is that the people in question occupy the same dwelling as the main residence and they are married or are in a marriage like relationship together in a family unit, or have parental responsibilities over a child as part of the family unit. This basic rule is qualified by two further provisions which provide that a person exempt from remunerative work because they are in education or training will be part of the household unless that person has an impairment component when they will be treated as a separate household. Paragraph (3) of the Article, describes how the shared care arrangements for a child will be determined. A single person may also constitute a household.
Part 3 of the Order describes the manner in which a claim shall be made. Income support is a strict means tested benefit and as such requires detailed sensitive information to be supplied by a claimant in order for the benefit to be paid. This may be seen as intrusive by some people but directing financial benefits to those in need and to meet their specific needs requires the disclosure of information in respect of those needs. The administration of the income support system has not been built, therefore, on impersonal forms that are passed through various offices. It is built on the basic premise that sensitive information is best collected face to face at interview. New claimants will be interviewed, and the details collected and input directly onto the computer system and on completion a declaration of information that has been supplied will be generated for the claimant to check and sign, along with other adult members of the household. The form that has been used prior to the implementation of income support was based on the annual rent rebate/abatement review form and was used to target recipients of existing benefits that will be replaced by income support. This was done to avoid the administrative difficulties of over 7000 claims for income support (with transition payment arrangements) being received from existing beneficiaries on implementation which would have resulted in known claimants in need of financial assistance not being paid. In simple terms the exercise should transfer existing beneficiaries to the new benefit without the need for interview or the completion of further forms. With that in mind it is pleasing to note that over 6000 forms have been returned from over 7000 that will have been sent out before implementation.
Article 6 this Article sets out the time that a claim is made and in particular the date of the claim if there is a problem with the claim or there is an amendment to the claim prior to any determination. The information necessary for the claim is set out in Part 1 of Schedule 1.
Article 7 the determining officer as defined in the principal Law may require evidence to support a claim for income support and this Article requires such evidence to be supplied which may also involve the claimant attending the office. In the case of an impairment component the person whose condition is being determined may be required to furnish the information and this can be done without the involvement of any other member of the household. Article 8 relates to supplying information when a household is receiving income support and the household circumstances change. The Article provides that such changes must be notified.
Article 9 allows a person to act on behalf of another person but only if the request is in writing and that there is no other guardian or curator in place.
Part 4 of the Order refers to Schedule 2 of the Order which defines how income shall be determined whilst Part 5 applies the previous administration Articles to special payments including a separate schedule which sets out the information necessary for a claim.
Part 6 of the Order describes the functions of the Determining Officers which principally are to decide on any claim, or question arising from a claim for income support. The functions of a determining officer are a little different from those under existing benefits. Income Support is the safety net for financial social assistance. Other than a charitable fund, a person cannot be referred to any other local source of financial assistance. Determinations of benefit need to be quick and accurate given that the case in front of the determining officer may be a case of immediate need. By their very nature formal benefit appeals take time to set up, so to ensure that errors are limited and decision making is quicker, every adult of the household has a right to a second determination by a different determining officer, and if still unhappy with that decision has the right of appeal to a Tribunal. This may however take some time but with this system of referral and the ability to award “interim” payments for a limited period, the determining officers have several tools to ensure that decisions are correct whilst balancing the need for immediate or emergency payments.
Article 12 every claim shall be decided upon by a determining officer who will allow payment if all criteria are met and inform all adult members of the household of the decision whether payment is made or disallowed, as well as informing them of their right to a second determination. This notification must be in writing.
The Law Officers have advised that every adult member of the household must be informed of the determining officer’s decision. If this is not done an adult member might be considered to be treated differently from the claimant with regard to fair treatment or hearing in determination of a civil right (Article 6 of the European Convention of Human Rights). This will mean that copies of the same letter will be sent to the same address for each adult of the household informing them individually of the decision and the right of re-determination and appeal.
Article 13 describes what must be contained in the notification of the determining officer’s decision which includes the reason for any disallowance and the right of re-determination and appeal.
Part 7 of the Order describes how reviews and appeals of decisions made by determining officers will be administered. The Social Security Department has always had a system of benefit appeals, including those of a medical nature and has used this experience to set out how they will work in the income support system. Essentially there are two types of appeal; those against a “lay” condition which will go to the existing Social Security Tribunal and those of a clinical nature that will rest with the Medical Appeal Tribunal. The constitution and procedure of the Medical Appeal Tribunal is set out in the Order.
Article 14 this Article gives the claimant or adult member the right to apply to appeal a decision of a determining officer to the Medical Appeal Tribunal within 14 days of receiving notification of the decision increasing to 28 days with the consent of the Chairman or Deputy Chairman of the Tribunal. This application has to be made in writing.
Article 15 sets out the constitution of the Medical Appeal Tribunal with a legally qualified Chairman (or Deputy Chairman) and membership drawn from a panel of medical practitioners and a separate panel made of people who have experience of disability issues. The members can only be appointed after consultation with the Appointments Commission and are appointed by the States. Each Tribunal will consist of a legally qualified person, a medical practitioner and a person experienced in disability, including mental health issues. The Article also sets out clearly the reasons why a Tribunal member may cease to hold office and cases on which a member shall not sit.
Article16 describes the procedures to be adopted by the Medical Appeal Tribunal. In other benefit legislation the Tribunal determines its own procedures but within the income support system the basic principles are set out in this Order.
Article 17 refers lay condition appeals to the Social Security Tribunal.
Schedule 2 Calculated Income
Income support is a strict means tested benefit and as such the determination of income is important. Unlike non contributory disability benefits currently in place it also looks at capital within a household and how it should be treated. The interplay between capital and income can be difficult. Throughout the development of the system over the past 10 years, the idea of treating capital as income (which is common in other means tested systems) has been advocated rather than the simple capital bar or threshold. Paragraphs 1 and 2 of the schedule set this out with a basic rule which deems a weekly income from a capital sum but provides a disregard of capital so that only sums above this level are deemed to provide a weekly income. The disregard figures are higher than current welfare figures and are weighted in favour of pensioners and those people with disabilities who may not have the ability to add to their savings. Certain assets are also disregarded; the value of the principal residence, the value of business assets during a period of illness (for a period of 6 months) and the value of furniture and basic effects
A special disregard is also given to any capital that has been accumulated for the future care of a severely disabled person.
Paragraph 3 of the schedule allows divested income or capital to be included in the income support calculation. This is an extremely difficult and sensitive area particularly when property is involved, but evidence from the welfare authorities suggest that this is rare but does occur in a minority of residential care cases.
Definitions of earnings and income are to be found in paragraph 6. However the basic formula for determining income is that all income will be included unless there are specific disregards. Paragraph 4 lays out how weekly income will be determined, using averages for earnings where appropriate, adding derived income from capital but deducting any social security contributions to be paid and any qualifying child maintenance. The difficulty with using all income revolves around disincentives, especially disincentives to take up work or do better paid work, as well as disincentives to save for the future. Paragraph 5 seeks to provide incentives for certain households through disregards of earnings, pensions and annuities. The Minister is keen to see this area develop as experience with the benefit grows. As a deemed income is assessed on some capital assets, any actual income from capital is disregarded.
Income Support (Transitional Provisions) ( Jersey ) Order 200-
Article 19 of the Income Support (Jersey) Law 200- allows Orders to be made to facilitate the transition from existing benefits to the new benefit system. The Income Support (Transitional Provisions) (Jersey) Order 200- does this in two ways. Firstly it provides for those with existing benefits at a higher rate than the new income support system to be protected for a period of time and secondly it provides a mechanism for those on existing disability benefits to be transferred to the appropriate level of impairment component without undergoing a new medical assessment. This could not be accomplished without the data collection exercise undertaken in 2006/7.
Where a person or household is receiving an existing benefit immediately before the day income support is implemented and claims income support then provided they continue to satisfy the criteria (except for any income conditions), they can receive income support or the equivalent of the old benefit whichever is the higher rate. This protected payment would apply even to those who would not be eligible for income support.
Having set up the protected payment, the Order describes how this protection will be reduced over a period of time. Some £22 million has been targeted to this phased protection. The rates of phasing out the protection are slower for pensioners and those with disabilities than those under the age of 65, as generally those on pensions or with disabilities have a reasonably static income and have little opportunity to increase it.
Special provision has been made for those people in residential homes who are currently being supported. There are many and different rates being applied by the various homes with “spot” purchasing of beds also apparent. These are effectively being handled on a contractual basis with providers and opportunities to standardise and streamline payments will only become apparent as the new system of placement takes effect. The Minister has therefore decided to maintain existing arrangements whilst monitoring the situation which will also feed into any research on new systems of funding residential and nursing care including any insurance based mechanism.
The order will also provide for the transfer of existing beneficiaries to the new impairment component. This transfer would remain in place until the household was reviewed under the income support system.
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