Income Support – Minister for Social Security’s Draft Report to the Law
Introduction
The draft Income Support (Jersey) Law 200- is an important piece of enabling legislation which provides the framework for a new system of financial support for households on low incomes and is the first step towards the Strategic Objective, within the States Strategic Plan, of delivering an integrated system of benefits which help residents to achieve and maintain financial independence and which provides appropriate financial support for local households and individuals unable to support themselves.
The Law does not set out details of the system or indeed the rates of the new benefit components which will be debated in full by the States once the enabling Law returns from its passage through Privy Council.
Approval of the draft Law will mark the beginning of intense activity leading to implementation in the middle of 2007.
Proposition
On the 21st June 2005, the States approved the 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 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 through a “Citizen’s Fund”.
The States also agreed that the Employment and Social Security Committee 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 and, from the same funding source, protection be afforded to those households who may be affected by the removal of existing benefits.
Reasons for Change
Currently about £64 million (2007) is spent annually in Jersey in means tested benefits to support about 25% of households (circa 7000). 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. Whilst this money is apparently performing well, there is no doubt that improvements can, and should be made. 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 and lead 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. Replacing them with one benefit and one consistent income assessment will create a fairer, more transparent and accessible system which will assist in the drive to minimize the impact of poverty in Jersey.
The purpose of the new system is that it should help and enable people to both avoid poverty and to take appropriate actions and life decisions to get out of poverty. To do this the new income support system should be effective in tackling real needs whilst promoting work and encouraging self-reliance. It should be equitable, consistent, sustainable, be 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. However 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. The Law allows subordinate legislation to define ordinarily resident and the constitution of a household as well as definitions for full time, 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 come from that part of the Income Support System commonly being described as the “Citizen’s Fund”. Special payments 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 or the Social Security Department’s “Social Fund”. 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 to be 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.
Cost
In approving P86/2005, the States agreed that the funds available to the new Income Support System would be equivalent to the overall cost of the existing means tested benefit systems, this amounts to £64 million in 2007 as per the States Annual Business Plan 2007. The view of the former Employment and Social Security Committee still prevails with the intention of setting rates higher than the existing Parish Welfare levels. At this stage, however, rates cannot be calculated but this will be done as more up to date and accurate information is gathered from those existing beneficiaries who will move over to income support.
It is clear however that, if we are to be successful in targeting resources to maximise the impact upon poverty levels in the Island, some households with higher incomes will not receive the same level of financial support in comparison to the level of existing benefits they already receive. This is an inevitable consequence of the better focusing of benefits towards those most in need. Some households will receive more in comparison to the level of existing benefits. To insulate those who will not receive the same level of support under the new system, a sum of £20 million has been identified by the Treasury and Resources Minister to be allocated over a period of years as phased protection to those households affected.
The Treasury and Resources Minister has also recognised that the income support system will be able to mitigate the effects of the introduction of a Goods and Services Tax (GST) on low income households. This can be done in two ways. Firstly prior to GST being introduced the relevant component rates within Income Support can be increased thereby giving immediate protection to those receiving income support and bringing more people into the income support net, and secondly further changes will be reflected in the retail prices index which will be a factor in the annual increase of benefits. The Treasury and Resources Minister has identified an estimated annual sum of up to £1.75 million for this purpose.
Manpower
The introduction of the new income support system will result in changes for staff in the Social Security Department, the Parishes and the Housing Department. Staff administering the rent rebate/abatement scheme will be transferred to the Social Security Department as will staff administering Parish Welfare for the Parish of St Helier. Coupled with the staff in the Social Security Department’s Family and Health Zones, this means a total of 28 people (18 from other Departments) being incorporated into the new income support infrastructure in the Social Security Department. Other Parishes are considering various options regarding benefit delivery, but it is clear in the Law that the Minister of Social Security is politically responsible for all income support provision. The manpower costs are included in the administration costs incorporated within the benefit costs described in the previous paragraphs.
Draft Income Support (Jersey) Law 200-
European Convention on Human Rights
The Minister for Social Security has made the following statement –
In the view of the Minister for Social Security the provisions of the Draft Income Support (Jersey) Law 200- are compatible with the Convention Rights.
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