Childcare Support for working parents with less than 5 years residence

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A decision made (10.12.2008) to approve Childcare Support for working parents with less than 5 years residence.

Decision Reference: MD-S-2008-0092
Decision Summary Title :	DS – Childcare support for working parents with less than 5 years residence		Date of Decision Summary:	10 December 2008
Decision Summary Author:	Sue Duhamel Policy and Strategy Director		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	n/a
Written Report Title :	Childcare support for working parents with less than 5 years residence		Date of Written Report:	10 December 2008
Written Report Author:	Sue Duhamel Policy and Strategy Director		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Childcare support for working parents with less than 5 years residence
Decision(s): The Minister approved a non-statutory stand-alone benefit scheme to provide assistance with childcare costs to working parents with less than 5 years residence.
Reason(s) for Decision: The Income Support scheme requires a minimum residency period of five years in order to qualify for support. The Minister wishes to provide some financial support to families that do not satisfy the residence conditions for Income Support but do incur childcare costs whilst the parents are working. A stand-alone, non statutory scheme will be used to allocate funds to these parents.
Resource Implications: There are no manpower implications. An annual budget of up to £200,000 has been made available within the Departmental cash limit and it is expected that costs will be met from within this amount.
Action required: Customer Services Director to liaise with the Jersey Childcare Trust to make details of this scheme known to childcare providers and parents. Customer Services Director to arrange for administration of stand alone benefit with effect from 1 February 2009.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Childcare Support for working parents with less than 5 years residence

Recent Arrivals Discount Scheme (RADS)

The Income Support scheme requires a minimum residency period of five years in order to qualify for support. The Council of Ministers agreed that some financial support should be available to families that do not satisfy the residence conditions for Income Support but do incur childcare costs whilst the parents are working. An annual budget of up to £200,000 has been made available.

A stand-alone, non statutory scheme will be used to allocate funds to these parents.

This benefit will be available to parents satisfying the following conditions:

The parent(s) of the household do not satisfy the residence conditions of Income Support
The childcare is required in order to enable the parent with caring responsibilities to undertake paid employment
The earnings of the parent with caring responsibilities are more than the total cost of the childcare
The parent with caring responsibility for the child was ordinarily resident in Jersey at the time of the birth of the child and at the time of the application for the benefit.
The parent with caring responsibility for the child was ordinarily resident in Jersey for at least six months prior to the application for the benefit.
The childcare is provided by a day carer or nursery registered under the Day Care of Children (Jersey) Law 2002 or is an Accredited Nanny

Calculation

The calculation of the benefit will be based on the Income Support calculations, although the only component that will be considered is the childcare component. The household unit will be ascertained in the same way as for a standard Income Support claim.

Using the IS calculation will provide continuity for the claimant when the 5 years’ residence is reached. It represents a reasonable assessment of the basic living costs for the household and is based on the actual amount of childcare needed.

It is unlikely that a family on a very low income would be able to maintain themselves in Jersey and so this scheme will be primarily aimed at assisting parents with a reasonable income to remain in Jersey in work, by covering the additional cost of childcare.

The level of support to be provided is such that it will overlap with the Income Tax allowance for childcare, depending on the exact situation of the household. The Income Tax allowance can only be set against the net cost paid by the parent. Further details of the calculation and worked examples are given in Appendix 2.

Number of claimants

There are approximately 1,700 registered childcare places available in Jersey.

The previous school age discount scheme provided discounts to 400 - 450 children.

The previous childcare scheme provided benefits to about 50 children.

Parents receiving support under the previous benefits have been transferred to the Income Support system. These parents are now either receiving Income Support benefit or they are receiving protected payment benefits capped at the level of their previous benefit rate.

Centrepoint had approximately 95 parents receiving a discount. They have identified 11 parents with less than 5 years residence. (about 12%). This will include a large proportion of children who would not qualify under the new scheme as their parents were not living in Jersey at the time of the child’s birth.

It is estimated that 5% of children receiving childcare benefits will be included in new scheme.

5% of previous benefit claimants (500) = 25.

This suggests that approximately 25 children/families will be eligible for the new scheme.

A small number of new applications received in 2008 from parents who would qualify under this scheme have been supported at a level equivalent to the previous benefit, until such time as this scheme is operational.

Estimate of cost

0-2 year old – average weekly benefit is likely to be approximately £150 pw

3-4 year old – average weekly benefit is likely to be approximately £100 pw

25 claimants x £125 pw = £162,500 pa.

Administration

The parent/guardian will apply to Social Security providing written evidence of income and expenses and confirmation from the childcare provider.

Social Security will check the application and evidence provided and calculate a Benefit value. Social security will inform the parent and the childcare provider of the value of the benefit.

The childcare provider will bill the parent for the fees minus the benefit and the Social Security Department for the remaining amount on a monthly basis in advance.

SSD will pay the value of the benefit to the childcare provider. The parent will be responsible for the balance of the childcare costs.

In the event of a dispute between the parent and the department in relation to eligibility for the benefit or the amount of benefit payable, the parent can ask for a redetermination of the claim and, if still dissatisfied, can appeal the decision to the Minister

Appendix 1

The derivation of the RADS benefit from the Income Support assessment is as follows

1. The living allowance is made up of the current rates for

 Adult component

 Child component

 Lone parent component

 Household component

 Accommodation component

for the household

No other components are taken into account.

The maximum value for the accommodation component is set at the rate for a two bedroomed flat for a family with one child, or a three bedroom flat for a family with two (or more) children.

2. The assessed income is made up of

Earned income, including disregards

Other income

Deemed income from capital

3. The net income is

Net income equals (calculated income) less ( living allowance)

If net income is less than zero, net income is assessed as equal to zero.

4. The RADS Benefit is made up of

Benefit equals (childcare component) less (net income)

Childcare component is calculated on the same basis as the Income Support childcare component

Hourly rate used is minimum of

actual hourly rate; and

Income Support maximum rate for age of child

Number of hours must be appropriate compared to working hours of parent(s), but will take into account the sessional nature of childcare provision.

The maximum benefit payable will be the value of the childcare component for the household and the benefit will decrease to zero as the income of the household increases.

If there are two (or more) children receiving childcare, the benefit is calculated as

Benefit equals (sum of childcare components for each child) less ( net income for household)

Benefit is only payable if the earned income of the parent with the main care of the child is greater than the total childcare costs.

Benefit may continue to be paid for up to 4 weeks if the parent with the main care of the child becomes unemployed (due to redundancy or the end of a fixed term contract) and is actively seeking employment.

Note on Income Tax Marginal Relief

The Income Tax Marginal rate threshold allows relief on childcare costs to a maximum value of £6,150, for marginal rate tax payers. The allowance is worth up to approximately £32 per week. A lone parent with one child will start to pay marginal tax at an income of approximately £20,000 pa (385 pw) and a couple with one child will start to pay marginal tax at an income of approximately £25,000 pa (480 pw).

Marginal tax relief is only provided in respect of “the amount paid by the claimant to a registered day carer for the care of a qualifying child;” (Income Tax Law Article 92B)

If a parent is receiving benefit from this scheme, the amount that can be claimed against Income Tax is limited to the NET amount of childcare costs paid by the parent.

Appendix 2 - Indicative Benefit levels (one child)

Childcare costs for 0 to 2-year-old – maximum £5.58 per hour

Childcare costs for 3 to 4 -year-old – maximum £4.37 per hour

£5.58 x 40 hours = £223.20 per week.

£4.37 x 40 hours = £174.80 per week.

2 bed flat £187.11 pw

Parent(s) work for 37 hours per week

Childcare is provided for 40 hours per week

Lone parent – one child under 3


hourly rate (1 earner)	Gross annual income	Monthly Living Allowance	Monthly Calculated Income	Monthly Net Income	Monthly Childcare benefit
6.50	12,500	1,828.80	916.67	-	967.20
7.80	15,000	1,828.80	1,100.00	-	967.20
9.10	17,500	1,828.80	1,283.33	-	967.20
10.40	20,000	1,828.80	1,466.67	-	967.20
11.69	22,500	1,828.80	1,650.00	-	967.20
12.99	25,000	1,828.80	1,833.33	4.54	962.66
14.29	27,500	1,828.80	2,016.67	187.87	779.33
15.59	30,000	1,828.80	2,200.00	371.20	596.00
16.89	32,500	1,828.80	2,383.33	554.54	412.66
18.19	35,000	1,828.80	2,566.67	737.87	229.33
19.49	37,500	1,828.80	2,750.00	921.20	46.00

Lone parent – child of 3-4


hourly rate (1 earner)	Gross annual income	Monthly Living Allowance	Monthly Calculated Income	Monthly Net Income	Monthly Childcare benefit
6.50	12,500	1,828.80	916.67	-	757.47
7.80	15,000	1,828.80	1,100.00	-	757.47
9.10	17,500	1,828.80	1,283.33	-	757.47
10.40	20,000	1,828.80	1,466.67	-	757.47
11.69	22,500	1,828.80	1,650.00	-	757.47
12.99	25,000	1,828.80	1,833.33	4.54	752.93
14.29	27,500	1,828.80	2,016.67	187.87	569.60
15.59	30,000	1,828.80	2,200.00	371.20	386.26
16.89	32,500	1,828.80	2,383.33	554.54	202.93
18.19	35,000	1,828.80	2,566.67	737.87	19.60

Couple – child under 3


hourly rate (2 earners)	Gross annual income	Monthly Living Allowance	Monthly Calculated Income	Monthly Net Income	Monthly Childcare benefit
5.85	22,500	2044.16	1650.00	0.00	967.20
6.50	25,000	2044.16	1833.33	0.00	967.20
7.15	27,500	2044.16	2016.67	0.00	967.20
7.80	30,000	2044.16	2200.00	155.84	811.36
8.45	32,500	2044.16	2383.33	339.17	628.03
9.10	35,000	2044.16	2566.67	522.50	444.70
9.75	37,500	2044.16	2750.00	705.84	261.36
10.40	40,000	2044.16	2933.33	889.17	78.03

Couple – child of 3-4


hourly rate (2 earners)	Gross annual income	Monthly Living Allowance	Monthly Calculated Income	Monthly Net Income	Monthly Childcare benefit
5.85	22,500	2044.16	1650.00	0.00	757.47
6.50	25,000	2044.16	1833.33	0.00	757.47
7.15	27,500	2044.16	2016.67	0.00	757.47
7.80	30,000	2044.16	2200.00	155.84	601.63
8.45	32,500	2044.16	2383.33	339.17	418.30
9.10	35,000	2044.16	2566.67	522.50	234.96
9.75	37,500	2044.16	2750.00	705.84	51.63

Appendix 3 - Explanation for Parents

1) All parents/guardians and their live-in partners who apply for the RADS Benefit must satisfy the following:

(a) you are in paid employment;

(b) you have lived in Jersey for less than 5 years and do not have residential qualifications (NB If you have lived in Jersey for more than 5 years, or have residential qualifications, you may be eligible for help with childcare costs through the Income Support system)

in Jersey for the last 6 months before the date of the application

(d) Your child is aged under12 and your care provider is registered with Day

Care Registration or is an accredited nanny.

3) All claims for the RADS Benefit must be received on the form that is provided and must be accompanied by supporting evidence for all items contained in the application.

4) SSD will assess your income by asking for supporting information including current pay slip, employer’s letter, tax returns, rent slip, maintenance agreements etc.

5) Income assessment will take the following into account:

For all parents/guardians and their live-in partners, weekly income is assessed as the total of:

· Current gross earned income less an allowance of 12%

· All other current income including maintenance and benefits

· Any capital assets above £7,911 (lone parent) or £13,113 (couple) is assessed as providing a deemed income of one pound per week per £250

7) Allowances for rent and living expenses are assessed as the total of:

Rent - The actual rent charged less any service charge up to a maximum of

	Weekly	Monthly
One child	£187.11	810.81
Two children	£212.59	921.22

Living expenses:

	Weekly	Monthly
Lone parent	£174.65	£756.82
Couple	£224.35	£972.18
Per child	£60.27	£261.17

Net Income is calculated as follows:

Assessed income LESS allowances for rent and living expenses

8) the maximum benefit available for childcare depends on the age of the child

	Maximum hourly rate
Child under the age of 3	£5.58
Child aged 3 to 4	£4.37
Child aged 5 or above	£3.14

The childcare must be needed to provide care for the child while the parent(s) are working. For children attending after-school clubs, an average cost is calculated for term time and holiday care.

The maximum benefit is calculated by multiplying the actual hourly rate (up to the maximum) by the number of hours per week that childcare is provided.

9) The actual benefit payable is

Maximum benefit LESS net income.

10) Parents will be expected to pay for the balance of the cost of the child’s place by standing order monthly in advance.