New Benefit Rates from October 2007.

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A decision made (18/09/2007) regarding: New Benefit Rates from October 2007.

Subject:	New Benefit Rates from October 2007
Decision Reference:	MD-S-2007-0063		Exempt clause(s):
Type of Report: (oral or written)	Written		Person Giving Report (if oral):
Telephone or e-mail Meeting?			Report File ref:	5/5 10/4/2
Written report – Title	New Benefit Rates, Income Bars and Disregards Effective From 1st October 2007
Written report – Author (name and job title)	David Rose Customer Services Director
Decision(s): The Minister agreed as follows - To increase the Earnings Limit by 4.7% to £3394 a month with effect from 1 January 2008. To increase the child rates for Family Allowance by 4.3% To maintain the value of Disability Transport. To increase fee rates to designated medical practitioners and board personnel by 4.5% To increase Parish welfare rates.
Reason(s) for decision: Every October most benefit rates are increased automatically by the increase in retail price index, the earnings index or an average of both these figures. However a number of benefits and parameters need sub-ordinate legislation to be prepared to effect similar increases.
Action required: To note the new rates and instruct that the computer parameters be amended and Order Books prepared. To ask the Law Draftsman to prepare the necessary legislation.
Signature: Senator Paul Routier Minister		Date of Decision:

New Benefit Rates from October 2007.

New Benefit Rates, Income Bars and Disregards

effective from 1 October 2007.

Introduction

After the publication of the Average Earnings Index the annual uprating of benefit, income bars, disregards and other assessments can begin. The effective date is

1 October but to manage administration and to advise customers of the increases in their benefit entitlement, work must commence now on the uprating process. The Jersey Average Earnings Index was 4.7% as at June 2007 and the Jersey Retail Price Index for the same period was 4.3%.

Benefits, income bars and disregards in the Social Security and Health Schemes systems are generally automatically uprated under statutory provision each year on

1 October. Social Security benefits are increased by the Earnings Index and non contributory benefits are increased by a figure half way between the Cost of Living and the Earnings Index. The rates of welfare are increased by the Cost of Living Index as are the living allowances in the assessment of HIE entitlement. The effect of all these increases on individual benefits is displayed at Appendix A. Below are details of the statutory rules regarding the uprating of each benefit and increases in Income bars.

Social Security Contributory Benefits

Statutory provision to uprate the standard rate of benefit is provided at Article 13(2) of the Social Security (Jersey) Law 1974. This article directs that the rate of benefit shall be increased on the first day of October in every year by the percentage figure equal to the percentage rise in the Earnings Index during the 12 months commencing July of the proceeding year. In addition, Article 4(1) of the Social Security (General Benefits) (Jersey) Order 1975 requires that the weekly rate be increased to an amount which is divisible by 7 during the uprating process. This provision enables the Department to pay a daily rate of benefit. A copy of Article 13 of the Law and 4 of the Social Security (General Benefits) (Jersey) Order 1975 is attached at Appendix B. Applying the Earnings Index figure of 4.7% results in the standard rate of benefit rising from £158.27 to £165.76 and the dependency increase from £104.51 to £109.41. Grants payable from the Social Security fund are also increased as a result of this uprating exercise, namely:

2006/2007 2007/2008

Maternity Grant £474.78 £497.10

Adoptive Parents £474.78 £497.10

Death Grant £633.04 £662.80

Attendance Allowance

Attendance Allowance is another benefit which is automatically uprated under statutory provision. Article 3(2) of the Attendance Allowances (Jersey) Law 1973 requires that from 1 October the allowance be increased by the percentage figure half way between the percentage in the Cost of Living Index and the percentage rise in the Earnings Index during the 12 months commencing July of the preceding year. This results in the monthly rate of Attendance Allowance rising from £425.60 per month to £444.75, an increase of 4.5%.

Attendance Allowance legislation also requires that the income bar be increased from 1 October. This statutory requirement is set out at Article 4 of the Attendance Allowance (Jersey) Law 1973 and again uses the percentage figure half way between the percentage rise and the Jersey Cost of Living Index and the percentage rise in the Earnings Index. This results in the income bar increasing from £53108 to £55498.

Articles 3 and 4 of the Attendance Allowances (Jersey) Law 1973 are attached for your reference.

Adult Disablement Allowance, Invalid Care Allowance and Child Disablement Allowance.

Adult Disablement Allowance, Invalid Care Allowance and Child Disablement Allowance are administered under the provisions of the Invalid Care and Disability Allowances (Jersey) Law 1978. Under this legislation the three benefit types are automatically uprated under statutory provision from 1 October each year. Again it is the percentage figure halfway between the percentage rise in the Cost of Living Index and the percentage rise in the Earnings Index during the 12 months commencing July of the preceding year. The new rates are increased as per the table below.

	2006/2007	2007/2008
Disabled Adults Allowance	£349.67	£365.41
Disabled Child’s Allowance	£233.03	£243.52
Invalid Care Allowance	£685.27	£717.48

There is also a requirement under this Law to increase the income bar at the same time resulting in an increase from £53108 to £55498.

Articles 5 and 6 of the Invalid Care and Disability Allowances (Jersey) Law 1978 provide for this statutory uprating and are attached for your reference.

Disability Transport Allowance

Disability Transport Allowance, which is administered under the Disability Transport Allowance (Jersey) Law 1997 is not automatically increased each year but is subject to an increase by enacting Regulations. The ability to increase the rate of the allowance by Regulation is set out at Article 3 of the Law which is attached. However, during 2005 the then Employment and Social Security Committee discussed Disability Transport Allowance as part of the budgetary process and agreed not to increase this allowance further. This decision has continued in recent years and as a mobility component will shortly be present in the Income Support System , it is proposed that no uprating of Disability Transport Allowance should take place. However, under Article 5(2) of the Disability Transport Allowance (Jersey) Law 1997, (attached) it is a requirement that the income bar be increased by the percentage figure halfway between the percentage rise in the Cost of Living Index and the percentage rise in the Average Earnings Index. Applying this provision results in the income bar increasing from £53108 to £55498.

Christmas Bonus

Christmas Bonus is administered under the Christmas Bonus (Jersey) Law 1991. Article 3 (2) of this Law requires that the Christmas Bonus shall be increased by the percentage figure half way between the percentage rise in the Jersey Cost of Living Index and the percentage rise in the Earnings Index during the 12 months commencing in July the preceding year and rounded up to the next highest 50 pence. This results in the Bonus rising from £85 to £89.

Parish Welfare

The responsibility for determining the increase in Parish Welfare rates was transferred to the Social Security Minister when the benefits and Welfare Working party was disbanded. The rates of Welfare have nearly always been increased by the Cost of Living Index. The effect of this on individual Welfare benefits is shown in the table below.

Parish Welfare Rates		2007

Single Householder		126.45
(excluding rent allowance)

Married couple/genuine lone		209.75
(excluding rent allowance)

Dependent relative in another
person's household		103.45

Dependent Relative
	18-20 years	74.25
	16-17 years	58.10
	up to 15 years	48.25
	(increases in Jan)

17-20 year old independent		90.95

Single person capital		7612
Married couple capital		12635

Personal Allowance		28.00
(to nearest £1)
Residential home fee		435.89
(divisible by 7)

Heath Insurance Exception (HIE)

The living allowances in the means assessment of eligibility are also generally increased by the cost of living. Article 9 (2) of the Health Insurance (Jersey) Law 1967 allows provision that different classes of people may receive different rates of medical benefit through Regulations. Schedule 1 of the Health Insurance (Medical Benefit) (Jersey) Regulations describes the assessment criteria to determine people entitled to a different rate of medical benefit. The living allowances described in the assessment were set at 20% above the Parish Welfare rates in the early 1980s. The other allowances and the capital disregards are the same as the Welfare rates. However, a disregard for pensioners is included as 15% of the value of the Jersey Old Age pension. However, in considering the annual uprating for this year, thought needs to be given to the impending Income Support system and administrative arrangements currently being employed to manage the transition to the new benefit. In relation to H.I.E. regular reviews of existing claims are not routinely being carried out as resource has been transferred to other duties in preparation for the Income Support Scheme. As such, even if new Regulations were passed there would be little opportunity to administer reviews of all current claimants without there being a detrimental effect to the planned implementation program for Income support. It is therefore suggested that the Regulations currently in place remain in force until legal go-live of Income Support.

Family Allowances

Family Allowances are increased in January each year with new means tests taking place in May each year. However, this benefit is to be subsumed into the Income Support system and over the past few years the parameters for the system have not been altered but benefit rates have been increased by the Cost of Living Index. It is proposed that this method of uprating Family Allowances continue until the Income Support Scheme comes into force.

Income Limit for Dental and Milk Scheme

Entitlement to the benefits of the Dental and Milk at reduced rate schemes is governed amongst other criteria, by having income below the income bar. Annually this income bar is increased by the percentage figure halfway between the percentage in the Cost of Living Index and the percentage rise in the Earnings Index. Applying this to the current income bar, the figure will rise from £38833 to £40580.

Social Security Contribution ceiling

The contribution ceiling and thresholds are also increased each year with the Earnings Limit being amended by Order. It is requirement in Article 5 of the Social Security (Jersey) Law 1974 that the Minister review annually the Earnings Limit having regard to the general level of earnings. A copy of this Article is attached.

The Earnings Limit for 2006/2007 is £3242. Applying this figure to the Earnings Index of 4.7% we arrive at £3394.37. Rounded to the nearest whole pound equally divisible by 2 equals £3394.

Designated Medical Practitioners

The Minister is also asked to approve fee rates for Designated Medical Practitioners and Members of the Medical Boards which are also reviewed for October each year. In the past the practice has been to increase these fees by the halfway Index (4.5%) with Doctors being paid £50.40 per hour (previously £48.20) and lay persons £25.20 (previously £24.10)

Recommendation

The Minister is asked

to note the new benefit rates, income bars and disregards from 1 October 2007 where statutory provision is present to automatically uprate

to ask the Law Draftsman to prepare an order for the Earnings Limit for

January 2007.

to agree the Cost of Living increases for Welfare Rates.

to note the new limits in the HIE assessment, and

to approve increases in fee rates for Boarding personnel.

David Rose

September 2007