Social Security (Amendment of Law No. 4) (Jersey) Regulations 201-

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A decision made 9 October 2012:

Decision Reference: MD-S-2012-0083
Decision Summary Title :	DS – Draft Social Security (Amendment of Law No.4) (Jersey) Regulations 201-		Date of Decision Summary:	9 October 2012
Decision Summary Author:	Policy and Strategy Director		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	WR – Draft Social Security (Amendment of Law No.4) (Jersey) Regulations 201-		Date of Written Report:	9 October 2012
Written Report Author:	Policy and Strategy Director		Written Report : Public or Exempt?	Public
Subject: Draft Social Security (Amendment of Law No.4) (Jersey) Regulations 201-
Decision(s): The Minister decided to lodge ‘au Greffe’ the Draft Social Security (Amendment of Law No.4) (Jersey) Regulations 201-
Reason(s) for Decision: The amendment introduces a new benefit, home carer’s allowance, which replaces invalid care allowance and it creates a further condition for eligibility for survivor’s pension. These two changes are required in order to achieve the departmental cash limits set out in the Medium Term Financial Plan to be debated by the States Assembly on 6 November. The amendment also makes minor adjustments to insolvency benefit and the conditions for eligibility for the adoptive parent grant.
Resource Implications: Home carer’s allowance and survivor’s pension There are no significant manpower considerations. The cost of the existing ICA benefit will be removed from the tax funded budget of the Department, in line with the proposals published in the MTFP. This cost will be borne in future by the Social Security Fund. There will be an increase in the cost of benefits paid out of the Social Security Fund and a reduction in the income received to the Social Security Fund. The cash limit within the Medium-Term Financial Plan is based upon savings equivalent to the current budget of ICA of £2.2 million. Without the proposed transfer of ICA, the Department would also require a growth bid of £480,000 in 2013 to meet the current level of ICA claims. If the proposal to transfer ICA funding to the new HCA benefit is not agreed by the States then, without an amendment to the Medium-Term Financial Plan, savings of £2.68 million from either income support or employment services will need to be made in 2013, on top of the £600,000 income support savings already identified for 2013 and the additional £3 million savings included within the 2014 cash limit. The impact on each area of Social Security expenditure is set out below: 1. Tax funded budget - In 2013, the cost of ICA will be removed from the tax funded budget. The estimate of the 2013 cost is £2.68 million. This is made up of £1.82 million in benefit payments and £860,000 in contribution payments. From 2014 onwards, there will be a gradual increase in income support costs as a small proportion of new survivors will require additional income support payments at the end of their entitlement to survivor’s allowance. The bulk of these costs will build up over the next 10 -15 years. The eventual cost is estimated at approximately £320,000 per annum (2012 prices) 2. Social Security Fund - The changes will have an impact both on the income received by the Social Security Fund and the benefits paid out by the Fund. At present, contributions are paid on behalf of the majority of ICA claimants into the Fund to maintain their contribution record. These contributions will not be paid in 2013, and the contribution income of the Fund will reduce by approximately £860,000. Note that there are no consequences for supplementation. At the same time, the cost of the proposed HCA benefit will be paid out of the Fund. The estimate of this cost in 2013 is £1.8 million. From 2014 onwards there will be a reduction in the cost of survivor’s pension payments, as these will be restricted to survivors with dependent children in respect of new claimants. As existing claimants will be fully protected from these changes, it will take time for the full impact of the savings to be felt. The long term impact of these changes is an overall reduction of net costs of £3.6 million per annum. These estimates are based on an analysis of a “snapshot” of survivor’s pension claims in April 2012. Actual expenditure will depend on a wide variety of factors. One off development costs, mainly in respect of changes to software, are estimated to cost approximately £150,000 and these costs will be met from existing departmental allocations. Insolvency Benefit and Adoptive Parent Grant There are no significant resource implications in respect of these proposals. There will be a small saving in the costs of the adoptive parent grant as some future applications will not satisfy the proposed requirements.
Action required: Policy and Strategy Director to request the Greffier of the States to lodge ‘au Greffe’ the draft legislation and to request a States debate at the earliest possible opportunity.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):