http://www.thesun.co.uk/sol/homepage/features/3091717/The-Sun-declares-war-on-Britains-benefits-culture.html

The story featured a young couple with two children that believe their benefits would be ‘cut’ if they work. This is a common pre-conception about the benefits system along with the idea that people are always ’worse off’ when they start work and come off benefits such as Income Support or Job Seekers Allowance.

At IncomeMAX we believe that one possible solution to the problem with benefits and worklessness is to ensure that people can access expert advice and support, so that they can make the correct choices in relation to work, benefits and income. I appreciate this might not be the answer for people that really do not want to work! But many people do want to come off benefits and into work, so quite often its not knowing where you stand that is the issue.

To explain this in more detail, I have worked out a couple of scenarios for the young couple that were featured, to show that they could be better off working. In an interview with BBC Radio Kent, the couple said that when it comes to work, they do not have a choice, but I believe they do have a choice – its just that they don’t realise they do!

I have worked out two scenarios, based on a couple with two children, one of whom is aged under 1. Figures are approximate and for guidance only as I have included a full year of the Child Tax Credit baby edition, when there might only be a part year entitlement to that particular element. Also, I do not know if there are any disabilities in the family, so if either of the couple or any of the children receive Disability Living Allowance this would alter the calculation.

Scenario 1: Dad takes on a job for 16 hours per week, min wage £4.92 per hour

Current Income before working;

Jobseekers Allowance £102.75 per week

Child Benefit £33.70 per week

Child Tax Credit £109.42 per week

Total = £245.87 per week

Plus they receive Maximum Housing Benefit and Maximum Council Tax Benefit

New income once working 16 hours per week;

Wages £73.80 per week

Child Benefit £33.70

Working Tax Credit and Child Tax Credit £182.69

Total = £290.19

Plus they will still receive Maximum Housing Benefit and Maximum Council Tax Benefit

BETTER OFF BY £44.32 per week

Scenario 2: Dad takes on a job for 35 hours hours per week, min wage £4.92 per hour 

Current income before working;

Jobseekers Allowance £102.75 per week

Child Benefit £33.70 per week

Child Tax Credit £109.42 per week

Total = £245.87 per week

Plus they receive Maximum Housing Benefit and Maximum Council Tax Benefit

New income once working 35 hours per week;

Wages £155.82 after tax and NI per week

Child Benefit £33.70

Working Tax Credit and Child Tax Credit £197.88 (they will get full WTC and CTC for the first year as previous years taxable income is £0 – this will change in year 2 though and they should seek advice at that point)

Total = £387.40

They will still receive some housing Housing Benefit and Council Tax Benefit but they will need to pay £52.52 per week towards their rent and £16.16 per week towards their Council Tax

BETTER OFF BY £73.17 per week after rent and council tax is paid

Summary

The difficulty is that ‘better off’ is a subjective term. Feeling ‘better off’ is clearly not just about having additional income, especially if this extra income has to go towards fares, lunches, uniform etc. This is also the conclusion that the Centre for Social Justice came to in their recent report ‘Dynamic Benefits’.

The Government is going to reform the system to make the withdrawal rates of benefits less harsh which is a step in the right direction. This will try to ensure that people see more money through the work that they do.

BUT you can see already that for many, it simply isn’t the case that you will be ‘worse off’ financially. Instead, in many cases you will be slightly better off, or about the same if you come off benefits such as JSA and IS and into full time work (which meets the conditions for Tax Credits). 

So the question might soon become… how do you change the culture? How do you incentivise people to want to work, to want to contribute to society by working? It is clearly not just about being better off financially as you can see from my examples above.

The Government must therefore find a way of instilling work, or the preparation for work as a cornerstone of our culture and the expected ‘norm’ for people of a working age. This must then be reflected in the welfare system rules.

The use of credit check records in benefit fraud cases is already common practice and can be useful from the point of seeing if someone has applied for loans, credit cards and mortgages, either individually or with a partner. 

The information available from companies such as Experian would, as you can imagine, be of much value to Government agencies such as the DWP or HMRC in ascertaining whether a claim was genuine or not, so I’m not altogether surprised that the Government are considering using private firms to combat benefit fraud. 

The trouble is that it isn’t just fraud that is the problem, its error as well. This is also unsurprising given the complexity of the system. Claimants, a lot of the time, have no idea why they get the benefits and tax credits they get, and I’m sure lots of people get caught up in ‘fraud’ accusations when actually it’s just not knowing why they get what they get and a general lack of awareness of what the actual benefits rules are.

There is also the other side of the coin – DWP and HMRC decision makers (and their computer systems!) make regular mistakes when calculating benefits and tax credit entitlement. Experian say that they expect to receive a bounty payment if they uncover a fraud case. Wouldn’t it be great if the advice sector could claim a ‘bounty payment’ from the Government when we uncover errors that the DWP and HMRC have made!?

I would like the Government to consider a ‘benefits amnesty’ to help those unsure if their current benefit and tax credit entitlement is correct. Claimants that are worried about their current claims could have their benefits payments and relevant circumstances checked by independent advice services such as IncomeMAX, CAB, Advice UK Member Centres and Law Centres etc. If the amnesty check highlighted that benefit payments were incorrect, the advice service could take steps to ensure that benefit claims were stopped and that no fraud action was taken.

I think a ‘Benefits Amnesty’ would be particularly useful for lone parents that now lived with a partner, disability cases where health had improved and also those that are not currently declaring work earnings. 

I think fear is such a massive part of the problem, so while the Government are at this point, i.e. re-affirming what the system is there for and who it is designed to help, and also before we get too far down the line of welfare reform, why not give people a fair chance to check if their benefits are correct and the chance to give them back without fear of prosecution?

That way we can start with a clean slate, the welfare benefits system can be reformed, the people that are genuinely claiming benefits can relax and the Government can crack down on those knowingly committing fraud.

Here is the BBC story on the topic. Let me know what you think.

http://www.bbc.co.uk/news/uk-10922261

Lee Healey

IncomeMAX Managing Director

iBenefits is here!IncomeMAX are proud to announce the launch of iBenefits, the UK’s first ever benefits and tax credits iPhone app.

iBenefits is an easy to use information hub, bringing the benefits and tax credits system to your fingertips in an instant.

Features:

- Comprehensive list of benefits and tax credits available to people in Great Britain 

- Key entitlement information for each benefit and tax credit 

- Essential claiming contact details and websites 

- 2010/2011 benefits and tax credits rates 

iBenefits is available in the iTunes store for just 59p 

To purchase iBenefits visit the iTunes store

http://itunes.apple.com/gb/app/ibenefits/id379865887?mt=8

iBenefits was designed by the award winning Attitude Design

So, what exactly are the plans? And what will this mean for the great British public?

Families with children are the hardest hit in the proposed reforms. Child Tax Credit and Working Tax Credits are to be completely reformed, with a number of changes made. But there are lots of other changes affecting disabled people, lone parents, pensioners, jobseekers and those requiring support for rent/housing costs.

Here are the main changes:

People claiming Tax Credits

• The second income threshold currently used to calculate and award the family element of Child Tax Credit (presently £545 per year) for higher earners will reduce from £50,000 per year to £40,000 from April 2011. Then in April 2012, the family element of Child Tax Credit will be withdrawn immediately after the child element(s) when calculating tax credit entitlement (so the £40,000 limit should in effect only last for one year basically – after that the family element will be subject to the same tapering rules as all the other Child and Working Tax Credit elements).
• The family element will also now taper away using the new universal Tax Credit withdrawal rate of 41% (increased from 39% currently) from April 2011.  
• The Child Tax Credit baby element (currently £545 per year) which is paid when children are under one will no longer exist from April 2011. 
• Within Working Tax Credit, the 50 plus element will be removed from April 2012. 
• At present, HMRC use an income disregard of £25,000 when calculating entitlement to tax credits (meaning they can ignore income increases of up to £25,000 from the current tax years’ income when calculating your entitlement). This disregard will be lowered to £10,000 for two years from April 2011 and then to £5,000 from April 2013. This could mean a return to the bad old days of Tax Credits overpayments (which the £25,000 disregard was designed to eradicate).  
• The government also plan to introduce an income disregard of £2,500 for falls in income from April 2012. I must be honest and say I’m not 100% on what this actually means. My worry is that it could mean that if your income falls by up to £2,500 HMRC will not adjust your Tax Credits payments. This is something of a concern but we’ll need to see more detail on this before we can comment further.
• The backdating of Tax Credits will be reduced from 3 months to 1 month from April 2012.  
• Some good news for low income families with children – Child Tax Credit will see an increase of the child element (currently £2300 per child) by £150 in April 2011 and £60 in April 2012 above CPI indexation.

 Child Benefit

• Child Benefit, which is universal and NOT MEANS-TESTED will be frozen for three years from April 2011. So you can expect to receive £20.30 for your first or only child and £13.40 for each other child for a while!

Pensioners

• The Basic State Pension will be uprated by a triple guarantee of earnings, prices or 2.5 per cent, whichever is highest, from April 2011.
• Pension Credit guarantee credit will match the basic State Pension cash increase in April 2011. 
• From April 2011 people aged over 60 will qualify for Working Tax Credit if they work for at least 16 hours a week. 

Saving even more dosh on the benefits bill – using CPI not RPI

• For many years now the government has mainly used something called the Retail Price Index (RPI) to increase the levels of certain benefits. The government will now switch to using Consumer Price Index from April 2011.
• This SHOULD mean that many benefit payments will not rise as much each year, therefore saving the government even more money in the long-term.  
• Richard Exell, the TUC’s Senior Policy Officer has written a very interesting blog on the subject of using CPI to uprate benefits, and so has his colleague Nigel Stanley, the TUC’s Head of Campaigns and Communications.

 Disabled people

• Disability Living Allowance will be reformed to introduce the use of medical assessments for all DLA claimants from April 2013.

Lone Parents  

• Income Support for Lone parents will see an extension to the conditionality rules for those with children aged 5 and above from October 2011. This basically means that many lone parents will need to sign on as Jobseekers and look for full-time work once their youngest child is aged 5 and over.

 Expectant Mums

• The £190 Health in Pregnancy Grant is to be abolished
• The £500 Sure Start Maternity Grant will only be able to be claimed for your first child (or children where the first is a multiple birth) from April 2011.  

Housing 

• Support for Mortgage Interest within certain means-tested benefits will be set at a level equal to the Bank of England’s published monthly Average Mortgage Rate from October 2010. 
• From October 2011 the Local Housing Allowance will be set at the 30th percentile of local rents. 
• Local Housing Allowance rates will be uprated in line with the CPI from April  2013. 
• Deductions made on certain benefits for non-dependents living with you will be uprated in April 2011.  
• Housing Benefit will be reduced to 90 per cent of the initial award after 12 months for claimants receiving Jobseekers Allowance from April 2013. 
• From April 2011 Housing Benefit claimants with a disability and a non-resident carer will be entitled to funding for an extra bedroom. 
• From April 2011, Local Housing Allowance rates will be capped at: 

-          £250 per week for a one bedroom property

-          £290 per week for a two bedroom property

-          £340 per week for a three bedroom property

-          £400 per week for four bedrooms or more

• Funding for Discretionary Housing Payments, where Housing and Council Tax claimants can access additional help for rent and council tax not already covered by Housing & Council Tax Benefit will be increased by £10 million in April 2011 and then by £40 million in each year from 2012/2013.

 Saving Gateway

• The Saving Gateway, a scheme to help low income families save will no longer be introduced in July 2010.

 Family Financial Health Check 

• The Government has asked the Consumer Financial Education Body (CFEB) to develop a new annual family financial healthcheck. This will be introduced in spring 2011 as part of a national financial advice service.

IncomeMAX comment

It is certainly a bold budget and one that sets out a clear message on Tax Credits. The Government clearly wants the tax credits system to support only lower income families, rather than both lower and higher income families as has been the case.  

The Government clearly believe that Tax reform is the way forward, wanting to put money in peoples pockets before they start to pay tax, instead of paying tax and then claiming tax credits, which when you think about it does make more sense.   

Many of the usual client groups are targeted, and disabled people will rightly be worried that they could get caught up in the new medical assessments for DLA and, as previously announced, Incapacity Benefit and that they will lose benefits as a result.

Lone Parents have long been targeted and the change to Income Support rules for Lone Parents have been gradually coming in for a while now. In our experience the majority of Lone Parents have no real problems claiming Jobseekers Allowance and want to be in full-time work. But don’t forget the difficulties that lone parents often face in finding work that is flexible with hours and also finding (and funding) suitable childcare. 

This budget, in my opinion, is a definite move towards making the majority of the public fend for themselves. 

The Government clearly wants us to be more responsible for our own lives and our own finances, whilst still having a benefits and tax credits system that supports people less able to support themselves. 

Many will welcome the proposed changes but what is evident is that the system, for the next few years at least, will remain complex and difficult to navigate. That is why good benefits advice will be as important as ever for those needing to access and make sense of the benefits and tax credits system.

I was really pleased to be back on BBC Two’s Working Lunch Programme on Friday 18th June 2010, answering viewers benefits and tax credits questions during the regular ‘ask the expert’ section.

There was a range of really great questions and as always it was great to have the opportunity to provide help and advice to BBC viewers and also to highlight how important it is for people to get some good advice when it comes to benefits and tax credits entitlement.

The programme is available on BBC iPlayer for the next few days:

http://www.bbc.co.uk/iplayer/episode/b00sty55/b00sty51/Working_Lunch_18_06_2010/

I also feature on the BBC website:

http://news.bbc.co.uk/1/hi/programmes/working_lunch/8748198.stm

I was really pleased to be back on BBC Two’s Working Lunch on Thursday 27th May 2010, commenting on the coalition government’s proposals for welfare reform.

The Secretary of State, Iain Duncan Smith, has called for an end to the culture of welfare dependency, saying that,

‘A system that was originally designed to help support the poorest in society is now trapping them in the very condition it was supposed to alleviate. Instead of helping, a deeply unfair benefits system too often writes people off’

IncomeMAX are very much in favour of welfare reform and we hope that the government will consult with experts that already support people to understand their benefits and tax credits so that a sustainable, sensible, clearer and fairer system is established.

My interview with Naga and Declan on Working Lunch is available on BBC iPlayer for the next week:

http://www.bbc.co.uk/iplayer/episode/b00sm004/Working_Lunch_27_05_2010/

Having been involved in benefits and tax credits for the last 16 years, I can’t help having the feeling of deje vu, in that we’ve been here before, but the fact that there is a promise of a comprehensive review is a positive and welcome change from other reforms which quite frankly have done very little to change what is a creaking, fragmented and incredibly complex system.

My worry is that once again the reforms will not go far enough to make the system more accessible for people and that once again reform will only skirt round the edges of the problem.

So my message to the Government is to be bold, and here is how you can do that…

Re-communicate and reinforce to the public what the welfare system is there to do and the help it is supposed to provide  

This is so important, more so than fancy headline grabbing policies such as re-testing Incapacity Benefit recipients (wasn’t that the plan anyway when Employment & Support Allowance was introduced?).

In my opinion, one of the major problems of the welfare system is that everyone, and by everyone I mean the general public, the government and the media have largely lost sight of what the system is there to do and the support it is supposed to provide to people. I know this because I have spent much of the last 16 years up and down the country delivering benefits overview courses to thousands of people and believe me, when it comes to the welfare system, people are seriously confused and misinformed.

There are two main reasons for this. The first is obviously complexity. The system is so complex that it is impossible to get your head around it without studying it in real detail.

The second is the public perception of the welfare system, often reinforced through the media. Think about the last time you read a tabloid news story or watched a TV programme about benefits. I bet you £65.45 (the current single rate of Job Seekers Allowance for a person aged 25 or over) that it mentioned fraud, or possibly scrounging at some point.

Is it any wonder then that the message about the welfare system and the type of support it is supposed to be able to provide to people has been lost?

For the record, my understanding is that the welfare system is there to support people with genuine reasons for requiring financial and social assistance. Here are some of those reasons;

–        Jobseeking (working age, good health, looking for full-time work) 

–        Incapacity/Sick (working age, health problems or disabilities mean that you are limited in your ability to work full-time)

–        Disability (requiring help with mobility/care needs)

–        Caring for a disabled person

–        Pension age (this is currently a very complex area as some men can claim Pension Credit earlier than their state pension age)

–        Lone parent

–        Having dependent children

–        Working full-time and on a low income (inc help with childcare)

–        Maternity/Adopting a child/Paternity

–        Needing help to pay Rent/Council Tax/Mortgage 

–        Bereavement of a spouse/civil partner

–        Industrial injury or disease

Is your head spinning reading through that list? I expect it is as it is easy to forget how complex our lives are and the types of situations and circumstances we can find ourselves in as human beings, meaning that working or using pension provision as a way of surviving is not always an option for people.

So at the heart of the welfare system is something positive e.g. it is intended to support people for a range of genuine reasons and this is why I would like this message reinforced as part of any reforms. Re-branding and re-communicating what the system is there to do and the support it can provide would have many benefits (excuse the pun) including: 

• Supporting the public to know where they stand on the subject
• Enabling culture change and fostering the idea that people need to use the system responsibly
• Enabling people that do need to use the system to use it without fear or stigma

 Involve the experts – and I don’t just mean people in government or government departments!

My second key recommendation on being bold is to ensure that the government involve a range of experts in the consultation process. It is intended that there will be a cabinet committee set up to co-ordinate the strategy between government and government departments but it will also be important to involve experts outside of government, many of whom will have been supporting the general public with their benefits and tax credits problems for many years.

IncomeMAX for one would love to be consulted and I think it is fair to say that my colleagues from organisations such as Advice UK, Citizens Advice, Law Centres Federation, Age UK etc would also like to be involved.

And what about the general public? Why not consult with them? Let the general public feed into the debate so that we end up with a sustainable system that everyone has shaped and feels comfortable with.

Independent advice and personalised support is the solution you might be looking for…

My final point is one relating to advice. I am certain that there is a long-term sustainable solution to supporting people in relation to their welfare needs and that that solution is independent advice and personalised support for people.

There is without a doubt a need for a welfare system and we have already discussed that the complex nature of peoples’ lives contributes to having a complex system.

IncomeMAX would like the government to support the provision of quality, independent, personalised advice and support. For too long, it has just been accepted that “no-one tells you what you are entitled to” and that “the system is just too complex”.

This has to change but I can see that even after reform, the general public will still find it difficult to understand the system. It is, after all, a niche financial area, albeit an area where the Government spend over £100billion pound plus on benefits payments every year.

So, I would urge the Government to consider not just welfare reform, but to support charities and social enterprises to have the resources to provide good quality advice and personalised support to people. If this were a key element of the system, then quite often personalised advice and support would get to the heart of the problem as to why people need to access the welfare system in the first place.

Advice can help in so many ways; 

• It helps people use the system correctly and responsibly
• It uncovers other underlying issues that need to be dealt with e.g. debt problems, housing, employment, skills & training, financial capability etc
• It supports people to report changes of circumstances effectively
• It helps people in transition phases, e.g. retiring, moving from benefits and into work, splitting from a partner etc
• It helps people challenge incorrect decisions or injustices
• It helps ensure people maximise their income and that poverty is relieved

 A free training offer to the Government!

 Here is an offer to the new Government – I’d love to share with you my experiences of the benefits and tax credits system over the last 16 years and I’d actually think you would get a lot out of the IncomeMAX benefits overview course! So if you are reading this, I’d be more then happy to deliver it to you at No 10! You can find my email address at the contact us section of the website!

Lee Healey

IncomeMAX Managing Director

We are proud to announce that IncomeMAX, along with our partners Hillingdon Council, have achieved finalist status in the National Government Opportunities (GO) Excellence in Public Procurement Awards, in conjunction with National Public Procurement Practitioners Day.

Following intense consideration from the GO Awards judging panel, the finalists in each category have been decided and IncomeMAX and Hillingdon Council have achieved finalist status in the Best Service category.

The project that helped us achieve finalist status was a benefit check pilot that we delivered in partnership with Hillingdon council. It was an important project for us as it laid the foundation for IncomeMAX to be launched as a CIC and set a benchmark for how our projects could be successfully delivered in partnership with organisations that commission us.

The Hillingdon benefit check pilot was a great example of joined-up working. IncomeMAX provided its Entitlement Check service to 1000 referred residents. Hillingdon Housing Benefit Team, The Pension Service and the local Advice Sector then delivered the  face2face advice work that was required as a result of IncomeMAX identifying new benefits that were available to customers. Hillingdon’s Energy Efficiency Team then supported customers that then became eligible for help with thermal comfort measures as a result of successful benefit claims. IncomeMAX acted as a central contact, case-managing each customer and also referring them into additional services such as social services where appropriate. As a result of the project we raised over £250,000 of additional benefits for vulnerable residents in Hillingdon.

The 2010/11 GO Awards will be presented at a special ceremony on 15th June 2010 at Institution of Civil Engineers
One Great George Street, London.

GO Awards Best Service Finalists 2010/11

In the first of a series of articles, leading mental health and benefits experts Jenny Blackshaw and Judith Hodson outline the positive effects of ‘ Permitted Work’ for someone with a mental health problem…

People with mental health problems may find moving from Social Security benefits into full time work stressful and overwhelming. Worries about not being able to cope with the pressures of full time work and not being able to return to benefits if unwell again, may lead to people being wary of trying any work.

Permitted Work rules allow people on sickness related benefits – Employment and Support Allowance (ESA), Incapacity Benefit (IB), Severe Disablement Allowance (SDA) and Income Support on ill health grounds (IS) – to do a limited amount of work whilst remaining on these benefits. In addition linking rules allow people to return to the same level of benefits if they are unable to carry on working due to ill health within a set period. This encourages social inclusion and decreases isolation, increases confidence and self esteem, and provides meaningful activity during the day, particularly relevant for claimants with mental health problems.

Over the last couple of years these rules have been improved in order to encourage more people to try this route into full time work. Previously the rules and criteria for Permitted Work had varied between the different sickness benefits eg earnings from Permitted Work affected each individual benefit differently, with some people being better off than others. The rules have now changed so that most people can earn the same amount without their sickness benefits being affected. People receiving ESA can now earn up to £93 / week with no effect on these benefits, and no effect on their Housing and Council Tax Benefits (HB/CTB). Unfortunately this rule does not apply to people in receipt  of Income Support (on ill health grounds) where any earnings over £20 /week will still be deducted from their benefit, and may still affect their HB/CTB.

As training providers we have had success in this area by paying mental health service-users to be involved in our training within the Permitted Work criteria, including our training on ‘Mental Health Awareness and Accessing Benefits’ to groups of front line staff and mental health professionals (eg housing and information staff, DWP officers, social workers, nurses, support workers). This includes service-users with long term mental health problems using their IT skills to produce the power point presentation and handouts, and a personal account of how severe mental illness had resulted in the loss of benefits and accommodation due to difficulties dealing with forms, letters etc.  In addition, the training courses are, as a result, more individual and relevant for the course attendees due to service-users’ involvement. 

Also, service-users are able to raise awareness of issues relating to mental health with front line workers, develop new skills and increase self-confidence. The Permitted Work rules enable service-users to do this without having the extra worry and anxieties about losing benefit entitlement.  

Jenny Blackshaw & Judith Hodson are experienced welfare rights advisers with a specialism in mental health. In their work they have found that access to advice can help break the cycle of deprivation linked to mental ill health by increasing  income and reducing stress related symptoms, thereby enabling better engagement with services and improving social inclusion.