A. Cuts to backdating of HB/CTB and PC
We have corresponded with Ministers on this issue and have met with officials. However this has not allayed our concerns which include the following:
- From a claimant’s perspective, we do not believe it can be argued that aligning the backdating rules will deliver any benefit in terms of greater simplicity. We very much doubt that many claimants are aware of the current lack of alignment across different benefits and in any event we suspect that most successful backdating claims are made with the support of a welfare rights adviser.
- We are concerned that the proposed timetable for implementation in October 2008 will not allow a proper consideration of the recommendations from any SSAC report which follows from their consultation with stakeholders.
- In relation to Pension Credit, the CAB service has been working closely with DWP to tackle pensioner poverty. Undoubtedly pension credit has played an important role in this work, and the access to 12 months backdating without the need for good cause has been a very welcome feature. We can therefore see no justification for the proposed change and, moreover, it does not seem to fit with the Government’s wider and overarching policy to tackle pensioner poverty and promote the wellbeing of older people (PSA 17).
- While we welcome the package of measures introduced to simplify the claims process for Pension Credit, Housing Benefit and Council Tax benefit for older people, we are concerned that the proposal to reduce backdating for pension credit will have the opposite effect, making it less likely that the most vulnerable older people will claim their full entitlement.
- In relation to HB/CTB, we understand that there are no figures available on the number of HB/CTB claimants whose benefit is currently backdated by between three and twelve months. Without these figures and more information about who is currently benefiting, it is difficult to understand how a full impact assessment of the proposed change can be made.
- We understand that the backdating proposals are part of a package of measures, some of which are intended to make it easier to claim benefits. However we are concerned that the HB/CTB claimants who will lose out from the backdating rule change will not be the ones who may gain from a simpler claiming process. CAB evidence suggests that those who currently benefit from longer backdating entitlement are often particularly vulnerable and living chaotic lives, which is the reason why their HB claim may have been stopped at some point in the past or they have been unable to meet the requirements for making a successful claim on their own. For example CAB advisers report that longer backdating is often vital for clients with mental health problems, where the nature of their illness means they struggle to provide the necessary documentary information within strict timescales. Advisers working with prisoners also report that prisoners can easily build up more than three months arrears before they seek advice, because they have been preoccupied by coping with the process of being arrested, imprisoned, tackling addiction problems and adjusting to prison life. Yet the importance of having a home at the point of discharge is well recognised as being key to successful rehabilitation.
- Although landlords may serve notice when arrears reach eight weeks, it does not follow that a three months backdating limit will be sufficient to avoid possession being granted. Advisers report that it is not unusual for claimants to receive no advice on making a backdating claim until their court appearance, by which point the period of arrears may be well beyond the three months deadline. In addition it is not unusual for part of the arrears to relate to a break in claim which took place some months before the immediate problem which led to notice being served.
- We understand that the Department hopes to mitigate some of the impact of the change through publicity to claimants. However the group who will be most seriously affected – vulnerable people living chaotic lives – are likely to be particularly difficult to reach effectively through publicity.
- We believe that, in relation to HB/CTB, the requirement to prove “good cause” already means that this important safeguard is tightly targeted on those who need it most, and that it is an essential component of DWP’s efforts to respond to claimants with chaotic lives. Because it is often the most vulnerable claimants whose HB is backdated by more than three months, they are therefore likely to be deemed to be in priority need under homelessness legislation if they lose their home. There is therefore a real risk that this change may result in increased public expenditure on homelessness which would more than offset any savings from restricting the backdating period.
B. ESA and passported benefits
Citizens Advice is particularly concerned about access to passported benefits for people whose only income will be contribution-based ESA (ESA(C)). The Government has said that both ESA(C) and ESA(I) will be paid at the same rate. Passported benefits – including prescription charges, access to the social fund, legal aid, entitlement to travel and leisure passes, free school meals etc. – are a crucial tool in keeping people out of poverty and engaged in their local communities.
Under the new arrangements, people who are in receipt of income-related ESA (ESA(I)) will be automatically passported to these benefits; people whose only income is ESA(C) will have to apply separately for each one. This will entail a separate means-test for each ‘benefit’, making the claiming process for this group of low-income disabled people much more difficult than necessary.
We are concerned that, for the first time, a system is being proposed where, as a result of having worked and paid contributions, or having a sickness/disability benefit as of right (because they have had no opportunity to build a contributions record), ESA(C) claimants could be very considerably worse off than those who have not paid contributions. We believe that it is an absolute requirement of any legislation that it should be demonstrably fair and we are concerned that ESA does not meet this criteria.
We have corresponded with Leigh Lewis on this issue, and met several times with his officials in the DWP. However, this has not allayed our concerns which include:
- Those claimants who have worked and paid National Insurance contributions (and so will be entitled to ESA(C)), but have no partner and no other income or savings will be worse-off than those people who have paid no contributions and so will be entitled to ESA(I).
- If they do permitted work, the financial difference will be considerable. People on ESA(I) could be almost £60 per week better off, more if the lack of access to other passported benefits is taken into account).
- At present, people who are unfit for work and on IB can keep their earnings from permitted work, but those who are on Income Support keep only the first £20 (disregarded income) and then lose it pound for pound. The proposal to align the existing permitted work higher earnings limit between the contributory and income-related elements of the benefit is a well-intentioned attempt to address this and allow those who do not have a contributions record to gain.
- However, the result is that people who receive ESA(C), who have some earnings from permitted work, will continue to have 85% of their earnings above £20 clawed back from their HB/CTB, whilst those on ESA(I) will be passported through to full HB/CTB.
- There is no plan, as we understand at present, to change the HB/CTB regulations to disregard permitted work. As ESA(C) is not a means-tested benefit, people on ESA(C) will not be passported full HB/CTB.
We believe that there are a number of ways in which this problem could be solved:
- People who apply for ESA, and have sufficient contributions, could still be offered a means-test and, if they fulfil the requirements, would have a marker on their benefit showing that they were entitled to ESA(C) with passporting.
- People who apply for ESA and have sufficient contributions could still be offered a means-test and, if they fulfil the requirements, could elect to be awarded ESA(I), with the option of switching to ESA(C) should their circumstances change and they are no longer eligible for ESA(I).
- ESA(C) could be paid at a rate of £1 less than ESA(I) so that those on ESA(C) with no other income would be eligible to a top-up of the income based benefit which would automatically ‘passport’ them to the other entitlements.
- Regardless of these options, the Housing and Council Tax Benefit regulations should be changed to disregard earnings from permitted work.
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