Friday 27 January 2012
A major overhaul of the supplementary benefit system will be debated by the States at the March meeting. The Social Security Department's proposals include higher rates of benefit, improved rent support for low income families and combining the rent rebate system with supplementary benefit. But the extra help will be within a 'work first, benefit second' approach. Supplementary benefit will also renamed "Income Support" under these changes.
The proposals, although detailed, are at the 'in principle' stage as Social Security have not included where the money will come from to fund the proposals. They have estimated extra costs of the modernised scheme to be in the range of £8m to nearly £20m per year, depending on how many low-income families, not currently claiming, take-up benefits in future. If the States agree, Social Security will consult with T&R and report back to the States by September 2013 with funding proposals and only then, if the States agree to the funding, will the proposals be actioned. 'The Department has done a massive amount of detailed work, with input from social policy academics, and before work is done on funding we believe the States need to debate this report' says Deputy Mark Dorey, Social Security Minister.
'This review has been Social Security's top priority over this term of government and I'm pleased that the States now have the opportunity to debate this fundamental area of social policy' says Deputy Dorey. 'Only three months ago, as part of the States Strategic Plan, the States set the specific social policy objective of providing adequate assistance to meet welfare needs, incentivise working and reduce duplication in administration.'
'Our proposals cover those objectives. They recommend higher benefit rates, as the Minimum Income Standards study showed that the current rates are inadequate. They integrate the Housing Department's rent rebate scheme within supplementary benefit, thereby removing duplication. And they put a much stronger emphasis on the need for work to come first and benefit second.'
People of working age who claim supplementary benefit will be expected to work or undertake training. The same requirement will apply to the spouse or partner of the person making the claim, which is a major change from the present system. Single parents will be expected to work when their youngest child reaches 7, compared with 12 at present.
Social Security are keen to stress that these new initiatives do not mean that the majority of benefit claimants deliberately avoid work. They say that the vast majority of benefit claimants would prefer not to rely on the States for financial support and are already doing their best to become financially self-sufficient.
The report also proposes to increase the age at which a person can claim supplementary benefit. If the States approve the recommendation, the minimum age will increase from 16 to 18. But there will be rules to allow benefit to still be paid to 16 and 17 year olds if the child is vulnerable according to criteria agreed with HSSD.
Since reporting to the States last July, Social Security and Housing have been working closely on plans to create one system of rent support. Both Departments currently operate different means-tested rent assistance schemes. This leads to people renting in the private sector being generally worse off when compared with people living in social housing.
Proposals mean that Housing's rent rebate scheme would be gradually merged with the supplementary benefit scheme and eventually replaced. That way, all people who need help to pay their rent would be treated the same. But this can only be done if the current, one-size-fits-all, benefit limitation is replaced.
The benefit limitation, currently £450 per week, means that some families are forced to live on less money than the States say they need. Benefit expenditure will instead be controlled by rent caps or maximum rent allowances. These maximum rent allowances would be based on different family sizes and linked to the maximum weekly rents for social housing. This means that families would get more benefit towards their rent than single people.
Replacing the benefit limitation is only one part of making sure people, with a low-income, get what they need. Social Security say that the current rates of benefit are too low and should be increased.
The proposed higher rates of benefit will still fall short of the Minimum Income Standards that were published for Guernsey last year.
'If our proposals are approved and, in time, implemented, we will be providing much needed financial assistance to several hundred low income households who are getting no help at present and improving the financial assistance for existing claimants and many social housing tenants', says Deputy Dorey.
The Department estimates that the total number likely to be helped by these proposals could total as many as 4,500 people comprising 2,300 existing claimants (including over 700 pensioners), 554 social housing tenants and an estimated 400 to 1,600 additional low income claimants. Ensuring that everybody is treated fairly does mean that some social housing tenants will in fact be worse off, as for some the new proposals are less generous than the current rent rebate system.
It is difficult to make accurate estimates on the numbers who may claim in the future. Even at the present time, in the course of the financial modelling for the new proposals, it has been estimated that there are between 200 and 650 individuals or families who may be entitled to benefit under current rules but who are not claiming.
Social Security say that the introduction of the changes will be phased over 3 or more years and a brake can be applied if the States subsequently decide that the implementation should be slowed or stopped.
'We realise how unwelcome this major additional expenditure will be in this period of fiscal constraint, and have been told as much by the Policy Council and Treasury and Resources.' says Deputy Dorey. 'But we think that islanders will suffer if fiscal policy always out-ranks social policy. Many Islanders, including pensioners, are finding it increasingly difficult to make ends meet. The changes we're proposing to the benefit rates and maximum rent allowances are very modest. The proposed maximum rent allowances only match the maximum rents for social housing.' Deputy Dorey added. 'Finding the solutions to the funding will be the next task if the States approve proposals in the report.' The Department is aware that the States Strategic Plan predicts future surpluses greater than the maximum cost of these proposals.
The additional costs include an estimated maximum of £800,000 (including pension costs and social insurance), for up to19 additional staff at Social Security to handle the expected extra numbers of claimants and to work one-to-one with people to get them back to work.
'The extra staffing will be essential' says Deputy Dorey. 'The supplementary benefit staff are already working at full capacity with the 2,300 current claims. With approximately 800 rent rebate claims coming across to supplementary benefit and between 400 and 1600 new claims from low-income families not currently on benefit, there will be a huge increase in this means-tested workload which will have to be properly resourced. The one-to-one working with claimants is also essential. It's well known that the longer someone is out of work the harder it is for them to return to the workplace. They need the right sort of support and it's labour intensive.'
Deputy Dave Jones, Housing Minister commented as follows.
'Housing has worked very closely with Social Security in drawing up the proposals that would see the discontinuation of the rent rebate scheme. It has also played a significant role in the Minimum Income Standard research which, for the first time, confirmed what we had always suspected - that there are very many Guernsey people, including many in work, that are finding it hard, if not impossible, to make ends meet on a regular basis. It should therefore come as no surprise that Housing fully supports the principles at the heart of SSD's report, as it is morally reprehensible that the States has allowed so many people in our Island to be left behind financially.
However, like Policy Council and T&R, we are concerned that by deferring to a later date how its proposals are to be funded, Social Security's report will be viewed as doing only half the job. If that is the case, it will be a pity, as the widening income disparities in the Island and the social problems that are already coming to light will inevitably get worse the longer that this equality between the 'haves' and 'have nots' is allowed to continue.'
27 January 2012
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