Income support: mileage allowance.

STATES OF JERSEY

INCOME SUPPORT: MILEAGE ALLOWANCE

Lodged au Greffe on 14th June 2012 by Deputy G.P. Southern of St. Helier

STATES GREFFE

2012   Price code: B  P.62

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to request the Minister for Social Security to take the necessary steps to disregard any mileage allowances received when assessing household income for the purpose of income support awards.

DEPUTY G.P. SOUTHERN OF ST. HELIER

REPORT

It is widely accepted today that if Jersey is to deliver high standards of care it must make better and wider use of its major resource, its people. For example, the Health and Social Services White Paper, "Caring for each other, Caring for ourselves", has the following –

Efficiency:

"Many people felt that there are opportunities to improve the current system. Suggested ways to improve efficiency included reducing bureaucracy in health and  social  services,  improving  communication  between  organisations  and bringing  in  more  third  party  and  private  sector  organisations  to  provide care."

Services for older adults:

"A  wide  range  of  care  and  support  will  be  available,  provided  in  a coordinated  way  by  an  integrated  multidisciplinary  community  team. Individuals can expect their . community based health provision and social care .. to be coordinated. The Third Sector is essential, as Islanders will continue  to  receive  support  from  Parishes  and  other  community  based voluntary  organisations,  enabling  them  to  remain  independent  for  longer through a range of activities such as luncheon clubs and voluntary visitors."

Volunteers will be at the heart of Health and Social Services reforms it seems. One such vital service which we are being encouraged to encourage and support is the voluntary hospital car-drivers.

Under this scheme, volunteers use their own cars to transport patients, elderly persons, those with special needs, to and from appointments for treatment and activities. This forms one element of assisting people to remain living relatively independently in their own homes. As such, this clearly contributes to the community-based approach advocated in the Strategic Plan and to the direction of much of our health and social services.

These volunteers receive a mileage allowance for using their own car. This is currently 62.7 pence per mile.

In the words of one person whose mother is such a volunteer –

"As it is voluntary she gets nothing but likes doing the service for meeting people and helping those less fortunate. And this is also saving the States of Jersey a lot of money as it doesn't have to pay someone to do this job."

As the allowance is not regarded as income for social security contributions or for income tax purposes, it is therefore open to all those who have a car, and who wish to do  so, to  volunteer.  (See  Appendices 1  and  2 –  letters  from  the  Chief  Minister's Department and Health and Social Services Department.)

Except that, under the Income Support system, all money coming into a household, from whatever source, is regarded as income for assessment purposes. For those on income support, these mileage payments are regarded as income and will mean that their income support award will be reduced.

When asked to address this issue, departmental officers had the following to say –

"Income support is clearly based on the principle of individuals contributing to  supporting  themselves  through  paid  work  whenever  this  is  possible. Voluntary activities are a vital part of community life, but an income support claimant cannot choose to substitute voluntary work for paid work, if paid work is available.

I  can  confirm  that  where  a  similar  situation  has  arisen  in  the  past,  an allowance of 25% has been allowed in respect of the mileage allowance, with the remainder of the income treated as self-employed earned income."

There are several problems with this approach –

1. Are mileage payments set at the right level to compensate motoring costs?
2. Can mileage payments be regarded as a "substitute" for earnings?
3. Does a 25% allowance deter volunteering?

1. The AA analysis of the cost of motoring 2011 for petrol-driven cars is given in Appendix 3. Without attempting to adjust these figures for inflation  or  for  Jersey  costs,  this  shows  that  the  average  cost  of keeping and using a car in the 2 lowest-value groups, at 5,000 and 10,000 miles annually, is 63.5 pence per mile, almost exactly equal to the mileage allowance.
2. There are several groups of people in receipt of Income Support who do not have to seek work and for whom voluntary work, such as driving, is an appropriate activity. This includes pensioners, parents with  children  under  5,  and  those  with  a  disability  that  does  not preclude driving. Given today's level of unemployment, this activity might be useful for many.
3. Let us suppose a single pensioner with only a Jersey pension decides to become a volunteer driver. His or her weekly income support award would be as follows –

£ Accommodation (one-bedroom flat)  156.31 Adult  92.12 Household  49.56

Total  297.99 Less pension (£184.45 disregard £42.28)  -142.17 Income Support  155.82

As a volunteer driving, say, 100 miles per week, Income Support is reduced as follows –

Mileage (100 x 62.7p) less 25% disregard  -£47.02 New Income Support  £108.80

It seems clear from the above that the mileage allowance accurately compensates for the real costs for an individual providing transport on a voluntary basis.

This is clearly recognised by the Income Tax Department, and indeed, by the Social Security Department, in terms of whether this payment is regarded as income on which contributions have to be paid.

Equally, it seems to me that, even with a 25% disregard, those on Income Support who wish to do such voluntary work will see their award reduced. This will mean that those who are less well-off and dependent on income support, and who wish to volunteer in this way, will be put off such activity.

If we are to genuinely encourage activities such as the voluntary hospital drivers scheme, then we must have a joined-up system. We cannot have disincentives built into the system, especially for those on low incomes. We need to encourage all sectors of the community if we are to effectively realise the "big society" in Jersey.

Financial and manpower implications

There are no manpower implications arising from this proposition. There will be a financial cost dependent on the number of those on income support who may choose to do voluntary work for which a mileage allowance is paid. In the example given, using 100 miles per week (at the high end of likely mileage) this amounts to additional IS payment of £2,350 in a year.

APPENDIX 2