Proposed new income support system and funding mechanism for citizens fund

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WRITTEN QUESTION TO THE PRESIDENT OF THE EMPLOYMENT AND SOCIAL SECURITY COMMITTEE BY DEPUTY G.P. SOUTHERN OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY 23rd NOVEMBER 2004

Question

With regard to R.C. 48/2004, entitled Income Support System', would the President –

( a ) give details of the calculation which results in a rise of 2.4 per cent in the single adult's budget standard,

from table 2 (summary consensual budget standards 2001) of page 5 of the Centre for Research in Social Policy (CRSP) report 2001 of £125.05 to the figure of basic adult budget for 2002 of £128.03, given on page 7 of the report?

( b ) what funding mechanism is envisaged for the citizens fund', shown on page 3 of the report, given that

the exceptional costs' on page 8 of the report are currently met through one-off' grants from welfare; what thought has been given to funding the fur furniture and equipment costs for various types of families, with and without disability, outlined in the CRSP report?

( c ) give details of who has been consulted and what comments have contributed so far to what is described

as a mixed response' from consultation on HIE and health issues outlined in section 6 of the report of the report, and explain to members what the Committee regards as the way forward from the alternatives presented, and, in particular, advise whether any concerns have been expressed by representatives of general practitioners on the Island?

( d ) ex p  lain why there is no mention in the entire report of the level at which the minimum wage is to be

set, despite the intrinsic interaction between it and low income support in terms of means-testing and poverty traps', outlined on page 6 of the report, and requirement to work' mentioned on page 13?

( e ) state at what income levels the Committee envisages the introduction of a very strict application of a

means test with pound-for-pound regression', outlined on page 6 of the report, and give a worked example of how such a means test will operate for a single person in the income range between current benefit levels (£7,568 annual income) and the income tax threshold?

( f) e x p lain how this means test will interact with the assets test' also proposed on page 6 of the report?

Will this parallel the Housing Committee's rent rebate rules on incomes and savings over £50,000, which is currently awaiting a ruling on its legitimacy from the Attorney General?

( g ) clarify the Committee's stance on changes to child care components to income support, outlined on page

11 of the report?

( h ) give further guidance on the question of incentives for carers', outlined on page 12 of the report,

especially in terms of the effect on carers of the inclusion of 2 individual components rather than a couple' in income support? and,

( i) c o n firm that he has, or will, consult the Data Protection Registrar over any privacy issues raised by

the proposed database to be shared by his department and the parishes, outlined on page 14 of the report.?

Answer

1. The budgetstandardswerere-priced in 2002 to match the IncomeDistributionSurvey data andnotdirectly indexed from the 2001 figure. Therefore, the figures of£125.05 and £128.03 are not directly comparable. The budget figures will needto be re-pricedyetagain before the design ofthesystem is complete.

2. I would draw the Deputy 's attention to the lastparagraph of section oneof R.C. 48/2004,which states –

T h is report outlines the progress made and thinking to date so that States members and the public generally can comment before the final proposals are put to the States in February 2005.'

T he purpose of R.C. 48/2004 is to engage both States members and the public at large in a wide ranging

consultation on both the principles and practice of Income Support over the next two months. To that end, seven specific meetings have been set up so far with a range of stakeholders and States Members. Information is regularly appearing in the local media and the Department is collating responses from the general public. Further meetings are planned for the New Year.

W  hilst such consultation is under way, the Committee will be responsive to all the comments and suggestions

that are made to it. When the consultation finishes, the Committee will assess all the proposals at that time and produce a final document which will be presented to the States early next year.

T  he proposed Citizens Fund will be funded by the States, as it forms part of the Income Support system

which will be funded from the revenue budget. As stated in section 5 of R.C. 48/2004 it is envisaged that this would cover the kind of exceptional costs that might be covered by the UK Social Fund', Guernsey's Medical Emergencies Fund or, in Jersey, through a one off grant covered by the Welfare Grants System. The Committee has also recently heard from the Jersey Community Savings and Credit Ltd. group, which has an interest in this area. Final proposals for such a Fund will be developed following this consultation round.

3. R.C. 48/2004, and, indeed the related R.C. 49/2004 outline theCommittee's thinking to date' and also reflect someof the ideas of the Integrated HealthCaregroup involved in the Health Strategic Review to date. The Integrated Health Care Group was originally set up with representatives of all the health care professions. In addition, the Department meets regularly with the Jersey Medical Association's representatives andsomeof the ideascontainedinR.C.48/2004 and R.C. 49/2004alsoreflectdiscussions over the years. At the presenttime,thereare a number of viewsand options being considered as part of the Health Strategic Review.TheCommitteewill give further consideration to health subsidies in the light of the results of the Health Strategic Review and the current consultation exercise. This will, of course, include the viewsof the local medical community.
4. The leveloftheminimum wage has been set and will be introduced on 1st April 2005. R.C. 48/2004 doe not make specific reference to this as there are a very complex set of interactions, notleastthose relating to wages in the Island (not just theminimumwage) and the sizeof the family unit,not to mention particular needs such as disability, childcare and health. The prime purposeof R.C. 48/2004wastoset out thekey policies and methodology of the IncomeSupport system itself.
5. As set out in section 13ofR.C. 48/2004, theCommittee has commissionedOXERA to modeltheoverall cost of theIncomeSupportscheme.This work is progressingwell and will continue in parallel with the public consultation. Work is also continuing to refinetheincome figures andincome levels will be included in the Report and Proposition to bepresentedto the Statesinearly2005.The report and proposition will include workedexamples for a range of household situations. The principle ofIncome Top UpassetoutinR.C. 48/2004 is that,as the incomeof a household rises, benefit levels will decrease.It should help many benefit recipients assome of the current means tested benefits, suchas welfare grants andHIE, apply a strict cut-off rather than a graduated one.
6. It is proposed that realisable assetswillbeincluded as part of the means test, and realisable assets will be assumed toproduce an income.Itisalso reasonable to expect that there will besomeuppervalueof liquid assets owned by a household,whichwilldebarit from receiving Income Support. This is notanunusual approach to means tested, welfare,IncomeSupport systems which are meant to targettheless well off in society. Final details will beput forward to the States in the context of the whole system.
7. The Committee is aware that the Education, Sport and Culture Committeeis developing a strategyfor early years education and care; final details to changes in child care components will be dependent on any proposals that mayarise from the new strategy. If a childcarecomponentis to beincludedin the finalIncome

Support scheme, this will be set out in the Report and Proposition to be presented to the States early next year. At

the present time, the Committee is of the view that support should continue to be targeted to those in work with more specific alleviations to cover periods of sickness, unemployment and essential training, which might currently be covered by the Parish Welfare System. Any component, though, must ultimately support a new early years/childcare strategy approved by the States following the review of the Education, Sport and Culture Committee.

8. The Committeeisawareof the valuablework undertaken by carers within the communityand that the carer is often faced with considerable loss of income through havingto give upwork.One suggestion is that if one partner cares for the other, within a household, then the household would receive two single adult components, thus providing extra financial support (as thecomponentfor a couple is less than that for two single adults).Othersuggestionsmay arise from the consultation exercise.
9. The nature of the administration has yet to be decided. In addition, the proposed database will be administered under a law that has not yet beendrafted.At the appropriate time, consultation with the Data Protection Registrar will take place.