New Benefit Rates from October 2006.

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A decision made (04/09/2006) regarding New Benefit Rates from October 2006.

Subject:	New Benefit Rates from October 2006
Decision Reference:	MD-S-2006-0056		Exempt clause(s):
Type of Report: (oral or written)			Person Giving Report (if oral):
Telephone or e-mail Meeting?			Report File ref:	5/5 10/4/2
Written report – Title	New Benefit Rates, Income Bars and Disregards Effective From 1st October 2006
Written report – Author (name and job title)	Tom Gales Policy and Strategy Director
Decision(s): To increase the Earnings Limit by 3.3% to £3242 a month To increase the child rates for Family Allowance by 2.9% To increase the parameters for the income assessment of HIE claimants based on benefit and welfare increases To maintain the value of Disability Transport and Childcare Allowances To increase fee rates to designated medical practitioners and board personnel by 3.1%
Reason(s) for decision: Every October most benefit rates are increased automatically by the increase in retail price index, the earnings index or an average of both these figures. However a number of benefits and parameters need sub-ordinate legislation to be prepared to effect similar increases (Family Allowance, Disability Transport Allowance, Childcare Allowance). Similarly following last years enactment, Regulations have to be prepared for the HIE assessment.
Action required: To note the new rates and instruct that the computer parameters be amended and Order Books prepared. To ask the Law Draftsman to prepare the necessary legislation.
Signature: Senator P.F. Routier - Minister		Date of Decision: 4 September 2006

New Benefit Rates from October 2006.

New Benefit Rates, Income Bars and Disrergards effective from 1st October 2006

1. SUMMARY

With the publication of the average earnings index, the annual uprating of benefits, income bars, disregards and other income assessments can begin. The effective date is October 1st but with payments being made four weekly in advance and Order Books to be printed the new rates have to be calculated and input into computers by 5th September. The average earnings index was 3.30% as at June 2006 and the RPI for the same period was 2.90%

2. BACKGROUND

2.1 Benefits, income bars and disregards in the Social Security and Health systems are generally automatically increased each year on the 1st October. Social Security benefits are increased by the earnings index, and non contributory benefits are increased by a figure half way between the cost of living and earnings index. The effect of all these increases on individual benefits is displayed on the attached sheets. The Minister has already decided that Parish Welfare Rates will increase by 2.9% from 1st October 2006.

2.2 The only benefit that has not been increased is Disability Transport Allowance which is not automatically increased each year but is subject to increase by enacting Regulations. The Minister has discussed DTA over the year as part of the budgetary process and had agreed not to increase it this year. DTA will be subsumed into the Income Support system in 2007.

2.3 Family Allowance is increased in January each year with new means tests taking place in May each year. The benefit is to be subsumed into the income support system and over the past few years the parameters for the system have not been altered but benefit rates have been increased by the cost of living. Examples of this are attached for this year. Childcare Allowance which has connections to the income tax system is also reviewed at this time to ensure that in January each year it is aligned with the childcare tax allowance. The Early Years Strategy from the Minister for Education, Sport and Culture is nearing the end of its consultation and consolidation and will be considered in the development of the income support system. With regard to the introduction of the income support system in 2007, it should be borne in mind that this is the last year that existing non-contributory benefits will be increased.

2.4 The contribution ceiling and threshold are also increased each year with the earnings limit or ceiling being amended by Order. From 1st January 2007 the earnings limit will be £3242 (from £3138) per month and the threshold (which is related to the level of benefit) will be £ 685 per month.

2.5 The overall uprating has an effect on the income assessment for HIE and the new limits are also attached which now have to be set by Regulations. These figures generally follow on the welfare rates and are therefore increased by 2.9%.

2.6 The Minister also needs to approve fee rates for Designated Medical Practitioners and members of medical boards which are also reviewed for October each year. In the past the practice has been to increase these fees by the half-way index which this year is 3.1% and will give a rate of £48.20 an hour for medical practitioners and £24.10 an hour for lay members.

The budget forecasts are based on increasing benefits by 3%. The estimated variance over a full year (assuming no growth) from this figure for States Revenue Benefits if the recommendations are followed is as follows;

Attendance Allowance	(£5,100)
Invalid Care and Disability Allowance	(£4,000)
Disability Transport Allowance	£194,000
Christmas Bonus	£0
Family Allowance	£5,000
Welfare	£12,000

3. RECOMMENDATION

The Minister is asked

(a) to note the new benefit rates, income bars and disregards from 1st October 2006;

(b) to ask the Law Draftsman to prepare an Order for the Earnings Limit for January 2007;

(d) to agree cost of living increases to the child rates in the family allowance system and ask the Law Draftsman to prepare Regulations;

(e) to agree no increase to the childcare allowance system except as a consequence of any changes in the childcare tax allowance;

(f) to agree the new limits in the HIE assessment, and to ask the Law Draftsman to prepare Regulations;

(g) to approve increases in fee rates for medical boarding personnel by 3.1%

Contributory Benefits	2005Weekly Rate	2006 Weekly Rate
Short Term Incapacity Allowance	£153.23	£158.27
Invalidity Benefit	£153.23	£158.27
Long Term Incapacity (100%)	£153.23	£158.27
Maternity Allowance	£153.23	£158.27
Pension	£153.23	£158.27
Survivors Allowance	£183.89	£189.98
Survivors Pension	£153.23	£158.27
Dependency Increase	£101.15	£104.51
Maternity/Adoptive Grant	£459.60(lump sum)	£474.78(lump sum)
Death Grant	£612.80 (lump sum)	£633.04 (lump sum)
Non Contributory Benefits	2005 Monthly Rate	2006 Monthly Rate
Attendance Allowance	£412.80	£425.60
Disabled Adults Allowance	£339.16	£349.67
Disabled Child Allowance	£226.02	£233.03
Invalid Care Allowance	£663.36	£685.27
Disability Transport Allowance	£167.56	£167.56
Christmas Bonus	£82.50(lump sum)	£85.00(lump sum)
Income Limit (Disability)	£51511	£53108
Income Limit (Milk/Dental)	£37665	£38833

Family Allowance Rates

First Child £3258

Second Child £2782

Subsequent Child £2631

Examples of a two child family

Annual Income	Current Rate	Proposed Rates
6,600	112.88	116.15
8,600	93.07	95.78
10,600	69.05	71.06
12,600	45.03	46.35
14,600	21.02	21.63

SCHEDULE 1

(Regulation 3 (1))

assessment of eligibility for different rate of medical benefit

1. Income limits

(1) For the purposes of Regulation 3(1)(c) the weekly income limits are –

(a) if the person is over the age of 21 and single, £145.50;

(b) if the person is over the age of 17 but under the age of 21 and does not live with a parent or guardian or in a hostel, £119.05;

(d) if the person does not fall into clauses (a) to (c) and has sole responsibility for a person under full age, £241.35.

(2) If the person is maintaining a dependent child or young person there shall be added to the applicable income limit set out in sub-paragraph (1) the following amounts for each such child or young person–

(a) for a young person aged 18-20 years, £71.20;

(b) for a child aged 16 or 17 years, £55.70;

(3) However, in the case of a person mentioned in sub-paragraph (1)(d), the first child shall be disregarded.

(4) The following shall be added to the applicable income limit set out in sub-paragraph (1) –

(a) the total of any amount paid by the person in rent;

(b) one third of any amount paid by the person by way of board and lodging;

(c) in the case of a person who is an owner occupier, an amount equivalent to the minimum that would be charged by the Housing Committee by way of rent if the person were a States tenant; and

(d) 25% of any fee paid by an insured person –

(i) to a hospital or care home for which the Health and Social Services Department is responsible; or

(ii) to a home to which the Nursing and Residential Homes (Jersey) Law 1994 [i][4] applies.

2. Income assessment

(1) Subject to sub-paragraph (2), the following sources of income are to be included when assessing the weekly income of an insured person –

(a) earnings;

(b) an amount in respect of income from savings of –

(i) £1 in respect of savings of up to £7,298 in the case of a single person and up to £12,114 in the case of a married person, and

(ii) 25 pence for each £50 of savings over and above the amounts specified in clause (i);

(d) pensions;

(e) any deed or gift;

(f) maintenance payments for the insured person or a dependent child;

(g) parish welfare;

(h) income from lodgers; and

(i) income from letting of property.

(2) The following are to be disregarded when assessing weekly income –

(a) in the case of the earnings of an insured person who is a single parent or a pensioner who works less than 25 hours a week, the first £20 earned and half of the amount earned over £20 and under £40;

(b) in the case of any training allowance paid by an employer training scheme administered by the States, the same amount as described in clause (a) plus a quarter of any allowance exceeding £40;

(d) 15% of any allowance payable under the Family Allowances (Jersey) Law 1972 [ii][5] or £8, whichever is the greater;

(e) disability transport allowance (within the meaning of Article 2 of the Disability Transport Allowance (Jersey) Law 1997 [iii][6]), attendance allowance (payable under the Attendance Allowances (Jersey) Law 1973 [iv][7]) and any allowance payable under the Invalid Care and Disability Allowances (Jersey) Law 1978;[v][8]

(f) the first £21.45 of any maternity allowance or long term incapacity benefit payable under the 1974 Law;

(g) in the case of an insured person in receipt of an incapacity pension or an old age pension under the 1974 Law –

(i) £23.75 in the case of a single person, and

(ii) £39.40 in the case of a married person;

(h) survivor’s benefit under Article 24 of the 1974 Law;

(i) educational grants and grants from charitable organisations;

(j) in the case of income from lodgers –

(i) if the lodger lives as a member of the family, £40.30,

(ii) if the lodger is not provided with food, £32.28,

(iii) if the lodger is provided with food, £36.70; and

(k) in the case of income from property, 20% of the cost of exterior repairs and 40% of the cost of all other repairs.