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A decision made (28/08/2009) regarding: Income Support - Component Rates Amendment.

Decision Reference: MD-S-2009-0050
Decision Summary Title :	DS - Income Support (General Provisions) (Jersey) Order 2008 - amendment		Date of Decision Summary:	28 August 2009
Decision Summary Author:	Policy and Strategy Director		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	WR - Income Support (General Provisions) (Jersey) Order 2008 - amendment		Date of Written Report:	28 August 2009
Written Report Author:	Policy and Strategy Director		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Income Support (General Provisions) (Jersey) Order 2008 - amendment
Decision(s): The Minister decided to amend the Income Support (General Provisions) (Jersey) Order 2008 to improve the incentives available to Income Support households by amending a number of parameters and accordingly requested the Law Draftsman to prepare the necessary draft legislation.
Reason(s) for Decision: Income Support component rates will rise from 1 October 2009. The component rates are set by Regulation which has been approved by the States (P.93/2009). Other parameters are set within the General Provisions Order. In the Report accompanying P.93, it was noted that adjustments would be made to various parameters following the publication of the Earnings Index. These adjustments will improve the incentives within Income Support in respect of savings, earned income and pension income for those aged 65 or above.
Resource Implications: There are no manpower implications. The cost of increasing these parameters is included within the cost of uprating Income Support which will be met from within proposed cash limits.
Action required: Instruct the Law Draftsman to amend the Income Support (General Provisions) (Jersey) Order 2008.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Income Support - Component Rates Amendment.

Income Support Law – General Provisions Order – Increase in certain parameters

Income support component rates will be increased from 1 October 2009. The component rates are set by Regulation which has been approved by the States (P.93/2009). Other parameters are set within the General Provisions Order. Following the approval of P.163/2008 a number of parameters have already been improved in 2009, with effect from 1 February.

The report accompanying P.93 and the subsequent addendum set out a proposal for further improvements to some of the parameters associated with the calculation of income under Income Support. Following the publication of the Earnings Index at 3.0%, revised calculations indicate that the proposal set out in the Addendum to P.93 is achievable within the available budget for 2009 and 2010.

The funding for Income Support in 2009 is derived from two sources. The original cash limit for IS benefit was £56.9 million, which included the provision of £641,000 for growth in the IS budget including the impact of uprating for 3 months (Oct – Dec 2009). Additional budget has now been provided through the automatic stabiliser fund, to provide a further £2.3M.

Three parameters will be improved with effect from 1 October 2009.

In order to incentivize workers within Income Support households, the earnings disregard will be increased from 10% to 12%. For example, an individual with earnings of £300 per week will, in future, receive a disregard of £36 (in addition to a disregard of £18 in respect of Social Security contributions).

To encourage low income households to accumulate savings, the amount that can be held in savings (excluding the value of the main property) without seeing any reduction in benefit will be increased by 10%. Various limits are used for different household types ranging from £8,702 for a single working age claimant (up from £7,911) up to £21,636 for a pensioner couple (up from £19,669).

To encourage workers to make provision for their retirement, the pension disregard for those aged 65 and above will also be increased. These disregards were improved substantially in February 2009 and are now increased by a further 2% on that level. This is equivalent to an increase of approximately 20% since October 2008. A single pensioner aged 65 will see a disregard of up to £32.70 in respect of pension income and a couple who both receive pensions will receive a total disregard of up to £53.05. These disregards are not based on percentages and, as long as the claimant has a pension income in excess of the disregarded amount, the full disregard is available to the claimant.

The following table sets out the parameters in force during 2009 and the revised parameters effective from 1 October 2009.

Capital disregards (£)	01/10/2008	01/02/2009	1/10/2009
Single adult with personal care element	11,866	11,866	13,053
Other single adult under 65	7,911	7,911	8,702
Couple with at least one with personal care element	19,669	19,669	21,636
Other couple under 65	13,113	13,113	14,424
Single adult 65 or over	11,866	11,866	13,053
Couple 65 or over	19,669	19,669	21,636

Income and earning disregards (£ per week)	01/10/2008	01/02/2009	1/10/2009
Pension – First pensioner	27.09	32.06	32.70
Pension – Pension from Additional pensioner	17.01	19.95	20.35
Lone Parent – 1st level	16.24	16.24	16.24
Lone Parent – 2nd level	27.09	27.09	27.09
Lone Parent – 3rd level	48.79	48.79	48.79
Income and earning disregards (% of gross income)
Earnings disregard	6%	10%	12%
Maintenance disregard	N/A	10%	10%
Pension disregard (under 65)	N/A	5%	5%
LTIA disregard	N/A	5%	5%

Appendix

Extract from GPO of Income Support Law – the values to be amended are shown highlighted. The amendments introduced from 1 February 2009 have been incorporated into the text.

SCHEDULE 2[9]

(Article 10)

CALCULATED INCOME

1 Capital to be treated as income

(1) Every £250 of capital belonging to a household other than any capital disregarded under paragraph 2 shall be treated as providing the household with an income of £1 a week.

(2) The value of capital shall be calculated at its current market or surrender value in the country or territory in which the capital is situated.

2 Capital to be disregarded

(1) The following amounts of capital shall be disregarded in assessing calculated income –

(a) in the case of a household containing a sole adult under the age of 65 years where a member of the household meets the criteria for the personal care element of the impairment component under paragraph 6 of Schedule 1 to the Regulations	£11,866
(b) in the case of any other household containing a sole adult under the age of 65 years	£7,911
(c) in the case of a household containing 2 or more adults who are all under the age of 65 years where a member of the household meets the criteria for the personal care element of the impairment component under paragraph 6 of Schedule 1 to the Regulations	£19,669
(d) in the case of any other household containing 2 or more adults who are all under the age of 65 years	£13,113
(e) in the case of a household containing a sole adult aged 65 years or over	£11,866
(f) in the case of a household containing 2 or more adults, at least one of whom is aged 65 years or over	£19,669.

(2) The following capital shall also be disregarded –

(a) subject to sub-paragraph (3), the value of any dwelling owned by a member of the household and occupied by the household as its principal residence;

(b) the value of any dwelling purchased by a member of the household that is intended to be occupied by the household as its principal residence, until the property is so occupied or for a period not exceeding 13 weeks from when the property was purchased, whichever is the earlier;

(c) the value of assets integral to the running of any business owned by a member of the household for which a member of the household is normally engaged in remunerative work, or for which the person would be so engaged were he or she not prevented from being so engaged by reason of ill health, for a period of more than 26 weeks;

(d) the household furniture and effects of any dwelling occupied by the household and articles of clothing and personal effects of any member of the household, other than a motor vehicle or any item bought as an investment;

(e) the value of any motor vehicle up to a maximum of £10,000;

(f) any capital that has been accumulated solely to provide for the future care of a member of a household who meets the criteria for the rate of personal care element of the impairment component payable under paragraph 6(3)(c) or (d) of Schedule 1 to the Regulations, for as long as the member continues to meet that criteria.

(3) If the dwelling mentioned in sub-paragraph (2)(a) is not appropriate to the needs of the household the capital to be disregarded is the average market value of a dwelling that is so appropriate.

(4) In this paragraph a dwelling is appropriate to the needs of the household if it is no larger than is reasonably necessary for that household or if, having regard to all the circumstances, it would be unreasonable to expect the household to move from that dwelling.

3 Treatment of capital and income

(1) If a person has directly or indirectly deprived himself or herself or any other person of any income or capital in order to qualify for income support or a special payment, the amount of that income or capital shall be included in his or her total income or capital as the case may be.

(2) Any income or capital that is available to a person in the household if he or she applied to acquire it shall be treated as having been acquired by that person on the date on which the person was capable of acquiring it.

4 Calculation of income

(1) The income of a household shall be calculated on a weekly basis by –

(a) estimating the average weekly income of the household;

(b) adding the amount derived from capital in accordance with paragraph 1; and

(i) contributions payable under Article 4(2)(a)(i) and (b) of the Social Security (Jersey) Law 1974[10], and

(ii) any qualifying maintenance payment up to the amount specified in paragraph 2(a) of Schedule 1 to the Regulations in the case of a payment to a spouse and up to the amount specified in sub-paragraph (c) of that paragraph in the case of a payment to a child.

(2) If the income of a household includes earnings from employment, the average weekly earnings from that employment shall be calculated over a period immediately prior to the determination of –

(a) if the earner is paid weekly, 5 weeks;

(b) if the earner is paid monthly, 2 months,

or over such other period as will most accurately enable average weekly earnings to be assessed.

(3) If the income of a household includes the earnings of a self-employed person, the average weekly earnings shall be estimated over such period as will most accurately enable average weekly earnings to be assessed.

(4) If the income of the household includes any unearned income, the average weekly income of the household from that unearned income shall be estimated over such period, not exceeding one year immediately prior to the determination, as will most accurately enable average weekly income to be assessed.

5 Percentage of income to be disregarded

In assessing the weekly income of the household there shall be disregarded –

(a) 10% of the earnings of any adults in the household who are not entitled to a basic component under Article 5(2)(b) of the Law;

(b) 100% of the income of any children in the household derived from earnings;

ba) 5% of any income derived from an award of long term incapacity allowance under Article 16 of the Social Security (Jersey) Law 1974 or of invalidity benefit by virtue of Article 18 of the Social Security (Amendment No. 14) (Jersey) Law 2000;

(bb) 10% of any income derived from any qualifying maintenance payment received by any person in the household;

(bc) 5% of any income derived from a pension or annuity of any person under the household aged under 65 years;

(c) 100% of the first £32.06 of any income derived from a pension or annuity of one person in the household aged 65 years or over;

(d) 100% of the first £19.95 of any income derived from a pension or annuity of any other person in the household aged 65 years or over;

(e) in the case of a person entitled to a basic component under Article 5(2)(b) of the Law, either –

(i) 100% of the first £16.24 of earnings;

(ii) 50% of earnings over £16.24 but under £27.09; and

(iii) 25% of earnings over £27.09 but under £48.79,

or 10% of total earnings, whichever results in the greater amount to be disregarded.