Christmas Bonus (Jersey) Law 201-

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A decision made 21 March 2011:

Decision Reference: MD-S-2011-0018
Decision Summary Title :	Christmas Bonus (Jersey) Law 201-		Date of Decision Summary:	18 March 2011
Decision Summary Author:	Policy and Strategy Director		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Christmas Bonus (Jersey) Law 201-		Date of Written Report:	18 March 2011
Written Report Author:	Policy and Strategy Director		Written Report : Public or Exempt?	Public
Subject: Christmas Bonus (Jersey) Law 201-
Decision(s): The Minister decided to lodge ‘au Greffe’ the Christmas Bonus (Jersey) Law 201-
Reason(s) for Decision: This law replaces the existing Christmas Bonus Law and brings into effect a number of changes agreed by the States last year as part of the agreed CSR savings for 2011. The opportunity has been taken to update administrative procedures and appeal rights.
Resource Implications: The removal of eligibility from certain groups and the reduction in the value of the Bonus will create a saving in 2011 of approximately £440,000. The cost of the Bonus in 2011 is estimated at £1.32 million. There will be a small reduction in administrative overhead.
Action required: Policy and Strategy Director to request the Greffier of the States to lodge ‘au Greffe’ the draft legislation on 22 March and to request a States debate on 3 May 2011.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Christmas Bonus (Jersey) Law 201-

Report

Background

The Christmas Bonus Law provides an annual payment in December to individuals who satisfy certain criteria. In 2010 the full value of the bonus was £97, with a reduced bonus of £87 paid to individuals who also received the UK Christmas bonus of £10. 18,927 persons received a Christmas bonus last year, at a total cost of £1.74 million.

As part of the Comprehensive Spending Review process for 2011, the Minister for Social Security proposed to limit the eligibility criteria for the Christmas bonus (SS-S8) to create a saving of £439,000 in 2011.

During the Annual Business Plan debate, the States approved an amendment brought by Senator Le Gresley (P.99/2010 - 6th amendment). The amended proposal, as approved by the States, is that the Christmas bonus should no longer be paid to:

Individuals living outside Jersey;
Individuals living in Jersey who currently only qualify on the grounds of residency and age (i.e. they do not receive any qualifying benefit such as old age pension)

However, in order to maintain eligibility to other individuals aged below 65, it was also agreed that the value of the Christmas bonus should be reduced to

£78 in 2011
£80 in 2012
£82 in 2013

In addition to pensioners aged 65 and above, the Christmas bonus will continue to be payable to:

Women in receipt of a pension with a pension age of 60, aged 60 to 64
Pensioners who have opted to take a pension at the age of 63 or 64
Individuals aged below 65 receiving a Survivor’s Allowance or Survivor’s Pension
Individuals aged below 65 who receive Invalidity Benefit
Individuals aged below 65 with a 100% award for Long Term Incapacity Allowance
Individuals of any age receiving Invalid Care Allowance
Individuals of any age receiving Income Support and a personal care component (level 2 or level 3)

Revised Law

The Christmas bonus is administered through the Christmas Bonus (Jersey) Law 1991. In order to remove eligibility from the two groups set out above, changes are required to this law.

The existing law does not include a right of appeal to an independent tribunal. Rather than make extensive amendments to the current law, a new law has been prepared. The explanatory notes set out the detail of the new law.

The Social Security Department administers three similar benefits which provide an annual lump sum:

TV Licence Benefit - £145.50 in 2010 paid to individuals aged over 75 subject to income and other conditions
Food Costs Bonus - £153.60 in 2010 paid to households subject to income tax, income support and other conditions
Christmas Bonus - £97 in 2010 paid to individuals satisfying benefit, residency and age conditions

The provisions within the new Christmas Bonus Law now provide for the redetermination of claims, independent appeal rights and penalties which are similar to those included in the Social Security (Television Licence Benefit) Law. The Food Costs Bonus triennial regulations which are planned to be renewed in July 2011 will also include similar provisions.

In summary these provisions allow for a decision in respect of the payment of a benefit to be challenged by a claimant within a set time frame. The decision must then be reviewed by a second officer within the Department. If the claimant remains dissatisfied with the second decision, there is a right of appeal to an independent tribunal. Offences committed in respect of these three benefits will carry a penalty of up to two years imprisonment or an unlimited fine.

The new law includes a requirement for the Minister to publicise the payment of the bonus each year. Almost all claims are paid automatically, and the public notice will ensure that anyone who does not receive an automatic payment is able to make a claim at the correct time.

In line with Senator le Gresley’s amendment, the value of the Christmas bonus is reduced from its 2010 value and is set for the next three years. From 2014 onwards, the value of the Christmas bonus will revert to a formula in which it is adjusted according to the midpoint between the June Retail Prices Index and the Average Earnings Index for that year.

Financial and manpower considerations

There are limited manpower considerations - under the current law, individuals who do not receive a benefit from the Social Security department can apply for Christmas bonus, if they satisfy age and residency conditions. These applications are currently processed manually. This group (approximately 450 individuals in 2010) will no longer be eligible for the Christmas bonus and there will be a reduction in administrative overhead. Under the new law, almost all claims will be paid automatically, minimising administration costs.

It is estimated that approximately 18,000 individuals will be eligible for the Christmas bonus in 2011 and the bonus will be paid at a maximum rate of £78 per person, a total estimated cost of £1.32 million. This sum is allowed for within the departmental cash limits, taking into account the approved CSR saving.