Select Committee on Deregulation and Regulatory Reform Eighth Report


Letter from the Chairman of the Social Security Advisory Committee

Proposal for the Regulatory Reform (Carer's Allowance) Order 2002

Thank you for your letter of 13 February asking for the Committee's comments on the above proposed Order. We are very happy to provide these, as this represents our first opportunity to comment on the detail in the proposals. As you know, the proposals were not put to us for scrutiny because - as I understand it - the Department for Work and Pensions took the view that they did not fall within the terms of our statutory responsibilities. We understand that the Department attempted to consult the Committee informally at the drafting stage, but that, as a result of a failure in electronic communications, the request for our views was never received. We are seeking advice from the Treasury Solicitor's Department on the whole issue of the Committee's scrutiny of Regulatory Reform Orders (RROs), and we are also in contact with the Department for Work and Pensions with a view to putting in place a uniform approach to RROs dealing with social security.

In general, we are very supportive of the proposals in the Order. We have taken a continuing interest in the operation of Invalid Care Allowance, and many of the changes being introduced reflect concerns that we and others have previously raised with the Department. However, in two areas we believe that the proposals would benefit from further amendment.

The first of these relates to the issue that has already been picked up by your Committee - the impact of withdrawing the concession under Section 70(6). As we understand it the proposal would affect the individual carer differently, depending on whether or not they will be eligible to claim the Minimum Income Guarantee at age 65.

Claimant to the Minimum Income Guarantee (MIG)

At present, where an ICA recipient is over 65, in receipt of MIG and the person being cared for dies, the recipient can continue to be awarded the Carer's Premium within the MIG. (Although, oddly, someone in the same situation getting the Carer's Premium because of an underlying entitlement to ICA would have it withdrawn). However, under the proposal, any recipient of ICA who is now under the age of 65, and could currently look forward to keeping the Carer's Premium as part of their MIG - should they be over 65 when the person being cared for dies - will lose the Carer's Premium following the death. Given that the current rate of Carer's Premium is £24.40, this is a not inconsiderable loss of income. In addition, if the reduction means that they are no longer entitled to the MIG, they also face the withdrawal of full rate Housing and Council Tax Benefit.

No entitlement to the MIG

The situation is different for a person who is aged over 65 when the person they are caring for dies and they have no entitlement to the MIG (possibly because they inherit a relatively small sum from the person they were caring for). At present this person could continue to get ICA; under the proposals ICA would cease. Many of this group will already have ceased to receive ICA, because they have qualified for a basic rate Retirement Pension (RP) by virtue of National Insurance credits arising from their ICA. However, not all ICA recipients in this category will have accumulated sufficient credits or actual contributions to qualify for a full RP.

The Committee acknowledges that the proposed change puts these two groups in the same position as other pensioners. However, they have had a reasonable expectation that they would retain this benefit, and their financial loss could be considerable. In accordance with earlier work carried out by the Committee on transitional protection, we consider that those who would lose out as a result of this amendment, and who are currently aged over 45, should have their entitlement to the 'age 65' concession protected; and that the Department will need to give extensive publicity to the introduction of this change, so that younger carers who are likely to be affected can take timely steps to alleviate the position.

Restrictions on the extension period

The Committee's second concern relates to the proposed restrictions on the extension of entitlement for eight weeks after the death of the person being cared for. The Committee strongly welcomes the proposed extension, not merely on compassionate, but also on administrative grounds. Notification of the death of the cared-for person to the Department may not be in the forefront of the carer's mind at the time of death, and the risks of late notification and subsequent overpayment are therefore high. Against this background the Committee does not support the withdrawal of the extension where the recipient takes up employment or enters full-time education. The rationale that we assume lies behind this proposal (that these people have an income from elsewhere) will not in all cases hold good (as a mature student the carer may well have to fund their education) and even when the former carer moves into paid employment there may well be a difficult transitional period. Excluding some individuals from the extension is likely to be seen as rather petty and will undoubtedly impose an additional administrative cost on the Department, while yielding only minimal savings. We would therefore recommend that the qualifications to the extension are not proceeded with.

Finally we would like to thank the Deregulation and Regulatory Reform Committee for referring this issue to us.

Sir Thomas Boyd-Carpenter
Chairman, Social Security Advisory Committee

5 March 2002

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