Welfare Reform Bill

Memorandum submitted by Carers UK (WR 42)

Welfare Reform Bill and carers

1. Why the Welfare Reform Bill is important for carers

1.1 There are 6 million carers in the UK, 72% of those providing substantial care are worse off as a result of caring [1] , because of the combined pressure of reduced earnings and the high costs of illness and disability. Many carers’ family finances rely on income from carers and disability benefits and there is the risk that changes or reductions to which could have a serious impact on their capacity to continue to provide care.

1.2 536,000 people are in receipt of Carer’s Allowance or the Carer Premium to means-tested benefits, and a further 450,000 have an ‘underlying entitlement’ to Carer’s Allowance which may entitle them to other means-tested benefits. Other families not in receipt of Carer’s Allowance rely on DLA to cover basic living costs, transport, aids and adaptions.

2. Carer’s Allowance

2.1 Carers UK welcomed the Government’s decision to keep Carer’s Allowance outside the Universal Credit. Drawing Carer’s Allowance into the new system would have resulted in hundreds of thousands of carers facing a means-test on their household income and savings, and the risk of losing the rights to £233 a month in Carer’s Allowance and a key recognition of their contribution to society.

2.2 The measures set out in the Welfare Reform Bill would mean that:

- 245,000 carers on Carer’s Allowance will remain outside the Universal Credit.

- Approximately 250,000 carers currently in receipt of the carer premium to means-tested benefits will be moved onto the Universal Credit. Carers UK does not oppose this in principle, as these carers are already means-tested and could be better off if they are able to juggle work and care, as they should be able to keep more of their benefit as they earn.

2.3 Key point for carers: whilst it is welcome that Carer’s Allowance has been preserved as a non means-tested benefit, it remains an outdated benefit in need of some reform. Carers UK propose that the Bill should be amended to:

a) Introduce an earnings taper for Carer’s Allowance, to replace the existing £100 earnings limit. A significant minority of claimants, around one in fourteen working age claimants, receives Carer’s Allowance alongside earnings. The current cliff-edge limit means that carers able to juggle work and care lose their entire benefit if they earn over £100.

This provides considerable disincentive to work and traps carers in low paid jobs. For those working in professional occupations, this amounts to just several hours of work a week. The limit acts to prevent carers from keeping in touch with the workplace and skills, or from supplementing low-level benefits. Application of a taper in this way, outside Universal Credit, is already proposed for contributory JSA and ESA and we believe this should be extended to Carer’s Allowance.

b) Lift the 21 hour study rule for Carer’s Allowance, which prevents carers from engaging in education or training alongside caring if they are considered to be spending 21 hours a more on study. Carers UK’s Adviceline has frequently hear from carers who wish to gain new skills through studying alongside caring, but are unable to do so because their only independent income would be taken away as they lose the right to Carer’s Allowance.

The 21 hour rule can also encompass coursework or homework set by tutors, and can lead to carers being unable to participate even in short or part-time courses. Carers UK believes that this rule is outdated and acts as a barrier to carers keeping in touch with skills and knowledge to enable them to work alongside caring or when caring comes to an end.

3. Impact assessment

3.1 Carers UK is surprised and disappointed that no assessment has been published on the impact of the Welfare Reform Bill on carers. Of particular concern is the lack of assessment of how the £2.17 billion reduction in the DLA budget, or the introduction of the Personal Independence Payment would affect Carer’s Allowance claimants.

3.2 There was no mention of carers in the initial Impact Assessment of the DLA reforms, published with the Bill; or in the Equality Impact Assessments published during the Committee stage. The Government’s response to the DLA reform consultation, published in April, simply states that the Government is considering the implications for Carer’s Allowance of DLA reform.

3.3 This lack of upfront information not only makes adequate scrutiny of the proposals impossible – but it is also causing a huge amount of distress for families, including those affected by the most severe disability and terminal illness, who fear the loss of their disability and carers’ benefits because they do not know if they may be affected.

3.4 Key point for carers: It is critical that a full evaluation of the impact on carers is conducted as a matter of urgency. This must include an estimate of the number of carers expected to lose Carer’s Allowance, a disability impact assessment and a carer equality impact assessment which looks at the impact on gender equality of the likely loss of Carer’s Allowance through cuts to the DLA/PIP budget, given that the majority of Carer’s Allowance claimants are women.

4. The Carer Addition to State Pension Credit

4.1 C arers UK warmly welcomes proposals in the Bill to sim plify eligibility for the Carer Addition in Pension Credit. Currently, in order to receive the Carer Addition, carers in receipt of their State Pension must apply for Carer’s Allowance even though they are unable to receive it (because individuals cannot receive both Carer’s Allowance and the State Pension). This establishes an ‘underlying entitlement’ to Carer’s Allowance which then entitles the carer to the Carer Addition to Pension Credit.

4.2 Key point for carers: Instead of this complicated and frustrating procedure, the Bill states that carers will be entitled to the Carer Addition so long as they can establish that they have ‘regular and substa ntial caring responsibilities (C lause 73) – which should be defined as 35 hours a week . This should make the process of applying for the Carer Addition much simpler for carers.

5. Carer Premium in Universal Credit

5.1 On top of a ‘standard allowance’ Universal Credit awards will include additional amounts (similar existing Carer or Disability Premia), for people in certain circumstances. The Bill states that these may include having children, needing help with housing costs or ‘the fact that a claimant has regular and substantial caring responsibilities for a severely disabled person’ (clause 12, subsection 2).

5.2 This means that carers who currently receive the Carer Premium to Income Support or Jobseeker’s Allowance may be able to receive an additional amount when their benefit is replaced by Universal Credit. Provisions which set out additional amounts for claimants with children indicate that there will also be extra amounts where those children are disabled.

5.3 Key point for carers: The Bill states that the qualification for the additional amount for carers will be set out in regulations, but that those with ‘regular and substantial’ caring responsibilities should qualify. Carers UK strongly believes that this should not be tied to an application for Carer’s Allowance (to establish an ‘underlying entitlement’, as with Income Support and Jobseeker’s Allowance) and would argue for a separate gateway as the Bill establishes for the Carer Addition to Pension Credit – for example, caring responsibilities for 35-hours a week for someone with a qualifying disability benefit. This would remove the necessity for individuals to apply for both Carer’s Allowance and Universal Credit, or for a carer within a couple to have to apply for Carer’s Allowance alongside their couple’s application for Universal Credit.

6. Earnings disregard

6.1 It is disappointing that the Bill does not make clear what earnings disregard there will be for carers (how much they will be able to earn under the Universal Credit before their benefit starts to be removed). Currently, for carers in receipt of Income Support, this is set at £20 per week. Carers UK believe that it should be set higher, at least at the same level as Carer’s Allowance, and should then taper off after that point. This would help carers to juggle work and care to improve family incomes and keep in touch with the workplace.

6.2 Key point for carers: We propose that carers in receipt of Universal Credit should have an earnings disregard of £100 before the taper begins, helping them to juggle work and care to improve family incomes and keep in touch with the workplace

7. Conditionality

7.1 Carers UK welcomed the clear statement in Clause 19, Subsection 2 of the Bill that prohibits back to work conditionality being applied to claimants with ‘regular and substantial caring responsibilities.’ This is crucial, as the Bill also introduces tougher sanctions against Universal Credit claimants who are not considered to be properly seeking work – removal or reduction of benefits for up to three years.

7.2 It is vital that robust procedures are put in place to identify carers early in the Universal Credit application process and that carers are not drawn into other strands of conditionality. For example, lone parents face relatively tough conditionality and there is a risk that a lone parent who was cares for a disabled child would face sanctions if they are initially grouped with lone parent rather carers.

7.3 Whilst carers do not become eligible for carers’ benefits until they care for 35 hours a week or more, Carers UK research indicates that caring responsibilities of 20 hours a week or more can have a substantial impact on carers’ ability to juggle work and care [2] . In addition cases where carers have multiple caring responsibilities which total more than 35 hours a week, but do not individually exceed that figure, should not put carers at risk of sanctions. For example, supporting an adult child with moderate learning disabilities who lives in supported living, and an elderly parent may be the equivalent of a ‘full-time’ caring role and could easily make work impossible.

7.4 Key point for carers: Alongside clear procedures to identify carers early in the Universal Credit application process, the threshold for exemption for back to work conditionality should be set at 20 hours or more of care a week.

8. Benefits cap

8.1 The Bill proposes a benefits cap with reference to the average earnings of working households in Great Britain (Clause 93). The method of calculation and the level of such a cap would be prescribed in regulations, but in October, the Government estimated that, in 2013 the cap would be £500 for household income and £350 for individual claimants. The Government also committed to exemptions for Disability Living Allowance claimants, War Widows, and families claiming the working tax credit, but that other benefits, like Carer’s Allowance, would be included.

8.2 Carers UK and the Disability Benefits Consortium (DBC) are concerned that the introduction of the household benefit cap fails to reflect the varying needs of different households. If the cap is introduced, commitments have been made for exemptions for households with someone receiving DLA, working tax credit. Subsection (4)(c) provides for regulations to specify exceptions from the benefits cap but given the impact the cap could potentially have on disabled people and their families these exemptions should be added to the face of the Bill, and a dditional exemptions to protect families affected by illness and disability should be added. In particular , Carer’s Allowance claimants and carers in receipt of an additional amount for caring responsibilities within Universal Credit should be exempt from the household benefits cap – otherwise the cap could have the perverse outcomes of making family care financially untenable for families and a disincentive for families to provide care.

8.3 Key point for carers: Carer’s Allowance claimants and carers in receipt of an additional amount for caring responsibilities within Universal Credit should be exempt from the household benefits cap. In addition, the Government should consider exempting other benefits in the same spirit – including Attendance Allowance, Employment and Support Allowance and Bereavement Allowance.

9. Personal Independence Payment

9.1 Cut to the DLA/PIP budget - the Government has announced that there will be a 20% cut to the funding available for DLA/PIP which could affect hundreds of thousands of families. Carers UK is completely opposed to this arbitrary cut , which the Government has not published a clear rationale for. Our mode ling shows that the effect could be disastrous to those already struggling to make ends meet , as the loss of or reduction in disability benefits brings knock-on impacts to family incomes.

9.2 In the absence of DWP estimates, organizations like Disability Alliance have attempted to estimate the numbers of DLA claimants who would be affected to achieve a 20% reduction in expenditure. A 20% reduction in caseload would remove DLA from 360,000 people, but this would not deliver £1 billion in savings set out by the Government. Disability Alliance estimates that as many as 740,000 disabled people could be affected. [3] The Government has also not yet published any estimates on the number of carers who could lose Carer’s Allowance as a result of the disability benefits of the person they care for being changed, reduced or removed.

9.3 Our research consistently shows that heavy-end carers are financially worse-off as a result of caring:

- 74% were struggling to pay essential utility bills

- Over half were cutting back on food to make ends meet (52%)

- 66% were using their own income to pay for care for the person they cared for

- 54% were in debt as a result of caring [4]

9.4 The removal or reduction of DLA/PIP could be devastating for families, particularly those who face the loss of two earned incomes because of illness and giving up work to care. This would push many into debt and financial hardship and would make family care financially untenable for others – with serious cost implications for NHS and social care services.

9.5 Key point for carers: The Government must not proceed with this cut until an assessment of the impact on carers has been carried out, as the reductions in family incomes could cause caring relationships to become financially untenable as household incomes fall apart.

9.6 Eligibility for Carer’s Allowance c urrently eligibility is established through the middle or hig her rate care components of DLA. Instead of three rates within DLA (lower, middle and higher), PIP will have only two rates; standard and enhanced . The Bill does not establish how t hese groups of DLA claimants will fit into these new categories, or where eligibility for Carer’s Allowance is established.

9.7 Key point for carers: It is essential that eligibility applies to both rates of daily living within PIP . If eligibility were only according to the higher rate of the PIP daily living component, thousands of carers could lose Carer’s Allowance.

9.8 Qualifying period for PIP - t he Bill would extend the qualifying period for the new Personal Independence Payment to six months rather than the existing three months ( Clause 79) . Carers UK strongly disagrees with this , as the impact on families of having to wait for six months before receiving financial support could substantially increase family debt and financial hardship. This measure would have the biggest impact on families coping with a sudden, unexpected illness or disability who face the loss of two incomes – though disability and caring responsibilities.

9.9 Key point for carers: Carers UK does not believe that the current eligibility should change, but if the Government has resolved to extend the total qualifying period to a year (six months qualifying period and a further six month ‘prospective test’ – the expectation that the condition will continue for a further six months), our preference would be for a three months qualifying period and a nine month prospective test.

9.10 Assessments - We believe that it is crucial for the new PIP assessments to look at a wide range of evidence , rather than prioritise a ‘snapshot’ face-to-face meeting with a medical generalist, which may fail to gather comprehensive evidence of fluctuating or complex conditions . The new assessment must not be predominantly medical a nd must include evidence from a wider spectrum of professionals as well as consulting families and carers. Periodic reviews for PIP must also be appropriate and based on realistic assumptions of likely changes in conditions.

9.11 Key point for carers: Details of the assessment will be set out in regulations, but Carers UK urge the Government to ensure that assessments treat carers as ‘expert care partners’ as per the National Carers Strategy, refreshed in December by the Government.

9.12 Mobility component in residential care Carers UK is a signatory to the Mencap report Don’t Limit Mobility which sets out the united opposition of the disability sector to proposals to remove the mobility component of DLA from individuals in residential care settings ( Clause 83) . T he mobility component can be key to personal independence to disabled people in residential care, enabling them to engage in social activities, volunteering, work and hobbies– removing it could severely compromise disabled people ’s quality of life , trapping them in their own homes .

9.14 As outlined in the Mencap report, we strongly refute the Government’s assertion that, in these circumstances, the mobility component amounts to double funding. Particularly at a time of tight local authority spending, it is completely unrealistic to expect social care budgets to be able to absorb the additional expense required to achieve the kind of individualized support that individuals can achieve by choosing how to spend their mobility component.

9.15 Key point for carers: Although the Government has postponed the implementation of this until 2013, along with other members of the Disability Benefits Consortium Carers UK , call on the Government to scrap the proposals entirely.

April 2011

[1] Real change not short change. (2007) Carers UK , London .

[2] Carers, Employment and Services (2007) Carers UK and Leeds University

[3] Disability Alliance estimates that, in order to achieve £1 billion in savings, there would be a risk to the DLA of 643,000

[3] disabled people receiving the lower rate payment of care (£634 million per year) and a further 100,000 disabled people

[3] on the middle or higher rate care components or the higher rate mobility component.

[4] Of 1,734 carers responding to a survey Carers in Crisis (2008) Carers UK