Skip to content

Involving people who are in receipt of benefits

An introduction

This page provides general information about the benefit system where it may affect service user and carer involvement/participation/co-production in health and social care service design, delivery, research and training with public agencies such as charities, educational establishments, local authorities, the NIHR and the NHS.

Risk to benefits

Where an organisation involves people who are in receipt of state benefits in their work, there is a risk that people may have their benefits stopped as a result of an inadvertent breach of their benefit conditions. Some people may have their benefits (their income for food, clothing, heat etc) stopped for a week; some for several weeks, and some for several months pending an appeal and some in perpetuity.

Duty of Care

Where people who have been involved could be deemed to be vulnerable, the organisation will have a ‘Duty of Care’. The organisation that neglects their ‘Duty of Care’ may be found legally responsible.

Minimising risks

Many organisations have adopted policies for involving people that ensure that any risks to benefits are minimised. A partnership approach can ensure that people are provided with reliable and up-to-date advice on benefit conditions before they decide to become involved, and that the organisation provides their offer of payments in such a way as to avoid misunderstandings with Jobcentre Plus.

Inappropriate benefit rules were amended

The Social Care Institute for Excellence, forerunners of the Care Quality Commission and other health and social care arms length governmental organisations commissioned Judy Scott to liaise with DWP Ministers with the assistance of Peers. Support provided to DWP in 2009 resulted in the removal of  some inappropriate benefit rules that were causing problems to the Department of Health policy for involvement. Initially the legislation excluded involvement with charities and educational establishments. Eventually after representations to Lord Freud in 2014, further legislation was introduced and now when a person’s benefits are calculated, reimbursed expenses for service user and carer involvement will be ignored; notional earnings are no longer applied in all instances. Previously certain expenses were treated as earnings and an offer of payment that was declined was treated as if it had been received.

New risks

However successive governments have introduced ‘Welfare Reforms’ bringing new risks and threats to people who receive benefits.

Organisations must take great care with any contractual arrangements for involvement. Most people who receive benefits are required to prove they are looking for a job, and to undertake training or work related activity or risk being sanctioned. ‘Sanctioned’ means having their benefit reduced or stopped for weeks or months or longer. People must not be asked to make a commitment for involvement that could conflict with their benefit conditions. This applies to both volunteers and people who are paid for involvement.

Payments for involvement must not exceed benefit limits

The national minimum wage applies to service user involvement. Now renamed the ‘national living wage’ for people who are 25 years or older, it is £8.72 an hour from April 2020.

The benefit rules on earnings that are allowed per week may allow just £5 or £20 before the benefit is reduced for people who are unemployed or single parents.

Permitted Work for people in receipt of benefits for incapacity to work allows an absolute limit of £140.00 from April 2020. People who are in receipt of Employment and Support Allowance are allowed to earn up to £140.00 a week without the previous one year time limit.

People who receive benefits for incapacity for work MUST obtain and complete a form from the Jobcentre about their plans to earn some money before they start. This form is a ‘PW1’. The form is now available online. Google search DWP Permitted Work form.

Carers who care for a disabled person 35hrs or more a week may receive Carer’s Allowance. This benefit allows earnings of up to a limit of £128 a week from April 2020, but if the person also receives a means tested benefit such as Housing Benefit earnings over £20 reduce this benefit.

These low limits can make paying people for involvement difficult if their assistance is needed for a day at a time. However in some circumstances payments for involvement may be treated by Jobcentre Plus as spread over a month or longer. Barriers to involvement can be eased if the organisation understands the system.

Universal Credit 

Universal Credit will eventually replace Income Support, income related Employment and Support Allowance, income related Jobseeker’s Allowance, Housing Benefit, Child and Working Tax Credits. The process of introducing Universal Credit is taking far longer than anticipated.

DWP have amended the original plans for Universal Credit. DWP had introduced this massive change to the benefit system with an announcement about making work pay for people on the lowest incomes by tapering earnings at an affordable rate. Universal Credit was planned to remove the financial cliff edge between an income from benefits and an income from a wage.

Since these early announcements, both the Coalition and the current government have passed significant cuts to the amount (work allowance) that people with children or who are disabled can earn before Universal Credit is reduced by 63p in the £.

People who are in receipt of benefits because of ill-health will be able to earn up to the equivalent of £67.43 a week (£292 a month) before Universal Credit is reduced rather than the current rate of Permitted Work of £140.00 a week.

Single people without children have had their work allowance abolished entirely. Their earnings are subject to a scandalous 63pence deduction for every £1 earned.

The transfer of Council Tax Support to local authorities has led to further charges being made on any earnings. In many instances a person who receives Universal Credit may find that for every extra £ they earn 63pence is lost in Universal Credit reductions and a further 20p Council Tax Support reductions. This is an effective tax rate of 83 %.

Warnings! If you are about to be transferred from ESA to Universal Credit there are two pitfalls if you happen to be earning as allowed up to £140.00 a week according to the Permitted Work rules from April 2020.

  1. Your mortgage interest loan payments may be stopped for 9 months.    If you are on ESA and are receipt of Income Support that pays your mortgage interest loan costs and are earning low amounts intermittently you would be well advised to stop earning. Universal Credit has a new rule that means if you accept any payment at all for work or involvement (even £5 on one occasion) your mortgage interest loan payments will be stopped for 39 weeks.  If however you are earning enough on a regular reliable basis to cover your mortgage interest loan costs you could make use of the higher work allowance of £512 a month from April 2020  and pay your mortgage from your earnings instead of Universal Credit OR
  2. Your entitlement to an additional amount for incapacity may be reviewed if you earn the equivalent of the minimum wage rate x 16 hrs a week. Before you are transferred to Universal Credit you should reduce your earnings to less than £140 a week (£139 a week would be an adequate reduction) or risk losing the additional amount allowed in Universal Credit for Limited Capacity for work. See the next page for details.

What about Permitted Work rules for people who are now claiming current benefits during the changes? 

People who currently claim Employment and Support Allowance with Housing Benefit, will continue to be subject to the same Permitted Work rules until they are transferred to Universal Credit.

Earning limits and earning disregards according to benefit conditions: 

Benefit earning limits: Where benefits are received because of ill-health or disability Permitted Work rules apply to any paid work or paid involvement. There are absolute limits on earnings in any week. If the limit is exceeded benefits may be suspended for that week or stopped pending an enquiry into benefit entitlement.

Benefit earning disregards: An ‘earning disregard’ is different to a benefit earning limit. If earnings are above the ‘disregarded’ amount then the benefit is reduced rather than stopped (providing earnings are below the benefit amount).Different earning disregards apply to different benefits: Jobseeker’s Allowance usually has a disregard of £5 a week. Income Support paid to lone parents or carer has a disregard of £20 a week. Housing Benefit has the same disregard as the benefit for Jobseeker’s Allowance and Income Support.

Council Tax Support rules are made by each local authority. There are no national rules on charging.

© Judy Scott Consultancy

Copyright applies to the above information.

%d bloggers like this: