Friday 20 September 2013
Billet d'Etat item: Benefit and contribution rates for 2014 and Modernisation of the Supplementary Benefit Scheme - Housing Department Amendments
The Housing Department thinks that the Social Security Department's plans to modernise the Supplementary Benefit Scheme don't go far enough, and wants to see them amended so that low income households get more help to make ends meet.
If amendments to be placed before the States by the Minister and Deputy Minister of the Housing Department are carried, supplementary benefit rates would be linked to minimum income standards defined by the people of Guernsey. Applying such rates would give households across the Island, both in work and out of work, targeted support.
The amendments will also call for the benefit limitation, which caps the amount of money someone on supplementary benefit can receive from all sources, to be increased to £650 one year earlier than the Social Security Department is proposing.
Deputy Housing Minister, Deputy Mike Hadley said:
"The benefit limitation stops families-usually families with older children, or with three or more younger children, from getting all the support that they need, Social Security wants to put the benefit limitation up to £600 in 2015 and £650 in 2016. We can't see any reason to put it up in two stages. If you recognize that it needs to go up to £650, and you recognize that holding it down is hurting people, why delay?"
As the Housing Department is responsible for accommodating low income families and administering the Rent Rebate Scheme, Deputy Hadley feels that the board has a right to speak up on behalf of low income households across the Island:
"This is about doing more than SSD are prepared to do to help those in Guernsey and Alderney who struggle to make ends meet. It's about doing more to help pensioners, working families, single parents anyone and everyone whose income falls below certain levels."
"In 2012 the States invited SSD to modernize the Supplementary Benefit Scheme so that it became more of an 'in-work benefit' aimed at everybody who didn't earn a living wage. With the economy still flagging and poverty back on the political agenda, now was the perfect time for SSD to unveil a bold, forward-thinking Supplementary Benefit Scheme built on benefit rates designed to meet the specific requirements of Islanders."
"Instead, on the back of a lengthy but undercooked States Report that's sorely lacking in policy detail, the 'modernisation' of Supplementary Benefit amounts to little more than the closure of the Rent Rebate Scheme and the replacement of one set of inadequate benefit rates with another. SSD appear to recognize that the current benefit rates aren't linked to any real-world calculation of need, but admit that the new rates aren't either! Islanders who rely on benefits or pensions, or who take home low wages, deserve better."
Impact on social housing tenants
As part of SSD's proposals, the Rent Rebate Scheme, which is administered by the Housing Department, would close in 2015. Eventually, every social housing tenant would be charged the full rent on the property they are living in. If they couldn't afford it, they would need to apply to the Supplementary Benefit Scheme for help. Housing's amendments, if carried, would do more to protect social housing tenants from the loss of a rent rebate, but Deputy Hadley rejects any accusation that Housing is only interested in looking after its own:
"Housing has always known that the closure of the Rent Rebate Scheme would leave some of our tenants out of pocket. And we've always said that we'd support the end of rent rebates if we could be confident that the new Supplementary Benefit Scheme would provide enough money for low income households across all tenures to fund a socially-inclusive standard of living. That way, we'd know that social housing tenants - even those who stand to lose out financially as a result of the closure of the rent rebate scheme - will be left with enough to live on."
Housing will be looking to amend Social Security's proposals to introduce an alternative set of benefit rates which, he says, will do more to help people in social housing and people renting privately.
"Of course we want social housing tenants and tenants renting privately to be treated equally, but that only goes half way to solving the problem of a community where far too many families don't have enough money to make ends meet. The fact is, living standards for all of the lowest income households need to rise, whether or not they are in social housing."
Deputy Hadley is concerned that because Social Security's report focuses almost exclusively on social housing tenants, the States will lose sight of the bigger picture.
"We can't allow the political debate to degenerate into 'social housing tenants versus other low income families', because it diverts attention from the bigger issue, which is the inadequacy of benefit rates."
Measuring the adequacy of benefit rates
Housing is concerned that the new supplementary benefit rates being proposed by Social Security are not pegged against any measurable assessment of need.
Deputy Hadley said:
"To have confidence in a benefit system you need to have confidence in the way the benefit rates are set. Housing wants to see benefit rates pegged against a minimum income standard agreed by the people of Guernsey, because we think that's the fairest and most transparent way of doing things. To that end, we will be proposing an alternative set of rates that are linked explicitly with the Minimum Income Study carried out in 2011.
"Under Housing's intended amendment, the benefit rates should be set at the equivalent of 61% (on short-term rates) and 70% (on long-term rates) of MIS-derived household budgets. The Department is conscious that in 2012 the States rejected proposals for rates set at 66% and 75% of MIS, partly on grounds of cost, so our rates will be set at lower percentages; but we hope that, in subsequent years, those percentages can be increased."
"We also want Social Security to carry out a new MIS at regular intervals, so that the benchmarking process remains meaningful."
Funding
Housing estimates that, if the States agrees their amendments, the additional expenditure required to fund their proposals will be approximately £6.58m, i.e. £2.83m more than the extra cost of Social Security's changes.
"Social Security has said that funding will come from the Personal Tax, Pensions and Benefits Review,‖says Deputy Hadley. ―Were saying if the States accepts our amendments, the sum to be found from that review will need to be higher than Social Security is prepared to pay. But unlike Social Security, well have a rationale for the higher expenditure which their proposals lack."
Withdrawal of support
The Housing Department originally reluctantly supported Social Security's proposals, albeit with a number of severe reservations (as outlined in its political letter of comment, a copy of which is attached). However, after submitting the letter, and in line with the Policy Council's desire to see a debate on where benefit rates should be set, the Department is of the view that putting an alternate set of proposals to the States is the best way of obtaining the political direction on how poverty should be addressed in Guernsey and Alderney.
Deputy Mike Hadley said:
"By supporting Housing's amendments, the States can prove that it's serious about eradicating poverty. We're giving States Members a choice to agree a higher set of benefit rates, rather than the ‗take it or leave it' proposals being put forward by Social Security."
Further Information
The following is an extract from the Social Security States Report:
Minimum Income Standard (MIS)
The MIS methodology was developed by the Centre for Research in Social Policy (CRSP) at Loughborough University, supported by the Joseph Rowntree Foundation, a social policy research and development charity. In 2011, at the invitation of the Social Security Department, CRSP academics visited Guernsey to carry out a study aimed at identifying a minimum socially acceptable standard of living on the Island, as defined by people who lived here.
Eight focus groups were selected randomly by telephone and recruited by certain characteristics in order to represent a cross-section of Guernsey society. The groups discussed and made decisions as to the items needed by different types of household (including working-age adults, adults with dependent children, and pensioners). Experts on heating and nutrition reviewed the 'household budgets' to ensure that they were healthy, but the decision-making process - on the type, quality and lifesplife spanch item - was entirely focus group-led.
The focus groups agreed that a minimum socially acceptable standard of living in Guernsey should include all the essentials for survival (food, clothes and shelter), but should also encourage human development by taking account of physical and mental wellbeing. Opportunities for exercising personal choice, responsible decision-making and participation in social and cultural life were therefore included.
Staff at the Social Security and Housing Departments then priced each household budget by contacting local shops and service providers. The total cost of each household budget was used as the starting point when, in 2012, the Social Security Department asked the States to approve a new set of benefit rates. The proposed rates represented 66% and 75% of the household budgets created via the MIS process, the higher percentage reflecting the long-term rates. The Department did not recommend rates equivalent to 100% of the MIS for two reasons:
Firstly, several items included in the household budgets were (and are) provided to people claiming supplementary benefit through a variety of allowances: rent is funded through a separate rent allowance; medical expenses are covered separately; a fuel allowance is available in the winter months; and the childcare costs of people who return to work are offset against their earnings. The standard benefit rates therefore do not need to cover these costs.
Secondly, the Department took the view that some of the costs in the household budget relating to social participation were too aspirational, and so scaled them back accordingly.
