Terms & Conditions

[Anonymous]

Jan and Mark, you have been keeping up an heroic effort on this issue. I’ve been following it with great interest, but I haven’t had any time to contribute. For what it’s worth, here are some ideas that occurred to me:

[b:d0788daaea]Relationship between AIF and SC[/b:d0788daaea]

DWP’s reply says: [i:d0788daaea]”Question 3 – What needs to be born in mind here is that while the [b:d0788daaea]AIF and savings credit may have a direct connection in Pension Credit[/b:d0788daaea] (my emphasis – PB) they are separate items as far as the HB/CTB calculation is concerned. So each must be treated separately. Changes to the savings credit must be considered under 68B because that regulation has been inserted specifically to deal with changes to HB because pension credit is payable. Changes to the AIF are changes to income. Therefore, they are not appropriate to 68B and must be dealt with using reg 68.” [/i:d0788daaea]

I disagree. It is extremely important that the council and DWP use the same figures in a SC case, because in this income range the combined withdrawal rate is 91p per £1 of additional income. One-stop verification for the customer is a spin-off advantage, but the real reason why you need an AIF is to ensure there are no worse-off traps arising from DWP and the council taking a different view about the same items of income and capital. The arithmetic of means-testing is very delicately poised in the SC income range. So I would argue the opposite of what DWP says: AIF and SC must always operate as a pair in HB, it makes no sense to separate them.

[b:d0788daaea]What Reg 68B says/tries to say[/b:d0788daaea]

Again, I would have to disagree with DWP’s comments about what the lawyers were trying to accomplish in the drafting here. I believe the lawyers envisaged there being only one effective date for the change in Pension Credit and the underlying change that caused it. Why? I offer two contrasting views of Reg 68B(3).

[i:d0788daaea]First view[/i:d0788daaea]: The lawyers would not have believed it possible to achieve the outcome in Reg 68B(3) as a result of a change in PC alone. A reduction in the amount of Pension Credit cannot, of itself, lead to a reduction in HB, they would have thought. That outcome only ever results when PC is reduced in combination with some other change. So the very existence of Reg 68B(3) caters for a scenario that cannot happen if you restrict the Reg to changes in PC only. The provision must therefore have been drafted to cater for a reduction in PC coupled with another change in income or capital, both to be effective from the same date.

[i:d0788daaea]Second view: [/i:d0788daaea]The lawyers intended Reg 68B to apply only to the change in PC and not to any other associated changes. They put para (3) in there because they knew that it is in theory possible for the following to happen:

– a 64 year-old man is unemployed and getting £72.10 Guarantee Credit to top up his income from capital of £30 (he has £21,000 of savings). he has no other income.

– on his 65th birthday a shedload of retirement income comes on stream and he only qualifies for £5 of Savings Credit.

– taken on its own, the reduction in PC from £70.10 to £5 would actually reduce HB, because the capital would no longer be disregarded.

– therefore a reduction in PC has directly resulted in a reduction in HB, even if you ignore all the other changes.

The lawyers knew that the Regs had to cater for this unlikely scenario, hence Reg 68B(3) was included. This already dodgy view is further weakened by the fact that you have to accept the term “reduction” of HB includes a reduction from something to nothing: if it doesn’t, then there is no way at all in which a reduction in PC can directly cause a reduction in HB that leaves residual entitlement to HB.

I think the first view suggested above is more likely to be correct. I would maintain that the policy intention, certainly among the people who drafted the legalese, was to apply a single date for both or all changes.

[b:d0788daaea]”Timeously”[/b:d0788daaea]

I think the DWP’s comments on this are muddled. The only time limit that exists in the D&A Regs as far as I am aware is one calendar month to report an advantageous change (i.e. one that increases benefit). But Reg 68B(3) is concerned with changes that reduce Pension Credit, not increase it. I would suggest a different definition of “timeous”: in time to stop another payment going out at the wrong rate. This could be anything from a matter of hours to a complete payment cycle, depending on when you get paid and when the change happens; although you would think there should be some reasonable reaction time buiklt in. I doubt it will be as long as a month though.

Finally, I would like to echo Mark’s comment in one of his enquiries to DWP: what on earth will the commissioners make of DWP’s suggestion that it is not the council’s place to try and interpret legislation? The gist of one of DWP’s replies seems to be that you administer the scheme the way the DWP tells you to and just accept that the lawyers have written what the DWP asked them to. It’s as if the legislation is just a necessary formality, there has to be some in the background, but the council should consult the Q&A log for definitive instructions on how to interpret the scheme.

Keep plugging away you two.