Benefit Targeting (Hansard, 3 July 1996)

§ Mr. Lilley

I have today passed two proposals to the Social Security Advisory Committee which are intended to ensure that resources are targeted in a more effective way.

The first proposal is to increase the levels of deduction from benefit that people receive for housing costs where there are non-dependant adults living in the home who are in remunerative work and whose earnings are considerable. It is reasonable to expect non-dependants who are financially able to do so to contribute more towards housing costs than they are doing at present. We propose to introduce two higher levels of deduction: £36 a week for non-dependant adults with gross incomes of between £200 and £249.99 a week, and £39 a week for those with incomes of £250 or more a week.

Similar changes will be made to the help people receive to pay their local taxes by increasing the deductions from council tax benefit to £3.50 and £4 a week for those non-dependants on the above levels of incomes.

The changes will take effect from April 1997 in housing benefit and council tax benefit and from April 1998 in income support and income-based jobseeker's allowance. They will reduce benefit expenditure on housing costs and local taxes, and reduce the burden on the taxpayer.

The second proposal is to change the arrangements for paying child personal allowances in the income-related benefits. At present, the amount of money we give to less well-off families with children at school is not directly linked to the educational year, but depends on the date of a child's birthday. An increase in allowance becomes due 472W at the time of a dependent child's 11th or 16th birthday. This means that some families receive the increase much earlier in the year than others and the increase is not properly linked to educational changes, such as a move to secondary school. We propose to move the date of the increase to the first Monday in September following the relevant birthday. This will broadly align child allowances with the start of the school year when extra costs are more likely to be incurred. Families of pupils who decide to stay on in education at 16 will get their increased help—currently an extra £4.75 a week in income support—from the September of the new academic year.

Relatively few young people will be in non-advanced education in the academic year which begins after their 18th birthday. In the interests of simplicity and consistency, there will no longer be a change in the rate for young dependent people on reaching 18.

In family credit and disability working allowance, the changes will come into effect from the start of the award following the new September trigger date, just as at present increases take place from the award following the child's birthday.

The changes will take effect from April 1997 in income support, income-based jobseeker's allowance, housing benefit and council tax benefit and from October 1997 for family credit and disability working allowance. No one will suffer a cash reduction. The changes will apply only to those whose 11th, 16th or 18th birthday is on or after the date the new provisions would come into force.

There is also a beneficial change for those with child care costs which will help working families claiming family credit, disability working allowance, housing benefit and council tax benefit. The child care disregard, worth £60, will continue to be available until the award in which the increased personal allowance takes effect.

These two proposal are expected to save £80 million rising to about £150 million over the next three years, and will ensure that resources are used more effectively.