Thursday, September 28, 2006

Free Money

It is received opinion that a significant proportion of people on Incapacity Benefits are malingering; that is, they are capable of work, but choose instead to live off benefits instead. The stated ambition to get a million people off Incapacity Benefits (more than half of the current beneficiaries) suggests that the government at least wants us to believe this is the case. And listening to the conversations that arise among ordinary folks, it certainly seems a commonplace perception; a lot of us are simply on the scrounge.

But we're not. I don’t know of course, there are surely some malingerers out there and certainly reforms are needed, including changes which would be of genuine help to disabled people to enable them to work or at least do some work. A major flaw with the current system is a failure to acknowledge any middle ground between the working-week and the scrapheap; it is often safer and financially more rewarding to do nothing at all than attempt a little bit, if a little bit is all that a person is capable of.

However, the idea of widespread malingering is damaging to all disabled people. And I know it is the height of vulgarity to talk about money, but I am afraid the only way I can argue against this untruth is with the use of gratuitous maths.

I have to simplify this a bit, because the benefits and tax systems are immensely complex and individual’s personal circumstance can vary widely. Once I made the assertion that it always pays to work and someone replied with their own figures, which incorporated a significant private pension. However, I don’t feel that it is those in receipt of ill health pensions who commonly stand accused of malingering; after all, these folks have had to prove to a commercial organisation that they are not only unable to work, but they will never be able to work again.

The stereotype of the malingerer would be someone of low socio-economic status who is unlikely to be able to earn a great deal of money in any case. So we’ll go with the stereotype. I shall also make them single and childless for simplicity.

The minimum wage for people aged 22 or over is £5.35 an hour. So say I do a 40 hour week at minimum wage – a rock bottom job - that’s £214 a week. According to this tax calculator, I would be left with £179 after tax and NI.

If I were a single person and a tenant (after all, £179 does not pay a mortgage), I would be entitled to Housing Benefit. I would receive my ‘eligible rent’ (i.e how much the council think I ought to be paying for the minimal standard accommodation) less £23.35.

This leaves me with a net income of £155.65 a week after rent.

The highest rate of Incapacity Benefit (i.e that payable after you have been unable to work for year) is currently £78.50 a week. People on Incapacity Benefits are not eligible for Income Support or any other concessions like free prescriptions. There are other benefits that disabled people claim, but none of these are related to capacity to work.

If I were a single person and a tenant, I would receive my ‘eligible rent’ less £7.40, leaving me with a net income of £71.10 after rent.

Thus, it pays to work. Earning the absolute minimum a person can earn full time, it pays £84.55 a week, or four and a half thousand pounds a year. Which is significant. Plus, all the non-financial benefits and freedoms associated with being in work. Which are also significant.

Arguably, people in work have more expenses, such as transport and buying suitable attire. However, people out of work have to find things to do with themselves all day, every day, and we could argue about exactly what the precise difference might be until the cows come home.

But, there are three important points about this which may explain why some people may be on Incapacity Benefit when they shouldn't be:

1. It may be better to be Incapacitated than Unemployed

Jobseeker’s Allowance (Unemployment Benefit) stands at £57.45 and is paid on condition that a person signs on every week. People on Jobseeker’s Allowance must prove that they are looking for work.

So, a long-term unemployed person stands to gain up to £20 a week (after a year), and free themselves from a great deal of hassle if they can prove that they are unable to work due to ill health. Being disabled does not necessarily mean a person is incapacitated for work, but if poor access and discrimination make it difficult for them to gain employment, then one can have some sympathy with their choosing to claim that their health problems are more limiting than they actually factually are.

Disability is not the only factor in this; folks subject to age discrimination or people living in areas with very high unemployment could also succumb to this temptation – if indeed they haven’t been actively encouraged by authorities wishing to reduce unemployment statistics.


2. Most fraud involves claiming Beneift and working anyway.

This is the only way that fraud could actually pay; there’s no economic reason to stay at home on benefits when one can work, but if one is fit enough to work, one has managed to wangle a successful claim for Incapacity and one has one's moral fibres in a tangle, there is money to be made by playing the system.

However, the truth is that folks who do this are probably not that organised or calculating. I imagine the sort of thing that happens is that a person is genuinely incapacitated for a period of time, but their condition improves, they go back to work and simply neglect to inform the appropriate agencies of the change. If they are hard-up, they may feel that they simply can't afford to let this money go. But it is a great naughtiness and folks who do this risk prison.


3. Some people believe everything they read.

If a person were to believe everything they read, they may well think that a life on benefits is a life of luxury. If such a person was not very good at maths, then they might well consider giving up work and feigning a medical condition in order to enjoy the delights promised to them. Well, it could happen...

On the subject of fraud, Morning Star has some news about Blue Badges, which I haven't seen mentioned anywhere else.


kethry said...

thankyou, hon. I shall be showing this entry to certain induhviduals who seem to believe that i'm doing the whole "claiming incapacity" thing to get out of work, and that my OH and i are living the life of riley while we claim benefits. living off benefits is a full time job - the sheer meagreness of the money means that in order to survive, one has to make pennies and pounds stretch as far as possible, and THAT is the part that is almost a full time job, wandering around different supermarkets, calculating the price differences, trying to get heavy items home on the bus and then having that wiping you out for the best part of a couple of days.. its not easy and its not fun.


p.s. on the subject of blue badges (and i really need to copy morningstar in on this one): locally, a man with a blue badge has been conducting a campaign against our local asda (one of the biggest in the country) for failing to address the issue of people parking in disabled spots without a blue badge - made the front page of the local newspaper.. - and i know there's been a real crackdown on people using fake disabled badges to get free parking in manchester - a story on 31st March this year reported that more than 300 drivers were to be brought to court for exactly that.

Mary said...

Tax Credits
If you have recieved Incapacity Benefit or DLA, and start working 16 hours a week or more, you are entitled to Disabled Person's Working Tax Credit. Not a massive amount, but a bonus, certainly.

That said, I will not personally recommend anyone to take up Tax Credits. They can be a lot more trouble than they are worth unless you're *really* good at filling out forms and waiting on hold on the phone for up to an hour at a time (the hold resets and hangs itself up after one hour).

Permitted Work
This is where an IB claimant may work for less than 16 hours a week and earn, and keep, up to £70 a week **on top of their benefit** for a maximum period of six months. This is usually supported by the JobcentrePlus or an agency dealing with helping disabled people back to work who deal with the bulk of the paperwork and may also help set up the placement, deal with accessibility issues, etc.

Supported Permitted Work
As above, but highly supervised by the agency. This is for people who are NOT likely to "ease back into working more than 16 hours a week", so every so often they see someone at the agency to discuss how things are going, and assuming there are no changes, everything continues. The six-month limit does not apply as long as the agency is stating that the client Really Could Not do more. Typically these people work about 8-10 hours a week.

Benefits Protection
On getting a job you can also apply for 12 months' benefits protection. This means that if, say, after 6 or 7 months, your job isn't working out, you can go into the JobcentrePlus and get put back on the same level of benefits you were on before. It doesn't count if you are sacked - only if you "have to leave for health reasons".

No prizes for guessing what I used to do for a living, before I went and got ill myself.

Mary said...

oh, and I am a single tenant getting Incapacity Benefit, and I get Income Support as well. I think it might be because I get quite a high level of DLA and therefore count as "severely disabled"... the IS I get isn't the full level, it's about £10 a week, BUT it then means I'm entitled to free prescriptions, glasses, hospital transport, all that sort of thing, because of my IS status.

I met people at work who were entitled to IS of about 30p a week, which they were given as a single Giro once a year... the money wasn't the important part, it was everything that went with it.

The Goldfish said...

Great news about the campaign in Manchester, Keth. :-) You're quite right about the effort involved in living on the state. What's more, I've never met a single person unable to work who isn't extremely frustrated about that limitation - not just the money, but everything that goes along with being able to provide for oneself.

Fair point about IS and Tax Credits, Mary - I had to simplify things, of course. You're quite right that IS can make all the difference, especially with stuff like prescription charges.

Permitted Work
This is where an IB claimant may work for less than 16 hours a week and earn, and keep, up to £70 a week **on top of their benefit** for a maximum period of six months.

£70? If it has changed to that, that's absolutely great, but last year it was a £20 disregard, after which all the money was removed from my benefits. What's more, if you do a one off piece of work, then it counts as if you are working from that point for the next six months - after that, I had a choice between "Supported Work" or to be forbidden from working at all for a further year. I was told the "Supported Work" must be intended to help me move towards full time work - which of course, being paid for writing the occasional article, was not.

Mary said...

Ah, were you getting Housing Benefit as well? They cap at £20, because £20 is what IS caps at, before taking pound for pound. I know, I know, it's silly. I think it's cos HB is dealt with by local govt, while the others are central.

But for IB, when I was working, I'm sure it was about £70 for a max of six months. Supported Permitted Work had a lower amount you could take home, but was an indefinite period of time.

Or thinking again, it could have been because we were part of a pilot scheme, although I think that was for something else.

One-off bits and home-working (you know, like when a company sends you a box of leaflets, a box of envelopes, and twenty sheets of address labels) were things we discouraged because the system wasn't designed to account for them, it caused people more problems than anything else, as you found out. The hourly rate doesn't work out as minimum wage (usually) which is a large part of the problem.

The way round this is voluntary unpaid work. You write a piece for a newspaper/magazine, you send it, you express that you *do not want payment*. You also keep a copy of this standard letter. Then you're getting published (which I assume is what you want from the exercise, rather than the odd £50 here and there), there's less paperwork, and anything they give you is either a GIFT, or EXPENSES.

And you can do as much voluntary work as you like.

We did tend to make the benefits agency aware that our clients were doing (whatever) voluntary work, to avoid problems if someone saw them "going to work" once a week and tried to snitch them for fraud. The only problem we had was that occasionally someone at the Jobcentre would get confused and send through the Permitted Work forms, and we'd have to explain clearly and carefully to the Jobcentre muppet the difference between Permitted PAID work, and theraputic volunteering.

kethry said...

"jobcentre muppet".... absolutely fits the description to a *T*!!!

I have to say though, to be scrupulously fair, i used to work for a company working very closely with jobcentre workers, and of course i've had plenty of experience on the benefits side over the last three and a half years. I've generally found that they're either absolutely brilliant, know their job inside out and are *really* underpaid for what they do and the level of help they give people... or they're people who do the bare minimum, won't go out of their way to help anyone, clock in at 9 on the dot, go home at 5.30 on the dot, stick to the rules *rigidly*, and generally use their job as an excuse to behave like complete... *insert very naughty swearword here*.

sadly, there are far too many of the latter.. and no where near enough of the former.. and equally sadly, the whole civil service system isn't set up to encourage people to work like the former rather than the latter. I used to do a job very similar to one specific person in the job centre, and the difference between me and her, with me working for a private company was about £5k a year, 5 days holiday, and £600 a year in bonuses.

I've an appointment on monday, as it happens, to examine the situation myself and my OH are in (I claim IS for him, as he's unemployed), and i fully expect the jobcentre muppet to put serious pressure on him to get a job, any old job. Fortunately, they can't put pressure on me, at least, not undue pressure.. i do know that much of the system!


The Goldfish said...

Yes, Mary, that would explain it.

I sometimes think that jobs in the benefits agencies give people quite a lot of power. And for some people, this is the positive power to help people who have fallen on hard times - as most people have when they are claiming benefits. But for others, I sometimes wonder if they get a kick from assuming some sort of moral high-ground and forcing folks to jump through hoops to get the help that they are entitled to (and have more often than not paid for through tax whilst working).

Good luck with your appointment Keth!

Mary said...

Keth: Yes, I think our Jobcentre had two effective people for every seven muppets, it was just a question of praying for who would pick up the phone.

Got to say though, that I fully advocate going in at 9 and coming out at 5.30, on the dot. Half the reason I got as ill as I did and ended up disabled and out of work was because I overdid it - unpaid overtime, which I was supposed to take back "in lieu" but never got round to doing because there was so much to do, taking work home with me, that sort of thing. I was basically working, sleeping and eating. If I'd been sensible enough to just work my contractual hours, and leave work at work and keep home for home, ok I might have still got ill, but not as badly.

Goldfish: I think the company I worked for had the advantage because we weren't the Jobcentre, we were an external agency. We did not have the power to stop people's benefits, and our targets weren't connected to getting people off benefits.

We had referrals from doctors who felt patients would benefit from getting back into a workplace of some sort. We had people with plans of years before work would be considered, for instance one year doing a single GCSE course to get back into the swing of learning and deadlines, two years for an appropriate FE/HE course, and then we'd start to look at part-time work.

Actually, there's a point. Often when the terms "full-time" and "part-time" are bandied about, what it actually means is more/less than 16 hours. 16 hours is the magic number.

Anonymous said...

Hi, Can anyone help my mum (58) was made redundant after a few years in a job, had only 6 months prior bought her house and didn't take redundancy cover, she managed to stretch her little payout to cover 3 months mortgage and found another job but unfortunately was only temp and has been paid off again after only 6 weeks. She has been told that her mortgage or interest will only be paid after 9 months. How crazy is that how can she possibly meet her payments off Job seekers allowance. She is beside herself, what annoys me is, if you are unemployed an renting you get housing benefit, surely there should be something in place for a women who has worked all her days and is now in financial turmoil. Can anyone help with some info.

Kindest regards.