Changes to jobseeker’s allowance (JSA) designed to further encourage claimants into employment will be moved at the July sitting of Tynwald by Bill Henderson MLC, political member of the Treasury with special responsibility for social security matters.
The changes include:
- reducing the rates of JSA for jobseekers who do not have to pay housing costs;
- incremental reductions in the rates of JSA for jobseekers who have been signing on for more than 6 months;
- scrapping the current rule whereby a jobseeker who takes up temporary work of 16 hours or more a week - with a view to improving their prospects of getting a full-time job - loses all their JSA.
Mr Henderson explained:
‘In his Budget speech in February this year, the Treasury Minster pointed out that the rates of income-based JSA payable on the Island are significantly higher than in the UK. He announced a review to look at reducing the rates of income-based JSA either across the board, or on a targeted basis.
‘Since then the Treasury has carefully considered where our allowances might act as a disincentive to returning to work and where reductions should therefore be made. We have concluded that people who do not have housing costs – generally those who are living with family or friends – do not need the same level of support as those who are living independently who have to pay housing costs, so we intend to introduce lower rates of JSA for such people. The Treasury has also concluded that JSA should be reduced incrementally for all jobseekers after they have been unemployed for 6 months.’
Subject to Tynwald’s approval, the lower allowances will come into effect from November 1 this year and all jobseekers will be advised immediately of the changes. Abolition of the ’16-hour rule’, to support those trying to return to full-time employment by way of temporary work, would be effective from August 9, if approved.
Mr Henderson concluded:
‘If approved, these changes will result in a growing advantage to being in work and earning, rather than staying on benefits, and will provide the added incentive some jobseekers need to find a job and leave benefit. Some jobseekers may need to re-double their efforts to find work if they are to avoid a reduction in their benefits. Furthermore, it is Treasury’s intention to now look at whether some of the changes being introduced for jobseeker’s allowance might also be mirrored in income support’
Further information:
- To qualify for a jobseeker’s allowance a person must, generally speaking, be
- unemployed, or working for less than 16 hours a week;
- capable of work;
- available to take up full-time work, usually straightaway; and
- actively seeking work, i.e. taking at least three steps in each week to look for work or improve their prospects of getting work.
- Jobseeker’s Allowance (JSA) has two elements:
A contribution-based element – which is paid at an age-related, flat rate and entitlement to which depends on the claimant having paid sufficient National Insurance contributions in the prescribed period. The amount payable is reduced if the claimant receives an occupational or personal pension or has earnings from part-time work of more than £30 a week. The amount of contribution-based JSA payable is not affected by any other income or capital the claimant of their partner (if they have one) has. Contribution-based JSA is paid for a maximum of 6 months in any jobseeking period.
An income-based element – which is means-tested and intended to meet a person’s living and housing costs (if they have any). A claimant does not have to have paid National Insurance contributions to qualify for an income-based JSA. The amount payable is affected by any other income or capital the claimant (or their partner, if they have one) has. Income-based JSA is payable for an indefinite period, subject to the claimant meeting all of the qualifying conditions.
- A person’s entitlement to an income–based JSA is assessed by comparing their applicable amount with any income they or their partner are treated as having. The amount by which their reckonable income falls short of their applicable amount is the amount of income-based JSA they are entitled to.
- A person’s applicable amount is made up of:
- a personal allowance for themselves and their partner (if they have one);
- personal allowances for any dependent children they have; and
- an allowance towards their housing costs (e.g., rent, mortgage interest, rates), which may be capped.
Exceptionally, a jobseeker may also be entitled to an extra amount (called a “premium”) if they or their partner are disabled, care for a severely disabled person or are of state pension age.
5. Currently, the weekly rates of personal allowance for a single jobseeker are:-
- £80.00 for a jobseeker aged between 18 and 24; and
- £100.05 for a jobseeker aged 25 or over.
These compare with the UK rates of personal allowance of:-
- £57.90 for a jobseeker aged between 18 and 24; and
- £73.10 for a jobseeker aged 25 or over.
- The same rate of personal allowance applies whether the jobseeker lives independently (in a flat or house) or with family or friends. Clearly a person who lives independently - a “householder” - has to meet expenses which a “non-householder” does not have, such as utility bills, repair and replacement of furniture and household equipment, domestic cleaning products etc.. Therefore the Treasury has decided that given these differences, new lower rates of personal allowances should be introduced for jobseekers who are not liable for housing costs, equivalent to the personal allowances payable in the UK, viz:-
- £57.90 for a jobseeker aged between 18 and 24; and
- £73.10 for a jobseeker aged 25 or over.
- New, lower rates of personal allowances for couples and lone parents who are not responsible for housing costs are also being introduced, set at around 27% below the current rates.
- The Treasury also believes that jobseekers who have been receiving JSA for at least 6 months should have their allowances reduced, so as to further incentivise them to return to work. Once they have been on JSA for 6 months their personal allowance will be reduced by 20% (any allowances they receive for their children or towards their housing costs, or any premium they might be entitled to, will not be reduced). Three months later, i.e. after they have been on JSA for 9 months, their personal allowance will be reduced by a further 10%, and 3 months after that, i.e. after they have been on benefit for 12 months their personal allowance will be reduced by a further 10%. At this point their personal allowance will be reduced by the maximum 40%.
- Also, the amount of earnings a jobseeker can have from part-time work before it affects their JSA is being reduced from £30 a week to £10 a week. This is because it is possible for some jobseekers to have a greater income (through JSA plus £30 earnings) than the net pay of an adult working full-time on the minimum hourly rate of £6.65.
10. Subject to Tynwald’s approval, the changes set out in paragraphs 6 to 9 above will come into effect from 1 November 2015 for new and existing claims.
11. Currently, if a jobseeker in any week works for 16 or more hours a week they will lose the whole of their JSA for that week, irrespective of how much they earned. This is preventing some jobseekers from undertaking temporary work of 16 or more hours a week, which could improve their prospects of getting full-time work. Therefore, this “16-hour” rule is being abolished and a person’s entitlement to JSA will instead be determined only by the level of their earnings.
12. Similarly, if a jobseeker’s partner works for 24 or more hours a week he is not entitled to any income-based JSA, irrespective of the level of his partner’s earnings. This can lead to some people actually giving up their jobs so their partners can get an income-based JSA which is worth more than their earnings. This is clearly nonsensical, so this “24-hour” rule is also being abolished; entitlement to income-based JSA will instead be determined only by the level of the partner’s earnings.
13. The Treasury is also tightening up on jobseekers who fail to sign on at the date and time they are required to. Whereas currently “late signers” have up to 5 working days to explain why they failed to sign on on time, in future they will only have 2 working days. And whereas currently jobseekers who have lost benefit because they repeatedly failed without good cause to sign on on time can claim emergency payments, in future no such help will be available to them for 14 days.
14. The changes set out in paragraphs 11 to 13 above will, subject to Tynwald’s approval, come into effect from 9 August 2015.
