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Claimants notified of reductions in jobseekers allowance

Friday, 11 September 2015

The Social Security Division of Treasury will be writing to claimants further notifying them of reductions to some elements of Jobseekers Allowance (JSA), the principles of which were approved by Tynwald at the July sitting and come into effect from November 1 this year.

Social Security staff are working hard to ensure all claimants are fully aware of these changes. In addition Job Centre advisors will be present at all signing-on days over the next few weeks to support and assist those who will be immediately affected.

The reductions reflect Treasury’s view that aspects of the Island’s JSA system act as disincentives to taking up job opportunities. Current rates of personal allowance for single jobseekers are up to 38% higher than the UK equivalent.

The changes, designed to provide further encouragement for claimants to move into employment, include:

  • incremental reductions to the personal allowance element in the rates of income-based JSA for jobseekers who have been signing on for more than six months, up to a maximum 40% reduction in this element for those who have been on JSA for over a year. Any allowances for children and housing costs are not affected.
  • reducing the rates of the personal allowance element in income-based  JSA for jobseekers who do not have to pay housing costs.
  • reducing the amount of earnings a jobseeker can have from part-time work before it affects their JSA, 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 wage. 

The labour market statistics for July this year showed 790 registered unemployed including 160 classed as long-term unemployed (signing on for 12 months or more). There were 450 vacancies at the Job Centre at the end of the month, 200 of which required no qualifications.

Bill Henderson MLC, the Treasury member responsible for social security matters, said:

‘Being in work is better for people not just financially but also in terms of their personal wellbeing, morale and self-esteem. These changes to certain elements of JSA will increase the relative advantage of being employed and earning, rather than staying on benefits, and will provide the added incentive that some claimants need to take up one of the job opportunities that are available.’

Explaining the reduced rates for those without housing costs, he added:

‘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 and do have to pay housing costs, so we are introducing lower rates of JSA for such people.’

Mr Henderson went on:

‘These are significant reductions so we are contacting everyone affected explaining what is happening and giving them notice that the changes come into effect from the beginning of November.

‘After Tynwald approved the provisions in July, Treasury advised all jobseekers of the changes to be introduced in November and the letters being issued this month represent further actions designed to keep jobseekers informed and aware as we move into the last eight weeks before the reductions come into force.

‘Job Centre advisors are interviewing every person who has been unemployed for nine months or more during September. We are trying to establish the reason for their continuing unemployment so that we can provide a more individually-focussed support service to help them overcome any specific barriers. Many of them will be in similar situations and can – to some extent- be grouped, but even a slight shift in how we encourage them may help them succeed where they have previously failed.’

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