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Working for a change? The same as you?

LEVEL ONE: A fairer and simpler tax and benefits system

The interaction between pay, tax and benefits is always complex. But it increases in complexity for vulnerable people who are caught in the gaps between sickness and disability benefits, Income Support and employment, and housing, support and care benefits. The problem is that it tends to become most complex for the most vulnerable, including people with learning disabilities. People with learning disabilities also tend to have the greatest difficulty understanding complex rules and advocating for themselves. They are the very people for whom the rules need to be most simple, but the opposite happens.

Compounding this, people typically pay very high marginal tax rates when moving from benefits into employment, so their net rate of pay is very low.
As well as losing income support, housing benefit and council tax benefit, working tends to impose extra costs, for example for travelling to work, prescription charges and so on.

Two examples show the very real differences in 'making work pay' for two people with learning disabilities who have recently taken on employment at 16 hours per week. Although both are better off in work, the impact of differential previous benefits due to differing needs has a dramatic effect on their ability to 'make work pay'.

The above example shows that for some people with learning disabilities, the transition from benefits to wages currently offers little financial gain. But these disincentives are compounded by doubts about the potential barriers that may be had in regaining benefits if work finishes for any reason.

Although gaining employment does not mean that people lose Disability Living Allowance or even that they are subject to review, it seems that many people are told or understand that this might happen. As people with learning disabilities are also more vulnerable than most to misinformation and inconsistency, a watertight benefits-to-work mechanism aimed specifically at this group is vital to give people the confidence that will enable them to take chances to work.

But the long-awaited Department for Work and Pensions Green Paper Pathways to work: helping people into employment (November 2002) still focuses on getting disabled people into work in the short-term rather than recognising the benefits of supporting people in work in the medium and long term.
It offers little recognition of the work done by supported employment agencies who provide the delicate and skilled balancing act of joint support for the individual with learning disabilities, their employer and their co-workers, thereby enabling a successful transition to employment and - most importantly - its sustainability.

There has been some progress in recent years - for example, the tax credit system for people working 16 hours or more a week and the 'supported permitted work' rules for people working less than 16 hours. The supported permitted work rules mean that people with a learning disability in supported employment can earn up to 67.50 per week without losing incapacity benefit or severe disablement allowance - although they will still lose income support pound for pound if they earn more than 20 per week, and their housing benefit and council tax benefit will also be affected.

And whilst the Disabled Person's Tax Credit has now been mainstreamed as part of the new tax credit system, this has not been publicised effectively and accessibly for people with learning disabilities, and therefore few people are likely to realise that it applies to them. The importance of providing clear, targeted information on benefits, tax credits and transitions to work cannot be overestimated in helping people, their families and professional supporters to assess the costs, benefits and risks of seeking work. If the policy aim can be to always 'minimise the risk', more people with learning disabilities, including those with significant learning disabilities, will actively seek work.

Recommendation 1: Specifically publicising to people with learning disabilities the advantages of employment and the role of the new tax credits

We recommend that the Scottish Executive approach the Inland Revenue to request that they - directly or through a commissioned agency - specifically promote the new tax credit system targeting people with learning disabilities. The Executive should also ask the Department for Work and Pensions to commission and distribute accessible booklets about benefits and services they provide. This could include a web-based guide for people with learning disabilities addressing Frequently Asked Questions about moving into and sustaining employment.

The introduction of Supporting People, the availability of Direct Payments and the transfer of funding and responsibility for Preserved Rights from the Department for Work and Pensions to local authorities from April 2002, all increase the flexibility of local authorities to provide individualised support to people in their own homes. This means that fewer people with a learning disability are now living in residential care and paying an 'all-in' charge for care and accommodation, commonly of 300 or 400 per week. Again this contains the seeds of potential for allowing more people with significant learning disabilities to seek, get and keep a job.

But to take full advantage of this, to make real inroads into employment for people with learning disabilities, it is important that the Scottish Executive do more to minimise the perceived risk of taking employment. The Executive needs to go further and ensure that people are not financially disadvantaged or deterred in a move into employment by the prospect of increased local authority charges for care and support.

Recommendation 2: Making work pay for people with learning disabilities who receive care and support at home

We recommend that the Scottish Executive continues its work on applying Supporting People to Scotland and consider the need for a Guidance Note clarifying that local authorities should disregard any earned income in their charging policies under Supporting People.

Underlying all this is the inherent complexity of the tax and benefits system mixed with the persistent rolling out of tax and benefit initiatives which may or may not affect people with learning disabilities. People with learning disabilities are more likely to have difficulty negotiating complex systems than most of the population - and the complexity of the benefits system makes it very hard for even the very best professional communicators to give clear and easily comprehensible advice. A 2-year Equal Theme A and Scottish Executive-funded research and training initiative by the Scottish Poverty Information Unit is currently examining the question of how agencies can better help marginalised groups, including people with learning disabilities, to understand the benefits, tax credits and transitions to work. A training pack will result, which will be very welcome.

But the role of key workers in care homes and day centres, of Careers Scotland, of schools and colleges, and of those providing day-in, day-out floating support for people with learning disabilities are also absolutely vital - and commonly overlooked - in creating a culture of moving into work. These professionals are key 'gatekeepers' to employment. They are key opinion formers who need to be able to communicate with confidence with people with learning disabilities about choices and risks in employment. The complexity of the transition from benefits to work makes this an unenviable task. So the path of least resistance - continuation on benefits - tends to be sustained.

We propose a dual strategy to lower this barrier. First, a specific, targeted and sustained scheme is needed which guarantees specifically to people with learning disabilities that they will both be better off in work and can go back on benefits at the same level if work is unsustainable for any reason. Secondly, far more targeted work should be done to ensure that anyone thinking about paid work gets an accurate and understandable 'better off' calculation done by whichever agency they approach for advice - Jobcentre Plus, the Citizens Advice Bureau, a specialist employment agency, or the agency which provides their day-to-day support.

Recommendation 3: Ending benefits uncertainty and reducing the risks of taking work for people with learning disabilities

We recommend that the Scottish Executive works with other agencies, including Jobcentre Plus and the Department for Work and Pensions, to overcome institutionalised inequalities in knowledge and awareness of benefit/work transitions. It should do this by ensuring that people with learning disabilities in Scotland receive targeted, accessible, benefits advice and better-off-in-work calculations. This information needs to enable people with learning disabilities to understand if, and by how much, they will be financially better off than on their current benefits if they choose to work for any number of hours per week, however few.

The Scottish Executive should also enable the risk of taking employment to be minimised for people with learning disabilities. We recommend that the Scottish Executive ask the Department for Work and Pensions to consider protecting the level of benefits for people with learning disabilities beyond the present linking period if they are unable to continue in work for any reason.

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