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3 Case studies

This section considers a number of case studies. They illustrate the impact on benefit entitlement of becoming responsible for a child or children. They include kinship carers with different circumstances.

In the case studies, unless otherwise stated, it can be presumed that:

• the kinship carer has been deemed responsible for the child for benefit purposes;
• the children are not disabled;
• the kinship carers are not disabled;
• the children have no savings or income in their own right;
• the kinship carers have no savings or income other than that indicated.

In all but one of the case studies the kinship carers live in rented accommodation. This is because the situation with mortgage payments is complex; this is dealt with in general terms in section 4.7. Figures for housing benefit and council tax benefit are included in the totals for comparison purposes, although these benefits are usually paid directly to the landlord and the local authority.

These case studies are loosely based on real examples, but additional details have been added to enable the entitlement of means tested benefits to be calculated. The calculations provide approximate figures for benefit entitlement.

Case study 1

Part a)

A 55 year old single woman is unemployed and lives alone. She is in receipt of income-based jobseeker's allowance ( JSA). She lives in rented accommodation, and the rent is £50 per week and the council tax (minus the water charge, as this is not covered by council tax benefit) is £20 per week. She was widowed two years ago.

Her six year old grandson comes to live with her. She does not receive any financial support from either the local authority or the child's parents.

Table 3.1 illustrates the benefits she will be entitled to before and after she becomes responsible for her grandson.

Table 3.1 Benefit entitlement for case study 1a)

Her benefit entitlement increases by £61.83 once she becomes responsible for the child.

As the claimant is on income-based JSA before the child comes to live with her, she will receive housing benefit and council tax benefit in full. Once the child moves in with her she will be eligible for child benefit and child tax credit. She will be able to claim income support rather than income-based JSA, as she is a single person responsible for a child under 16.

When claiming income-based JSA a claimant must:

• 'sign on', usually at a JobcentrePlus; and
• be 'actively seeking work'; for example, by
  • attending advisory interviews at the Jobcentre Plus;
  • proving job applications are being made;
  • attending job interviews;
  • registering with agencies.

None of the above is needed when in receipt of income support. However, she will not receive national insurance credits when on income support. She will, however, be eligible for HRP if she is getting Child Benefit for the child. She will need to decide if this is relevant for her and then which benefit to claim.

Part b)

One of the parents of the child starts to make child maintenance payment of £30 per week. Table 3.2 illustrates the impact of this payment.

The child maintenance counts as income for the calculation of income support, with £10 per week disregarded.

Table 3.2 Benefit entitlement for case study 1b)

Case study 2

A couple, both in their thirties, take on the care of a 4 year old relative. They have no children of their own. The female partner gives up paid employment to care for the child. The male partner works full time and earns the average wage of £23,244 per annum (£447 per week). They are owner occupiers with a mortgage, and they pay council tax of £40 per week (without water charge). They receive no payments from either the local authority or the child's parents.

Before they become responsible for this child, they will not be entitled to any benefits, irrespective of the income of the female partner. Table 3.3 illustrates their benefit entitlement once they are responsible for the child. The male partner's income will stay the same, but they will obviously lose the income of the female partner, as she gives up paid employment.

Table 3.3 Benefit entitlement of couple once they become responsible for a child.

There is no entitlement to working tax credit, as the couple's income is too high. However, the addition of a child to the household means that some council tax benefit is payable, although they will still need to pay £37.49 per week council tax.

They will not receive help with their mortgage, as these housing costs can only be considered if a claimant is entitled to income support or income-based JSA. This couple are not entitled to these benefits, as the male partner works too many hours.

This couple will lose the earnings of the female partner, and will gain £30.46 per week in benefits if she gives up paid employment to care for the child full time. If she did continue in paid employment, childcare costs would not be covered by working tax credit as their income is too high (whatever she earns).

Case study 3

Part a)

A single pensioner of 68 becomes responsible for her two grandchildren. They are 6 and 8 years old. She is in receipt of state retirement pension, and has an occupational pension of £160 per week. She lives in rented accommodation, and her rent is £52 and her council tax (minus water charge) is £25 per week. She has savings of £15,500. She receives no payments from either the local authority or the children's parents.

Table 3.4 illustrates her income and benefit entitlement before and after she becomes responsible for the children.

Table 3.4 Benefit entitlement for case study 3a)

This woman's income will increase by £164.12 per week when she becomes responsible for her two grandchildren. Her own retirement benefits remain the same, but as she now has two children in her household she becomes entitled to both housing benefit and council tax benefit. She also becomes entitled to child benefit and child tax credit.

Case study 4

A couple, both aged 70, become responsible for the two grandchildren of the female partner. They both receive state retirement pension and some guarantee pension credit. They live in a house rented from the local authority, and pay £55 per week rent and council tax (without water charge) of £28 per week. The children are 12 and 10 years old. They have no occupational pension or savings. They receive no payments from the local authority or the children's parents.

Table 3.5 illustrates the benefits they would receive before and after becoming responsible for the child.

Table 3.5 Benefit entitlement for case study 4

The couple will be £107.41 better off when they become responsible for the children. As this couple were entitled to full housing benefit and council tax benefit in their own right before the children moved in, there is a smaller gain here than in case study 3.

Case study 5

A retired couple aged 69 and 71 become responsible for their two grandchildren, aged 10 and 8. They have savings of £25,000 and an occupational pension of £8,000 and £7,000 per annum respectively, and both receive the state retirement pension. They pay rent of £55 per week, and council tax of £28 per week (without water charge). They receive no payments from the local authority or the children's parents.

Table 3.6 illustrates the benefits they would receive before and after becoming responsible for the children.

Table 3.6 Benefit entitlement for case study 5

This couple will have an increase in income of £41.20 when they become responsible for their two grandchildren. The level of their occupational pensions and savings means that they are not entitled to council tax benefit or housing benefit. It also reduces the amount of child tax credit that they would be paid.

Case studies 3, 4 and 5 illustrate the implications for kinship carers of retirement age, on different levels of income, of taking over responsibility for two children.

The maximum income gain occurs for kinship carers who only receive a small amount of housing and council tax benefits themselves, but have an income low enough that they become eligible for them once there are children in the household. The least income gain occurs for kinship carers with income too high to access means tested benefits even if there are children in the household.

Case study 6

A single female (27) becomes responsible for her niece and nephew, aged 4 and 2. She works part time, 18 hours per week, and earns £108 per week. She lives in rented accommodation and pays £50 per week rent and £20 council tax (without water charge). Table 3.7 illustrates her income:

• before taking over care of the children;
• after taking over care of the children but still working part time (she leaves the children with a relative and does not pay them as she cannot afford childcare);
• after taking over care of the children but having given up her employment.

Table 3.7 Benefit entitlement for case study 6

If the aunt continues in employment, she will be £146.17 better off once she has responsibility for the children. If she was paying child care to a registered child minder, she would receive more working tax credit, housing benefit and council tax benefit, which would cover most of the childcare costs.

Case study 7

A single woman (58) is unemployed and lives alone in rented accommodation. She pays £55 rent and £23 council tax (without water charge). She becomes responsible for her five year old grandson. The grandson is in receipt of the middle rate care component and lower rate mobility component of DLA. The woman becomes the appointee for the DLA. She fulfils the criteria for receipt of Carer's Allowance as she:

• has earnings of less than £84 per week (level for 2006-7);
• cares for her grandson for in excess of 35 hours per week;
• cares for her grandson who is in receipt of at least the middle rate care component of DLA.

Table 3.8 illustrates her benefit entitlement before and after she becomes responsible for the child. The after situation presumes that she has applied for and been granted Carer's Allowance.

In many cases, the carers of a disabled person will appear to be entitled to Carer's Allowance. However, the receipt of other earnings replacement benefits, such as Retirement Pension or Incapacity Benefit, prevents the payment of Carer's Allowance. The knock on effect on other means tested benefits is also complex. Receipt of Carer's Allowance will mean that the carer is credited with National Insurance Contributions and will be eligible to be credited into Additional Pension for each full tax year.

Table 3.8 Benefit entitlement for case study 7

The difference in income level is £191.41.

Payment of child tax credit for a child with a disability is at a higher level than for a child without a disability.

Case study 8

Case study 3 involved the following woman:

A single pensioner of 68 becomes responsible for her two grandchildren. They are 6 and 8 years old. She is in receipt of state retirement pension, and has an occupational pension of £160 per week. She lives in rented accommodation, and her rent is £52 and her council tax (minus water charge) is £25 per week. She has savings of £15,500. She receives no payments from either the local authority or the children's parents.

If she does start to receive fostering allowance of £120 per child from the local authority under the section 26 budget, her entitlement to benefits will change. Table 3.9 compares her position:

• prior to taking responsibility for the children;
• after taking responsibility for the children but with no payments from the local authority;
• after taking responsibility for the children but with the fostering allowance from the local authority.

Case study 3 demonstrated a substantial increase in income for this woman when her grandchildren start to live with her. The impact on her benefit entitlement of receiving fostering allowance will be considerable.

Table 3.9 Benefit entitlement for case study 8

This comparison clearly indicates that payment of fostering allowance, even with the resultant loss in benefit, will increase the income of the kinship carer.

These case studies provide an illustration, with actual figures, of the effect of taking responsibility for a child, or children, on the benefits a kinship carer may receive.

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