Joint claims for jobseekers allowance

Currently, jobseekers allowance is claimed by one partner on behalf of a couple. The Welfare Reform and Pensions Bill introduces a requirement for both partners of a couple to sign on. We understand that the intention is to introduce it for people born after a certain date. The intention is to bring in people currently aged 18-24. These people are to remain subject to the requirement for both partners to sign on. The intention is to draw these partners in to the New Deal for Partners of the Unemployed.

• CPAG believes that measures to require couples to make joint claims should be accompanied by changes to the benefits system to prevent poverty when one of a couple becomes unemployed. Improvements to contribution based JSA would help prevent in-work poverty, and assist in reducing the number of workless couples.
• Steps should be taken to reduce the severity of JSA sanctions and the circumstances in which they apply.
• Clear steps should be taken to address issues identified in recent research by the DfEE on claimants sanctioned and disallowed jobseekers allowance. The report found, for example that claimants disallowed benefit on the basis that they were not available for work found their circumstances made it difficult for the to comply.

Background

Contribution-based JSA is there to replace earnings (at least in part) when a person becomes unemployed regardless of whether or not their partner is working.

Facts and figures

Number of JSA claimants:

• 1,049,000 people claim JSA.
• 227,200 are couples.
• 67,000 of these couples are childless.
• 11% (155,000) of JSA claimants get contribution-based JSA.
• 2% (25,000) get contribution-based and income-based JSA

Martin Taylor in his report on work incentives for the March 1998 Budget, identified the increase in the number of workless households as a ‘great cause for concern.’ He suggests several explanations for this:

• those with relatively poor labour market prospects are likely to partner other people with similar prospects;
• the structure of means-tested benefits;
• unlike their partners, they are not placed under an obligation to look for work.

The March 1998 Budget therefore announced that partners aged under 25 are to be included in the New Deal for Young People. The Welfare Reform and Pensions Bill now requires both members of a couple to make a joint claim for jobseekers allowance and each satisfy the conditions of entitlement.

Comment

Currently if one partner becomes unemployed, s/he may be entitled to contribution-based JSA. This is paid regardless of any savings the couple have or of the income of the partner. There is every incentive, therefore for the partner to continue working or to increase her/his hours of work. Any earnings s/he has will increase the household income. However, only 11% of jobseekers allowance claimants get contribution-based jobseekers allowance.

Income-based JSA, in contrast, is not available to anyone whose partner earns more than 24 hours, even if the partner’s earnings are less than the couple would be entitled to in benefit. In such cases, it can be difficult for that partner to remain in work.

In addition, if either partner works part time, any earnings over £10 reduce the amount of benefit payable. There is little incentive to increase hours of work if it does not increase the household income.

What could the Government do?

In the 1999 Budget, the Chancellor made two announcements which may be of assistance for childless couples where at least one is in low paid work. The Government is considering introducing:

• a new ‘Employment Credit’ (to mirror the working families tax credit) for childless people in low paid work. This will be piloted for over 50s from October 1999;
• help with housing costs for home owners in low paid work.

These will financially assist couples where at least one person is in low paid work. Tax credit recipients do, however, face relatively high marginal rates of taxation (MTRs). While the numbers facing a very high MTR will be reduced by the introduction of working families tax credit in October 1999, 1.5 million families will still face an MTR of over 60%.

Improving the value and availability of contribution-based JSA would support the Government’s aim of reducing the number of workless households. By ensuring the income of the unemployed partner was replaced, at least in part, it would help prevent ‘in-work’ poverty, without introducing the relatively high MTR associated with the Employment Credit.

Options for reform

• Extend contribution-based jobseekers allowance from 6 months to one year (as was the case with unemployment benefit.) 32% of young people and 48% of older people are currently unemployed for more than six months. Allowing them to keep the contributory benefit for longer would provide them with a means of going back to work.
  
• Increase the value of the contributory benefit by improving the amount that people can earn on contribution-based jobseekers allowance. Improving the earnings rules on jobseekers allowance would help people to improve their financial position in unemployment. It would also allow people to keep in touch with the labour market by working part time while continuing to look for full time work.

• Changing the contribution conditions so that more people qualify for the contributory benefits. At present, you have to have paid and been credited with sufficient contributions in the last two complete years. Only 11% of JSA claimants get the contribution-based benefit.

Exempt groups

We are pleased to see in the explanatory notes that certain couples will be able to claim joint claim JSA even though both of them are not available for and actively seeking work. Examples given are people incapable of work and full time students. CPAG welcomes this.