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Means Tested Benefits

Volume 474: debated on Monday 21 April 2008

The Petition of FOCUS and the Richmond Fellowship Scotland,

Declares that the level of Permitted Earnings disregard for people on means tested benefits has not increased since 2001.

This £20 a week Permitted Earnings disregard has not increased in line with inflation or other benefits. The minimum wage increases have significantly eroded the value of Permitted Earnings. Similar to the minimum wage it is paid for by the employer, not the Government and not through Government public expenditure.

Permitted earnings enables people to increase their skills and confidence in the knowledge that their benefits will not be affected. In some cases this can be a stepping stone to future employment.

The Petitioners therefore request that the House of Commons urges the Government to introduce legislation making an adjustment to the £20 Permitted Earnings disregard to get it back to it's original value and that this revised amount is then increased each year in line with inflation.

And the Petitioners remain, etc.—[Presented by Jo Swinson, Official Report, 26 March 2008; Vol. 474, c. 294 .] [P000130]

Observations from the Secretary of State for Work and Pensions:

People have signed this petition because they wish to see an increase to the current £20 earnings disregard within the means tested benefits.

The earnings disregards can provide financial incentives by making work pay for those moving into work from a period of incapacity or unemployment. They postpone the point at which benefit will start to be withdrawn and ensure that income can rise immediately upon entering work.

Raising the current disregards, however, would narrow the gains to full time work in that we would reduce the incentive for people to leave benefit for work—the gap between in work income and out of work benefits becoming so narrow as to discourage people taking up full time work. Therefore there is a balance to be struck.

Any increase in the disregard levels within current DWP income-related benefits would cost money and much therefore depends on whether increasing the level of the disregard could succeed in commanding greater priority than other competing claims for expenditure. Alongside disregards there are other ways in which the benefit system recognises the value of allowing people to decide if they want to work either part or full time.

People can currently take part in approved schemes without there being any adverse impact on their Jobseeker’s Allowance. For example, we allow longer-term unemployed customers to try out a job for two weeks whilst continuing to receive benefit. Similarly, volunteering is recognised within the benefit system and can play a key part in giving confidence to those who do not have recent experience of the labour market.