Flexible New Deal | New Deal Scandal: Leading Welfare Reform Concerns

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New Deal Scandal can today reveal the official DWP response of how the £64.50 (over 25) Jobseekers Allowance (JSA) is calculated, after the Department for Work and Pensions responded to a Freedom of Information Act request.

How is the weekly jobseekers allowance of £64.30 broken down into job hunting costs and living expenses?

The original request (published on whatdotheyknow):

Dear Sir or Madam,

How the weekly jobseekers allowance of £64.50 is broken down into costs

Can you please provide a breakdown of how the job seekers allowance benefit (england) of £64.50 a week is broken down.

By that I mean how that actual amount was deemed the amount necessary to sustain a person for their job hunting and living expenses. I also would like to know the name of the body/panel who makes such decisions.

Yours faithfully,

Miss L J Murphy

The weekly jobseekers allowance of £64.30 excludes most living costs

The response from the Department for Works and Pensions:

Dear Miss Murphy,

Thank you for your Freedom of Information request received on 12 August 2009. You asked for a breakdown of how the job seekers allowance benefit (England) of £64.50 a week is broken down. By that you mean how that actual amount was deemed the amount necessary to sustain a person for their job hunting and living expenses. You also wanted to know the name of the body/panel who makes such decisions.

The national rate of Jobseekers Allowance for 2009/10 for a person over 25 is £64.30 per week. The benefit rates do not reflect nor are they made up of specific items of household and other expenditure. Instead the rates are intended to cover overall household expenditure taken as a whole, including such things as food, normal replacement of clothing and local travel.

Each year the Government reviews the rates of benefit. A number of factors are taken into account during the review, the most important of which is the level of inflation. Two indexes are used to calculate any uprating. The first is the Retail Price Index (RPI), which is used for benefits, such as State Pension, Child Benefit etc. The RPI takes account of variations in a wide range of goods and services to reflect the typical change in costs (both increases and decreases) that people face from year to year. This includes the average change in council tax.

Income-related benefits, such as income-based JSA but also including contributory-based JSA, are increased by the “Rossi” index. This index is based on the RPI but excludes rent, mortgage interest payments, council tax and depreciation costs. Housing costs are separately provided for through Housing Benefit and JSA mortgage interest.

The RPI linked benefits must be reviewed and uprated annually by at least the level of inflation (Social Security Administration Act 1992). The Secretary of State has discretion as to whether or not to provide for annual increases in the Rossi linked benefits.

The proposed rates from this review are submitted to Parliament for approval and become law under The Social Security Benefits Up-rating Order. The current one for JSA is available to view through the Office of Public Sector Information website. Their web address is:

www.opsi.gov.uk

In many cases the basic rate of JSA is just one element of the total package of support that a person receives. Additional support may be available in terms of Housing Benefit and Council Tax Benefit, Child Benefit and Child Tax Credit and Disability Living Allowance.

Financial help can also be given for some work search costs. For example travel to interviews in the UK can be reimbursed in certain circumstances and help may also be available to cover other costs associated with starting work which might otherwise prevent someone taking up a suitable vacancy. Your local Jobcentre Plus adviser can provide you with more information on this.

If you have any queries about this letter please contact me quoting the reference number above.

Yours sincerely,

DWP Central FoI Team

What does jobseekers allowance cover?

We are advised that Jobseekers Allowance is linked to the “Rossi” index (sounds Italian Mafia ish to me) and is intended to cover costs of:

• “Household expenditure“: furniture, utility bills, appliances, electrical items and small items such as bog roll, air freshener and bleach etc.
• Food
• Clothing (replacement only)
• Travel (local only)

What doesn’t jobseekers allowance cover?

We are advised that Jobseekers Allowance is linked to the “Rossi” index and is not intended to cover costs of:

• Rent: too bad if you rent a property/room off someone related to you etc. would have to come out of your Jobseekers Allowance benefit
• Mortgage interest payments
• Council tax
• Depreciation costs
• The costs of Jobseeking

Criticism: why Jobseekers Allowance isn’t enough and how the two rate ageist system needs to be pulled!

1. Jobseekers Allowance isn’t enough.

   Ipswich Unemployed Action have reported how Unemployment Benefit has halved over time.

   Looking at “What does jobseekers allowance cover?” above, we can see that the allowance covers all household expenditure, food, replacement clothing and local travel. Leaving out food which can be quite pricey these days and clothing as the price of clothes (except brands/designer) are really cheap due to the exploitation of low paid workers in sweat shop factories in Asia, we will focus on household expenditure and travel.

   Household expenditure includes appliances, furniture and electrical goods which you could well find it difficult to afford just one item using the whole weekly allowance. They assume say an appliance cost £165 and you have it for 2 years spreads the cost out to just £1.59 per week. Of course, being on jobseekers allowance you will find it hard to get credit and if you did find a ways or means to spread the payment out in instalments you will be paying interest on top bumping up the actual cost of the goods.

   Unfortunately, the mail order catalogues which are one of just a few retailers that offer spreading out the cost in instalments are typically a reason why you can’t claim jobseekers allowance as the DWP checks your address to see whether you are subscribed to any catalogues regardless of the fact if you never buy anything from them. The DWP assumes if you are subscribed to a catalogue which typically are more expensive then a shop, that you have a million pounds sterling lying under your bed and thus must be a benefit fraudster or benefit thief.

   Travel… well New Deal Scandal worked out travel could cost a Jobseeker on average of £1.56 to £2.08 a week just to sign on once a fortnight. We can’t surely presume that only travel costs budgeted is a couple of journeys a month to the Jobcentre as your only means of using local public transport. That would be unrealistic. We have not included cost of travel for Jobcentre interviews which you can claim travel back. So… obviously as a jobseeker you wouldn’t have a life and won’t have any needs to use public transport other than to seek employment.

   Some peoples Jobseekers Agreement (JSAg) says you need to visit the Jobcentre twice a week to use the Jobpoints and look in recruitment notices on shop windows. In Ipswich, the cost to use the bus (Ipswich Buses) is £1.70 one way (therefore £3.40 return for 2 separate journeys) which would make £6.80 (not to forget the costs to sign on in addition) over 10% of total weekly income of £64.30!

   We must also see the other side of the story. If the costs of weekly benefit was over £100, people would not look so hard to find employment and before you know it the country would be more bankrupt than the Government is currently trying with icnreased borrowing and bailing out banks.

   Costs of seeking employment are not included in the calculation for Jobseekers Allowance and New Deal Scandal remains to state that an extra £10 per week should be included for jobseeking alone.

2. Why are there two different rates depending on age?

   Lets pick a very close scenario of a jobseeker A whos 24 and a jobseeker B who is 25.

   Why should jobseeker B get almost £15 more than jobseeker A?

   They both (in this scenario anyway) do the same amount of jobseeking, they both are unemployed and both are available to work. Why doesn’t the Equality Commission pick this up when they attacked the BNP for not allowing other races to signup? I believe in equality and no political group should exclude by differences however how many people are going to join as a member and be deported from the country if they got into power? hmm.. None!

   Tescos wont charge jobseeker B more for food than jobseeker A. This is the same for all over household costs that Jobseekers Allowance covers, travel is the same (both Adult rates) and clothing will be the same cost (could vary on size but no reason why they would be different just because of age).

   The lower rate is the sole intention of discouraging “young people” (although the legal terminology applies to those inbetween a child and an adult. Those over 18 are an adult) from claiming benefit instead of finding employment, not that they would get away with it as you have to be seeking employment to claim.

   Lets do the same with Jobseeker C who is 18 and Jobseeker D who is 40. They will both still incur the same costs regardless of the age gap.