For people who do not receive income support but are entitled to housing benefit and council tax benefit 85p of every £1 earned is lost when income is £15 per week over income support limits. The £15 per week limit (the earnings disregard) has not been changed since 1988. Claimants are likely to be constrained from working beyond the £15 per week limit - a theoretical maximum of some five hours, ie, five hours @ £3.60 per hour = £18. In practice, therefore, the £15 per week limit becomes effectively the therapeutic earnings limit.
It is, therefore, scarcely surprising to find in the report of the Mind enquiry into social exclusions and mental health problems (November, 1999) only a single reference to therapeutic earnings. In an oral submission from the Institute of Psychiatry, professor Leff commented “People diagnosed with schizophrenia are amongst the poorest members of society. They are dependent on disability allowances. If they are able to work in a sheltered facility, they cannot earn more than £15 per week, the so-called therapeutic earnings limit, without having the amount deducted from their allowance.”
A solution from the perspective of the claimant - target for change - proposed by professor Ann Davis and Jean Betteridge was to raise the earnings disregard to the same amount as allowed for therapeutic earnings (Welfare to work: the benefit issues for people with mental health problems, MHF Briefing 10, November 1997, which can be read on the Mental Health Foundation’s website).
Given that this relatively modest proposal has not been implemented and the evidence for such a reform appears substantial, the Mind report’s comment that: “the issue of the benefits system was a huge barrier to employment” led directly to the national employment policy recommendation that “anomalies in the benefits system that put barriers in the way of those attempting to work must be addressed.”
There is, finally, a serious problem for a claimant who undertakes therapeutic work. He or she risks prejudicing their rights to benefit, as it can be used as evidence in the‘ all work’ test of capacity to work. This can result in the removal of incapacity benefit and the requirement to sign on as available for work. For such individuals it may be worth appealing against the decision. The best source of advice on the all work test, which was re-named the‘ personal capability assessment’ in April 2000, is Mental health and incapacity for work,an information pack for people claiming incapacity benefit, income support and severe disablement allowance, by Jean Betteridge and Ann Davis, Paper 7, Working with poverty series, Department of Social Policy and Social Work, University of Birmingham, January 2000, 3rd edition, £5 inc p&p, ISBN 0704 17138.
A possible way of minimising the problem to the claimant of benefit loss is to examine with an experienced adviser before applying for therapeutic work, the likely point score that would be recorded on assessment. This cautious approach has been recommended, for example, to listeners of Radio 4’s Moneybox Live in April, to ensure that any ensuing complications can be anticipated.
