We raised a similar query with the DWP Benefits Simplification Unit recently, only our query was about the Permitted Work earnings limits being out of synch with NMW upratings and NI Lower Earnings Limit. The rather rambling reply went something like this:
There is no legislative requirement that the Permitted Work earnings limit is increased each year or that it should be linked to the minimum wage. Ministers took the decision in April 199(9?) to align the former therapeutic earnings limit with 16 hours paid at NMW rates and these arrangements carried forward into the Permitted Work rules when they were introduced.
The current limit for Permitted Work is £86 p/w (16 hours @ £5.35 rounded upwards). From April 2007, the National Insurance Lower Earnings Limit is £87 p/w. This would mean that if that limit were adopted at least for part of the year (from April until October when the NMW is increased) if customers were earning £87 p/w they would fall foul of the 16 hours work full time work rule and would lose their entitlement to benefits or be faced with a situation where they had to reduce (albeit slightly) their hours of work.
That position might well change in October when the NMW is increased but we would want to avoid, primarily for reasons of over complicating the benefit system, the see-saw effect whereby we make changes every six months to reflect changes both in the Lower Earnings Limit and then every October the NMW.
So in keeping the linkage between the higher Permitted Work Levels and the NMW, we remove the see-saw effect from in making (sic) alternate linkages as a result of increases in the NMW and the the NI LEL - which would be more customer friendly and far less complex; and increases in the NMW would no longer mean people who work 16 hours a week having to choose between reducing their hours and staying within the Permitted Work rules or losing their entitlement to IB.
I still don't really understand what that is getting at tbh but basically, i think the jist of it is that the DWP are aware that their annual upratings of earnings limits are out of synchronisation with changes to NMW and NI LEL but they're willing to live with it? Maybe take this up with Carer's UK?
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