The Deputy has raised two issues in his question, the assessment of capital for the purposes of the unemployment assistance scheme and the assessment of benefit and privilege where a claimant lives at home. However, I understand the case the Deputy has in mind relates to a claimant with a small amount of capital who has lost entitlement to payment.
Unemployment assistance is a means tested payment and as such it is designed to ensure the limited resources available are directed at those most in need. In assessing a person's means for unemployment assistance purposes, account is taken of any cash income the person may have together with the value of any capital or property. In addition, the value of any benefit or privilege enjoyed by an applicant, such as that of free board and lodging in the family home, is assessed. A number of improvements have been made in the assessment of benefit and privilege in recent years. For instance, where the sole means of a claimant for unemployment assistance are derived from the assessment of benefit and privilege and that person qualifies for a payment, even at a reduced rate, he or she is entitled to receive a minimum payment of £25 a week. However, where such a person has additional means from any other source, for example, earnings from part-time work or the value of capital owned, the full means of that person are assessed. The £25 minimum payment only applies where there are no other means. That has been the position since the measure was introduced in 1993 and there has been no change in that respect.
The value of capital for unemployment assistance purposes is determined by assessing the first £400 at 5 per cent, with the balance being assessed at 10 per cent. This is the formula which has applied to the scheme since its introduction. Over the years different methods of assessing the value of capital have been applied to the various social assistance schemes. This led to significant differences in the treatment of capital under the different social assistance schemes. Accordingly, it was decided to introduce a standardised method of assessing capital across all social assistance schemes.
Under the revised capital assessment method, which was introduced by my predecessor in 1996, the first £2,000 is disregarded, the next £20,000 is assessed at 7.5 per cent and the balance is assessed at 15 per cent. This standardised method has now been extended on a progressive basis to all social assistance schemes, other than unemployment assistance and supplementary welfare allowance. However, since the introduction of the standardised method of assessing capital, interest rates available on investments have fallen significantly. In the circumstances and because of representations, I have arranged for my Department to review the current standardised method of assessing capital.
Additional InformationAs I have already indicated, the original intention had been to extend the standardised capital assessment method to all social assistance schemes. However, in view of the changed circumstances in relation to interest rates, it would be preferable to await the outcome of the review before making any changes in the method of assessing capital for unemployment assistance purposes. Any relaxation of the current rules would have financial implications and could only be considered in a budgetary context.