Title: Universal Credit the impact on passported benefits
Author: DWP
Last saved by: 57555710

The SSAC review: passporting to the future

Chapter 1	Introduction to the Review

The Commission

1.	In May 2011 the Social Security Advisory Committee (SSAC) was commissioned by the Minister for Welfare Reform, Lord Freud, to undertake an independent review of the current passported benefits and to provide advice on possible approaches to the provision of these benefits when Universal Credit (UC) is introduced in 2013. This commission was, in many ways, an unprecedented request. Although the Committee has initiated reviews on a number of topics in recent years and produced a range of occasional papers offering independent advice to the Secretary of State, it had not received a request from Ministers to examine a specific policy issue until it was invited to review passported benefits last year. 

2.	The SSAC, a statutory committee established in 1980, has two key functions:
i)	To provide advice and assistance to the Secretary of State for Work and Pensions, whether in response to a specific request or on its own initiative. 
ii)	To scrutinise secondary legislation, for the benefit of both the Secretary of State and Parliament.

3.	In reality, the second of these functions – the scrutiny of regulations – has dominated the Committee’s routine workload. As part of this scrutiny, the Committee may ask for regulations to be formally referred. This usually involves conducting a public consultation, submitting a report to the Secretary of State setting out the SSAC’s comments and concerns about the proposed regulations and making recommendations as to whether and/or how they should proceed. 

4.	This commission has been a different kind of task for the Committee and has provided an opportunity for it to fulfil its advisory role in direct response to a specific request. The task has involved gathering evidence from a wide range of sources, synthesising that evidence and reporting on it, in order to provide a balanced and considered view which can inform policy discussions and decision-making going forward. It has not involved the Committee in making recommendations to Ministers but enabled it to offer assistance at the formative stage to Ministers in the DWP, other government departments and the devolved administrations, in respect of a topic which is of central importance within the Coalition Government’s welfare reform agenda.

5.	This report presents the findings from the SSAC’s review:
•	it examines the current system of passporting 
•	it considers the challenges for the provision of similar levels of passported benefits in the future 
•	it puts forward some options that might meet a range of policy objectives 
•	it suggests some guiding principles as a foundation for decision-making about passported benefits under UC

6.	In this first chapter we outline the terms of reference for the review; note the context within which the review was undertaken; define passported benefits; and describe the scope of and our approach to the review. 

7.	Chapter 2 looks in greater detail at the current system of passported benefits, illustrating the inherent complexity and the acknowledged problems associated with a system that is in need of reform. 

8.	Chapter 3 sets out a number of approaches which could be considered for the delivery of those benefits which are currently passported, many of which have been designed over the years to meet varying needs and differing policy objectives, in education and health for example, but which the Government is now expecting to support the overarching objectives of a radically new and simplified social security system. 

9.	Chapter 4 sets out a range of guiding principles which we believe can provide a robust framework to assist decision-making about the delivery of these benefits within the rubric of UC.

Terms of Reference for the review

10.	The Terms of Reference for the review were developed in consultation with the Department for Work and Pensions (DWP), the Minister for Welfare Reform and the devolved administrations.

The full Terms of Reference can be found at Annexe 1.

11.	The Terms of Reference originally anticipated that the SSAC would make recommendations about how passported benefits might be dealt with in future and consider the broad cost implications for other government departments and the devolved administrations. These expectations were subsequently revised in discussion with the DWP.

12.	The SSAC agreed to put forward possible options, drawn from evidence obtained, for the provision of existing passported benefits under UC, indicating any advantages and disadvantages of each option, but to stop short of making any specific recommendations as to the best way forward. The decisions taken by Ministers across government and the devolved administrations must take account of a range of policy objectives as well as political imperatives and priorities. We agreed, however, to highlight a number of principles which we believe should guide the thinking about the provision of additional benefits and provide a framework within which the Government can consider the most effective ways to meet its overall objectives for welfare reform, well in to the future.

Terms of Reference for SSAC’s Review of Passported Benefits

Purpose: to analyse the current passported benefits in order to: 
•	classify the target audience(s)
•	identify the needs which those benefits address, and the wider policy objectives served by them now and in the future
•	identify and analyse the mechanisms that are currently employed to determine entitlement
•	consider the potential impact of changes in eligibility rules
•	assess the extent to which passported benefits influence employment decisions
•	examine variations in the provision of passported benefits and the levels of complexity in accessing them
•	consider how a more coherent approach to the delivery and withdrawal of passported benefits might be developed in order to maintain work incentives and ensure transparency and fairness in the benefit system
•	consider whether there are other simpler alternative options that might mitigate any disincentives to work
•	identify ways in which such benefits might be developed in future, ensuring that the replacement system is coherent, simple and removes disincentives to work
•	consider ways to reduce costs

13.	The SSAC was asked to take into account the Government’s objectives that options for the future should neither involve a net increase in expenditure, nor compromise the drive for simplification in the benefits system which underpins the proposals for radical reform. Although the SSAC was asked to be mindful of the requirement that options should be cost-neutral, the Committee was not expected to undertake cost-benefit or cost-effectiveness analyses, nor to model the cost implications of new approaches for individual benefits. Such modelling is a matter for the government departments that have responsibility for passported benefits, and for the devolved administrations, having considered the evidence from the SSAC’s review and weighed up the potential options. It has become clear from our work that this modelling and subsequent decision-making will need to handle a number of tensions and trade-offs between the various objectives and constraints involved in this complex subject area. 

Rationale for the Review – 21^st Century Welfare

14.	Why was a review of passported benefits necessary? The social security system in the UK is in the process of being overhauled and passported benefits need to be reconsidered as part of the reform agenda. In July 2010, the Coalition Government laid out its ambitions to simplify the benefits system, end welfare dependency and improve incentives to work. The Green Paper highlighted the Government’s analysis of weaknesses and anomalies in the current system which the Government believes encourage welfare dependency. It described the current system as consisting of a hugely complex set of independent benefits and tax credits which are delivered by numerous different agencies, and which is overly bureaucratic, acts as a barrier to work and traps people in poverty. 

DWP (2010) 21st Century Welfare, Cm. 7913.

15.	Responses to the Green Paper indicated general consensus with the view that the current system of benefits and tax credits is overly complex and in need of simplification, and that potential work disincentives should be removed.

DWP (2010) Consultation Responses to 21^st Century Welfare, Cm. 7971.

Key Responses to the Government’s Green Paper: 21^st Century Welfare

Responses indicated:
•	broad agreement about the need for fundamental reform of the benefits system
•	overwhelming support for simplifying and streamlining the benefit structure and the delivery process
•	a strong belief that people should be better off in work than on benefits
•	agreement with the principles underpinning the proposal for a single, dynamic benefit that would support people in and out of work
•	concerns about how the most vulnerable people will be protected, the availability of sustainable jobs, how housing costs might be met and the importance of promoting education, training and voluntary work as a beneficial first step into work

16.	The Coalition Government subsequently developed its proposals for radical reform, putting forward its plans to introduce one universal benefit and greatly simplify the system. The Government expressed its commitment to make the welfare system fairer, more transparent, and more affordable, whilst continuing to support the most vulnerable in society. At the heart of the Government’s reform agenda are the principles that people should be consistently better off in work than on welfare benefits, and that those able to work should be incentivised to do so.

DWP (2010) Universal Credit: Welfare that works, Cm. 7957.

17.	The Government’s proposals for radical reform of the benefits and tax credits systems were encapsulated in the Welfare Reform Bill 2011. Our review of passported benefits has taken place during the passage of this Bill through Parliament and against a backcloth of renewed media attention in the provision of social security benefits.

Universal Credit

18.	Central to the Government’s programme for achieving simplification, fairness and transparency in the benefits system is the introduction of a Universal Credit.

ibid, p.13-14.

Universal Credit

Universal Credit has been designed to:
•	bring together different forms of income-related support and provide a single, integrated benefit for people of working age who are either out of work or in low-paid employment
•	consist of a basic personal amount with additional elements for disability, housing, children, and caring responsibilities
•	provide an additional element for childcare costs for those in work
•	be withdrawn at a constant rate of 65 pence for each pound of net earnings as earnings rise, while higher earnings disregards will reinforce work incentives
•	have a simple structure which is expected to: 
o	provide a basic income for people out of work, covering a range of needs
o	make work pay as people move into and progress in work 
o	help lift people out of poverty

19.	The key mechanisms put forward by the Government for making work pay are a single taper to withdraw support as earnings rise and a new approach to earnings disregards. The taper is designed to ensure that support is reduced at a consistent and managed rate as people’s earnings increase, thus avoiding potential cliff-edges in income when people lose benefits as a result of moving into work or increasing their earnings. Figure 1.1 illustrates how the UC payment is expected to decrease smoothly as earnings rise.

Provided by the DWP UC Team.

Figure 1.1 Typical Universal Credit entitlement for a lone parent with one child

20.	Universal Credit will replace most of the benefits and tax credits that currently provide means-tested support, except for Council Tax Benefit (CTB). It will not replace any non-means-tested or contributory benefits.

Universal Credit: A single integrated benefit

Universal Credit will replace the following benefits: 
•	Income-based Jobseeker’s Allowance
•	Income-related Employment and Support Allowance
•	Income Support
•	Housing Benefit
•	Working Tax Credit
•	Child Tax Credit

21.	The Government expects UC to improve the take up of benefits and, thereby, tackle poverty. In addition, UC is designed to be simpler to understand and access than the current array of benefits; and, as a single integrated benefit, to do away with the need to claim separately for different benefits. The introduction of UC, however, presents considerable challenges for, and will involve changes in, other parts of the welfare system. This includes the range of passported benefits that are currently available, the loss of which can create a significant cliff-edge when people move into work, as we illustrate in the next chapter. Under UC, the current eligibility criteria for accessing passported benefits will no longer exist. Simply migrating the current system on to UC is not possible and not an option, therefore. Changes are inevitable. Hence the importance of this detailed review of passported benefits.

Understanding and Defining Passported Benefits

22.	The concept of ‘passporting’ is not new. When responsibility for assisting tenants with their housing costs was passed to local authorities in 1983, those entitled to receive supplementary benefit from the Department of Health and Social Security qualified for a housing benefit. The term ‘passported benefit’ was subsequently applied more widely to other secondary benefits, the entitlement to which was established through the award of a primary benefit.

23.	Before the term ‘passported benefit’ became commonplace, additional benefits were commonly known as ‘fringe benefits’, some of which actually had a higher monetary value than the primary benefit. Help with the provision of school meals, for example, dates back over one hundred years to Section 3 of the Education (Provision of Meals) Act 1906, which enabled local education authorities to obtain permission to provide meals to children who were ‘unable by reason of lack of food to take full advantage of the education provided for them’. By 1945 the focus had turned from the situation of the child to the needs of the family when regulation 10 of the Provision of Milk and Meals Regulations 1945 gave power to local authorities to remit the cost of school meals if, ‘in the opinion of the authority, a parent is unable without financial hardship to pay.’

24.	Since these provisions required judgements to be made about levels of need, local education authorities wanted a test that would accurately assess the financial circumstances of a family. The obvious way to do this was to link entitlement to school meals to the receipt of a means-tested benefit. This solution provided for administrative simplicity and consistent application of regulations. However, these kinds of passporting rules have been applied over the years to an ever-increasing number of secondary benefits, so that today there is a plethora of benefits which are passported and the initial simplicity has given way to increased complexity not only for claimants and welfare rights advisers but also for government departments, local authorities and others who provide the wide range of secondary benefits. The current system of passported benefits has undoubtedly grown in an uncoordinated, piecemeal fashion to meet a range of specific policy objectives and it is not easy to understand or navigate. 
Categorising passported benefits 

25.	For this review, we defined passported benefits as those additional benefits to which working-age claimants of certain means-tested benefits and tax credits are automatically entitled because they are in receipt of a primary benefit, such as Income Support (IS), Income-based Jobseeker’s Allowance (JSA), Income-related Employment and Support Allowance (ESA), Child Tax Credit (CTC) and Working Tax Credit (WTC).
 
26.	Because UC applies only to claimants of working age, we have not included in the review any passported benefits that are available to those in receipt of state pensions and pension-related benefits. Moreover, our Terms of Reference did not require us to look at passported benefits that are currently linked to a disability benefit.

27.	The main passported benefits are delivered either as benefits-in-kind, cash benefits, or given as discounts on charges or fees. A full list of the passported benefits we have considered in our review is given in Annexe 2. It is easy to see from this list just how diverse and wide-ranging passported benefits are under the current system, and that the majority are administered by government departments other than the DWP. The primary benefits and tax credits administered by the DWP and Her Majesty’s Revenue and Customs (HMRC), however, have provided useful hooks for departments responsible for education, health and justice, for example, to determine eligibility for the passported benefits they administer. 

28.	As the number of passported benefits has increased, so too has the complexity in the system. Eligibility criteria differ widely between benefits, and some act as passports themselves to yet more benefits. For example, eligibility for receiving school meals as a benefit-in-kind acts as a passport for the receipt of school clothing grants, travel costs and the delivery of the Pupil Premium. 

29.	Annexe 3 lists the main passported benefits, and provides information about the eligibility criteria for them.

Categorisation of passported benefits

Benefits-In-Kind

A benefit-in-kind is defined as provision of a good or service – without a cash payment being made to the recipient of the passported benefit – which is not transferable and cannot be reconverted into cash.

The main benefits-in-kind considered during the review are:
•	school meals
•	prescriptions and eye and dental care
•	Healthy Start vouchers
•	legal aid and exemption from court fees

Cash Benefits

Cash benefits are paid or reimbursed to eligible recipients and include:
•	Cold Weather Payments
•	help with travel costs (for school children, healthcare and prison-visiting)
•	Sure Start maternity grants
•	school clothing grants
•	education grants

Discounts on Charges or Fees

A wide variety of discounts are passported, and these include:
•	leisure activities
•	transport schemes
•	warm home and utility discounts
•	BT Basic

Rethinking passporting

30.	The welfare reform agenda and the introduction of UC as a single benefit provide an important opportunity to rethink passporting and reconsider how best to meet the needs of those benefit recipients that the passported benefits are targeted at and the needs of those living on low incomes. There are a number of challenges to be addressed, however.

Rethinking Passporting

The challenges include:
•	the extent of passporting, and the wide range of payments and concessions
•	the differing policy objectives associated with the various passported benefits
•	variations in the administration of passported benefits
•	the difficulties in ascertaining and verifying eligibility
•	the extensive administrative systems for processing applications
•	the different delivery mechanisms
•	the complexity for claimants in understanding entitlement and ensuring they receive what they are entitled to
•	the cost implications

31.	The two common themes that run through the current system are, first, that the majority of passported benefits are generally targeted on broadly the same group of people, and second, that central and local government departments, the devolved administrations and the private sector, all use hooks within the current benefits and tax credits systems to define and flag up eligibility. But the sheer complexity of establishing eligibility, applying for passported benefits and negotiating delivery mechanisms is in danger of undermining the policy objectives underpinning many of the individual passported benefits and the benefits system as a whole, depressing take-up rates, and creating anomalies in provision. We examine these challenges and complexities further in Chapter 2.

32.	The introduction of UC provides the perfect opportunity to look for a simpler, fairer and more transparent system to ensure that wide-ranging needs are met in the most effective and efficient manner. In our review, therefore, we have sought to understand the policy objectives and importance of the various passported benefits and to identify the balances to be struck between reducing complexity, maximising the financial benefit for those moving in to work and managing costs. We have also examined eligibility and entitlement, delivery mechanisms and the point at which passported benefits are withdrawn as income increases.
33.	In order to make sense of the wide range of passported benefits we have grouped them into four main categories: education, health, access to justice, and utilities. This categorisation has helped us to envisage ways of simplifying the current system and to consider options for the future.

The Scope of the SSAC Review

34.	Although the SSAC review initially focused on benefits-in-kind, specifically school meals and prescriptions, it became clear that the distinction between different modes of delivery is somewhat artificial and that local flexibility frequently blurs the boundaries. We therefore considered a wide range of benefits and delivery systems in our review, including cash benefits and discounts on charges. It is the main benefits-in-kind, however, that are perceived to pose the greatest challenge for the introduction of UC, so seeking options for the delivery of school meals and health benefits has been an important focus during the review.

35.	While some passported benefits are currently available to a wider range of people than those on means-tested benefits, we have focused our attention on the possible approaches to those benefits that are currently made available via existing means-tested benefits because, under UC, those means tests will no longer be available. Universal Credit is an integrated benefit and the current distinctions between out-of-work and in-work benefits will disappear. The eligibility criteria for passported benefits can no longer be linked simply to the receipt of a particular kind of benefit, so the status quo cannot be sustained. 

36.	A wide range of non-state bodies also base their eligibility criteria on current means-tested benefits, such as the availability of concessionary rates at local cinemas. The introduction of UC will require considerable change to the way in which these often locally determined additional benefits are handled, presenting a communication challenge for the DWP and other government departments in order to ensure that such benefits are not simply discontinued. The disappearance of these locally-determined passported benefits could have serious consequences because of their importance in promoting involvement in civic life and local activities.

37.	Currently, means-tested benefits also act as a passport to Housing Benefit and Council Tax Benefit. We were not asked to look at the implications for Housing Benefit because a housing element is included in UC. Council Tax Benefit will be localised from 2013-14: local authorities in England will be required to run local council tax reduction schemes; and Scotland and Wales will bring forward their own proposals. Council Tax does not exist in Northern Ireland.  

38.	In England the Government’s response to the consultation on localisation set out that the eligibility criteria and allowances for pensioners will be prescribed nationally and local authorities failing to implement a scheme to meet the 2013 deadline will be required to operate a default scheme, which the Government has proposed should retain the criteria and allowances currently in place for Council Tax Benefit. We have not considered this reform in the review. 

39.	The review did not consider the impact of Universal Credit in relation to Social Fund payments where reform is currently underway. The Social Fund includes Funeral Payments, Sure Start Maternity Grants, Crisis Loans, Budgeting Loans, Community Care Grants and Cold Weather Payments. Although the Social Fund is not a passported benefit in a strict sense, part of the eligibility test for receipt of a Cold Weather Payment, Funeral Payment and Sure Start Maternity Grant is that a person must be in receipt of a qualifying benefit. We refer briefly to these benefits, however, in Chapters 2 and 3.

40.	In summary, we focused our attention on means-tested benefits, particularly those currently administered as benefits-in-kind, in order to examine how the existing passported benefits available to benefit recipients of working age, both those in and those out of work, can be managed under UC. 

The Devolved Administrations

41.	We have been mindful during the review that across the devolved administrations there are political and contextual sensitivities relating to the welfare reform agenda. Whilst social security is not a devolved matter except in Northern Ireland, most of the other areas of government involved in the provision of passported benefits are devolved (for example, health, education, and transport). In some cases there are already clear differences between England, Scotland, Wales and Northern Ireland (for example, in respect of the criteria for free school meals and the provision of prescriptions). The most obvious distinction is that prescriptions are free in each of the three devolved administrations but not in England. In many cases, however, although the devolved administrations are free to determine their own policies they choose to mirror the situation in England, primarily for financial reasons and for simplicity.

42.	In this report we have sought to provide overall guiding principles and high-level discussion regarding potential options for the future; it was not within our remit to make specific recommendations to government departments and devolved administrations. We anticipate that they will be able to reflect on the findings of the review and apply them to the design of passported benefits under UC, in the light of their own expertise, contextual knowledge and policy objectives.

43.	We have reviewed the consultation responses received from representatives in the devolved administrations and discussed possible approaches with officials from Scotland, Wales and Northern Ireland. Although officials highlighted differences between the administrations, none flagged up major issues that would lead us to conclude that the options we discuss in the report could not be considered.
 
44.	Clearly, each of the devolved administrations will have different priorities, legislative requirements, financial challenges and views about Universal Credit, which may lead to differences in the final decisions taken. For example, the Law Centre (NI) told us that “Northern Ireland presents particular circumstances with regards to welfare reform … After London, Northern Ireland will be the hardest hit by the tax and benefit cuts announced and to be implemented under the [Welfare Reform] Bill”. The Law Centre (NI) go onto suggest that this is a result of the higher numbers of people in Northern Ireland in receipt of Disability Living Allowance and the greater proportion of larger families, two groups who will be especially impacted by the cuts. Child poverty is also more severe in Northern Ireland: the rate for persistent child poverty is more than double the rate in Great Britain. 

Monteith, M., Lloyd, K. and McKee, P. (2008) Persistent Child Poverty in Northern Ireland, Save The Children, ARK and ESRC.

45.	We believe that the options discussed in Chapter 3 are flexible enough to apply to the devolved administrations as appropriate, although if each of the administrations takes a different approach then these differences could add to overall complexity, particularly for claimants in border areas, and raise questions about benefit integrity. We recognise that some of the approaches may also be more politically sensitive than others, for example the potential financial transfers involved in a cashed-up system under UC. 

46.	We note that each of the devolved administrations is taking advantage of having a smaller central administration than England, which may enable them to simplify passported benefits through a more joined-up approach than might be possible in England in the immediate future. The smaller scale has also allowed the devolved administrations to think more flexibly now about how passporting should work in the future in order to provide a more comprehensive, holistic package of support.

The SSAC’s Approach to the Review

47.	We were keen to seek as wide a range of views as possible about the current system of passported benefits and to gather suggestions for ways in which these benefits might be dealt with under UC. It was never our intention to conduct rigorous empirical research and instead we endeavoured to involve people in receipt of passported benefits, agencies working with benefit claimants, government departments, local authorities and the devolved administrations in the kind of debate and discussion which would enable us to put forward options for the future. Annexe 4 provides fuller details of our approach to the review and lists those who took part in our various review activities.

Review Activities

During the course of the review the SSAC obtained data from:
•	a public consultation which elicited over 60 responses, many of which were extremely detailed and included proposals for future approaches to passported benefits under UC
•	a consultation targeted at academics, specifically designed to identify relevant research 
•	discussions with government departments, the devolved administrations, local authorities and public and private sector companies involved in administering passported benefits
•	qualitative focus groups with Citizens Advice Advisers around the UK
•	a small number of focus groups and interviews with benefit recipients, in association with the DWP Insight Team
•	a Stakeholder Seminar attended by officials from the DWP and other government departments, the devolved administrations, local authorities, energy and utility companies, and a wide range of representatives from the charitable and welfare advice sectors
•	meetings with a senior stakeholder group consisting of officials from across government and the devolved administrations
•	discussions with officials and others developing systems for the implementation of UC
•	desk-based research

48.	Throughout the review, we received updated information from the DWP Universal Credit team to ensure that we kept abreast of developments during the passage of the Welfare Reform Bill and the work being undertaken to develop a Real Time Information System to administer UC from 2013 onwards.

49.	In the following chapters, we draw heavily from the responses and information we received. It is worth noting that our desk-based research revealed a paucity of research data relating to passporting, and demonstrated that benefits systems in other countries have largely avoided the establishment of a complex system of passported benefits. Annexe 5 briefly summarises the main approaches taken in other countries to the provision of benefits in three of our main categories. It can be seen that school meal costs, for example, tend to be state subsidised, either in whole (Sweden) or in part (France), and health benefits are commonly provided via a compulsory insurance system (France) or partially passported (New Zealand). Energy costs are partially passported in some countries but, generally, there is little help provided directly for energy/utility costs. 

50.	We concluded that the UK system of passporting is not mirrored in other countries, where passported benefits play a far less significant role in the benefits system, the levels of benefit payments tend to be higher and social insurance systems are in place.

Messages from previous research

51.	Before examining the current system in more depth, we extracted the key messages from previous research relating to passported benefits, although there is relatively little of it. Passported benefits are referred to in a number of studies, but rarely have they been the central focus. 

52.	A study about housing costs, housing benefits and work disincentives, for example, had as its main focus how people approach decision making about whether or not to take a particular job. It showed that people approached this decision in one of three ways: the smallest group undertook a more or less precise better-off calculation, although they did not often factor in passported benefits; the second group formed an overall view of whether or not they would be better off; and the third group made no calculations at all. The first two groups frequently over-rode their better-off calculations, partly because they had a strong attachment to the labour market and partly because they thought that any job was better than none, because it made it easier to move into a better paid job. 

Kempson, E. and Ford, J. (1996) ‘Housing costs, housing benefits and work disincentives’, JRF. See http:www.jrf.org.uk/publications/housing-costs-housing-benefits-and-work-disincentives.

Key Messages from Research

The key messages from other research relevant to our review are that:
•	a substantial proportion of people do not make decisions about whether to take work or remain on benefits on purely economic grounds – other social and attitudinal factors are important
•	worry about the financial implications of returning to work is common among people on out-of-work benefits, and the complexity of the tax and benefits systems means that people do not always understand whether they would be better off in work 
•	income from benefits can be seen as more predictable than income from work
•	passported benefits are regarded as positive aspects of a complex benefits system
•	there is a lack of information for claimants about entitlement to passported benefits and many are confused about the detail
•	many people do not appreciate that the receipt of passported benefits is closely linked to receipt of out-of-work benefits, and it is only when they take up work and lose the passported benefits that they realise this

53.	Other studies have considered the complexity of the benefit system and shown that many low-income families struggle to negotiate it successfully. Nevertheless, while benefit recipients often depend on passported benefits to provide a set amount of income over and above the primary benefit, the combined effects of overlapping means-tested benefits have the potential to create disincentives to work. We look at these issues in more detail in the context of our review, in Chapter 2.

Hooper, C. A., Gorin, S., Cabral, C. and Dyson, C. (2007) ‘Living with hardship 24/7: The diverse experiences of families in poverty in England’, NSPCC/The Frank Buttle Trust.

Single Parent Action Network (SPAN) (2007) Proofed for Parents by Parents (Participatory One Parent Proofing: Findings).

Adam, S. and Browne, J. (2010) ‘Redistribution, work incentives and 30 years of UK tax and benefit reform’, Institute of Fiscal Studies.

March 2012