Kendal's Local Exchange and Trading Scheme.

This information was provided by Letslink UK .

LETS & BENEFITS: A 'ROUGH GUIDE' FOR CLAIMANTS.

The existing DSS regulations were designed long before the appearance of LETS and as yet there has been no comprehensive general ruling on this type of exchange. Letslink UK is working on an approach to the DSS nationally to cover systems in general. Before any new decision is reached, claimants may be best advised to keep their LETS trading within the disregard levels normally applied to sterling. At present, local benefits officers may use discretion on how to apply the existing regulations, subject to appeal.

Extracts from a letter from Peter Lilley, Secretary of State for Social Security, 2nd February 1994:

"The current Income Support regulations do not make any specific provision for dealing with this type of scheme, but there are a number of ways in which participating in a LETS may affect a person's Income Support entitlement I should emphasise that decisions on entitlement to IS are made, in the first instance, by an independent adjudication officer (AO) in the local benefits office, and are based on the particular facts of each case. Their decisions carry a right of appeal to an independent Social Security Appeal Tribunal, with a further appeal on a point of law to the Social Security Commissioners.

The AO would first of all need to consider whether a LETS participant was engaged in remunerative work, which for IS purposes is defined as work in which a person is engaged for, on average, 16 hours or more a week and which is done in expectation of payment. The AO may decide that participating in a LETS should be regarded as work and that the LETS credits obtained are a payment for the goods or services provided. As people who are in remunerative work are not normally eligible for IS, a person who spends more than 16 hours a week on LETS, may lose their entitlement to benefit.

Where a person spends less than 16 hours a week on LETS activities the AO will need to consider taking LETS credits into account as earnings. Since LETS credits can be exchanged for goods and services in participating shops and businesses in much the same way as ordinary currency, the AO may decide that a LETS participant should be treated therefore as having an amount of earnings equivalent to the credits awarded for the service performed. These earnings would be taken fully into account subject to the appropriate disregard."

Some basic points to remember:

Claimants joining LETS should be aware that their eligibility for benefit could be at risk if they are doing 16 hours or more "remunerative" work per week. This also applies to claimants who are administering systems.
In many cases (this does not apply to lone parents or the long-term sick or disabled) they must also ensure they are actively seeking and available for work.
At this stage the DSS appear to have difficulties in interpreting the rules and frequently do not reply to letters from groups seeking clarification. However it seems likely that any decisions arrived at locally will be on the basis of factors such as system size, scope, or the purchasing power of the local unit.

ACTIVELY SEEKING WORK: It may be argued that participating in LETS does not prevent a claimant from actively seeking work. (Advertising through a LETS directory - which does not prevent you from advertising in other ways -indicates that you are making some effort to find work. LETS trading may also begin a process of attracting work paid in sterling.)

AVAILABILITY FOR WORK: This means you must always be available to take up work offered. (On LETS there is never any compulsion to trade, and there is always complete flexibility about times of trading. Also, for people short of cash, work paid in sterling will always tend to be preferred over LETS). You may wish to cover yourself by using the "availability for work" form, which should be signed by those for whom you provide a service. It formally releases you from any LETS transaction to take up formal employment.

REMUNERATIVE WORK: This is defined as work done in expectation of payment. Whether this would include LETS, is up to the local AO.

DSS regulation 5 states that work done for 'payment in kind' must be considered remunerative work. Thus trading for 16 hours or more a week might result in a loss of your benefit.
However, DSS reg 35 (2) Schedule 9, para 21 says that 'payment in kind' is not counted as earnings.

EARNINGS RULE: This determines whether any income you receive affects the amount of your benefit.

If the LETS unit were regarded by the DSS as equal to the pound, the normal "disregarded earnings" thresholds would apply. The amount you could earn on IS without loss of benefits would be between ES and £15 per week, depending on which benefits you receive. UB is affected by earnings above just £2 per day.
Alternatively the DSS could regard your LETS earnings as payment in kind which they can ignore.

INVALIDITY BENEFIT: claimants should take care that LETS trading is not regarded as an indication of their 'ability to work' by the Benefit Agency, leading to loss of benefit. However, if the work is recommended for therapeutic reasons by a doctor or social worker, or is carried out under medical supervision, invalidity benefit claimants are allowed to earn up to £42 a week. The advice is to get a letter from your doctor or social worker before you start Lets trading, in which they recommend you participate in LETS work for therapeutic reasons.

LETS & Sickness Benefits.

Briefing kindly compiled by a Joseph Rowntree Foundation Welfare Advice Worker.

The following is a brief outline of the implications for people with health problems who are receiving incapacity and means tested benefits. It is as clear as possible about a somewhat "ambiguous" area. Unfortunately there is no way of offering people cast-iron guarantees, but the approach outlined is current "best practice" and is unlikely to lead to problems for the individual concerned.

Income effects of working.

Means-tested benefits.

People who receive means-tested benefits (Income Support, Council Tax Benefit, Housing Benefit) and have a disability premium are allowed to earn up to £15 before benefits are affected. Once this level is reached the excess is deducted:

• from Income Support £ for £
• and, where the person is not on Income Support,
  from Housing Benefit at 65p per £
  from Council Tax at 20p per £

People who get Sickness Benefit, Invalidity Benefit or Severe Disablement Allowance are allowed to earn up to £43 without losing benefit if the work is treated as work they have "good cause" to do under the "therapeutic earnings" rule. However, if they are receiving any of the means tested benefits listed above, the £15 limit will apply. For this reason, those most likely to benefit in full are people without housing costs ( e.g. living with parents, paid off mortgage etc.) or partners of people in full time work.

LETS currency should not be treated as income. There is no case law on this issue, as far as we are aware, but there are analogous situations with respect to earnings in kind and earnings in foreign currency which could be used as the basis for an argument. What is more likely is that it could be argued that the person was foregoing earnings which were available in the sterling economy. "Notional income" at the hourly rate for the job would then be deducted from the person's benefit. There are a number of points to note if this is attempted:

the burden of proof lies with the Adjudication Officer to show that what the person is doing is work for which an employer would pay.
(arguments to be used here relate to flexibility, timekeeping, allowances for health condition which are available under LETS and would not be in a formal job, especially if the person's mental health means they could not cope with a regular commitment).
if the person "paying" for the service could not afford to purchase it in sterling then the notional income argument cannot be used.

Impact on decisions about a person's fitness for work.

A. What is therapeutic work?

work recommended or approved by a doctor beforehand
duties involved in being a local councillor
"light" work whether physically or mentally
CRUCIALLY the main motivation for doing work must not be financial

Unfortunately, any work done, with the exception of being a councillor, can potentially be used to argue that the claimant is no longer incapable of work. "Defences" to this approach would centre on whether the work was of a type for which an employer would be willing to pay, i.e. is the person reliable, do they need lots of time off for medical appointments, to what extent is the work they are doing tailored to their specific needs, etc. as above. The question of whether the work is paid or not is irrelevant to the question of fitness for work, as even voluntary work can be used to argue that a person is no longer incapable of work.

What should a person do to avoid risking their benefit?

get a letter from their doctor explaining why the work they intend doing is beneficial to their condition.
consult the DSS to see if they have any objections to the work proposed before starting to do it - if they do object, this decision can only be appealed if the person goes ahead and loses benefit. It cannot be appealed (to resolve the issue) in advance of the work being done.
people whose benefits are adversely affected in terms of either income or queries relating to their incapacity for work should be encouraged to appeal. They will need a considerable amount of support to follow this process through, as it can be very stressful in itself.