This case illustrates the abysmal lack of joined up policy between childcare legislation and social security legislation. This has been raised several times in the past at senior levels within DWP but they appear to view families with children in care as such a small minority that it's not an issue for them and parents of children in care are not a socially popular group to campaign for.
That said, part of the problem is that it sounds as if the intensive contact arrangements have not been designed to be benefit efficient and may have been set up without any thought about the impact on benefit entitlement. There may also be some communication failures with the Job Centre.
It is possible to have intensive contact arrangements which still ensure that the parent is taking at least three active steps each week to find work (eg the steps could be specified in the plans for the contact arrangements). It could also be specified that the parent is still available for employment - other parents have lots of contact with their children but are still regarded as available. Has anything been said to the effect that she would not be available for work during this period? If so a letter clarifying what was probably really meant might be helpful - particularly if the social worker could confirm this.
If the parent is without sufficient money (including when she has her JSA single person rate back), Social Services' duty to provide financial support in exceptional circumstances under S 17 Children Act is very compelling - the welfare of the children and her ability to look after them would clearly be affected by her not having an adequate income and any refusal by Social Services to financially support would be strongly challengeable in such a case because a refusal woud be utterly perverse. Apart from anything else it's a false economy for Social Services not to support her as it's far cheaper than the situation breaking down and the children entering the care system long term.
A claim for HB/CTB should also be made to safeguard entitlement to these benefits (assume LA have suspended these following notification from the DWP of her JSA stopping).
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