Esa

A question about : Esa

Hi
My Father had an accident at work which along with serious other injuries incurred he lost the whole of his right arm. He has recently had his ESA benefit stopped because it had expired past the 365 days he was entitled to it. He has now been refused the benefit because he received an insurance pay out and has over Ј16,000 in his bank. He was told that he can not go and spend this money as that would be fraud? My father paid into this insurance policy his whole life and he feels that this is compensation for the loss of his arm and should be used to buy things that make his life more manageable not to use as living costs. If he had not paid into this policy he would be able to claim benefits as he has been marked as been 110% disabled. Please could anybody let us know if his money is classed as savings? My Father worked from 1976 until 3 years ago when he had the accident and worked 6 sometimes 7 days a week. I would appreciate some advice.

Best answers:

• Yes, the money is counted as capital. It is in effect compensation, but for the fact that he can no longer work, and hence needs the money as an income.
  He can spend the money on day to day items, but anything frivolous, or giving the money away, may be counted as intentional deprivation of capital. If his spending is classed as intentional deprivation, he will be treated as having notional capital i.e. as if he still has the money.