Potential merits of introducing a capital disregard for payments made to UK residents under the Republic of Ireland's Mother and Baby Institutions Payment

During the 20th century tens of thousands of unmarried women and their children were residents of mother and baby homes, and county homes, in the Republic of Ireland. In 2021, the Irish government issued a state apology to those who spent time in these institutions, and published an action plan including proposals for financial redress for survivors and former residents.

The Mother and Baby Institutions Payment Scheme provides financial payments and a form of enhanced medical card to defined groups in acknowledgement of suffering they experienced.

The main payments made under the scheme can range from €5,000 to €125,000, depending on the length of time people were resident.

Many former residents of mother and baby institutions now live in the UK, and 11% of all applications to the scheme at the end of April 2025 have been made by UK residents.

Unless explicitly ‘disregarded’ in regulations, all savings above a certain amount are taken into account when determining entitlement to means-tested benefits such as Universal Credit and Pension Credit. In many cases, payments made under the payment scheme will be significant enough to reduce or even stop entitlement entirely.

The UK government does allow money from certain compensation schemes, such as Windrush Compensation Scheme payments and payment schemes set up following the 2017 terrorist attacks in Manchester and London, to be disregarded. However, it does not disregard money from compensation schemes in general, and there is no example of compensation paid by a foreign government being disregarded.

Liam Conlon MP is leading this debate. Mr Conlon is also the sponsor of a private members bill “to require the Secretary of State to report to Parliament on the potential merits of disregarding payments” made under the scheme for the purposes of means-tested benefits and other purposes.

Background to the Mother and Baby Institutions Payment Scheme

In 2015, the Irish government established a Commission of Investigation into Mother and Baby Homes to investigate what happened to women and children in mother and baby homes, and county home institutions, in Ireland from 1922 to 1998.

The final report of the commission was published in January 2021. The Taoiseach, Micheál Martin, then issued a state apology, recognising “a profound failure of empathy, understanding and basic humanity over a lengthy period” detailed in the report, and “the profound generational wrong visited upon Irish mothers and their children who ended up in a mother and baby home or a county home.”

Later in 2021, the Irish government published an Action Plan for Survivors and Former Residents of Mother and Baby and County Home Institutions, which included adopting the Commission’s recommendation of a payment scheme.

Citizens Information (an Irish institution similar to Citizens Advice) has a useful webpage setting out background to the scheme.

Following publication of the Commission’s final report, BBC News Northern Ireland also published a timeline of the Irish mother and baby home controversy.

The payment scheme

There are three forms of support offered by the Mother and Baby Institutions Payment Scheme:

• A general payment to recognise time spent in the institution, harsh conditions, emotional abuse and all other forms of mistreatment, stigma and trauma experienced while resident in an institution.
• A work-related payment for mothers who were resident for more than three months in Tuam Mother and Baby Home, Sean Ross Abbey Mother and Baby Home or a county home institution – institutions where residents undertook work which was not compensated.
• An enhanced medical card for those residents in relevant institutions for six months or more. For those living overseas, a €3,000 payment in lieu of the card will be available.

The rates of the general and work-related payments depend on length of time spent in the relevant institution. Total compensation from the general and work-related payments can range from €5,000 to €125,000. See pages 46-47 of the Mother and Baby Institutions Payment Scheme Information Booklet published on the gov.ie website.

For further information see Mother and Baby Institutions Payment Scheme: Your questions answered on gov.ie.

How many people in the UK might get payments?

The latest statistics covering the period from the opening of the scheme to the end of April 2025 show that just under 6,500 applications have been made, and 4,200 general and work-related payments have been processed. 11% of the applications originate from the UK.

The regulatory impact analysis for the Mother and Baby Institutions Payment Scheme Bill (PDF) estimated that 34,000 people would ultimately get financial payments under the scheme, with 19,000 of those also qualifying for an enhanced medical card. There is no breakdown of expected recipients by country of residence.

How payments might affect benefits

As noted above, the payments can reach up to €125,000 for long-term residents of mother and baby institutions. Of payments made or in progress up to 30 April 2025, the average amount paid is equivalent to around £11,000.

Unless disregarded (see below) cash sums held as savings will be counted as ‘capital’ for the purposes of means-tested benefits and adult social care means-tests.

For Universal Credit claimants, the first £6,000 of capital (or £10,000 if they are in a care home) is ignored and doesn’t affect their benefit. No benefit is payable if total capital exceeds £16,000. For every £250 of capital between the lower and upper limit, an ‘assumed monthly income’ of £4.35 reduces the amount of benefit payable.

Different rules apply for Pension Credit. The first £10,000 of capital is ignored, and the claimant is treated as a having a ‘deemed income’ of £1 a week for every £500 of capital above this amount. There is no upper capital limit.

For Housing Benefit claimants above the qualifying age for Pension Credit, the £10,000 lower capital limit also applies, as does the more generous tariff income rate of £1 a week for each £500 of capital. However, the upper capital limit of £16,000 beyond which no benefit is payable still applies.​

If a person deliberately gets rid of capital in order to secure or increase their entitlement to a means-tested benefit, it may still affect their benefit. This is known as ‘deprivation of capital.’ A person may be caught by this rule if, for example, they transfer the capital to another person or use it to buy a house.

The Commons Library has a constituency casework page explaining how savings can affect benefits.

Capital is also taken into account when determining whether someone is eligible for local authority funding for social care – see section 2 of the Library’s briefing Paying for adult social care in England. Section 5 of the briefing covers arrangements Scotland, Wales and Northern Ireland.

Can compensation schemes be disregarded?

Unless a particular form of savings or asset is disregarded under benefit regulations, it will be relevant to eligibility and entitlement.

There are various specified compensation schemes that are disregarded. However, none of the compensation schemes for which payments are currently disregarded are provided by countries outside the UK, and regulations specify only official UK-based schemes.

Certain ‘special compensation schemes’ can be disregarded in means-tested benefits. However, disregards for compensation schemes do not apply as a general rule, and schemes must be specified in the regulations in order to be disregarded.

The government does not always introduce disregards for compensation or redress schemes. For example, payments to family members made from the NHS and Social Care Coronavirus Life Assurance Scheme were not disregarded in means-tested benefits by the Conservative government in 2020, despite calls from trade unions and the opposition front bench to do so.

The specified special compensation schemes to be disregarded are set out in regulation 76 of The Universal Credit Regulations 2013, SI 2013/376. There are equivalent regulations for other means-tested benefits such as Pension Credit. A wider variety of capital to be disregarded for UC is set out in schedule 10 to the 2013 regulations.

All of the compensation schemes currently listed are official and UK-based. When Universal Credit regulations were originally made, specified special compensation schemes included:

• people diagnosed with variant Creutzfeldt-Jacob disease or infected from contaminated blood products,
• victims of the July 2005 bombings in London, and
• persons who have been interned or suffered forced labour, injury, property loss or loss of a child during the Second World War.

Subsequent schemes such as those set up following the 2017 attacks in London and Manchester, as well as the Grenfell fire, were also added through amendments. Recent compensation schemes added to the list are those set up to support victims of historical institutional child abuse, those affected by the Windrush scandal, as well as for victims of the Post Office Horizon scandal and the Armed Forces LGBT Financial Recognition Scheme.

Certain compensation scheme payments are disregarded in local authority financial assessments for social care – see Annex B of the Department for Health and Social Care’s Care and support statutory guidance.

What has the UK government said?

In March 2024, the then Conservative Employment Minister said:

Means-tested benefits have no specific disregard of payments made by the Republic of Ireland’s Mother and Baby Institutions Payment Scheme to those living in Great Britain and DWP currently has no plans to change this policy.

As in the UK, capital can affect Irish means-tested benefits. Capital above specified levels is treated as if it produces income – see Capital and social welfare payments on the Citizens Information website.

The Irish government’s proposals for the Mother and Baby Institutions Payment Scheme noted that the payments made under the scheme would be discounted in Irish benefits, and that representation would be made to other countries to recommend doing the same:

Finally, awards and benefits will be discounted for the purposes of determining entitlement to social welfare payments and/or income tax liability. There will also be engagement with relevant authorities overseas, where possible, to recommend consideration of similar provisions in other jurisdictions, while noting that the Irish Government does not have the authority to compel other jurisdictions to make such allowances.

In March 2024, the then Conservative Secretary of State for Northern Ireland, Chris Heaton-Harris said that he had not had any discussions with the Irish Government