More changes to Universal Credit

A number of positive changes to Universal Credit were announced in the recent budget:

  • Universal Credit Work Allowance increase – the Work Allowance for households with children, and people with disabilities will be increased by £83.33 a month from April 2019. However, Work Allowances have not been restored for other types of claimant.
  • Maximum rate at which deductions can be made from a Universal Credit award will reduce from 40% to 30% of the standard allowance from October 2019.
  • 12-month grace period for Minimum Income Floor will apply to all gainfully self-employed people. This will be introduced from July 2019 and implemented fully from September 2020.
  • Additional fortnight’s benefit payment for transition to Universal Credit for people on the income-related elements of Jobseeker’s Allowance and Employment and Support Allowance, and Income Support from July 2020.
  • Universal Credit advances can be recovered over 16 months from October 2021.
  • Claimants receiving SDP on legacy benefits, who would normally have naturally migrated to UC, will no longer be required to do so. They will remain on their existing benefits or be able to claim another existing benefit instead.
  • Claimants who have already been naturally migrated to UC and who are still entitled to UC; and who were entitled to the Severe Disability Premium via JSA(IB), HB, IS or ESA(IR) immediately prior to migration; will have transitional payments added to their UC award.
  • 18 to 21 year olds will be entitled to claim support for housing costs under Universal Credit from 31 December 2018.
  • There will be a new statutory entitlement to two weeks’ of leave for employees who suffer the death of a child under 18, or a stillbirth after 24 weeks of pregnancy. Employed parents will also be able to claim pay for this period, subject to meeting eligibility criteria. This entitlement will come into force in April 2020.
  • The surplus earnings policy in Universal Credit will continue to affect large earnings spikes (above £2,500) until April 2020, when it will revert to affecting earnings spikes of £300.
  • The Universal Credit implementation schedule has been updated: it will begin in July 2019, as planned, but will end in December 2023
  • Funding for supported housing will be retained within the welfare system, rather than moving to a local funding model.
  • The transfer of rent support from Housing Benefit to Pension Credit will be delayed by 3 years.

There are more changes to managed migration detailed in the draft UC managed migration regs.

Changes to Universal Credit

A number of changes to Universal Credit (UC) were announced in the Budget and David Gauke’s subsequent statement. Before the Budget, there were also announcements on helplines and advances. Here is a short summary of the changes in chronological order.

  • New guidance on advances has been issued to Jobcentres so that all UC claimants are informed about advances, how much they can request and over what period they can repay it.
  • All 0345 DWP telephone numbers will move to 0800 Freephone numbers by the end of the calendar year starting with the UC helplines, which became free on 29 November 2017. A full list of the DWP telephone numbers which will become free to call is here.
  • In December 2017, new guidance will be issued to staff to ensure that claimants in the private rented sector who have their housing benefit paid directly to landlords are offered that option when they join UC.
  • New claims for UC in live service areas will cease at the end of December 2017.
  • Advance payments of up to 100 per cent of notional entitlement with a 12 month repayment period will be available from January 2018.
  • 7 waiting days at the start of UC claims will be abolished from February 2018 (subject to passing of legislation).
  • UC will be rolled out more gradually between February 2018 and April 2018, and roll-out to all Jobcentres will be complete in December 2018. Full service UC will be rolled out to Brent in November 2018. View the revised roll out schedule here.
  • Stays in temporary accommodation will be paid through housing benefit from April 2018 (subject to passing of legislation).
  • From April 2018, new UC claimants in receipt of housing benefit will receive an additional housing benefit run on payment of two weeks (subject to the passing of legislation).
  • It will be possible to apply for advance payments online from Spring 2018.
  • Currently any new UC claim from a family with three or more children will be routed back to tax credits until November 2018. With the extension to the roll-out plan that will now shift to the end of January 2019.
  • The government will increase some Local Housing Allowance rates by increasing Targeted Affordability Funding by £40 million in 2018‑19 and £85 million in 2019‑20. This will increase the housing benefit and UC awards of approximately 140,000 claimants in 2018‑19, by an average of £280, in areas where affordability pressures are greatest.

There is also the potential for the taper rate of UC to be reduced in future, with the Budget stating: “The taper rate will be kept under review and the government will continue to consider the case for further changes.”

You can read more details about the changes in the Budget (p64 and 67), David Gauke’s post Budget statement and Neil Couling’s letter to local authorities.

 

10 things you didn’t know about benefits

1. Most new people claiming Housing Benefit are working.

2. Sickness benefits have been renamed and now include no mention of illness or disability. The new names are “Employment and Support Allowance” and “Personal Independence Payment”. They were formerly called “Incapacity Benefit” and “Disability Living Allowance”.

3. Jobseeker’s Allowance claimants can now be sanctioned for up to three years.

4. Under 25s receive £57.35 a week in Jobseeker’s Allowance; 25s and over receive £72.40 a week. Couples receive £113.70 a week.

5. Pensioners can receive substantially more in benefits each week: Pension Credit for a single person is £148.35 a week and £226.50 a week for couples.

6. Pensioners are not affected by the Bedroom Tax or Benefit Cap.

7. Most people affected by the Benefit Cap are single parents.

8. If you are a single parent, you can avoid the benefit cap by working 16 hours a week. If you work for minimum wage, you will likely be entitled to Working Tax Credit of approx £74 a week. So you will end up with more benefit than if you were still on Jobseeker’s Allowance, which is approx £72.40 a week. So, in certain situations, single parents working can actually increase government spending on benefits.

9. Many people on low incomes have their salary topped up with benefits such as Working Tax Credit, Housing Benefit, Child Tax Credit and Child Benefit.

10. Two thirds of people affected by the bedroom tax are disabled.

So the best way to cut the benefit bill quickly is to: encourage employers to increase wages so benefits are not necessary to top up income AND introduce a rent cap on privately rented properties to decrease spending on Housing Benefit.

Some single people can only afford £10 a week for food due to changes to Council Tax Benefit

Many of the clients I see are struggling to pay the bills due to welfare reform. One group less mentioned in the media is single people with no children, particularly those in part time work.

When they are in receipt of Jobseeker’s Allowance, it is slightly easier as they can get discounted travel, access the Jobcentre Discretionary Fund for help buying work related items such as work clothes, get full housing benefit and the maximum council tax reduction.

However, once they start part time work of over 16 hours a week, an aim we assume they should aspire to, their council tax bill rockets (at least in Brent), they lose their Jobseeker’s Allowance, travel costs increase (unless they are lucky enough to find a job in walking distance) and there will probably be extra costs such as work clothes and shoes, extra haircuts etc.

Their housing benefit will also decrease and they will face the ordeal of providing up to date payslips to the local authority on a monthly basis. Failure to submit on time often leads to an overpayment that has to be paid back. It is very difficult for people whose salary fluctuates to keep on top of this and any overpayment deduction puts a massive strain on their ability to pay rent.

Even without any debts, many of my clients in the above situation can only afford to spend very little on food – as low as £10 a week. All other costs are essential: gas, electricity, water, rent, council tax, phone, food, essential clothes, cleaning materials and toiletries. And my clients have no surplus income for any emergencies that may arise. They really are living on the breadline. Not to mention those who are affected by the bedroom tax as well.

Until the government can recognise and address the fact that £71.70 a week is not enough for a single person to pay for all of their essential items (pensioners are assumed to need £145.50 a week), single childless workers and single people on Jobseeker’s Allowance are going to be pushed deeper and deeper into poverty.