Carers UK Forum

There are more fundamental problems with Universal Credit than the 6-week initial wait for payment.

There's the fact that it has been used as a vehicle to reduce the amount of money paid to disabled people, with the Severe Disability Premium scrapped completely (an extra payment available under legacy benefits for people receiving disability benefits such as PIP or DLA).

They have scrapped the LImited Capability for Work element completely, despite oppostion at the time.

There are long delays in people being offered a Work Capability Assessment to test whether they have limited capability for work in the first place, and many people are required to undertake 35 hours work search a week regardless of their health condition.

The rates paid with UC are part of the benefit freeze, whereby there is no annual uprating until at least 2020, which means people who need to claim UC are seeing their income fall in relative and real terms. In particular, the housing element no longer bears any resemblance to the actual cost of local housing.

Despite what government and DWP say, there is virtually no support for people around budgeting and how can you budget when you simply don't have enough money to live on in the first place?

The two-child limit applies to UC, so you don't get paid anything extra if you have more than 2 kids.

The bedroom tax still applies to UC, so your payment is reduced if they think you have one or more spare bedrooms.

The overall benefit cap still applies and this was lowered again last year.

Universal credit has poleaxed the jobless. Now for low-income workers

If you’re on minimum wage and claiming housing benefit and tax credits, beware. The new system is loaded with booby traps and financial penalties

One particularly severe consequence of the universal credit rollout – likely to be objectionable to even the staunchest of Tory voters – is being overlooked.

Universal credit is set to replace the main means-tested benefits. These include not just employment and support allowance (ESA) and jobseeker’s allowance (JSA), but also two benefits claimed by millions of low-waged employed people: working tax credits and housing benefit. Part-time workers don’t know what’s about to hit them. The effect it will have will be huge, and the consequences for the government could prove fatal.

By May 2016, 15,000 working people had been moved on to universal credit. The Resolution Foundation estimates that by the time it is fully rolled out it will affect 1.2 million workers. Many of these will be families, and about 200,000 will be lone parents. Most are unaware that once they are moved on to universal credit their claims will entail the same degrading treatment currently reserved only for the unemployed.

Under universal credit, workers on low incomes will be made to look for extra hours as a condition for receiving the benefit. If they are earning less than the equivalent of the minimum wage at 35 hours a week, they will be placed in one of two “labour market regimes” (otherwise termed a “work-related activity group” or “conditionality group”) with conditions attached to their benefit claims to “incentivise” them to increase their hours – or find higher paying or full-time work.

Those placed in the “intensive work search regime” will be obliged to “take intensive action to secure … more work, attending regular work-focused interviews, attending work search reviews (at least fortnightly) and undertaking work preparation, work search and other work-related activities”.

If they are judged to not be complying with these conditions they will be sanctioned, just as jobseekers are now. At the higher level this would mean the loss of about £70 a week for three months for the first failure, six months for a second failure, and three years for a subsequent failure. Millions of sanctions have already been applied to people on ESA and JSA with dire consequences. Not only are sanctions often applied unfairly, numerous studies have shown that sanctions do not in fact work as an effective incentive to finding employment. Pushing people to the brink of destitution tends to diminish rather than enhance people’s ability to find a job.

One group who would be expected to benefit from a welfare system that can pay varying amounts of benefits according to changing irregular working hours – as planned on universal credit – are those on zero-hours contracts. However, this group will be among those hardest hit by the regime of in-work conditionality and sanctions. Already, as with JSA and ESA claimants, we are seeing sanctions being applied to in-work universal credit claimants for spurious reasons. They have had money deducted when irregular working hours have made it impossible to make scheduled appointments, or after having told the jobcentre they would be on holiday.

For many, the money will be taken from elements of the benefit paid for children and housing. Removing money intended for the children of working people – to the point of threatened eviction for rent arrears – will hopefully be a step too far for most of the population, and will be intolerable for the families affected.

It’s possible that employers may also withdraw support for the measures when they witness the effect on their staff. Workers weakened by hunger, or exhausted from having to walk for miles as they can’t afford bus fares, or unable to wash with hot water because they can’t top up gas or electricity meters, generally do not perform well at work.

In abandoning the traditional distinctions between the “deserving hardworking”, and “undeserving”, non-working poor, the government is taking a very unwise political risk. The financial punishments currently reserved for the unemployed have been accepted by many because they appear to follow a particular – albeit simplistic and ill-informed – justification: why should hardworking people subsidise those portrayed as lazy scroungers? It has been this logic that has propped up support for the Conservative party among many working class people for years. That narrative is about to fall apart.

The consequences of universal credit will be catastrophic, for those claiming the benefit of course, but also for the government that implements it.

Universal credit ‘penalises the self-employed’ report warns.

Low Incomes Tax Reform Group says welfare change fails to account for fluctuating earnings or one-off expenses.

Britain’s growing army of low-paid, self-employed workers face being more than £2,000 a year worse off than employees with the same earnings as a result of the government’s flagship welfare reform, ministers have been warned.

Hundreds of thousands of self-employed workers on low incomes who are dependent on in-work benefits could eventually be affected by unfairness built into the universal credit system, according to a new analysis. Some could be forced out of business altogether.

The revelation is the latest in a series of high-profile setbacks to the programme. Earlier this month, after pressure from Labour leader Jeremy Corbyn, Theresa May scrapped a 55p-a-minute charge for using a universal credit helpline, but the prime minister has so far refused to delay the national rollout of the new system, despite evidence of claimants falling into rent arrears while waiting for a claim.

The new warning comes in a report published on Monday by the independent Low Incomes Tax Reform Group (LITRG). It states that there is “a very real possibility that people will be discouraged from starting self-employment, and existing claimants may be forced to give up their work”.

It states: “We have modelled numerous examples that show how a self-employed person earning the same across a 12-month period as an employed person can be worse off. In one example, the self-employed person received £2,600 less universal credit than their employed counterpart. We cannot see how this can be fair.”

Under universal credit, several benefits are combined into a single payment. Ministers are expected to reduce the time claimants have to wait for their first payment from six to four weeks after pressure from Tory MPs. The overall budget of the programme has been raided several times as a result of welfare cuts imposed by the former chancellor, George Osborne.

The LITRG expresses most concern over the “minimum income floor” (MIF), a claimant’s expected monthly income after tax and national insurance have been deducted. It is used to calculate universal credit payments but can penalise low-paid workers whose monthly income fluctuates, and result in some having their entitlement to state support severely curtailed. Documents from the Office for Budget Responsibility suggest that the government stands to reduce universal credit expenditure by £1.5bn by 2021-22 as a result of the MIF.

Anne Fairpo, chair of the LITRG, said: “The last 10 years have seen a significant rise in the number of people who are self-employed, many of whom are on a low income and therefore unable to afford professional advice. Universal credit is gradually replacing working tax credit as the primary welfare support for low-income working-age people.

“Perhaps the most concerning part of the self-employment regime under universal credit is the minimum income floor, which fails to account for fluctuating earnings or one-off large business expenses.

“This can lead to a situation where a self-employed claimant with fluctuating earnings can receive substantially less universal credit than an employed claimant earning a similar annual income above the level of the current minimum income floor. We cannot believe that is an intended consequence.”

The government has already introduced a 12-month “start-up period” when the MIF does not apply in an attempt to lessen the impact on entrepreneurs. However, Andy Chamberlain, from the Association of Independent Professionals and the Self-Employed, warned that it was not enough.

“Fluctuating income, typical among self-employed people, can make it extremely difficult to meet the requirements of the minimum income floor,” he said. “Unless the self-employed business can reach the minimum amount required every month, access to credit is stopped. The majority of the self-employed have been operating for over 12 months, so the start-up period that has been offered does not solve the problem,” he said.

The LITRG, an initiative of the Chartered Institute of Taxation, calls for self-employed claimants with fluctuating income to be able to average their income over a period of up to a year. It also demands changes to the calculation of the MIF and an increase in the start-up period from one to two years.

Debbie Abrahams, the shadow work and pensions secretary, said: “It is deeply frustrating that self-employed people could be thousands of pounds worse off under universal credit.

“This government programme was supposed to make our social security system more responsive to the modern labour market. Yet it is not flexible enough to properly support the five million self-employed workers in Britain. Labour is calling on the government to pause and fix the programme, before millions of people are made worse off.”

A spokeswoman for the Department for Work and Pensions said: “Universal credit supports self-employed people for up to a year while they establish their business. If, after a year, the business isn’t meeting the minimum income floor, then they will have to either increase their self-employed earnings or take on additional work as part of their claimant commitment.”

It's worse than that.

Many thousands of self employed workers are also carers for somebody severely disabled.

The small businesses are a means to survive while allowing the flexibility to fufill their heavy caring roles.

They may be claiming the severe disability bonus of tax credits.

That bonus has not been transferred to Universal Credit and so they are immediately facing a huge cut to their family incomes.

Yet again the familes of the severely disabled hit by cruel and ill thought out cuts!

Who cares right?

The British public as a whole will just turn their heads away yet again.

Will I be worse off moving onto Universal Credit?

The way your Universal Credit payment will be worked out uses different rules.

In some circumstances you may be able to claim what's called Transitional Protection if moving onto Universal Credit means you will get less money than you were getting in your old benefits.

However, it depends on why you're moving.

If you are currently getting any of the benefits that are being replaced by Universal Credit and you have a change of circumstances that means you will now have to make a new claim for Universal Credit, you won’t qualify for Transitional Protection.

However it is proposed that if you’re on any of the benefits being replaced and are asked by DWP to move onto Universal Credit, you may qualify for Transitional Protection if all the following things apply:

your UC award is less than you’re getting in your current benefits

you have no changes in circumstances.

You will continue to get Transitional Protection until your Universal Credit award catches up through increases in payments, or the family has a significant change in circumstances.

Your Transitional Protection will end if:

the amount of UC you're entitled to decreases to nothing
your partner leaves or joins the household
there is a sustained (3 month) drop in earnings so that you move into a more intensive conditionality requirement
you or your partner (or both of you) stop working.

Otherwise Transitional Protection will be reduced in line with any other increases in your benefit.

Reverse cuts or backing for universal credit may collapse, says thinktank.

Urgent £3bn cash injection needed to bolster confidence in failing system after welfare cuts, says Resolution Foundation.

Public confidence in universal credit will collapse without an urgent £3bn cash injection to reverse cuts that are set to leave millions of families worse off, an influential thinktank has warned.

The Resolution Foundation says a spree of Treasury-driven welfare cuts since 2015 has left universal credit unable to meet its original aims of strengthening work incentives and supporting the incomes of low-income families.

It warns that the current fragile political consensus in support of universal credit risks breaking down unless ministers refinance the reform and fix multiple design and implementation problems.

The original universal credit vision of merging six benefits into one to create a simpler social security system is still “worth holding on to”, Resolution argues, but it warns the programme will fail unless ministers face up to its inherent flaws.

“The government is rightly committed to the roll-out of universal credit, but will need to relaunch the benefit to both address the design challenges that are already visible and get ahead of those that will emerge in the years ahead,” said David Finch, senior policy analyst at the foundation.

The government is under increasing pressure to make changes to universal credit amid fears that the reform will reach poll tax levels of public unpopularity. Reports at the weekend suggested ministers were considering a reduction in the current 42-day wait for a first universal credit payment.

Although David Gauke, the work and pensions secretary, proclaimed at Conservative party conference that universal credit was “working”, he subsequently came under heavy pressure from his backbenchers to make changes and announced earlier this month that 55p-a-minute charges for the universal credit helpline would be scrapped.

However, Resolution argues that big changes to the financing of universal credit are needed to restore its credibility. It warns that cuts to work allowances will be a “major drag on the living standards of families on low and middle incomes”, leaving 1m working households an average of £2,800 a year worse off by the time universal credit is fully rolled out.

“Restoring parity with the tax credit system by reinvesting £3bn a year into universal credit is essential, not only to protect living standards but also to prevent universal credit’s brand becoming synonymous with such major cuts, resulting in significant opposition to roll-out,” it says.

The current political focus is on the hardship endured by claimants forced to wait a minimum of 42 days for a first universal credit payment. Resolution calls for this to be reduced to around 30 days, with the housing rent element paid within two weeks, to minimise the likelihood of poorer claimants running up debts and arrears.

Resolution adds that a series of other design flaws are likely emerge as “real world problems” as hundreds of thousands more families move on to the system over the next few months.

These include wider awareness of changes that will leave self-employed workers up to £2,000 a year worse off, and frustration over the complicated processes for payment of childcare support that have forced some parents to give up work.

It adds: “Until recently one of the biggest strengths of the new benefit was the near-universal support for the principle underpinning it of a simpler scheme that would improve work incentives and outcomes for low-income families. That consensus is now looking seriously strained.”

A DWP spokesman said: “This report fails to acknowledge the package of support introduced to help people move into work, including unprecedented support with childcare costs and wider reforms to taxation and the introduction of the national living wage. It also assumes benefit claimants’ lives remain unchanged, but the truth is [that], under universal credit, people are moving into work faster and staying in work longer than under the old system.

“The majority of people are comfortable managing their money, but advances are available for anyone who needs extra help and arrangements can be made to pay rent direct to landlords.”

Switch to universal credit will hit lone disabled people.

When I am switched over to universal credit, I stand to lose over £2,000 a year, writes Steven Livingston.

With universal credit in the headlines (Report, 24 October), with the extended rollout and the many issues this will cause recipients, I have sadly not seen much in any news coverage of late about how this benefit will impact on a specific group in society, of which I count myself.

As a severely disabled person who lives alone, I’m currently in receipt of employment support allowance, with the added severe disability premiums that apply because of that.

However, at some point, when I am switched over to universal credit, I stand to lose over £2,000 a year because, unlike ESA, universal credit has no single-person disability premiums, leading to a cut in weekly income of £60 or more.

The last time this very serious issue was covered in any detail was back in 2012 when Tanni Grey-Thompson headed a campaign to raise awareness of the problem that universal credit will cause for disabled people living alone.

The government and the DWP have attempted to nullify this concern by pointing out that there will be transitional payments to “protect” those being switched from ESA to UC. But, as always, the problem with this approach is that it effectively freezes the recipient’s income over the period of however long it takes for the transitional payment to be eroded away by increases in benefit rates.

Other claimants may receive 1% a year, while over the perhaps many years it takes to erode that £2,000-plus difference, the likes of myself will receive no increase. Meaning that all the transitional payment does is delay the situation, the end result being the same, an income loss of more than £2,000 over a period when all other costs and benefits may have risen.

Some in government also attempted to point out that the loss of the severe disability premium for those living alone will be compensated for by personal independence payments. Except, of course, that many disabled people currently in receipt of ESA who face being switched over to UC are already in receipt of PIP (or its previous form, DLA), so in truth that’s no compensation at all.

So, for me and many other severely disabled people who live alone, the thought of being transitioned over from ESA to UC in the near future, with the hefty cut in income that will result, is a truly worrying one. It is a real problem that, since Tanni Grey-Thompson mentioned it in 2012, the government has not addressed at all (or doesn’t care to).

Steven Livingston
Peacehaven, East Sussex

Over 400,000 more children will live in poverty by 2021 due to benefit changes, finds report.

Under current plans for changes to benefits, including roll-out of universal credit, relative child poverty is set to increase from 27 per cent to 31 per cent in next four years, research shows.

More than 400,000 more children are set to fall into poverty in the next four years if the Government pursues its planned tax and benefit reforms, a new report has warned.

Research by the Institute for Fiscal Studies (IFS) forecasts that under current plans for changes to benefits, including the rollout of universal credit, relative child poverty is set to increase from 27 per cent to 31 per cent by 2021. Experts have warned that Britain’s record of reducing child poverty is at risk of “unravelling” as a result of the changes.

The research, which combines official economic forecasts with planned tax and benefit reforms to project incomes and poverty rates among UK households between 2015-16, shows that child poverty will rise in every region of the country over the next few years.

Child poverty is defined as any youngster living in a household with an income of less than 60 per cent the national average, after housing costs are taken into account.

The largest increases will occur in the North East, East Midlands, Wales, and Northern Ireland – all areas where poor households get more income from benefits and less from earnings, or where more low income households will be affected by the limiting of means-tested benefits to two children.

Tom Waters, an author of the report and a research economist at IFS said: “If the Government sticks to planned benefit cuts, it should not be surprised if, according to the official measure, absolute child poverty rises.

“The larger projected rises occur in areas where families with children are more reliant on benefits than earnings for their income, and where more families are likely to be adversely affected by the new two-child limit on means-tested benefits.”

Around 7.5 million low income households will see their benefit entitlements cut by over £500 per year in real terms as a result of the freeze to most working-age benefits, the report states. It adds that the limiting of tax credits and universal credit to two children means that some low-income families will receive over £2,500 less in benefits than they otherwise would have.

Income is projected to grow by just 4 per cent in real terms over the next four years – which the report authors say is slow by historical standards. And they warn that this prediction could be optimistic, with the OBR indicating that they will downgrade their forecast for productivity growth at the Budget later this month.

The report comes amid growing pressure on Theresa May to make changes to universal credit, which is being blamed for plunging people into debt and sending them to food banks.

In particular, there are calls - including from some Tory backbenchers – for the six-week wait before a first payment comes through to be cut to no more than four weeks.

So far, No 10 has refused to bow to the pressure, although the change is believed to be under consideration behind the scenes.

However, there are also warnings that universal credit is punishing the self-employed, people working part-time and women – because payments go a single household earner, usually a man.

The shake-up replaces six different working-age benefits with a single payment, making the system simpler to understand and administer, Ms May has insisted.

It also comes as new research from Child Poverty Action Group (CPAG) found that a lack of affordable childcare and poor opportunities for progression were already holding low and middle-income parents back, with almost half of working parents with an annual household income under £30,000 saying they didn't have enough money to support their families.

A separate report published by campaign group Gingerbread meanwhile indicated that 165,000 single parents of pre-school aged children were at increased risk of going into poverty and debt because of new job-seeking requirements placed on them under the universal credit system.

It has also emerged this week that benefit cuts and increased levels of poverty across the UK are a primary cause for an “unprecedented surge” in demand for children’s services in recent years, with cuts to financial support for families causing demand to rise to levels local authorities say they are unable to meet.

Alison Garnham chief executive of CPAG, told The Independent the UK was heading for a "child poverty crisis", warning that it is "extremely unusual" to have increases in absolute child poverty in every UK region and nation on the horizon. "So much of the damage to household incomes is being caused by the freeze on benefits and the huge cuts to tax credits and universal credit," she added.

"The Chancellor has the opportunity in this month’s Budget to reduce the scale of the oncoming crisis by ending the freeze on benefits and re-instating the money that has been taken out of universal credit. Failure to act will jeopardise the life chances of a generation."

Campbell Robb, chief executive at the independent Joseph Rowntree Foundation (JRF), meanwhile said: “These shocking figures show the UK’s proud record of reducing child poverty is at risk of unravelling: it could mean an additional 1.2 million children in poverty by the end of the Parliament.

The budget will show whether the Tories really care about ‘just managing’ families.

The 2015 benefit freeze has been far more destructive than the government thought. Will the Tories take the chance to lift it?

In politics, there are some ideas that are good in theory but don’t work in practice. Then there are those that were always going to cause harm but turn out to be more damning than even the policy’s architects could have imagined. Increasingly, the benefit freeze is the poster child for the latter category. The government is rightly coming under increasing pressure to halt the roll-out of universal credit. But lifting this freeze in benefit levels should be as much of priority.

In the 2015 budget, then chancellor George Osborne put in motion a freeze on most working-age benefits for four years, from housing benefit and tax credits, to employment support allowance and child benefit. In other words, on the “top-up wage” for the mum working all hours as a care assistant but still struggling to pay the rent, or the safety net for the cancer patient temporarily too ill to hold down a job.

The human impact of a policy like this is obvious: when benefits don’t keep up with inflation, families already on some of the lowest incomes in the country are left struggling even harder to meet basic living costs.

And because increases in inflation have been greater than expected, this freeze is biting harder than even the Conservatives imagined. Inflation will have eroded in real terms an estimated £0.9bn more a year from the budget by 2020 than ministers intended – and a staggering £4.9bn in total.

The result is huge chunks of the population suddenly finding they can’t afford the weekly food shop, to put the heating on in the winter, or pay the rent. Over the next year, 7.3 million children – that’s half of all families with children – will be hit by this freeze. And we can add to that 2.4 million disabled people.

According to the Resolution Foundation, by 2018-19, families could be up to £315 worse off a year due to the policy. It will also mean a widening income gap between rich and poor, with a year-on-year fall in income for the lowest earners – for the first time ever.

By the time the freeze is scheduled to end in 2021, the Joseph Rowntree Foundation (JRF) calculates that almost half a million more people will be living in poverty as a result. To put that in context, that means the benefit freeze will be the single biggest policy driver behind Britain’s expected rise in poverty over the next four years.

That the majority of these families are actually in work feels like a particularly hollow joke considering the “shirkers v workers” ideology that underpins the benefit freeze. At the height of the Conservatives’ “hardworking families” rhetoric, the introduction of the benefit freeze spoke to the growing demonisation of social security and the people who rely on it.

Osborne claimed at the time that freezing benefits would “make Britain fairer” – the implication being that, in the contest between “deserving” workers and “undeserving” welfare claimants, freezing benefits would somehow push things in the former’s favour. It was a nasty divide-and-rule tactic: perpetuating the false ideas that benefit claimants are skiving off employment - when many of them are actually in low-paid work - and that the best way to ensure work pays isn’t to raise wages, but to cut benefits.

A couple of years on, while the language around welfare has changed, the drive to shrink social security is as strong as ever. The Child Poverty Action Group and the Institute for Public Policy Research thinktank found this week that families are being left thousands of pounds worse off a year due to continual benefit cuts. After all, the benefit freeze isn’t happening in isolation. The same people having their benefit frozen are likely also facing direct cuts to levels of universal credit work allowances, tax credits, and disability or housing benefits.

Things are only set to get harder. The uncertainty of Brexit will likely further impact families living without economic security: the National Institute Economic Review warned this week that households will have to find up to £930 more a year for basics like meat, vegetables, and clothes if Britain walks away from Brexit talks without a trade deal, with poorer families with children and unemployed people the worst hit.

Even without taking into account Brexit, the JRF calculate that by 2020, a decade of benefits not keeping up with prices means low-income families will have lost the equivalent of about a third of their annual shopping bill, whilst Shelter warns more than a million households could be forced out of their homes by then if the housing benefit freeze remains in place as planned.

The JRF calculates that if the government ended the freeze early it would prevent almost 400,000 fewer people from being in poverty in 2020 – the majority of those being working families or those with children. And just lifting the freeze in universal credit, while increasing child benefit in line with inflation, would result in 300,000 fewer children in poverty.

It’s easy to lose sight of the fact that behind each number is a real family – one falling into hardship at the hands of outdated, rotten government policy. If Theresa May’s ever-weakening government has any desire to help her “just managing families”, they’ll use this month’s budget to lift the freeze on benefits.

If not, it simply underlines the extent to which the Conservatives – fully aware that inflation has made the effects of the freeze have been made even more pernicious than expected – are simply abandoning people without enough income to live on.