Universal Credit is a means-tested benefit for everyone of working age – those who are unemployed, those who are unable to work, and those who are in work but not earning much. It includes an element for housing benefit.
Once you are on Universal Credit, you stay on Universal Credit when moving in and out of work unless you earn over a fixed limit.
Universal Credit is being introduced in stages – which is, notoriously, taking much longer than originally planned. Currently people are beginning to be signed onto the benefit if they are single jobseekers making new claims, and this is spreading across different parts of the country. These people will stay on Universal Credit even if their work or family situation changes, and there are also a few ‘Pathfinder’ areas (including Inverness) where the process started earlier and where they are now signing up people with more complicated claims.
Although Universal Credit will eventually replace means tested JSA, means tested ESA, Income Support and Tax Credits, contribution based JSA and ESA will remain.
This move to Universal Credit rarely benefits the claimant, so it is worth checking if you are in one of the current qualifying groups as the DWP can make mistakes and you may be able to avoid it: see www.citizensadvice.org.uk/benefits/universal-credit/before-you-apply/universal-credit-eligibility – it’s complicated.
CALCULATING THE AMOUNT
(For fuller details and an online calculator, try Turn2us)
Work out the MAXIMUM that would be received if there was no other income by adding:
the STANDARD ALLOWANCE – which, as now, depends on if you are single or a couple and if you are over 25
PLUS ELEMENTS FOR PARTICULAR CIRCUMSTANCES – which were formerly covered by other benefits (for: children, children on DLA, limited capability for work, limited capability for work related activity, being a full-time carer, 70% of childcare for working parents, rent (or mortgage if no earned income))
unearned income (but not disabled benefits or child benefit)
AND 65% of earned income above the Work Allowance
(The Work Allowance – the amount you are allowed to earn before it affects the benefit – depends on your household type and if you are receiving the housing element.)
THE CALCULATIONS ARE BASED ON THE ACTUAL SITUATION EACH MONTH
This avoids the current problems with Working Tax Credits overpayments, but will create lots of anomalies for people with irregular earnings (where a lot will depend on the dates when money is actually received), and will generate lots of paperwork.
Generally, people doing a bit of part time work will be able to keep more of what they earn than at present (though that isn’t saying much), but when a couple receives Universal Credit the second earner will keep considerably less than they do now.
CLAIMING UNIVERSAL CREDIT
The DWP would like everything to be digital, but you can still claim by phone.
Couples have to claim jointly, both members have to meet the basic conditions, and their money will be paid to a single bank account.
Jobcentres will push you to sign a Claimant Commitment that stipulates that you search for work 35 hours a week. You can try and argue for something more reasonable, though this can be difficult unless you have particular issues such as childcare or poor health. However, when it comes to appealing sanctions, it is still true that the law only requires you to ‘take all reasonable action for the purpose of obtaining paid work’, even if that takes less than the stipulated number of hours (The Universal Credit Regulations 2013, p51 clause 95). Unless you sign up to Universal Job Match and tick the box allowing the DWP access to your account they have no way of checking up when you are looking for work – and they cannot make you tick that box. Even if you have already set up an account you can un-tick the box. This is your right under data protection law.
If you want to avoid hassle it helps to be able to give a good account of your ‘35 hours’ jobsearch’. Knowing what they are looking for makes this easier – so here is the advice given to ‘Work Coaches’ – courtesy of Ipswich Unemployed Action:
There is no money at all for the first 7 days and then payment is monthly in arrears. This means a very long time – at least 5 weeks but often more – before the first payment. You can ask for a short term advance, but this is discretionary – only given after an inquisition – and needs repaid from future benefits. If you have asked and been refused an advance, and have no money, you can apply to the Scottish Welfare Fund – which is going to be put under a lot of pressure.
Rules about having to look for work and do work related activities are similar to those for the benefits being replaced (IS, JSA, ESA), but tougher for people with kids.
And there are NEW RULES FOR THOSE IN PART TIME WORK.
Currently, to get Working Tax Credit you have to work over a fixed number of hours a week (30 if you are single with no kids). You will get Universal Credit however many hours you work (so long as you are not earning above the limit), but if you are earning less than the equivalent of 35 hours at the minimum wage you will be under similar pressures to find more or better paid work as people who are unemployed. This means that low paid part-time workers can be sanctioned too.
And because you stay on Universal Credit any way, if you are unemployed and offered a part time job you will be required to accept it.
Sanction rules are similar to now but with some important – and potentially devastating – changes.
If you receive a further sanction while an earlier sanction is still on-going this will now be added on the end: under Universal Credit sanctions run consecutively not concurrently.
And hardship payments (which are discretionary and have to be applied for every month) are becoming loans recoverable from deductions from future Universal Credit payments.
These mean that some people will end up on reduced benefits for years and years.
Also, whatever the makeup of your Universal Credit, the amount you are sanctioned is the equivalent of the Personal Allowance (£73.10 for a single adult over 25). This means that if you are in work and your Universal Credit is reduced because of your earnings, part of the sanction will be taken from the other elements that have replaced child tax credits, housing benefit etc. If someone in part time work is sanctioned they could therefore be left without enough money to pay the rent.
THE SINGLE NOMINATED BANK ACCOUNT FOR A COUPLE
There have been lots on concerns raised about this but the government has refused to budge. It is theoretically possible to arrange to have split payments, but this can only be done on production of evidence, which is always intrusive and is especially difficult if there is domestic abuse. Joint payments are also a problem if one person has an addiction or a particular spending problem
These will make budgeting even harder
INCLUSION OF RENT
You (or the landlord) will have to specifically apply for this to be paid direct to the landlord. When money is so tight there will be many occasions when the rent money is spent on other things, building up debts and putting tenancies at risk. This also has wider implications – social housing will lose money, which will have to be made up from other people’s rents, and private landlords may resist taking people on benefits. As explained above, when people in part time work are sanctioned this will now effect the housing element and their ability to pay their rent.
PROBLEMS FOR THE SELF-EMPLOYED
People who are self-employed will be expected to produce mountains of paperwork each month. You are not allowed to carry over profits or losses from one month to another. If you earn a lot one month you will receive very little Universal Credit, but if you earn very little the next month you may not be able to make up for this. The highest rate of Universal Credit someone who has been self-employed for over 12 months can receive assumes they are earning the equivalent of 35 hours on the minimum wage, even if they actually got much less. And if you are deemed not to be earning enough, you will be forced to look for and take other work.
NO HOLIDAY ALLOWANCE
Unlike JSA, Universal Credit has no allowance at all for holidays.
EVIDENCE FROM PATHFINDER AREAS
These have suffered from increased poverty, rent arrears, administration problems and delayed payments. This hasn’t stopped the DWP going ahead with the roll-out to other areas.
WHAT CAN THE SCOTTISH GOVERNMENT DO?
The Scotland Bill only gives the Scottish Government power to make limited variations to this benefit.
They should be able to alter what is included under eligible rent and change who the housing element is paid to.
And they should be able to vary the frequency of payments and who they are paid to.
But we are stuck with Universal Credit – and allowances for the Scottish Government to top up reserved benefits expressly rule out compensating for money lost in sanctions. i.e. helping those most in need.
written 8 November 2015, updated 30 May 2016