What is Universal Credit?
Universal Credit is the biggest change to benefits since 1945, 19 million people of working age will be affected not Pensioners. There are Guinea pig trials happening in the north at the moment, but these are based on claimants who are in the simplest of circumstances e.g. no partners, kids or mortgages.
UC will replace the following:
Job Seekers Allowance
Employment and Support Allowance
Working Tax Credit
Child Tax Credit
Support for Mortgage Interest
It doesn’t include Council Tax as that is being replaced with Local Council Tax Support which will be paid by your local council. N.B. even people on benefits are required to pay a set amount of Council tax on CTS. However this will depend on your local council.
What’s different about it?
UC will be assessed by household rather an individuals as it is currently e.g. if one person in the household has savings, that will be taken into account if another person becomes unemployed.
It will be paid monthly in arrears; there currently is no easing in period. So you won’t get your first payment until the start of the 2nd month. Shifting to a monthly budget will make many people go into arrears while waiting for the first payment. Credit Unions are being approached by the government to give people loans to cover this first month.
UC will be paid to one person in the household, instead of people receiving their own benefits. E.g. Parents may receive JSA for over 18 year old son or daughter. But what if the elected person is unreliable or has an addiction? It’s also worth bearing in mind this person may not be a family member and be a person sharing the same accomodation.
The housing element will be paid to the claimants not to the landlords as it currently is as housing benefit. This could lead to rent arrears.
UC has to be paid into a bank account; this will cause problems for people who can’t get a bank account. Also if the person it’s paid to has an overdraft the banks may take first call on the money, leaving no or little money to pay the rent.
UC is digital by default you can only apply by filling in an online application.
As the UC system needs personal information from each claimant Identity Assurance Providers will put this information together to verify who you are and that your documentation us correct. However it keeps this information together so someone steal your identity and could use your information.
The Government plans to give the job of allowing access to the system to seven private companies who will undertake identity assurance- you will not be able to access the system without their say so.
In October 2013 all new out of work claimants will be put on UC
In April 2014 all new in work claimants will go on UC e.g. those eligible for Working Families Tax Credit.
In 2017 all those currently claiming benefits etc. will be ‘migrated’ to UC (This may happen earlier or later depending on how the system is working)
UC is reliant on your employer sending in all your PAYE details, this information is to be entered in on a real time system. If the wrong data is supplied or if it is late you won’t receive your UC payment.
Conditionality: Universal Credit is replacing housing benefit, working tax credit and child tax credit. Under UC it will consist of a household element, a housing element and a child element with various additions for carers, disability, childcare etc. But with this UC will extend conditionality within the benefits system for those claimants already in work.
Working claimants will be expected to meet a new ‘higher’ conditionality earnings threshold equal to 35 hours a week at the national minimum wage £6.19 x 35 = £216.65 or for couples £433.30.
When you receive UC you will go in the ‘All work related requirements group’ if your earnings don’t meet the conditionality threshold the DWP will ask you to do the following:
Increase your hours or get your hourly wage increased by your current employer.
Find one or more additional jobs alongside their existing employment.
Find a new job with a higher income.
Failure to do this will lead to 100% of payments ceasing until the claimant complies with their work related requirements. If this continues to happen the claimants payments can cease up to 3 months for a second offence and longer for repeat offences.
There are concessions for carers for parents of 5 to 13 year olds (where hours would be limited to school hours) and there maybe concessions for parents of 13 to 16 year olds, but this is not specified.
What could go wrong?
You have no access to the internet.
You are not confident about using the internet.
DWP get their calculations wrong.
Employer submits wrong PAYE data and as a result you do not get the UC you are entitled to.
Irregular earnings – Employer includes overtime pay from May in the July pay packet. You lose out because you only get the benefit of the working allowance once instead of twice because of irregular earnings being lumped together.
Identity Assurance Provider doesn’t ‘verify you’ - you will not be able to access the system without their say so.
What can I do about this?
Contact your local Councillors and MP’s to stop UC and bedroom tax.
You can also ask them not to make housing benefit paid directly to the landlord and to make the payment of UC fortnightly instead of monthly.
You can also get advice from the Citizens Advice Bureau.
This information was accurate the end of Feb 2013, however UC is changing all the time.