Tag: Universal Credit

I’ve been spending more time with the new regulations; there are 496 pages of documents, and I don’t claim to have grasped all the implications. In my previous post I listed several points. Looking through the regulations again, I could see three more issues.

The first concerns the relationship of National Insurance benefits to Universal Credit. While Universal Credit is in payment, it will still be possible for one or both of a couple to claim contribution-based JSA or ESA under the old rules. Notes from the DWP explain that “whilst there are no policy changes the opportunity is being taken to simplify and tidy up the existing provisions.” As these benefits have different eligibility criteria, rules for application and different time-periods for payment, the combined effects are unpredictable, and the result is a hotch-potch.

The second concerns periodicity. Universal Credit is going to be paid monthly in arrears. However, qualifying conditions are generally expressed in days or weeks. The work capacity assessment and availability are subject to weekly earnings (37(2), 80(2), 86(1)); part time work is defined in hours per week (37(6), 80(3), 81); sanctions are expressed in days. Rent free weeks are still being averaged out across a year, so that most people in social housing will not get a rent allowance based on their actual rent.

The third is the extent of discretion. The words “reasonable” or “unreasonable” occur 45 times in the UC draft regulations and 17 times more in the payment regulations. It is difficult to see how this level of administrative discretion can be sustained without an adequate system for redress and appeal.

The Universal Credit Draft Regulations have been published, and are available here. There are several hundred pages of regulations and explanatory notes, and it is going to take me some time to get a sense of just what the proposals mean. At a first glance, however, here are some of the issues.

1. Young people under 18 are not normally included in the scheme. In England, there may be the expectation that they will be in school. In Scotland, the same will not be true, and a young person who moves into the world of work at the age of 16 will not normally be treated as entitled to work-related benefits.
2. There seems to be a cliff-edge for owner-occupiers, who will lose housing support completely if they move into “paid work” of any kind.
3. Where sanctions are applied, and hardship payments are made, the hardship payments are recoverable. Because the sanctions have been extended, potentially, for years, that implies that repayments will also be extended for years.

Benefits from other sources, such as local government benefits, seem to be excluded from consideration as either earned or unearned income; that suggests that they might be fully exempt.

There are some other points which are worth noting:

• People who come off Universal Credit because of increases in income will go back onto automatically, without having to reclaim, if their income goes down again within six months.
• Where a couple claims, both must expressly consent to the terms, or neither will be eligible. A sanction applied to one is applied to both, and the circumstances of one person in a couple will be open to the other.
• Entitlement is being based on the calendar month. If rents are not brought into line – there is no reason why they should not be – the calculation of rent payments is going to be complex, and it will need to be recalculated month by month.
• Payments to people without bank accounts will be available only by the Paypoint system; there is no obligation on banks to make accounts available.
• There are several points where the government states there will be “no right of appeal”. This position is not sustainable in UK law; it means that appeals will go for judicial review of administrative action rather than through specified processes.

All these points are subject to further clarification, and some of them may not be realised in this form.

I’d be grateful if people who are aware of other issues could point them out.

Taken together, two recent announcements point to an important concession in the plans for introducing Universal Credit. Initially the government planned to take all new claims and significant changes from October 2013. The current plan is first to run a pilot in Manchester and Cheshire, taking about 1500 claims a month for six months. The next six months will see a roll-out to one district in each region. All new claims will finally be taken by mid-2014, rather than October 2013 as planned. Both the testing and the delay are welcome; they reduce the potential for the kind of administrative crash that seemed to be looming. However, as the processes that are needed do not exist yet, it is difficult to say more about what this is all going to mean for claimants.

Save the Children has identified an anomaly in the rules for Universal Credit. Single parents who currently receive Working Tax Credit while over 16 hours a week will lose on tapers and earnings disregards, with the effect they may be worse off.

It is difficult to be confident about any calculations. The rules for Universal Credit are still obscure; the position of Council Tax Benefit has not been settled; the tax threshold seems likely to change in the near future. There will be other changes, too: the government has signalled that conditionality may be introduced for people who work less than a full working week, which seems particularly likely to affect single parents. It would be surprising, though, if there were not more losers. The only way to reform a system so that some people are better off without others being worse off is to spend more money. The more fundamental the reform, the more it has to cost. My suspicion is that, by the time Universal Credit has been adapted and trimmed to fit, it will prove to be rather less radical than the government hopes. It will be the cuts in benefits, rather than the changing rules, that we’ll notice most.

This is from a press statement by Lord Freud, reported today.

Pretending you are a single parent to get benefits when you are actually living with a partner is stealing money from the people who genuinely need help. Sometimes these claims can be fraudulent from the outset, but often a person’s circumstances change gradually and they don’t tell the Department. Either way, it is a crime and one we are determined to put a stop to.”

So gradually forming a relationship, and not knowing quite what the position is, is a crime.

Freud goes on to say:

Universal Credit will simplify and automate the benefits system to make it less open to abuse and ensure this money is going to those who need it the most.

It is hard to see how the introduction of Universal Credit will make a difference to the situation – with one main exception. In the past, claimants have only been liable to repay benefits if they have failed to disclose a material fact. Universal Credit is going to include measures to allow the government to recoup overpayments, irrespective of whether or not a claimant has reported their circumstances, or whether they can reasonably be expected to know or understand that an overpayment has been made.

The pattern of Univeral Credit is slowly taking shape, though there are still large gaps. A series of briefing notes have been published, with the latest batch on 10th October – getting on for a year after the scheme was announced. Recent announcements have told us, for example, that Carers Allowance will be paid separately, rather than being integrated into UC; that child care costs will continue to be paid, on something like the present basis (though reduced); and that there will be higher suppot for some long term claimants.

An important new departure, however, is that there will sanctions, for the first time, applied to people who are working but not earning at least the equivalent of a full time minimum wage. Those people will be encouraged to look for additional work, and may be required to accept it. This provision is likely to affect women in particular, who are more likely to be on low part time earnings. The details are in Briefing Note 13.

The government’s plans for reforming social security benefits have been mis-sold. They have been presented as if the primary focus was getting unemployed people into work – along with people with serious physical and mental disabilities, who are most of the people identified as being long-term claimants of working age. The proposals for Universal Credit are about something different. They represent a unification of basic means-tested benefits – Jobseekers’s Allowance, Employment and Support Allowance and Income Support – with benefits in work, mainly Working Tax Credit, Child Tax Credit and Housing Benefit.

The crucial problem for any scheme that claims to simplify benefits is that they are liable to over-simplify. This scheme is no exception. Benefits cover a wide range of circumstances. They are not just about getting people into work: they are concerned with lots of other issues, including meeting needs, helping people whose incomes are interrupted, economic management. They are complicated because people’s lives are complicated.

This leads to the second key problem: the scheme is quite impractical. The government believes that a new computer programme will make it possible to respond to changes in “real time”, with implementation beginning in 2013. The computer programme does not yet exist – even on paper – but even if it did, it could not do want the government wants it to do. A computer programme, no matter how good it is, can only go as fast as the information that goes into it. People’s circumstances change with starting rapidity. They find it difficult to say what their situation is – whether they are now disabled, whether their partner has really left them, whether or not the prospect of employment means that they now have a job. Building a system on the hope of firm, confident answers cannot work.

There is no reason to believe that this scheme will increase incentives to work. There is no reason to suppose it will reduce fraud or error – quite the contrary. And there is no real basis for supposing it will make any difference in getting people to work instead. The government’s hopes for the new scheme look like wishful thinking.

Guardian article: The universal credit is only half-baked