Universal credit

Sam Lister, Policy & Practice Officer, CIH

Content

• Terminology and the basics

• Coverage and roll out

• Basic conditions

• Housing costs element (HCE)

• Claims and changes

• Better or worse off

• Calculating awards

• Calculating the HCE

• Payments

• Support for budgeting

• Third party payments

• Payments on account

• Summary

Existing benefits

• Housing benefit

• WRA and support

component

• Earnings disregards

• Non dependant deductions

• Applicable amount

• Personal allowance

• Personal allowance - child

• Carer premium

• Child care disregard

Universal credit

• Housing costs element

(renters)

• LCW / LCWRA element

• Work allowance

• Housing cost contributions

• Maximum award

• Standard allowance

• Child element

• Carer element

• Child care element

Terminology

• Replaces six ‘existing benefits’

– JSA(IB), ESA(IR), income support

– HB (working age)

– Child tax credit, working tax credit

• Working age benefit (mirrored by pension credit)

• A single award per household

• Couple joint claimant

• Paid monthly in arrears to the claimant

• Awarded in-work and out-of-work (no hours rules)

• Administered by the DWP

The basics

Coverage and roll out

• UC live:

– Switch on each JCP office for new claims

– Complete April 2016

– So far mainly unemployed singles but once on UC

cannot go back unless move to supported housing

• UC digital service (postcodes SM5 2)

• UC full service:

– Transition roll out phases 1 and 2 start May 2016

– Transition phase completes June 2018

– Migration of existing claims June 2018 - 2021

UC roll out and transition

UC full service: South West

• May 2016 – Bath JCP

• July 2016 – Frome JCP

– Wells JCP

• October 2016 – Taunton JCP

– Minehead JCP

• December 2016 – Swindon JCP

HA: South West 3

.28

%

11

.58

%

0.9

3%

1.7

2%

3.3

3%

1.4

7%

0.2

0%

0.9

6%

27

.07

%

5.7

5%

3.4

4%

4.0

3%

4.8

3%

12

.77

%

0.9

9%

8.8

0%

4.9

7%

2.3

5%

0.6

0%

0.9

2%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Single Lone parent Couple Couple with children

HB working age caseload South West

Income support

JSA(IB)

ESA(IR)

In work

Other non-passport

LA: South West 3

.17

%

12

.50

%

1.1

1%

1.7

6%

3.3

8%

1.8

8%

0.2

5%

1.1

7%

27

.66

%

5.9

9%

4.3

4%

4.3

6%

4.2

7%

10

.42

%

1.1

6%

8.0

1%

5.0

4%

2.0

4%

0.6

6%

0.8

4%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Single Lone parent Couple Couple with children

HB working age caseload South West

Income support

JSA(IB)

ESA(IR)

In work

Other non-passport

Basic conditions

• Under state pension credit age*

• Aged 18 or over (certain 16/17# year olds but no HCE)

• Not a student*

• Present in Great Britain#

• Meet additional conditions if a migrant#

• Not a prisoner or detained in hospital#

• Accept a claimant commitment (work related requirements)

* Only one member need meet if a couple

# single person rate if one member of couple does not meet

UC basic conditions

• The claimant can be asked to carry out one or more

of the following work-related requirements

– Work focused interview

– Work preparation

– Work search

– Work availability

• Failure to do so can result in their UC being

sanctioned

The claimant commitment

• The claimant may be exempt from one or more of

the work-related requirements such as if

– Limited work capability

– Child under one or adoption within last year

– Pregnant

– Foster parent

– Domestic violence

– Carer

– Prisoner

– Drug / alcohol rehabilitation

– Death in the family / domestic emergency

• Weekly earnings exceed £252.00 per week (35 x

minimum wage)

Exemptions (full or part)

• Failure to carry out a claimant commitment

• Up to three years in length

• The whole of standard allowance

• 40% of standard allowance (pregnant, child under one)

• Nil if LCWRA (support component of ESA)

• Hardship payment if

– Whole of standard allowance lost

– You have met any of the work requirements

– You apply

– You are in hardship

Sanctions

Housing costs element

• Living in your home (occupation condition)

• Liable to make payments (liability condition)

• Rent or eligible service charges (payment condition)

– Service or facility provided

– Occupation depends on payment

– Service and the charge is reasonable (rent officer)

– Not an excluded item; and

– One of four eligible categories (A to D)

• See DWP guidance for landlords on service

charges

Basic conditions: HCE

• Entitled in same way as for HB

– Family housed in two properties by social landlord

– Fear of violence and intention to return (12 months)

– Adapting for disablement needs but family member

must be getting daily living component of personal

independence payment or equivalent (one month)

• Entitled under HB but not under UC

– Unavoidable liability on former home

– Students: main home and term time address

Two homes

• Entitled in the same way as for HB

– 1 month: waiting to move in from a care

home/hospital

– 1 month: waiting for disability adaptations to home

– Indefinite: Moving for essential repairs with

intention to return (but only on the home you pay

rent for)

• Entitled under HB but not under UC

– Waiting for local welfare assistance and pension

age, disability premium or child aged under six

Delayed moves & decanting

• Entitled in the same way as for HB

– General rule – no special reasons required (six months)

– Fear violence with intention to return (12 months)

• Absences from Great Britain

– Up to one month (no reason)

– Up to one further month if in connection with death of a

close relative

– Up to six months in certain cases for medical treatment

or convalescence for you or a child

– In each case above must look like the absence is

unlikely to exceed the stated time limit at the point they

leave

Temporary absence

Claims and changes

• Couples: joint claim (unless treated as single)

• How to claim

– Online (UC full service)

– By telephone if the DWP agrees (0845 6000 723)

– For the time being clerically(at Job Centre Plus)

• One month to complete after it is first received

• Award date is the day your claim is first received

– Subject to ‘waiting days’

Claims

• One month backdating maximum

• Couples both have to qualify

• Unreasonable to expect an earlier claim; and

• One of the following (replaces ‘good cause’) – Notice of expiry of another benefit not received

– Disability

– Health condition that prevented from making a claim

– Previously single now a couple or vice versa

– Unable to make claim due to unexpected system failure or planned maintenance

Late claims

• No entitlement to UC during first seven days

• Work requirements or limited capability for work

• Exceptions – Current award ends on becoming a couple or

separating

– Terminally ill

– Victim of domestic violence

– A prisoner within the last month

– A care leaver

– On JSA or ESA within the last three months

Waiting days

• Begins on the first day of entitlement to

UC and lasts one calendar month

• Changes occurring part way through the

AP are implemented from the start

– Gain: if the change results in more UC

– Lose: if change results in less UC

• Report change before AP ends otherwise

starts in the AP when first reported

Assessment period

• A rent increase results in more UC

• Provided it is reported before the end of the

assessment period in which it takes effect it

is awarded from the start of that period

• In any other case it is awarded from the start

of the assessment period it is first reported in

• The same applies to a rent decrease but any

overpaid UC can be recovered

Changes in rent

• All overpayments are recoverable even if

caused by official error

• If you are overpaid for former home the

DWP can treat you as already having

received the amount overpaid for your

new home

Overpayments

• You must go through a mandatory

consideration first

• After which you can appeal to tribunal

• Time limit in both cases is one month

Appeals

Better or worse off

Winners and losers

• IFS study 2011

• 2.5 million gainers

• 1.4 million losers

• 2.5 million no change

• Bottom 60% of incomes gain on average

• Top 40% lose slightly

• Couples with children gain the most

Current benefits & tax credits

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Weekly gross pay

Net pay Child benefit Jobseekeer's allowance Working tax credit Child tax credit Housing benefit Localised CTRS

Couple, two children, one earner, rent £75.00, council tax £23.00

Universal credit

£0.00

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Weekly gross pay

Net pay Child benefit Universal credit Localised CTRS

Couple, two children, one earner, rent £75.00, council tax £23.00

Existing benefits and UC

Couple, two children, one earner, rent £75.00 July 2015 Budget & Autumn Statement changes combined

£300.00

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HB & TC 2015

UC 2015

HB & TC 2017

UC 2017

Calculating awards

Monthly award

• All calculations are calendar monthly

• Not four weekly

• 12/52 =weekly equivalent (1/4.3333)

Basic calculation

• Calculate maximum award

• Deduct any unearned income

– Most benefits except PIP, child benefit

• Deduct work allowance from net earnings and then deduct 65% of the result from the remainder of the maximum award

• The result is your monthly UC unless your UC plus child benefit is more than the cap in which cases it is the capped amount

Maximum amount

• Standard allowance

• Child element (includes disabled child)

• Housing costs element

• Work capability (LCW / LCWRA) element – Equivalent WRA and support component of ESA

• Carer element

• Child care costs (70% costs up to

maximum)

Rates 2016/17

Element

Single (under 25) £251.77

Single 25+ £317.82

Couple (both under 25) £395.20

Couple at least one aged 25 £498.89

Child (first / each other) £277.08 £231.67

Disabled child (lower / higher) £277.08 £126.11

LCWRA / LCW £315.60 £126.11

Carer £150.39

Childcare maximum (two or more, one) £1108.04 £646.35

Earnings

• Employed net earnings = gross pay less

– income tax and class 1 national insurance

– 100% of pension contributions

• Self employed net earnings = gross less

– income tax and class 2 & 4 national insurance

– 100% of pension contributions

– Minimum income floor 35 x minimum wage

Work allowance 2015

Single (rented housing) Weekly

equivalent

Lone parent £263 £60.69

No child but limited capability for work £192 £44.31

Any other case £111 £25.62

Couple (rented housing) Weekly

equivalent

Responsible for one or more child or young person £222 £51.23

No child but limited capability for work £192 £44.31

Any other case £111 £25.62

Work allowance 2016

Household type Monthly

Lone parent £192

Couple responsible for at least one child £192

No child but limited capability for work £192

Any other case £0

The cap

• Same as HB except:

• Continues to apply even when deduction

has already exceeded the maximum

housing costs element

• Simple earnings threshold for exception

=£430 per month (£100 per week)

Example

• Couple (both aged 25+), two children

• Rent = £75.00 per week (£325.00)

• One working

– £252.00 per week gross (£1092.00)

– £1006.49 net (no pension)

• Other income

– Other on JSA(C): £73.10 per week (£316.77)

– Child benefit (disregarded)

• No special needs (e.g. disability, child care)

Example calculation

Income Work allowance Element

Couple at least one aged 25 £498.89

Child (first) £277.08

Child (second) £231.67

Housing costs (rent, no HC contribution) £325.00

Total maximum award (A) £1332.64

Max UC less unearned income (JSA) (B) £316.77 £1015.87

Net earnings £1006.49

Net earnings after work allowance (£192.00) £814.49

65% of excess earned income (C) £529.42

Monthly UC (B-C) £486.45

Calculating HCE

• Social renter

– Rent plus eligible service charges (capped by rent

officer if DWP considers ‘unreasonable’)

– Less under occupancy deduction

– Less housing costs contribution

• Private renter

– Rent or LHA for appropriate size, whichever is lower

– Less housing costs contribution

HCE calculation

• Social renter – Divide monthly rent by number of joint tenants and

multiply by number of tenants in your benefit unit

– The under occupancy rules do not apply

– Less housing costs contribution

• Private renter – Divide monthly rent or LHA by number of joint

tenants and multiply by number of tenants in your benefit unit

– The size of accommodation you qualify for is worked out separately for each benefit unit

– Less housing costs contribution

Joint tenants

• One for each non-dependant including couples

• No deductions if claimant is (“exempt renters”)

– Blind

– Middle or high care rate of DLA

– Daily living component of PIP

– Attendance allowance

• Zero charge for certain non-dependants

• All others flat rate =£69.37 (£16.00 weekly)

Housing cost contributions

• Aged under 21

• State pension credit

• Middle or high care component of DLA

• Daily living component of PIP

• Attendance allowance

• Carers allowance

• Prisoner

• Responsible for a child aged under five

• A son or daughter who is member of armed forces away

on operations

Zero rate deductions

Payment

UC payment – principles

• UC is a surrogate wage

• Paid to the wage earner (or jobseeker)

• No separation of housing costs

• No third party (landlord) rights to know

How and when

• Direct credit transfer

• Paid calendar monthly

• Within seven days of the last day of the

assessment period

– 1st AP starts 1st day of entitlement

– All subsequent same day in each month

Support for budgeting

Personal Budgeting support

• PBS is the DWP strategy for claimants

who need support it comprises:

– Money advice

– Alternative payment arrangements (APAs)

• Two tiers (one-off, on-going)

• Delivered locally

• A local partnership led by DWP districts

Essential tools

Advice for Decision Makers (DWP Guidance)

Social landlord support pack

E-mail contact urgent enquiries

Types of APA

1. Managed payments ‘switch back’

2. Payment frequency (bi-monthly)

3. Split payments

APAs: basic principles

• Principles

– Case by case basis

– Claimant knowledge and consent

– Always a temporary arrangement

• Except…

– DWP is exploring ‘trusted partner’ status

– Arrears trigger (two months arrears)

Vulnerability

• Not mentioned in the regulations at all

– ‘[…] necessary to protect the interests of [the

claimant or his/her family…]’

• Vulnerable only with respect to their ability

to mange payments not their personal

characteristics (such as disabled)

• Separate facility for appointees (as HB)

– For example to an attorney

Third party payments

Qualifying conditions

• Award of UC which includes HCE

• In debt with rent or service charges

• The debt relates to the home that the

tenant currently occupies

• Earned income must not exceed the work

allowance

Guidance

• Advice for Decision Making (D2022 - D2023)

• History of persistent misspending

• Threat of eviction

• No other suitable method of dealing with debt

• Not repaying debt / no agreement to repay

Rate of deduction

• Minimum 10% of standard allowance

– Single aged 25+ equivalent £7.33 per week

• Maximum 20% of standard allowance

• Plus on-going ineligible charges (e.g. fuel)

Maximum deductions

• Must leave at least one penny of UC after deduction

• Maximum three deductions with priority as follows: – Rent has priority if at the minimum rate

– Rent has second lowest priority if at higher than minimum

• Fuel & water =5% of standard allowance for each plus ongoing cost

• Fuel & water must not exceed 25% of the sum of the standard allowance and child element

• Deduction for rent at minimum rate must not exceed 40% standard allowance unless in their best interests

Payments on account

Payments on account

• UC advances (advance payment of UC)

• Budgeting advances (one off expenses)

• A DHP is an alternative to either

– Entitlement to UC housing costs is also a

qualifying condition for DHP

UC advances

• An advance payment of your UC award

• Conditions

– Serious risk to health or safety; and

– Claim has been made but not yet paid

• Deducted from actual award

– From what would have been first payment

– From subsequent payments if award is less

• General payment first principles apply

Budgeting advances

• Similar to Social Fund budgeting loans

• Conditions

– On UC for six months

– Earnings not more than £2,600 / £3,600

– Repaid any previous advance and can repay

• Deduct any capital in excess of £1000

• £100 to £348 (£464/£812)

• Repay over 12 months or exceptionally, 18

Summary

Roll out and basic conditions

• Work out your profiling

• Change but much that is familiar

– Some of the rules lifted from HB

– Coherent and easy to explain

– But don’t assume it must be same as for HB

• Always check basic conditions

– First: to UC itself

– Second: to the housing costs element

Amount of award

• Broadly positive especially if in-work

• Winners and losers complex

– ‘Standard’ families in work gain the most

– Risk of loss higher if disability, childcare and

under 25s

• Change but much that is familiar

– Just different for what have been used to

– Coherent and easy to explain

Payment

• Completely different way of thinking about payment of personal housing costs support

– Less so in Scotland, Wales and Northern Ireland

• Rethink vulnerability (it’s not a box)

• From rules to discretion (‘must’ to ‘may’)

• APAs are temporary – look to move everyone over time to managing their own money

• Development is on-going (towards online)

• You need your own systems for support

CIH Web page

www.cih.org/universalcredit

• All the webinars

• A series of briefing

papers about the roll out

and that complement the

webinar topics

CIH /Shelter Guide

Our resources on UC

Any questions?