surplus earnings consultation

NAWRA is submitting one - draft attached here if any help -

Daphne, are you expanding that to incude the self-employed proposals?  I took part in the SSAC workshop this morning which focussed on that area and it’s fair to say that there was far from whole-hearted support for the proposals.

Gareth - I focused on the surplus earnings bit as we didn’t have much time - I’m still getting my head round the self-employed bit - would be interested in your thoughts - it seems to be saying that a limited amount of offsetting losses from one month to the next may be allowed for - is that how you read it?

It does but it only helps where the income after losses is still above MIF and below Universal Credit cut-off level - that can be a narrow band.  The surplus rules apply to self-employed people as well though, so someone with seasonal earnings may find that they’re shafted for months if their income in one month takes them off Universal Credit.

thanks for that daphne.

still feeling the rage from my original post!

my client group are people with a learning disability and often they and their parents etc have concerns about what will happen if they start work but then for for whatever reason it doesnt work out.

imagine being asked by a client what would happen in that instance. it would take me long enough to work it out never mind explain that to a client.

i didnt focus much on the self employment issue as our clients dont tend to go down that route in significant numbers but also the time given to respond wasnt sufficient.

and how will this simplify benefits and enable claimants to see that they will be better off in work when they will need a crystal ball to see how ‘surplus earnings’ might affect them in the future if they need to reclaim UC?

Or is it ‘better off in work - even worse off on UC if you have recently been in short term work and need to reclaim’?

“Simplicity” “Making work pay” “Digital by default”

UC…..RIP…......

I have sent a response to this today, after getting an email from NAWRA and reading their response. I cannot figure out for sure how this is supposed to work, the explanatory memorandum is too obscure. It doesn’t explain what would be counted as ‘surplus income’. But one interpretation is that everything a person earns in a month above their UC level would be counted as surplus income - is this how other people understand it?
  Whatever, the gist of my response was “what a stupid idea” and “of course it will put people at risk of destitution and homelessness”. I only focussed on the surplus income part, since the responses have to be in by today, I didn’t have time to do a very long response. But since this is a worse proposal than most welfare changes, I thought it had to have some reply.

It means income in excess of the amount required to extinguish your UC entitlement, plus £100 a month.

To take the most straightforward example of a single person with no housing costs.  Their maximum UC is 314.67 a month.  They have an earnings disregard (“work allowance”) of £111 a month and any earnings above that are tapered at 65%.  So for that person to lose UC they need to have earnings of 314.67/65*100 + 111: £595.11 a month.  So surplus earnings in such a case would mean anything in excess of £695.11 a month.

I hope I’ve got that right!

HB Anorak - 07 November 2014 12:19 PM

It means income in excess of the amount required to extinguish your UC entitlement, plus £100 a month.

To take the most straightforward example of a single person with no housing costs.  Their maximum UC is 314.67 a month.  They have an earnings disregard (“work allowance”) of £111 a month and any earnings above that are tapered at 65%.  So for that person to lose UC they need to have earnings of 314.67/65*100 + 111: £595.11 a month.  So surplus earnings in such a case would mean anything in excess of £695.11 a month.

I hope I’ve got that right!

That is certainly how I have understood it.

We are putting in a response that goes into detail on the self-employed aspects as well as the impact on the employed.

Particularly, the self-employed who have fluctuating income but have no losses will be far worse off from the surplus earnings policy because they are already affected by the MIF.

I can’t actually believe that anyone thinks this can work in practice and be explained to anyone.

Victoria
LITRG

I am mightily impressed that anyone can understand this at all.

You guys are really knocking my self confidence.

MartinB - 07 November 2014 04:01 PM

I am mightily impressed that anyone can understand this at all.

You guys are really knocking my self confidence.

this took me many, many hours of going around and around it to figure it out.

i wouldnt even be confident now that i could work out how it would be applied in practice for a client and be completely right.

it gets even more laughable when you have a couple that split up during a break in claim then the other has to claim UC!

the time scale to respond to this was ridiculous given the complexity and the fact that UC is new to us all so the issues dont jump out at you in the way they would for other benefits (for me anyway).

victoriatodd - 07 November 2014 03:34 PM

We are putting in a response that goes into detail on the self-employed aspects as well as the impact on the employed.

Will your response be up on your website Victoria - it would be great to have a link here.

As I understand it, it could be advantageous for couples to split to avoid the surplus earnings rule as, if you claim as a single person, the rule applies to the earnings that you as the claimant had. So for example if dad was working and mum at home with the kids and then dad loses his job within six months it might be financially advantageous for them to split so mum can get full UC for her and the kids and just dad’s UC is affected. So much for passing the new ‘families test’ to support ‘strong and stable families’.

Daphne - 07 November 2014 04:44 PM

victoriatodd - 07 November 2014 03:34 PM

We are putting in a response that goes into detail on the self-employed aspects as well as the impact on the employed.

Will your response be up on your website Victoria - it would be great to have a link here.

As I understand it, it could be advantageous for couples to split to avoid the surplus earnings rule as, if you claim as a single person, the rule applies to the earnings that you as the claimant had. So for example if dad was working and mum at home with the kids and then dad loses his job within six months it might be financially advantageous for them to split so mum can get full UC for her and the kids and just dad’s UC is affected. So much for passing the new ‘families test’ to support ‘strong and stable families’.

Yes, we will be, just tidying it up now! I will post a link as soon as it goes up.

My head was spinning thinking of the couples and my worry is we have barely touched the surface of the potential issues this will cause.

Victoria

I’ve appended an example of self-employment with variable earnings if anyone’s interested.

I give up….

Its like a Rubiks cube only worse.

If this comes in. I will buy in Gareth, or Stephen Hawking…..whoever is cheaper.

I couldn’t have put it better Martin.

I can already feel a darkened room and a couch coming on.

Here is a link to the LITRG response: http://www.litrg.org.uk/submissions/2014/141110-SSACC-UCregs14-LITRG

Victoria

our response

‘ENABLE Scotland believe that the starting point for welfare reforms is all too often that claimants must be stopped from exploiting the system when the focus should be on ensuring that claimants receive the entitlement that they require.’

Hear-Hear!!!!!

Too many people support UC ‘in principle’ when the principle is rotten: ‘People don’t want to work; they must be forced. People just want to claim; they must be stopped’

UC is punitive and regressive in its entire concept.

Andrew Dutton - 11 November 2014 12:45 PM

‘ENABLE Scotland believe that the starting point for welfare reforms is all too often that claimants must be stopped from exploiting the system when the focus should be on ensuring that claimants receive the entitlement that they require.’

Hear-Hear!!!!!

Too many people support UC ‘in principle’ when the principle is rotten: ‘People don’t want to work; they must be forced. People just want to claim; they must be stopped’

UC is punitive and regressive in its entire concept.

its a ridiculous starting point when even for that small minority who exploit the benefits system in terms of the wider picture were talking about pennies.

there is no system of entitlement anywhere, ever that will be created that someone somewhere wont find a loophole in and shaping your system around this tiny minority makes absolutely no sense.

Thanks for your response Victoria - helped me understand the whole self-employed bit!

As you point out how on earth are claimants expected to understand?

And since the current IT can’t even seem to cope when a single person becomes a couple how would it manage with this - it is fiendishly complicated.

Yours is next on my reading list Steven…