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Do the surplus earnings rules apply to anyone? an argument why not.
I’m considering whether the surplus earnings rules work at all. I’d very much appreciate thoughts and comments.
The rules are those in regulation 54A of the UC 2013 regulations.
Before the rules can apply there are 3 tests that must be passed, in 54A(1)
54A.—(1) This regulation applies in relation to a claim for universal credit where—
(a) the claimant, or either of joint claimants, had an award of universal credit (the “old award”) that terminated within the 6 months ending on the first day in respect of which the claim is made;
(b) the claimant has not, or neither of joint claimants has, been entitled to universal credit since the old award terminated; and
(c) the total earned income in the month that would have been the final assessment period for the old award, had it not terminated, exceeded the relevant threshold.
For the surplus earnings rules to apply then all these conditions must be met. The one that I am thinking about is the second condition, 54A(1)(b)
‘has not …. been entitled to Universal Credit since the old award terminated’
That drafting seems, to me, to have two main implications.
Firstly, there must be a decision about entitlement; there must have been a claim as required by 54A(1).
Secondly, that decision must have been made using income *without any surplus earnings figure*, as any such amount can’t be used until the three conditions have been met.
The results of that determination will be entitlement or non-entitlement.
If, without surplus income, that decision is that there is entitlement, then the surplus earning rule never triggers.
I’m looking at earnings cases, putting aside other reasons for non-entitlement, although capital from an original lump sum might arise. In a typical surplus earnings case, the surplus will arise from a temporary increase in earnings. Currently, perhaps, that might be a SEISS award, or when (if) the de minimis rate falls to £300, from £2,500, next April, a 5th weeks earnings.
Logically, therefore, this rule will, in the main, only work in those cases where the income is too high to get UC anyway and, once there is entitlement, the surplus earnings rule never gets used to reduce benefit.
The only way (I think) that this doesn’t work is if 54A is the very first thing that applies when a claim is made, so that there is no entitlement (although I think that has to be tested anyway).
I have another variant approach which comes from a slightly different direction
Part 2 of the UC regultions, from Regs 7 - 19, looks at entitlement. None of those are triggered to remove entitlement in this case,
The UC etc. C&P reg*s powers for live service not to need claims was pulled by The Universal Credit (Digital Service) Amendment Regulations 2014
The Act says, re entitlement; using the single person rules.
Entitlement
3.—(1) A single claimant is entitled to universal credit if the claimant meets–
(a) the basic conditions, and
(b) the financial conditions for a single claimant.
The financial conditions are
5.—(1) For the purposes of section 3, the financial conditions for a single claimant
are that–
(a) the claimant’s capital, or a prescribed part of it, is not greater than a prescribed
amount, and
(b) the claimant’s income is such that, if the claimant were entitled to universal
credit, the amount payable would not be less than any prescribed minimum.
54A(2) puts any surplus in place as income, so that could remove entitlement, under the Act, but it has to get to 54A(2) first and it can only do that by satisfying 54A(1)..
So in essence, in order to have surplus earnings added to earned income, you have to satisfy 54A(1)(b). You can’t do that, in this case, unless you add the surplus *before* you have the power to do so.
Am I confusing myself?
Moving this debate from Twitter as it needs a longer explanation I think!
Reg 54A(1) is setting up the preconditions for surplus earnings to be used in the UC assessment following a new claim. It falls to be considered before any determination of entitlement is made on the new claim going forward. I don’t read it as having a loop, where you have to determine entitlement before you know how to determine entitlement. The way I read it the condition in limb (b) refers to the period before the latest claim - if there was entitlement to UC between the end of the previous award and the latest claim, surplus earnings don’t apply. That is the logical sequence in which to look at things I would say: first, before we think about calculating UC for the new AP, has there already been UC entitlement during the period since the last award ended?
I don’t have any difficulty reading it that way, but it does kind of make my brain hurt when the new claim is immediate (or if DWP treats such a claim as having been made immediately under the new regs).
I understand 54A(1)(b) as coming to exclude cases where there was entitlement since the old award ended but before the current claim.
It is relevant for example in the following scenario:
1. A UC award terminated due to excess earnings received on 31/1/20, with the last AP being 16/12/19-15/1/20.
2. A fresh claim was made on 16/2/20, and went into payment after a suitable deduction due to excess earnings from the previous claim.
3. The fresh claim was ended due to earnings received on 31/3/20, with the last (and only) AP being 16/2/20-15/3/20. However the earnings from 31/3/20 were not enough to create a surplus for the next claim.
4. Another fresh claim was then made on 16/4/20.
In the above scenario, without 54A(1)(b), the surplus caused by the 31/1/20 earnings will have to be considered again, and the rules further in the Regulation don’t cater for that.
EDIT: Peter got there first!
[ Edited: 6 Jun 2020 at 11:27 pm by Charles ]I think your “old” award is better than my “last” award though Charles. Obviously, there won’t have been entitlement between the most recent award and the new claim! But it’s quicker than writing “the last award which ended in circumstances where surplus earnings were generated”
I understand the intent; I’m just very unsure that they’ve achieved it.
A claim has been made.
54A(1)(b) requires a test of whether there is any entitlement to UC
Until that’s decided, surplus earnings can’t be used.
Doesn’t the “has not” suggest it’s looking backwards from the day of the new claim?
Doesn’t the “has not” suggest it’s looking backwards from the day of the new claim?
It’s ‘has not since..’ which can only mean, in general usage, up to now.
How about this then. A claim only exists until a decision has been made on it, then it ceases to exist (s8(2) SSA 1998). Reg 54(1) applies “in relation to a claim”, so it is only relevant while the claim remains undecided. Therefore subpara (1)(b) can only be referring to entitlement that has already been decided following an earlier claim: it would be impossible to deal with the new claim by reference to entitlement established as a consequence of that new claim if the claim had already ceased to exist by then.
How about this then. A claim only exists until a decision has been made on it, then it ceases to exist (s8(2) SSA 1998). Reg 54(1) applies “in relation to a claim”, so it is only relevant while the claim remains undecided. Therefore subpara (1)(b) can only be referring to entitlement that has already been decided following an earlier claim: it would be impossible to deal with the new claim by reference to entitlement established as a consequence of that new claim if the claim had already ceased to exist by then.
Er, then how does 54A(3) refer to the first, second, third claim etc?
How about this then. A claim only exists until a decision has been made on it, then it ceases to exist (s8(2) SSA 1998). Reg 54(1) applies “in relation to a claim”, so it is only relevant while the claim remains undecided. Therefore subpara (1)(b) can only be referring to entitlement that has already been decided following an earlier claim: it would be impossible to deal with the new claim by reference to entitlement established as a consequence of that new claim if the claim had already ceased to exist by then.
Er, then how does 54A(3) refer to the first, second, third claim etc?
54A(1) applies to them too. It can apply to as many claims as it takes to erode the surplus to the point where there is entitlement again - up to six in theory - but the principle is the same each time: there will be surplus earnings included in the assessment done on *this claim* if there has been no entitlement to UC *in the meantime*
But if those claims don’t exist as you said?
The claims don’t - they have been replaced by decisions that the claimant has no entitlement to UC.
If you are saying: how can there be a second claim if the first one no longer exists? Well it did exist until it was decided, so there will always *have been* a first claim, which means it is perfectly correct to refer to subsequent claims as second, third etc
[ Edited: 5 Jun 2020 at 04:30 pm by HB Anorak ]I’m getting confused, if they don’t exist how can the regs refer to them?
Can you tell me how 1(b) is satisfied after a claim has been made, in order to get to the surplus income?
The claims exist while they are being decided. As part of the process of deciding those claims, DWP checks for entitlement in the period in which the original surplus earnings remain “live”: that is, from when UC ended due to earnings being too high down to the date of the new claim. That is how para (1)(b) is applied. This is done while the new claim still exists, otherwise the words “in relation to a claim” in the para (1) preamble would make no sense.
Having established whether or not surplus earnings are to be used, DWP then proceeds to decide the new claim.
If the decision is that the claimant still does not qualify for UC, then when there is a second (or third etc) claim para (1)(b) will be satisfied in relation to that second or third claim while it still exists and is yet to be decided: down to the date of claim #2 or #3 etc it remains the case that the claimant has had no entitlement since the previous award ended. Surplus earnings will therefore be taken into account in the determination of claim #2 or #3.
I really cannot see the problem - I think the Reg achieves what I have described above.
I don’t have any difficulty reading it that way, but it does kind of make my brain hurt when the new claim is immediate (or if DWP treats such a claim as having been made immediately under the new regs).
I’m not so bothered by this. Ultimately it is still true that there has not been entitlement since the old award terminated.
However, I’m not sure there is an immediate claim anyway. It doesn’t make sense to treat the claimant(s) as making a claim immediately: If there can be entitlement in the first month after the previous award terminated, the previous award wouldn’t have terminated, and no claim would be needed!
I therefore think you have to read “subsequent month” in the new Reg 32A as meaning subsequent to the month in which there was no entitlement due to the income condition not being met. This is backed up by the maximum of 5. If the first ‘treated’ claim is the day after the old award terminated, that should be 6, not 5.