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Moneybox vs DWP

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shawn mach
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Interesting exchanges on Twitter over the weekend in relation to a BBC Money Box piece on UC -

Thousands of people on universal credit may not be paid over the festive season or may get a reduced payment, the BBC Money Box show has highlighted.

Those hit will be some of the 67,000 people who claim the benefit while working and who are paid weekly.

This is because there are five paydays in December, so their monthly income will be too high to get any or some of the benefit. Some will have to reapply.

http://www.bbc.co.uk/news/uk-42036462

Prompted a series of tweets from UC Director General Neil Couling, including -

This so called problem would have occurred at Christmas 2013, 2014, 2015 and 2016. In fact it is just the system working as intended, adjusting to changes in household income. We’ve not seen problems with this in the past and won’t this year.

https://twitter.com/NeilCouling/status/931862939618959361

... and from David Gauke -

Worth looking at tweets of @NeilCouling to understand why #Moneybox piece on #UniversalCredit misleading and inaccurate.

https://twitter.com/DavidGauke/status/931867569874759681

And follow up from Moneybox’s Paul Lewis, including -

Here is the DWP’s own explanation of why weekly paid people will get less or no UC four months out of twelve - see point 8 http://goo.gl/Gnp56K  I can’t explain it more clearly than that. It will happen in December to tens of thousands.

https://twitter.com/paullewismoney/status/931893186531905538

 

 

HB Anorak
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At the risk of making myself unpopular, Neil Couling is right about this.

I think Moneybox has made the mistake of assuming everyone has an assessment period that runs from the 1st of the month.  If that were true, the UC payment issued early in January would indeed be reduced, or there wouldn’t be one at all, in view of the fact that they got five weekly wages during December.  They would of course have more money overall during December and early January, because 5x wage plus little UC > 4x wage + big UC.

But of course UC APs can run from any day of the month, so the five wages effect can occur at any time of year - there is nothing special about December.  Pick any arbitrary one month period that begins on a Thursday or Friday and you will get five traditional weekly wage days in it.

I have always thought that was one of the better features of UC - it doesn’t attempt to average earnings out over a longer period.  Under legacy benefits school auxiliaries etc can find the summer difficult if they haven’t managed to save during term time - I think UC’s approach of adjusting to what you just got paid is better.

There is an issue of people who are paid weekly tending to budget from week to week and not to think of their earnings in calendar monthly terms.  The issue Moneybox has raised is the difficulty claimants will have learning how to budget on a mixture of weekly and calendar monthly incomes.  I say this as someone from an HB and Ombudsman background who once spent several hours demonstrating to an HB claimant that his 52 weeks’ HB was not leaving him short-changed with his 12 months’ rent: the odd one or two days get paid the following week

[ Edited: 20 Nov 2017 at 12:13 pm by HB Anorak ]
Peter Turville
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But why is unearned income converted to a monthly figure [UC Reg. 73] and not earnings?

How does this reflect the real world of work if a person is paid weekly but has other income 4 weekly (like CA)? They would budget on a weekly / 4 weekly income cycle - not monthly.

This is a pure policy decision to inflict on claimants this impact of actual earnings received within an assessment period but not to do the same for unearned income.

The key question back to Govt/DWP/Labour etc is why not introduce an equivelent of Reg 73.

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Peter Turville - 20 November 2017 12:19 PM

But why is unearned income converted to a monthly figure [UC Reg. 73] and not earnings?

I would assume that it’s because unearned income tends to be irregular and often, for example, annual. From a technical perspective it would be very difficult to try to convert four weekly income into monthly income if those earnings varied from period to period. It is a no-win situation as we’ve seen with tax credits when, unless there is a particularly large buffer, annualised assessments end up creating large over or underpayments.

Peter Turville
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Gareth Morgan - 20 November 2017 01:11 PM
Peter Turville - 20 November 2017 12:19 PM

But why is unearned income converted to a monthly figure [UC Reg. 73] and not earnings?

I would assume that it’s because unearned income tends to be irregular and often, for example, annual. From a technical perspective it would be very difficult to try to convert four weekly income into monthly income if those earnings varied from period to period. It is a no-win situation as we’ve seen with tax credits when, unless there is a particularly large buffer, annualised assessments end up creating large over or underpayments.

I wonder if DWP has done any analysis of the frequency / regularity of unearned income? Aren’t the most common types of unearned income likely to be other benefits, occ pens, etc. and received regularly rather than irregularly (and I could be very wrong!)? Yes there will always be the problem of irregular earnings or unearned income and hence special rules for some types like student income, term time only workers etc. or regs that provide for averaging.

It seems to me that using a monthly assessment period is just as arbitrary as a weekly or annual period in a system designed for people with low incomes. It simply replaces, for example, some of the issues under TCs with new ones under UC which may not be any less problematic in the long run.

Claimants will just have to get used to budgetting on a monthly cycle with all the issues thrown up by more frequent earnings or govt/DWP will have to consider introducing ‘fixes’ to UC like introducing assessment periods that reflect the individual claimants earnings. How about bringing back fixed six monthly awards like FIS & FC (after all there is never really anything new in the benefits system!)?

I still can’t help thinking that the complexities of UC (inc. administration) once fully rolled out to include the most vulnerable of legacy benefit claimants will mean a (not to distant) future government will state that its not working and we need a modern benefits system for the second quarter C21. Some have suggested UC will be this government’s poll tax - CSA seems a more appropriate comparison.

Paul_Treloar_AgeUK
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HB Anorak - 20 November 2017 12:08 PM

I think Moneybox has made the mistake of assuming everyone has an assessment period that runs from the 1st of the month.  If that were true, the UC payment issued early in January would indeed be reduced, or there wouldn’t be one at all, in view of the fact that they got five weekly wages during December.  They would of course have more money overall during December and early January, because 5x wage plus little UC > 4x wage + big UC.

But of course UC APs can run from any day of the month, so the five wages effect can occur at any time of year - there is nothing special about December.  Pick any arbitrary one month period that begins on a Thursday or Friday and you will get five traditional weekly wage days in it.

Not necessarily actually, having read the Paul Lewis blog now.

Her December payment is due on 22 December and she is glad it will come just in time for a late Christmas shop. Her employer pays her weekly on a Friday. In the assessment period she is paid on 17 and 24 of November and 1, 8, and 15 of December. Those five pay packets mean her income is 25% more than it was in October or November and that is enough to stop her entitlement to Universal Credit.

You are correct that this isn’t necessarily a particular or peculair thing about December as such, but using Christmas as a touchstone is an obviously emotive way to demonstrate how the weekly pay cycles and their treatment under UC does lead to some apparently very unfair outcomes for people in this situation.

UNHAPPY CHRISTMAS

WillH
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That sounds good re blog - could you post the link, Paul?

I agree that it wasn’t very clear in the actual broadcast and also in the BBC news item - I’ve asked if they can put an example in the news item too.

http://www.bbc.co.uk/news/uk-42036462

It’s the five Fridays in December thing which I think is misleading. It all depends when your AP starts as to how many pay days you’ll have within it. I think they could have made it more topical still by making the point that whatever your payment frequency, employers often make the payment that would otherwise fall at the end of December early, so monthly/4 weekly paid people could also end up with 2 pay dates in one AP.

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WillH - 21 November 2017 11:36 AM

That sounds good re blog - could you post the link, Paul?.

It’s the big red link at the bottom of the post that says “UNHAPPY CHRISTMAS”

eta: in a very peculiar development, the blog seems to have disappeared now…..

[ Edited: 21 Nov 2017 at 11:45 am by Paul_Treloar_AgeUK ]
Mike Hughes
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We possibly need to remember that Neil Couling on Twitter is a kind of comedy bot which merely regurgitates press releases and official lines but then goes quiet when you contradict anything which is being spouted. If he actually turns out to be right on this occasion I may be off sick for a long time 😊

HB Anorak
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I promise I am not being deliberately contrary, but doesn’t the claimant in the blog also get paid wages on 22 Dec, so if you look at the period from start of last AP up to and including 22/12 there is more income than if the pay dates hadn’t fallen that way?

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HB Anorak - 21 November 2017 12:10 PM

I promise I am not being deliberately contrary, but doesn’t the claimant in the blog also get paid wages on 22 Dec, so if you look at the period from start of last AP up to and including 22/12 there is more income than if the pay dates hadn’t fallen that way?

No, i think it was 21st was end of AIP in that case (guessing now cos blog has vanished, just like a real UC journal).

HB Anorak
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I was thinking the AP probably ended on 15th or 16th, but the total income received between 16 November and 22 December is 6x wages and a reduced UC payment.  Whereas if the AP had ended on 21 December they possibly wouldn’t see any UC this side of Christmas. The next UC payment will be higher but does not fall within the arbitrary snapshot period of 16/11 to 22/12 (instead there was a UC payment in late November)

I am not convinced it is necessarily a bad thing to have a slightly higher amount of UC most of the time, interspersed with odd lower amount, than it is to have a slightly lower amount of UC all the time, but I do accept that the UC method works much better for people whose earnings are paid monthly.

[ Edited: 21 Nov 2017 at 01:38 pm by HB Anorak ]
Paul_Treloar_AgeUK
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Paul Lewis said on Twitter to me last night that the blog has been taken down as DWP dispute some of the figures but he’s confident that his blog was correct overall.

https://twitter.com/paullewismoney/status/933097061884366849

Separately, I’ve done some thinking around HB Anorak’s posts and it does strike me that I’m struggling to see what the problem is, apart from weekly paid workers not receiving a UC payment every time there are 5 pay days in an AIP.

For example, let’s say person is potentially entitled to £500 pcm Universal Credit.

They earn £100 p/w, so in 4-week months they receive £100 UC. In 5-week month, they don’t get a payment. There are 4 lots of 5-week months in 2018, so they get paid for 8 months and so they receive £800 UC overall.

If they were earning the equivalent amount on a monthly basis, they would be paid £433.33 pcm. So they receive £66.67 pcm UC.

Multiply that amount by 12 months and they receive £800 UC, exactly the same amount overall.

Yes, that presents some potentially significant budgeting challenges but they don’t actually lose out financially as such. Is there something I’m missing?

Barbara Knight
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I think what is lost is the extras i.e. DHP for say under occupancy - no entitlement in that month, free school meals, dentistry etc. No 3rd party deduction can be paid as no entitlement, so claimant will have to be on the ball and pay say the courts directly.
Break in claim - possible future loss of any transitional protection, when it finally starts.
I’m sure others can think of more.

Mike Hughes
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Barbara Knight - 22 November 2017 10:31 AM

I think what is lost is the extras i.e. DHP for say under occupancy - no entitlement in that month, free school meals, dentistry etc. No 3rd party deduction can be paid as no entitlement, so claimant will have to be on the ball and pay say the courts directly.
Break in claim - possible future loss of any transitional protection, when it finally starts.
I’m sure others can think of more.

Two aspects I think.

1) As you say, it’s the loss of things which people may need on an ongoing basis. The paperwork for maintaining such things on a low income basis could well be enough to drown people and if it doesn’t then the cost of shelling out for something in an AP when they don’t get UC will start to mount up. Very easy to underestimate this but try and imagine the grief at school for example when the arguments start about whether the child is entitled to free school meals this month or not. Doubtless some claimants will then decide it’s better to not be on UC and Neil Couling will claim his prize for putting another person into work when in fact the inept design of UC has driven them off from something which ought to enable them.

2) Budgeting is a huge thing. If you want people to budget month to month and not weekly then putting them in a scenario where they have to budget for varying 4 or 5 week periods is just abject nonsense.

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As far as we know/‘guess though, FSM’s are going to be linked to annualised income and UC entitlement, not assessed on a monthly basis, so not entirely sure that is a live issue. Although it’s out for consultation so maybe worthwhile respondng as such.

As I noted, the budgeting implications are clear but this is also a feature of tax credits currently to a large extent, with overpayments from year to year being a very common feature of that system also.

The obvious one for me was around UC claims closing on the nil income month but does that happen simply because of one month’s wages being equal to or exceeding the applicable amount for that month? I’m sure this increases the capacity for poor administration and claims being closed down but that could/should be a fairly simple work-around if it was found to be causing significant problems.

DHP point is interesting - these can be paid if someone is entitled to UC with a housing element - in keeping with point above, and following the general approach that distinguishes between eligibility and payability, does someone remain entitled to UC on a 5-week month where they receive no UC where there are no other changes to their circumstances?

I’ve gone back through 11 pages of UC threads, from around April 2017 and there hasn’t been a single enquiry that I can see connected to weekly paid workers - if there were problems, surely someone might have been asking questions?

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Hows about monthly earners that get paid early for Xmas? If the AP correlates anywhere near their pay day there’ll be a few people who might see big losses won’t there?

And… until now most of the people affected have not been able to claim UC; this is the first Xmas when there are an increasing number of people with dependants and substantial jobs on the scheme.

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nevip - 22 November 2017 12:59 PM

Talking about Neil Thanks for the Sanction Couling.

http://www.independent.co.uk/news/uk/politics/universal-credit-boss-neil-couling-project-management-award-winner-government-benefits-system-a8069141.html

Frank Field responds appropriately I see

More below

APM @APMProjectMgmt Congratulations to Neil Couling CBE on winning the Sir Monty Finniston Award! #APMAwards 19:57 - 20 Nov 2017

https://twitter.com/APMProjectMgmt/status/932699560245387264
https://inews.co.uk/essentials/news/politics/universal-credit-chief-wins-award-project-management/

 

[ Edited: 22 Nov 2017 at 01:37 pm by shawn mach ]
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neil couling is come to our next stakeholder meeting.  going to ask him about the client i have uc is costing around £90 a week or the disabled carer losing well over £100 a week.

see what parts of uc i should be telling them to celebrate.

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In one of Neil Couling’s twitter replies, he emphasised the rapid reclaim process for people who are kicked out of UC when their earnings are too high in a certain month (which could be the case either due to the 5 week month, or fluctuating earnings).

https://twitter.com/NeilCouling/status/931860002423345152

My colleague has done a rapid reclaim and confirms, that the reclaim button is prominently displayed and it is a straightforward boxticking. 

However, when you do reclaim, the system is only displaying this as if it were a new claim, with no journal or payment history.

What’s the best way to get an answer from DWP as to whether they are rectifying this?? 

As this has been raised in connection with other cases of ‘closed claims’ and also seems to be the case where a person separates their claim from their couple claim into a single claim, all their claim history is gone.

If only they had te…..

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I’ve got a phone meeting with a couple of UC people this afternoon - I’ll ask about it then…

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HB Anorak - 20 November 2017 12:08 PM

At the risk of making myself unpopular, Neil Couling is right about this.

I think Moneybox has made the mistake of assuming everyone has an assessment period that runs from the 1st of the month.  If that were true, the UC payment issued early in January would indeed be reduced, or there wouldn’t be one at all, in view of the fact that they got five weekly wages during December.  They would of course have more money overall during December and early January, because 5x wage plus little UC > 4x wage + big UC.

It’s true (I think) that if people can manage to save up the extra amounts in 4x months, they are no worse off overall. Much as are people who’ve been overpaid small amounts for years and now have to repay it. There are definite advantages to eliminating or smoothing out sudden shocks.

But on the other hand, Neil pointing out that something is a problem every month and not just this month isn’t a massively convincing answer either.

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SarahJBatty - 23 November 2017 09:30 AM

My colleague has done a rapid reclaim and confirms, that the reclaim button is prominently displayed and it is a straightforward boxticking. 

However, when you do reclaim, the system is only displaying this as if it were a new claim, with no journal or payment history.

What’s the best way to get an answer from DWP as to whether they are rectifying this??

Hi Sarah - at my meeting yesterday they confirmed this was happening. I’ve asked if anything can be done about it - I’m waiting a reply…

SarahJBatty
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Thanks Daphne

This ‘claim history’ thing is a real problem.  There is a case of someone who has been sanctioned twice and wanted to challenge those decisions but they were attached to the ‘old’ claim which had been closed.  Another case where someone has separated from their partner, but an overpayment decision on that couple claim has been generated and attached to that claim, but the client can not view the decision addressed to them as it is not visible on their ‘new’claim.

Apparently the ‘journal history’ is also being ‘wiped’ after a period of time.  Two cases where the journal has been disappeared for the period before September.  Is this notified to claimants anywhere - have I missed where this is written down?

shawn mach
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Tweet from MoneyBox’s Paul Lewis earler -

On @Moneybox noon @BBCRadio4 (2) I clarify last week’s Universal credit figures - for 100,000 read 25,000 and for five Fridays read five paydays (trust me, this matters), and most will not lose all their benefit, only some of it. Apologies all round.

https://twitter.com/paullewismoney/status/934376105494175744

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SarahJBatty - 24 November 2017 11:35 AM

Apparently the ‘journal history’ is also being ‘wiped’ after a period of time.

Time to dust off the Ophelia?

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Agreed on Dan’s point about being paid early at Christmas…and four weekly paid people are affected in similar ways too. All of which was stated to the BBC before the first programme!

So far, I’ve never had a client or heard of a client that had struggled to re-open their claim after being knocked off UC by high earnings or indeed other income, BUT I am worried by exactly the problems Sarah raises where you can’t see any of the history of your previous claim(s).

As Barbara says it’s suddenly losing your passporting that could be the big issue…as well as budgeting. What Neil Couling doesn’t address (or denies) is that claimants don’t get this explained to them. There is the DWP guidance but it is pretty long & off putting - plus I’ve no evidence that people with weekly/4 weekly pay frequencies are directed to it….Anyone know?

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shawn - 25 November 2017 07:40 PM

Tweet from MoneyBox’s Paul Lewis earler -

On @Moneybox noon @BBCRadio4 (2) I clarify last week’s Universal credit figures - for 100,000 read 25,000 and for five Fridays read five paydays (trust me, this matters), and most will not lose all their benefit, only some of it. Apologies all round.

https://twitter.com/paullewismoney/status/934376105494175744

Apologies in advance for the source but this has also been reported here.

Mr Lewis told the programme: ‘Last week I did say that up to 100,000 people might end up receiving reduced Universal Credit or even no Universal Credit at all over Christmas.

‘Now if Money Box gets something wrong, we admit it ... Some people will undoubtedly receive less Universal Credit over Christmas and New Year but by no means all of them.

‘Apologies to anyone on Universal Credit who was in any way unnecessarily alarmed.’ Last night critics said the apology was ‘inadequate’ due to the scale of publicity given to the story.

BBC is forced to apologise for report saying 100,000 Universal Credit claimants will lose their benefits over Christmas

shawn mach
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Written Question and Answer yesterday -

Jamie Stone: To ask the Secretary of State for Work and Pensions, what steps he will take to ensure that people paid weekly do not lose universal credit entitlements in months that contain five Fridays.

Damian Hinds: No one on Universal Credit, who are weekly paid, will see a drop in their total income from earnings and benefits in any assessment period with 5 paydays in it. In contrast because of the way UC works in 5 payday assessment periods, the total income a claimant will receive in that month will always be higher, whether their UC is reduced or extinguished

For example if someone is weekly paid at a rate of £200, and has a gross UC entitlement of £1400 a month their total UC entitlement (assuming no work allowance) is £896 a month and £800 from earnings. Total income in the month, benefits and earnings of £1696.

In a five payday month their earnings rise to £1000, UC falls to £770. Total income from benefits and earnings £1770.

For someone on higher earnings of £450 a week, with the same UC gross entitlement of £1400 will receive in a four payday month earnings of £1800 and UC of £266 a month with a total monthly income of £2066. In a five week month their total earnings rise to £2250, UC entitlement zero but total income in that month is higher than in the four payday month.

Everyone who is weekly paid will have a higher income in the 5 payday month, either through a combination of UC and earnings or on straight earnings. The UC taper ensure that people keep every pound of their earnings, with only a 63% reduction in UC entitlement. This is how the system works and how we make work pay. Media reports to the contrary were wrong, misleading and alarmist for UC claimants and I welcome the opportunity to put the record straight.

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2017-11-20/114640/

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Apologies if someone has mentioned this and I missed it - but another issue with getting paid twice in one monthly assessment period (MAP) and nothing in the next, is where someone is entitled to a work allowance.
This is because in the MAP where paid twice only one work allowance can be applied; then in the following MAP none can be applied- a double hit.
We came across someone who by reason of her particular MAP dates/salary dates being close together has this happening 4 X a year and is missing out immensely.  Can’t get salary dates changed (huge government employer) and to get MAPs changed would entail not claiming for 6 months.