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UC not causing hardship
It’s official ... universal credit is not causing hardship
Tweet from Neil Couling -
Without the context of the experience of claimants in the legacy system, provided in this answer, it is possible from the reference at para 2.11 of the NAO report, to infer wrongly that UC is causing hardship. Hopefully this answer clears up any confusion
https://twitter.com/NeilCouling/status/1027093096633434112
NB - this is what para 2.11 of the NAO report says -
The Department has not measured the impact on claimants or assessed how much hardship Universal Credit claimants suffer. It told us that the policy intent is to help people get used to monthly budgeting, and it does not accept claimants have suffered hardship as a result of Universal Credit. It said that there is no need for hardship in Universal Credit as it makes advances available, and that if claimants take up these opportunities hardship should not occur. However, in its survey of full service claimants, published on 8 June 2018, the Department found that four in ten claimants that were surveyed stated they were experiencing financial difficulties.
It’s official ... universal credit is not causing hardship
Tweet from Neil Couling -
Without the context of the experience of claimants in the legacy system, provided in this answer, it is possible from the reference at para 2.11 of the NAO report, to infer wrongly that UC is causing hardship. Hopefully this answer clears up any confusion
https://twitter.com/NeilCouling/status/1027093096633434112
The parliamentary answer quoted by Neil includes;
We also have a system of advances and budgeting support to help people with the transition to Universal Credit. From 3 January 2018, we increased the repayment period of Universal Credit advances to 12 months, with claimants able to get up to 100 per cent of their estimated monthly entitlement upfront. These advances are available to claimants interest-free, and from July 2018, can be applied for online.
So Neil routinely recovering UC advances at an unlawfully high rate (40% rather than the max 15% allowed for by the OR Regs) over 12 months doesn’t cause hardship? And I suppose acting unlawfully is just another example of ‘test & learn’? http://www.cpag.org.uk/content/ask-cpag-online-how-do-you-repay-universal-credit-advance
I have not encountered advances made when a claim is started being recovered at any rate other than 16.67% or 8.33% - depending on whether they are being recovered over 6 or 12 months.
The one thing that IS recovered at 40% is a hardship payment loan when someone has been sanctioned. The net effect is that when a Claimant is sanctioned and receives hardship payments they end up having to live on 60% of the Standard Allowance for 2½ times the duration of the sanction.
The other problems are with third party deductions or deductions for overpayments of legacy benefits (often tax credit overpayments from years previously). For example, if a Magistrates Court fine is being deducted the payment rate set by the court (usually £5 a week) is routinely ignored. There also seems to be nothing to stop legacy benefit overpayments being recovered at high rates so that total deductions are 40% of the Standard Allowance. While it should be possible to ask Debt Management to recover these overpayments at a lower rate I have yet to see that happening.
My personal view is that deductions at 40% should be not be routinely used but reserved for exceptional situations such as overpayment recovery where there has been fraud. In all other cases the maximum recovery rate should be substantially lower.
[ Edited: 8 Aug 2018 at 02:28 pm by Jeremy Barker ]Thank You for your views, Mr Couling.
The other problems are with third party deductions or deductions for overpayments of legacy benefits (often tax credit overpayments from years previously). For example, if a Magistrates Court fine is being deducted the payment rate set by the court (usually £5 a week) is routinely ignored. There also seems to be nothing to stop legacy benefit overpayments being recovered at high rates so that total deductions are 40% of the Standard Allowance. While it should be possible to ask Debt Management to recover these overpayments at a lower rate I have yet to see that happening.
Overpayments can only be recovered at 15% unless the claimant has earnings (25%) or it occured due to fraud (40%) - the total level of deductions and third party payments cannot exceed 40% (with limited exceptions) and are subject to the priority set out in UC etc (C&P) Regs. Sch. 6, para 5 (CPAG p 1213) - although for some reasons recovery of UC advances (technically ‘payments on account’) are not included in the prority list in the Regs! However the rate for specific third party deductions is also subject to the complexities of Sch 6, para 3 & 4. CPAG p1211.
The 40% maxima does not mean, for example, if a claimant has two legacy benefit overpayments but no other deductions (and the overpayment recovery rate in their case is 15%) recovery can be made at 2x15%. It is up to DWP to apportion the 15% to whichever of the overpayments it determines.
The maximum total deductions is 40% (with a few exceptions) but subject to a complex set of individual maxima and priority list.
Another example of simplification (and why DWP are getting it wrong in some cases?).
[ Edited: 8 Aug 2018 at 04:30 pm by Peter Turville ]