Penny Pinching in UC

I keep looking at clients’ UC breakdowns and thinking “That can’t be right!” and then I look it up and find out that it is.  So I thought it would be useful to list in one place all of the little differences between UC and legacy benefits which leave claimants worse off so we can make each other aware of them.
I’m not talking about the big changes which have been well publicised like the loss of the Severe Disability Premium and the lack of Work Allowance unless you’ve got children or LCW, but the little tweaks which have gone under the radar.

I’ll start off with:

- Income tax rebate is treated as income in UC.  It’s treated as capital in legacy benefits.
- There is no £10 weekly disregard for Widowed Parents Allowance.
- Children born after 06/04/17 are paid at the lower other children rate of £231.67, even if they are the eldest or only one.
- All claimants under 25 are paid at the lower personal allowance even if they are lone parents or have LCW/LCWRA.

(By the way, I don’t want to know about things that UC frequently get wrong here.  That would need to be another thread!)

You can’t have LCW/LCWRA and carer elements at the same time, even though loads of people are both disabled and a carer and bear the attendant costs.

The ‘lower rate’ element for a disabled child is far lower than in CTC: the government sees the carer going to work as the solution to this, even though many will not be able to.

I was collecting examples of cases where UC made poorer/more disadvantaged people better off, but can actually be better for people who are in a better position.

I had your loan parents 18-25 example.

Also I think people with a disabled child are £39.26 a week worse off (compared to CTC). £4.03 worse off for a severely disabled child. (Unless I’ve missed an additional element somewhere ?)

Claimants with non-dependants aged 18 to 25 and claiming benefit are £17.05 a week worse off.

(Claimants with non-dependants who are high earners can be £81.25 a week better off!)

Bedroom tax didn’t apply to people over pension age.

7. The change will only apply to working-age Housing Benefit claimants. Until April 2010, working-age included claims where both the claimant (and any partner) was under the age of 60. By 2020, legislation currently provides that the relevant age threshold will be 65 (in line with changes in the state pension age for women, and entitlement to the guarantee element of state pension credit). New and existing Housing Benefit claims from those claimants who have reached the qualifying age for state pension credit will be unaffected by this measure. “

Now with the mixed-age couples changes from May 2019, that is clearly not the case.

Equality impact assessment for introducing restrictions to Housing Benefit for working age customers living in the social rented sector who are occupying a larger property than their household size requires

Paul,

No doubt you saw this, breaks it down well!

https://benefitsinthefuture.com/the-price-of-love-for-a-pensioner-is-52-44-a-week/

Cheers

UC lower capital limit in a care home is reduced to £6000. Under legacy benefits the lower capital limit in care homes was £10,000.

UC housing costs for single claimant in hospital stop after 6 months.

Benefit Cap applies to the whole award rather than just to housing costs

DWP never pays for overpayments caused by official error no matter how crass that error and how blameless the client

Over payment due to official error being recoverable.

UC being used as a ‘debt hoover’ to collect sometimes very old debts at unaffordable rates

- see also what Step Change said about DWP debt recovery

https://www.stepchange.org/Portals/0/assets/pdf/social-security-mini-brief-report.pdf

roecab - 19 February 2020 02:42 PM

Paul,

No doubt you saw this, breaks it down well!

https://benefitsinthefuture.com/the-price-of-love-for-a-pensioner-is-52-44-a-week/

Cheers

Yes thanks #sadface

Further to the debt issue, you can be better off on UC on paper but quite considerably worse off because of deductions. And you won’t be able to tell one way or the other until they hit you.

Capital rules reduce UC for low paid workers who build up savings over £6,000 where this would not have affected tax credits.

There is no equivalent of the 13 week bedroom tax exemption in HB for people who could afford their home when they moved in and haven’t claimed HB in the past year.

The backdating rules are extremely narrow and have ejected most of the situations covered by the ‘legacy’ rules, including official error.

my list of losers as part of consultation response:

 Claimants who have lost out include:
o Claimants who on paper appear to gain from UC, but once deductions for an advance and/or historical tax credit overpayments/other deductions actually experience a drop in income.
o Severely disabled people who count as living alone and do not have a carer.
o Claimants who are both carers and have limited capability for work related activity.
o Disabled students (especially those in non-advanced education) who cannot be paid UC until after being assessed as having limited capability for work.
o The many disabled workers who cannot receive any extra support from UC as they are not assessed as having limited capability for work related activity due to the removal of the limited capability for work element.
o Disabled workers who cannot benefit from a work allowance because they are not assessed as having limited capability for work (loss of the many different routes into being a disabled worker in Working Tax Credit).
o Families with children entitled to the lower rate of the disabled child element.
o Mixed-age couples as no pensioner premium in UC and reduced chance of increasing their income through work as only one of the couple is working age.
o Lone parents, couples and people with limited capability for work under 25.
o Claimants unable to manage an online claim.
o Seasonal workers who will be affected when the surplus earnings rules change in April 2020 to the £300 de-minimis.

Lack of earnings disregards across the board - whilst the work allowance IS much more generous for those who DO qualify for it, those who don’t, e.g. single people, couples without children and carers in part time work lose out by between £5 to £31.12 pw week on legacy benefits (if you add the £20 disregard say on IS and the 11.12 you keep after a potential additional 17.10 disregard for HB)

For tax credits - the income threshold (currently 6420) equates to approx. £123 of earned income that could be ignored before the taper kicked in.

A number of disabled people who previously qualified for WTC with disabled worker element find after a gap in employment (thinking of a young man who was a seasonal worker) under UC there is no top up to their low paid work.

The taper difference between UC and TC is significant.

Loss of Dis Prem for those who have not/could not establish LCW/LCWRA - either in or out of work - who receive a Dis Ben lose up to 48.95 pw (the SDP and EDP were the high profile ones the effect of no dis prem when working out MTB entitlement is huge)