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Forum Home  →  Discussion  →  Universal credit migration  →  Thread

Erosion of TSDPE and ‘sum of the relevant increase’

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PCarysforth
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How do you calculate the ‘sum’ of a relevant increase to calculate erosion?

I have simplified the case for ease but the principle should be the same.
A claimant is getting the carer element of UC £163.73 and TSDPE of £285.
They are then assessed as LCWRA meaning an increase of £343.63.
For erosion -
(b)for the second assessment period, the initial amount reduced by the sum of any relevant increases in that assessment period;

So - is the ‘sum of the increases’ the net effect - ie 343.63 - 163.73 = The sum of the increases would be £179.90 and TSDPE could continue at £105.10
OR
the increases added up - i.e. £343.63 (while ignoring the loss of £163.73) so wiping out the TSDPE

Another example might be - going from LCW to LCWRA, if receiving LCW before is the increase 343 or 343-289 ?
In either of these examples the ‘new’ elements haven’t been increased, they weren’t in payment before so the sum of the increases would be the whole new elements.

‘sum’ could mean plus one element minus another, but there is no reference to decreases in other elements so I am fearing the worst!

if it is the net effect then timing could make a real difference, for instance if you gained 343 LCWRA but in the same month a child became an adult (loss of child premium) then you would keep most of your TSDPE, compared to losing child element one month and then getting LCWRA the next (TSDPE wiped out)

note - nothing in guidance comes close to explaining this, here is the reg
[F1The transitional element – initial amount and adjustment where other elements increase
55.—(1) The initial amount of the transitional element is—

(a)if the indicative UC amount is greater than nil, the amount by which the total legacy amount exceeds the indicative UC amount; or

(b)if the indicative UC amount is nil, the total legacy amount plus any amount by which the income which fell to be deducted in accordance with section 8(3) of the Act exceeded the maximum amount.

(2) The amount of the transitional element to be included in the calculation of an award is—

(a)for the first assessment period, the initial amount;

(b)for the second assessment period, the initial amount reduced by the sum of any relevant increases in that assessment period;

(c)for the third and each subsequent assessment period, the amount that was included for the previous assessment period reduced by the sum of any relevant increases (as in sub-paragraph (b)).

(3) If the amount of the transitional element is reduced to nil in any assessment period, a transitional element is not to apply in the calculation of the award for any subsequent assessment period.

(4) A “relevant increase” is an increase in any of the amounts that are included in the maximum amount under sections 9 to 12 of the Act (including any of those amounts that is included for the first time), apart from the childcare costs element.]

point 4 does relate it back to maximum UC, but states any amounts included that have increased - rather than a change to the overall maximum amount, so I don’t think the increases could be offset against losses in the maximum amount when calculating the relevant increase!
would the policy intention have been the ‘net’ increase? I’m not convinced on that either

Any ideas?

 

HB Anorak
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It’s a long shot, but perhaps the use of the word “are” in the phrase “in any of the amounts that are included in the maximum amount” suggests it applies to the cumulative total rather than to each amount individually - otherwise it would have said “is”.  That construction is reinforced by the use of the singular “is” in the second part of the definition where it refers to a newly included amount.  If that is correct the definition can be interpreted as the amount by which the combined sum of all the amounts included in the maximum, whether increased or newly included, has increased compared with the combined total before.

Daphne
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If you go to the explanatory memorandum to the managed migration regs which inserted regs 44-64 I think it could be argued that a decrease / loss of an element should be taken into account.

If you look at paragraphs 7.27 and 7.28, although it doesn’t give an example of a decrease (in the same way that you say the guidance doesn’t), the way the calculations work are to ensure that the total monthly indicative amount remains the same. I would definitely want to say that in your first example the loss is £179.90 and that is what the TSDPE is eroded by.

I guess at the end of the day it would come down to tribunal / courts to interpret but I think the above is a reasonable interpretation - it would seem very unfair that you could be worse off just because you were assessed as LCWRA

PCarysforth
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I like that, but that does open it up so that any reduction in max UC could be used to offset any increase in max UC if it happened in the same MAP.
That could be the way it works, but if so, wouldn’t they have referenced the max UC amounts rather than specific increases to elements?

Also, the regulation doesn’t compare it to the combined total before, it only references reducing the initial amount of TSDPE by increases since then, they don’t re-do the indicative amount calculation, so I’m still not sure.

PCarysforth
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Thanks Daphne, I replied before I had seen yours - definitely doesn’t seem fair if awarded LCWRA - I will check the memorandum

HB Anorak
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PCarysforth - 28 September 2021 03:02 PM

I like that, but that does open it up so that any reduction in max UC could be used to offset any increase in max UC if it happened in the same MAP.
That could be the way it works, but if so, wouldn’t they have referenced the max UC amounts rather than specific increases to elements?

Also, the regulation doesn’t compare it to the combined total before, it only references reducing the initial amount of TSDPE by increases since then, they don’t re-do the indicative amount calculation, so I’m still not sure.

You’re probably right, I thought it was an ambitious argument I was suggesting, but it seems perverse not to recognise that the award of a new element in at least three situations I can think of necessarily involves the loss of an existing one: that is clearly very different from acquiring a new element on top of the existing ones.

The situation you mention where an unrelated element coincidentally reduces at the same time as another one starts, leading to artificial protection of the transitional element, would be quite rare I think.  Thinking of people timing their WCA request to plan ahead for a child becoming a non-dep four months later.  Or: just been awarded carers allowance?  Now would be a good time to give up your tenancy and sofa-surf!

PCarysforth
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I have read the memorandum and think in managed migration cases it is covered as the guidance refers back to the indicative amount, whereas TSDPE could be more complicated as the ‘initial amount’ is a set rate, and so the indicative amount doesn’t come into it.
Hopefully I am concerned over nothing, I will keep an eye on how the DWP calculate it for my case though -  thanks for the input!

Charles
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This Reg is drafted exactly the same way as the original draft Regs published for the SSAC consultation in 2018. In the Explanatory Memorandum published alongside that consultation, the government stated (see Para 76 here):

Where there is more than one change in an assessment period, i.e., there is an increase in one element but a decrease in another, it is not the net effect of these changes that reduces the TE, but the total increase in the relevant element.

(I actually mentioned this issue in my response to that consultation.)

You could argue, as you mention, that there is a difference between a random reduction in (or loss of) another element and a case such as yours where the loss of the other element is ‘necessary’ to be entitled to the new element. But in my opinion that would entail making an argument that the Regs should not be read literally, so I don’t think it’s likely that was the government’s intention. That’s not to say a Tribunal wouldn’t agree with you..

PCarysforth
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I have emailed the policy team for confirmation - hopefully they can give an opinion at least so we know what to expect

PCarysforth
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Reply received from DWP policy team.
When moving from LCW to LCWRA the net effect would be used for erosion, but moving from carer element to LCWRA the whole of the LCWRA would be used for erosion.
So we do end up with a carer getting 163 carer element and 285 TSDPE, moving to LCWRA ending up £85 per month worse off as no account is taken of the loss of the carer element.
Good news on net effect from LCW to LCWRA- that seems reasonable but not 100% sure it matches the regs as LCW/LCWRA aren’t the same element and ‘health related element’ isn’t in the regs - Any thoughts?

Thank you for your email of 6 October about the Transitional Severe Disability
Premium Element.
Where a claimant, who has been determined by a decision maker to have limited
capability for work (LCW), has a change to their health condition and is
subsequently determined to have limited capability for work and work related
activity (LCWRA), this will be treated as a relevant increase to their health related
element, rather than the addition of a new Universal Credit element. This means
the transitional element (TE) would be reduced by the amount of the increase from
the LCW rate to the new LCWRA rate. In cases like this, the TE would be reduced
by £214.74 (£343.63 (LCWRA) minus £128.89 (LCW)).
You also asked: if it is the ‘net effect’ would it be the same if they lost the carer
element and gained LCWRA? Or even had a decrease in rent/child elements etc. In
this situation, the LCWRA addition would be treated as a new element, as it is not
an increase from one health related element to another, therefore the TE would be
reduced by the amount of the LCWRA addition.
With regards to the point about decreases in rent/child elements, reductions or
removals of other elements do not affect the rate of the TE being paid.

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Elliot Kent
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PCarysforth - 29 October 2021 04:26 PM

Good news on net effect from LCW to LCWRA- that seems reasonable but not 100% sure it matches the regs as LCW/LCWRA aren’t the same element and ‘health related element’ isn’t in the regs - Any thoughts?

Well I doubt anyone here is going to be enthusiastically arguing against it…

I think there is a logic in treating them in this way. They are introduced together in the regs and are clearly conceptually and practically linked in a way which the Carers Element and the LCW/LCWRA elements are not. It seems a defensible position to treat them as different degrees of the same element rather than altogether separate elements, although perhaps the regs could be clearer if that was the intent.

Ianb
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PCarysforth - 29 October 2021 04:26 PM

Reply received from DWP policy team.
When moving from LCW to LCWRA the net effect would be used for erosion, but moving from carer element to LCWRA the whole of the LCWRA would be used for erosion.
So we do end up with a carer getting 163 carer element and 285 TSDPE, moving to LCWRA ending up £85 per month worse off as no account is taken of the loss of the carer element.

Which means that if we see any clients in this situation we should advise them not to request a WCA.

It does seem irrational and contrary to the policy intent of the SDPTE.

WillH
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Isn’t the loss greater than £85, or am I missing something…?

Carer element gone & instead gets LCWRA
transitional SDP completely wiped out by LCWRA (rather than overall change)


£110 loss per month?

HB Anorak
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I think Pam’s example assumes that DWP would regard the claimant as having an underlying entitlement to an LCW element which was suppressed by the carer element, so when they upgrade to LCWRA the SDP erosion is still limited to the difference between the two “health related” elements.

Before: 163.73 + 285 = 448.73
After: 343.63 + 285 - (343.63 - 128.89) = 413.89

No, that’s not it either.  My brain hurts!

[ Edited: 1 Nov 2021 at 01:45 pm by HB Anorak ]
Elliot Kent
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I think in the typical case, its a loss of £285 TP + c. £164 CE less a gain of c. £344 LCWRAE for a net loss of c. £105.

Beyond just potentially losing out by pursuing a WCA in this situation, isn’t there a concern that these claimants could be left with recoverable overpayments as a result of an LCWRA assessment or a successful MR/appeal? I am away from reference stuff at the moment but this is something I would want to be very confident on before advising someone on a potential appeal…

WillH
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Yes, apologies all my arithmetic was out - post above should have read £105.10, not £110.

And agreed Elliott, most claimants will have arrears of LCWRA to be paid & so the effect will be retrospective - very worrying.