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Universal Credit - White Paper
Have you read it yet?
Lots of generality - little detail. Rather like previous reforms less change in substance more in rhetoric - change the name of everthing but only tinker with the existing rules.
introduced for new claims from Oct 13 - ‘migration’ of existing claims April 14 onward.
No details of how UC will be calculated - will the current applicable amounts and premiums remain?
new levels of earnings disregard and a single taper
What will be the assessment / payment period - will it be weekly / monthly or annual - monthly is hinted at.
A seperate UC for pensioners
A new system of council tax relief & benefit - allowing LA’s discretion - perhaps give discounts to certain bands of property rather than those on low income?
further changes (reduction?) in housing costs for home loans
what to do with Carer’s Allowance?
more sanctions & compliance
LA’s to take over responsibility for parts of the social fund in return for ‘losing’ HB.
more cuts to contributory benefits - with possible RP reform - will NI contributions be abolished - what will we be paying NI for??
administration - a more remote DWP where access is normally through the internet or phone.
simpler - well one means tested benefit (well 2 with a new CTB) may be simpler -but the actual calculation will be more complex as it will combine IS/HB&TC; calc into one highly complex calculation - will claimants (or MPs) really find it easier to understand - will the decision notices be as incomprehensible as those for TCs or HB/CTB?
what about decision making rules, overpayment rules etc - no mention.
It all looks like 1988 all over again - only then Universal Credit was called Income Support/Housing Benefit and Family Credit (and OK were 3 seperate benefits but one could use the same figures for the calcs)
But I suppose impending cuts mean there will be far fewer advisers around to help claimants etc through these changes
http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/universal-credit/
UnCred doesn’t include child benefit but will, it seems, include mortgage interest in work.
... and doesn’t include Council Tax Benefit. Surely that means that if local authorities continue with a 20% taper (and they’ll be hard pressed to keep it that low as central government is cutting its subsidy of CTB by 10%), then the effective taper of UC+CTB is 85%?
Am I missing something?
The big if is ‘if’.
AFAICS the intention is to localise the money for CTB but not the responsibility to run the scheme.
LAs will be able to create their own method of mitigating the effects of CT on the needy.
As the White paper points out, CTB is more of a reduction in charges than a benefit so the taper won’t affect the net gain from working (semantics - don’t you luv it).
I suspect that Wales and Scotland will go their individual ways and English LAs will demonstrate their political views and their penchant for social engineering.
Having had the chance to discuss the CTB in UC issue with DWP officials it now looks like they are envisaging all the assessment of CTB being done as part of the UC process. The CTB component won’t be paid as cash to claimants. The CTB element will be electronically notified to LAs, who will then issue a net Council Tax Bill. The 10% cut in CTB subsidy will have to be swallowed by LAs. I think LAs will come to view this as effectively as payment of an administration fee to the DWP for doing the UC/CTB calculation. Apparently this process has come about as a result of some LAs lobbying the DCLG and DWP about the potential loss of income if claimants were given the cash direct instead.
There will be further consultation by DCLG/DWP with LAs on the details of this arrangement, and this might well also include a look at the whole existing structure of Council Tax discounts and exemptions. Its early days, and its still possible that the process I’ve described might be further modified as LAs get a chance to look at the detail of the proposals.
There is some comparison with paid employment:
Employees are paid monthly, it is their own affair how they cover the bills pending their first pay packet (p34 “we are considering whether the period of the assessment and the frequency of payments should be monthly. About 75 per cent of all earnings are paid monthly, including most of those in the lower-earnings brackets. Rent and other major household bills are also usually paid monthly, rather than weekly.
We understand that many people on low incomes will be used to managing fortnightly payments of benefits and will ensure that, whatever the period of payment, there will be appropriate budgeting support to ensure recipients are supported effectively”)
The employer can unilaterally recover accidental overpayments from ongoing wages with no risk of a claim for illegal deductions (p44, “we will seek powers to enable us to widen the range of debts we can recover, to include those resulting from official error. While the Department must take responsibility for payments made mistakenly by our staff, that does not give recipients the right to hold on to public money not intended for them.”).
Employees can be suspended without pay (or be dismissed) where the employer considers there has been gross misconduct (eg p44 “Where there are grounds for instituting criminal proceedings against a person in lower level benefit fraud cases, we will consider offering the recipient a tough penalty they would have to agree to pay to avoid criminal prosecution. If accepted, the recipient would also be subject to four weeks’ loss of benefit payments.”)
Payment is strictly due in return for fulfilment of obligations; the goal is to minimise outlay, not to subsidise a lifestyle (passim). After all, isn’t someone providing a safety net out there?
Still baffled by the CTB issue. I take Al Franco’s informants’ point and I would assume that council tax rebate calculations will be done by the DWP, as the sole keepers of the information necessary to means testing. This doesn’t get round the issue of the extra taper. All the examples and graphs in the White Paper (16-17) assume a 65% taper, not more, for UC, even when the example specifies that there is council tax to pay. Similarly the ‘current system’ examples are based on an 85% taper, ie including CTB (yes, I measured the slopes on the graphs). Is it really as simple and cynical as reclassifying CTB as ‘not a benefit’ so that IDS can claim ‘benefit tapers’ are being reduced? Or is there something else?
And what then about other passported benefits? the White Paper suggests that these would be withdrawn at specified ‘thresholds’ on income and earnings. That will still lead to significant ‘kinks in the graph’ of net income and significant disincentives.
No mention of Fairer Charging charges for care services but I assume these will get swept in the general UC calculation process as well and I can’t see the current 100% earnings disregard surviving. That’s another taper (100% in many cases).
All in all, if the suspicions above are correct, the central claim of the White Paper - that UC will improve work incentives - looks to be bogus. Removing the 16 hours threshold is helpful, as will be the tapering of SMI. On the other hand Annex 3 to the White Paper makes it clear that current disregards for ESA (and probably CA?) wil be reduced to about £40pw (with no indication of permitted work limits). The glaring disparity between people with housing costs, minimally incentivised, and those fortunate people without housing costs remains. (No point asking why 65% effective marginal tax rates are OK for benefit claimants but not for higher rate taxpayers).
In fact looking at Annex 3 one has doubts even about the claim to be simplifying the system. Two levels of disregards, one for those with housing costs, one for those without: the former reducing to the latter as far as a ‘disregard floor’ at a rate of 1.5 time eligible rent or mortgage interest? NDD’s presumably stay, retaining another level of complexity and intrusiveness.
Richard Atkinson
Just received a letter from my MP in response to signing up to the Mencap online campaign (re.ludicrous proposal to remove DLA mobility from people in res. care). Hardly anything in the letter about the subject of the campaign, but on Universal Credit the letter states:
“The new system intends to mirror the Employment and Support Allowance in the Universal Credit system”. Heaven help us all!
It’s also reassuring to note that “The Government is committed to supporting disabled people to participate fully in society”. Clearly the best way to achieve that objective then is to remove their DLA Mob. I could go on with some more choice extracts but I need to find a sick bag.
Universal Credit is just Income Support as it used to be when it was introduced in 1988 (and Supplementary Benefit before that from 1966) i.e. the basic means tested benefit for most “out of work” people whatever their situation. They are just reinventing the wheel; but that’s how the world operates i.e. one generations invention is rediscovered 2 or 3 generations later, and they think it’s a new, novel wheeze, and congratulate themselves accordingly!
No, No you arn’t allowed to be more cynical than me. Still I could probably still complete an A14 (Supp Ben assesssment sheet) with my eyes shut and have a copy of Mesher covering Supp Ben.
Maybe parliement should pass an Act preventing governments from changing the name of social security benefits, tinkering with the rules a bit, cutting the rates for claimants and unscrewing the dept. nameplate from the front gate of the processing office and replacing it with the one taken off the last time around - and then passing this off as the most radical reform of welfare since Beverage.
I could go on about this for hours ( think Rightsnet ought to have a re-design your own system section. We could then vote for the best model and collect millions of pound consultancy fees from the govt.). My model would remove the responsibilty from central government (like the Bank of England) and we would be given a choice of SOCIAL SECURITY providers to pay our subs too.
It won’t ever happen, as benefits are a big social lever for government, plus it would probably have to be underwritten by the government, so back to square one. But we are sliding away rapidly from a social security system. The concepts work subsidy (and why are subsidising big employers anyway?) and social security are not mutually exclusive.
One of the problems is that the modern day benefit system was never designed for long term high unemployment. The contributory principle developed under the Liberal government at the turn of the nineteenth century was expanded into a centralized universal scheme designed (apart from old age pensions) to cushion people through short term periods of interruption of employment in a full employment economy re-building itself after the second world war.
However, in the 1970’s unemployment started to rise, particularly after the Arab- Israeli war in 1973 and the subsequent hike in world oil and commodity prices, so much so, that unemployment stood at about 500,000 in 1975 rising to over one million by the end of the decade. During the devastation wrought to Britain’s manufacturing industry during the 1980’s taking recorded unemployment (that is those in receipt of Unemployment Benefit) to record levels it became clear that high unemployment was here to stay, at least for the foreseeable future. The irony of this, for the first two Tory governments at least, with flagship policies of cutting public spending was that public spending rocketed as the benefit bill soared.
More and more social policy makers, commentators and researchers, from both left and right, started to talk more and more about the benefit and poverty traps and began to concentrate more and more on work incentives and in work benefits. True, Family Income Supplement had been around since the early 1970’s but, in the late 1980’s it was expanded into the Family Credit scheme and later under New Labour expanded further under Tax Credits.
We are now at a point were the benefit system is, as others have remarked, not fit for purpose. It is complex, labyrinthine, replete with means testing, administratively unwieldy, laboriously over regulated and governed by narrow policy objectives tailored toward pleasing and profiting the narrow economy and private contractors for services, while the less said about the various idiotic software systems and ludicrously inept contact centres the better.
No doubt , change is needed it is just that the system has undergone so much change over the last twenty years or so that people feel overwhelmed by its pace and cynical as to outcomes. People question, and rightly so in my view, the motives of those driving the change as so often the blame for being unemployed, sick, disabled or poor has been laid on claimants rather than the political and economic system that creates those problems which have led to social breakdown.
Not many of us are holding our breaths for the brave new world to come. Something tells me we will still be here in another twenty years time talking about the same problems, re-inventing timeworn solutions and still blaming the victims. Those who fail to learn from history will be condemned to repeat it.
God, I’m depressed now! I need a beer.
I was a civil servant in the (then) DHSS in 1971 - health services side, I hasten to add - but the “cycle of deprivation” of intergenerational poverty and worklessness was one of the catchphrases of the day, much used by the SoS Keith Joseph.
Plus ca change…
New briefing from Citizens Advice on the Universal Credit.
They seem to have missed the earnings dirsregard reduction in UC, because of rent, in their last example.
If this goes UC goes ahead, does it mean the end of HMRC being involved in Benefits/Credits?
If this goes UC goes ahead, does it mean the end of HMRC being involved in Benefits/Credits?
Not entirely, given the fact that the capacity of the UC to react to real-time changes in someone’s income relies on HMRC’s information gathering on income being relayed to DWP, via compatible IST. Which does hang an awfully big question mark over the whole concept in my opinion, given recent IST “difficulties” that we know all too much about.
....and the pundits reckon Mr C wants to privatise HMRC (and anything else in the public sector that still moves after the cuts). Another fine old mess on the way. I’ve already noticed an outbreak of food banks: http://www.trusselltrust.org. Just a matter of time now before some trans-global, hyperactive superlative busting service corporation comes up with a 2015 version of the work house. Or maybe the National Trust can make a killing as they at least own a real one in Southwell, Notts.