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21 May, 2020 Open access

Surplus earnings rules in universal credit must not ‘inadvertently undo the positive policy measures’ that have been introduced during COVID-19 pandemic, warns SSAC

Committee expresses concern about how the rules will be communicated to claimants, and whether the system can cope with the substantially increased volume of claims that are likely

The surplus earnings rules in universal credit must not 'inadvertently undo the positive policy measures' that have been introduced during the coronavirus (COVID-19) pandemic, the Social Security Advisory Committee (SSAC) has warned. 

NB - the surplus earnings rules apply where a universal credit claimant has an increase in their earned income that takes them outside of entitlement to universal credit by more than a 'de minimis' level - currently £2,500. Earnings above this level reduce subsequent entitlement.

In a letter to the Director General of the Change Group at the DWP, Neil Couling, the SSAC highlights that payments from the Self-Employment Income Support Scheme (SEISS) - which will be paid in a single lump sum and taken into account as income in the assessment period in which they are paid - are likely to trigger the surplus earnings rules. Referring to the SSAC's January 2018 report, which expressed serious doubts about the potential for the surplus earnings policy to operate effectively, the SSAC observes that it is likely to be triggered by a far larger number of claimants than originally envisaged and questions - 

NB - the SSAC also highlights that the rules are particularly complex in that some claimants would be better off making repeat claims every month while others might be better off waiting some months before making a new claim. However, the government yesterday laid regulations which give the Secretary of State the power to treat a person as having made a new claim in order for surplus earnings to be applied to their universal credit award until there is no surplus remaining.

While recognising the 'far-reaching policy and operational measures' that the government have taken in response to the COVID-19 pandemic, the SSAC emphasises that - 

'... it is important that the surplus earnings rules do not inadvertently undo the positive policy measures that have been introduced recently. We feel that the surplus earnings policy raises further challenges to be addressed and we would welcome further information on how those risks will be managed.'

The SSAC's letter to Mr Couling is available from gov.uk

Stop press - 29 May 2020 - the SSAC has today published Mr Couling's response to the letter about the universal credit surplus earnings rules. In the letter, Mr Couling confirms that the Universal Credit (Coronavirus) (Self-employed Claimants and Reclaims) (Amendment) Regulations 2020 (SI.No.522/2020) - which came into force from 21 May 2020 -

'... introduce an important easement which means that we will not automatically be closing claims where earnings exceed the claimant’s entitlement, thereby making it easier for awards of universal credit to be re-instated without the need for claimants to make a new claim. This also applies to people who are affected by the surplus earnings rules.'