Good morning,

When Universal Credit was first unveiled, one of its key objectives was to “make work pay”. In other words, claimants would be duly incentivised to work by being allowed to earn, a fixed sum, without their benefits being docked, £ for £. Initially, there was some truth to the claim, as the original “work allowances” were more generous than those previously applying to legacy benefits. But, I’m afraid, those have now been effectively removed or, at least substantially reduced, for the vast majority of claimants, due to government changes introduced from April, 2016.

For single unemployed and couples, without children or disabilities, the change means that for every £ earned 65% will reduce their Universal Credit entitlement or, to put it another way, they’ll keep no more than 35pence, per £ earned. Not much of an incentive to work or make the effort to find work, when you factor in the costs of travel, meals, clothing etc. required.

How much “work allowance” other claimants receives will depend on whether they are single or part of a couple and whether their Universal Credit includes amounts for:

  • housing costs
  • children
  • limited capability for work

The table below shows the varying amounts of work allowance. The “higher” allowance applies to claimants who don’t have “housing costs” included as part of their Universal Credit claim. Otherwise, the lower work allowance applies. Those responsible for a child and also have limited capability for work, will be assessed on the highest amount that applies.

Higher work allowance

(taking the highest of whichever of the following amounts is applicable)

  from April 2016 
Single claimant – not responsible for a child or qualifying young person  £111  £0
– responsible for one or more children or qualifying young persons  £734  £397
– has limited capability for work  £647  £397
Joint claimants – neither responsible for a child or qualifying young person  £111  £0
– responsible for one or more children or qualifying young persons  £536  £397
– one or both have limited capability for work  £647  £397
Lower work allowance

(taking the highest of whichever of the following amounts is applicable)

 from April 2016
Single claimant – not responsible for a child or qualifying young person  £111  £0
– responsible for one or more children or qualifying young persons  £263  £192
– has limited capability for work  £192  £192
Joint claimants – neither responsible for a child or qualifying young person  £111  £0
– responsible for one or more children or qualifying young persons  £222  £192
– one or both have limited capability for work  £192  £192

 

To working tenants, this is further bad news, as it means they will lose part of the Universal Credit Award, which helped meet their contractual liability for rent. As well as the change to work allowances, freezes on standard, child & disability allowances, for 4 years, mean that any future wage increase will result in further losses.

We already know from the recent Nat Fed of Almo’s report – One Year On – An indisputable link – http://www.almos.org.uk/news_docs.php?subtypeid=19, tenants on Universal Credit are more likely to be in rent arrears; their arrear levels are likely to be higher; and the tenants themselves, are more likely to seek advice & assistance with money & debt advice & making claims. Responsibility for picking up that baton lies squarely with social landlords (mainly RSLs) as the DWP offer no such advice & assistance.

If you require any further information on this or any other welfare reform topic, please get in touch with bill@ucadvice.co.uk or 07733 080 389.