Working families 'losing hundreds' under Universal Credit

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According to the Child Poverty Action Group, working families claiming universal credit are losing hundreds of pounds because of a 'flaw' in the system.

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Working families are losing hundreds of pounds under universal credit due to a 'flaw in the system'

New evidence gathered by the charity reveals that some universal credit claimants are seeing their benefits reduced by £258 a month when their pay days clash with monthly assessment periods.

One in 20 cases coming in to the charity’s early warning system, which gathers case evidence from welfare rights advisers across the UK, indicates a problem with the monthly assessment system in UC.

Universal credit assessment periods run for a calendar month, starting from the date UC is awarded. At the end of each month, claimants’ circumstances and income are assessed, with payment made a week later in arrears. 

However, CPAG has said, where a claimant’s monthly payday is on or close to the first day of their assessment period and they are paid a day or two early because payday would fall on a weekend or bank holiday, they are recorded as having had two paydays in one assessment period and none in the one after. 

For claimants who are parents, disabled or ill, being paid twice in one month means losing the effect of one month’s work allowance every time it happens, according to CPAG. Work allowance is the amount of earnings claimants can keep in full before universal credit is tapered away, at a rate of 63p in each pound. Only one work allowance can be applied per month, so if claimants are paid twice in one month, more of their money is subject to the taper. The charity says this can lead to a loss of £125 per month if claiming housing costs, or up to £258 if not.

CPAG added claimants may also lose help with prescription charges or travel costs for NHS treatment as a result of receiving two cheques in one assessment period.   

If claimants appear to have no earnings because they received two pay cheques in the preceding assessment period, they may then be subject to the benefit cap, and therefore lose out again, according to the charity.

The benefit cap restricts total benefit awards for claimants who have earnings below £520 a month, capping benefits at £1,667 a month (£1,917 in London) for couples or people with children, or a lower amount for single people without children.

 CPAG has called for UC rules changed to allow earnings to be averaged in order to determine whether claimants earn enough to exceed the threshold for being capped, to better reflect the reality of different pay cycles or irregular earnings.

The charity has also suggested the Department for Work and Pensions (DWP) should allow claimants to change the dates of their assessment period so the start date is not too close to their payday.

CPAG chief executive Alison Garnham said, ‘Universal credit isn’t working for working people. Our early warning system shows claimants are often left flummoxed by how much - or how little - universal credit they will receive from one month to the next. But we believe most of the problems created by the monthly assessment system can be fixed relatively easily if the political will is there. The mass migration of families on to universal credit should not begin until these fundamental problems are resolved.’

UNISON general secretary Dave Prentis added, ‘It’s wrong that working people are losing money because of flaws in the system. This is causing chaos as this report starkly highlights. No family should be hundreds of pounds worse off just because of when they’re paid. It means they can’t budget. The Government has created this mess and it needs fixing quickly.’

The Department for Work and Pensions said monthly reporting allowed universal credit to be adjusted on a monthly basis, meaning if a claimant’s income falls they will not have to wait several months for a rise in their universal credit. If a claimant’s income increases, their payment would decrease but they may receive a larger amount the following month.

A spokesperson for the Department said, ‘We are listening to stakeholders’ concerns and working on issues regarding payment cycles and we will consider this report carefully.’

 

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