Tuesday, 30 May 2017

2017 Election Manifestos - what they have to say for benefit claimants

Oh dear, here we are again...

Part of me feels that manifestos aren't worth the computer memory they occupy: a bundle of policies designed to increase votes but which can be jettisoned later if they become inconvenient. But it is possible to become too cynical: manifestos do show us what parties care about, and where their priorities lie. Perhaps it's also useful to keep these promises on record, so that we can call parties to account if they back track on their undertakings later.

This post attempts to summarise the different parties' commitments regarding welfare benefits. It also looks at commitments that are not directly related to benefits, but are relevant to benefit claimants, the low paid (who can also be benefit claimants, of course), and other vulnerable people.

The post is sorted by subject, not by party: this is so you can easily compare what different parties say about the same thing (or if they say nothing at all about it - the gaps may say more than what is said...)

Even though there are no quotation marks, all the comments have been lifted directly from the manifestos, apart for a few changes to ensure grammatical clarity. If I haven't been able to find anything in a particular party's manifesto about an issue, I've left their space blank. This post only includes promises made in the manifestos, so you won't find assertions made by party members in the media that are not in their manifesto. There is also some unavoidable repetition, when something applies to more than one category

This is not an opinion post (despite the temptation). However, as I've had to select and digest, there is inevitably going to be some subjectivity and judgement calls:
  • I've generally, but not always, avoided vague promises that include words like 'review', 'consider', 'explore', 'examine', as these don't generally amount to much of a commitment. The exceptions are where they appear to relate to a clear  and concrete plan of action. 
  • I've also not included 
    • Undertakings that are planned to take more than one parliament to follow through to completion.
    • Stuff that might have an impact on benefits provision because of competing budgetary demands: otherwise I'd have to include everything.
    • If parties are simply committing to continue something that's already in place, I've normally left it out.
    • I've not included anything about general equalities issues, or social care.
    • Much as I've been tempted to, I have not included anything about immigration issues, except insofar as they touch on the world of social security benefits.
It's been a challenge to decide which parties to include. In the end the list is:

I apologise to the parties that have been left out, but I had to balance the need for inclusion with that of getting this finished in time to be useful.

(A note on manifesto accessibility: Labour, The Lib Dems, and the Green Party provide a wide range of different formats, including Braille, BSL, and audio. As of 29th May the Conservative Party, the SNP, and UKIP both offer no alternatives to a standard pdf (The Conservative sites asks for your details so that it can release information about accessible versions 'when they are released', and the SNP says that they are working on them, as of 30th May). )

As I said before, this is not an opinion piece, but I will offer you some advice to help you form your opinion:
  • Be wary of 'weasel words' (e.g. 'we will help the jobless back to work' and 'we won't allow the sick to languish on benefits'). Always ask: what does this really mean?
  • Don't be too excited by very positive sounding pledges from smaller parties: the less likely a party is to form part of a government, the less likely it is that it will have to bear responsibility for not keeping to its pledges!
  • Be suspicious of vagueness

I have tried to be fair and thorough, but if you think I've left something substantive out, please let me know via the comments section.

To jump directly to any specific subject, click on the relevant link below:

Commitments that are directly related to benefits

Young people

Claimants with health problems and/or disabilities

Carers

Commitments that are relevant to the vulnerable, including benefit claimants

Minimum wage and living wage


Commitments that are directly related to benefits 


Young people


=Conservatives:

=Labour:
  • We will reinstate Housing Benefit for under-21s

=Liberal Democrats:
  • We will help young people in need by reversing cuts to housing benefit for 18-21-year-olds and increase the rates of Jobseeker’s Allowance and Universal Credit for those aged 18-24 at the same rate as minimum wages.

=UKIP:

=Green:
  • We will protect young people’s housing needs by reinstating housing benefit for under 21s and reverse housing benefits cuts.
=SNP:

  • SNP MPs will support restoration of housing support for 18 to 21 year olds across the UK.


=Labour
  • We will increase Employment and Support Allowance (ESA) by £30 per week for those in the work-related activity group, and repeal cuts in the UC limited capacity for work element.
  • We will implement the court decision on Personal Independence Payment (PIP) so that there is real parity of esteem between those with physical and mental-health conditions.
  • We will end the pointless stress of reassessments for people with severe long-term conditions.
  • We will change how Jobcentre Plus staff are performance-managed.

=Liberal Democrats:
  • We will reverse cuts to Employment Support Allowance to those in the work-related activity group.
  • We will scrap the discredited Work Capability Assessment and replace it with a new system, run by local authorities according to national rules, including a ‘real world’ test that is based on the local labour market.
  • We will improve links between Jobcentres and Work Programme providers and the local NHS to ensure all those in receipt of health-related benefits are getting the care and support to which they are entitled.
=UKIP:
  • The current Work Capability Assessments are not fit for purpose. We will reform them in consultation with disabled people and disability charities. 
=Green:

=SNP:
  • Under the Tories, from April this year, disabled and ill people assessed as not fit for work have lost out on £29 per week from their Employment and Support Allowance. SNP MPs will support reversal of this cut.
  • SNP MPs will call for the current work capability assessment to be halted, and a new system to be put in place which treats everyone with fairness and respect, helping people into employment rather than crisis.
  • SNP MPs will urge the UK government to follow the lead of the Scottish Government to review Personal Independence Payments, ensuring assessments, descriptors and award times are appropriate and rooted in respect and dignity.
  • To stop the revolving door of disability assessments and reintroduce long term awards for those with long term conditions we have established a Disability Benefits Assessment Commission to provide recommendations and guidance on eligibility and conditions [Scotland only].

Carers


=Conservatives:

=Labour:
  • We will increase Carer’s Allowance by £11 to the level of Jobseekers’ Allowance.

=Liberal Democrats:
  • We will raise the amount people can earn before losing Carer’s Allowance from £110 to £150 a week, and reduce the number of hours’ care per week required to qualify.

=UKIP:
  • We recommit to giving carers an extra five days’ paid holiday each year, and increasing Carer’s Allowance from £62.70 per week to £73.10 a week, to match the higher level of Job Seeker’s Allowance.

=Green:

=SNP:
  • The SNP will increase Carer’s Allowance to the level of Jobseekers Allowance.


Work-seeking claimants, and those in low-paid work


=Conservatives:

=Labour:
  • The cuts to work allowances in Universal Credit (UC), and the decision to limit tax credit and UC payments to the first two children in a family, are an attack on low-income families and will increase child poverty. Labour will reform and redesign UC, ending six-week delays in payment and the ‘rape clause’.

 =Liberal Democrats:
  • We will separate employment support from benefits administration – making Jobcentres places of training and support into work.
  • We will encourage people into work by reversing the cuts to Work Allowances in Universal Credit, enabling people to work for longer before their benefits are cut.

=UKIP:

=Green:

=SNP:


Families with children


=Conservatives:

=Labour:
  • The cuts to work allowances in Universal Credit (UC), and the decision to limit tax credit and UC payments to the first two children in a family, are an attack on low-income families and will increase child poverty. Labour will reform and redesign UC, ending six-week delays in payment and the ‘rape clause’.

=Liberal Democrats:
  • We will take 13,000 children out of poverty by letting both parents earn before their Universal Credit is cut and also reverse cuts to the Family Element.
  • Abandon the two-child policy on family benefits and abolish the Conservatives’ ‘rape clause’ where a woman has to declare children that are born as a result of rape in order to access benefits.

=UKIP:
  • We will limit child benefit to two children for new claimants.

=Green:

=SNP:
  • The SNP strongly opposes the cap that restricts Child Tax Credits to the first two children and the removal of the family element of Universal Credit
  • We oppose the ruthless and inhumane Rape Clause which forces women to relive the ordeal of rape in order to claim tax credits for third or subsequent children
  • We will extend the eligibility to Winter Fuel Payment to families with severely disabled children.

Older people


=Conservatives:
  • We will keep our promise to maintain the Triple Lock until 2020, and when it expires we will introduce a new Double Lock, meaning that pensions will rise in line with the earnings that pay for them, or in line with inflation – whichever is highest. 
  • We will also ensure that the state pension age reflects increases in life expectancy, while protecting each generation fairly.
  • We will means-test Winter Fuel Payments, focusing assistance on the least well-off pensioners, who are most at risk of fuel poverty. 
  • We will maintain all other pensioner benefits, including free bus passes, eye tests, prescriptions and TV licences, for the duration of this parliament.

=Labour:
  • Labour will guarantee the state pension ‘triple lock’ throughout the next Parliament. It will rise by at least 2.5 per cent a year or be increased to keep pace with inflation or earnings, whichever is higher.
  • The Winter Fuel Allowance and free bus passes will also be guaranteed as universal benefits.
  • Labour will legislate so that accrued rights to the basic state pension cannot be changed, but future benefits can.
  • The pension age is due to rise to 66 by the end of 2020. Labour rejects the Conservatives’ proposal to increase the state pension age even further. We will commission a new review of the pension age, specifically tasked with developing a flexible retirement policy to reflect both the contributions made by people, the wide variations in life expectancy, and the arduous conditions of some work.

=Liberal Democrats:
  • We will maintain the ‘triple lock’ of increasing the state pension each year by the highest of earnings growth, prices growth or 2.5% for the next parliament
  • We will withdraw eligibility for the Winter Fuel Payment from pensioners who pay tax at the higher rate (40%). We will retain the free bus pass for all pensioners.

=UKIP:

=Green:

=SNP:
  • We will vote to protect the Triple Lock, ensuring that pensions continue to rise by inflation, earnings or 2.5 per cent - whatever is the highest.
  • SNP MPs will oppose plans to increase the State Pension Age beyond 66. 
  • We will protect the Winter Fuel Payment.


Housing benefit


=Conservatives:

=Labour:
  • We will scrap the Bedroom Tax.

=Liberal Democrats:
  • We will increase Local Housing Allowance (LHA) in line with average rents in an area, ensuring that LHA is enough for a family to pay their housing costs no matter where they live.
  • We will scrap the ‘bedroom tax’, while seeking to achieve the aim of making best use of the housing supply through incentivising local authorities to help tenants ‘downsize’.
=UKIP: 
  • We will scrap the bedroom tax.
  • We will give tenants the right to request Housing Benefit is paid direct to their landlords, whatever benefit scheme they are on

=Green: 
  • We will abolish the cruel and unfair bedroom tax.

=SNP:
  • SNP MPs will continue to demand that the Bedroom Tax is scrapped across the UK.


Miscellaneous


=Conservatives:

=Labour:
  • We will scrap the punitive sanctions regime
  • We will scrap cuts to Bereavement Support Payment

=Liberal Democrats:
  • We will uprate working-age benefits at least in line with inflation.
=UKIP:

=Green:

=SNP:
  • We will call for the end of the cash freeze that the Tories have imposed on many benefits, leaving families struggling as the cost of living rises. Instead, we will support the annual uprating of all benefits by at least CPI inflation.
  • The SNP will continue to call for the current sanction regime to be scrapped.
  • SNP MPs will continue to argue for a complete halt to the roll out of Universal Credit until it is designed to treat everyone with fairness and respect, and will continue to call for it to be fully devolved to Scotland.
  • SNP MPs will continue to fight for an end to premium-rate telephone charges faced by those seeking advice on or claiming benefits from the DWP.
  • SNP MPs will support the reversal of the cuts to Bereavement Payments and Widowed Parents’ Allowance. 

Commitments that are relevant to the vulnerable, including benefit claimants


Minimum wage and living wage


=Conservatives:
  • A new Conservative government will continue to increase the National Living Wage to 60 per cent of median earnings by 2020 and then by the rate of median earnings,

=Labour:
  • We will Raise the Minimum Wage to the level of the Living Wage (expected to be at least £10 per hour by 2020) – for all workers aged 18 or over, so that work pays.

=Liberal Democrats:
  • We will establish an independent review to consult on how to set a genuine living wage across all sectors. We will pay this living wage in all central government departments and their agencies, and encourage other public-sector employers to do likewise.

=UKIP:
  • We will enforce the minimum and living wage and reverse government cuts to the number of minimum wage inspectors in England and Wales

=Green:
  • We will create a fairer working world for young people by scrapping age- related wage bands and raising the national minimum wage to living wage levels for all.

=SNP:

  • We will support moves over the next Parliament to increase the Minimum Wage to the level of the real Living Wage.



Zero-hours contracts, agency work, and related issues


=Conservatives:

=Labour:
  • We will ban zero hours contracts – so that every worker gets a guaranteed number of hours each week.

=Liberal Democrats:
  • We will stamp out abuse of zero-hours contracts. We will create a formal right to request a fixed contract and consult on introducing a right to make regular patterns of work contractual after a period of time.

=UKIP:
  • We will significantly tighten up rules on zero hours contracts and severely limit their use.

=Green:

=SNP:
  • The SNP will press the UK government to ban exploitative zero-hours contracts, and ensure that workers have appropriate rights and protections, including holiday and sick pay.

Housing


=Conservatives:
  • We will meet our 2015 commitment to deliver a million homes by the end of 2020 and we will deliver half a million more by the end of 2022.
  • We will enter into new Council Housing Deals with ambitious, pro-development, local authorities to help them build more social housing.
=Labour:
  • By the end of the next Parliament we will be building at least 100,000 council and housing association homes a year for genuinely affordable rent or sale.
  • Labour will make new three-year tenancies the norm, with an inflation cap on rent rises. 
  • We will legislate to ban letting agency fees for tenants.
  • The Labour government would introduce new legal minimum standards to ensure properties are unfit for human habitation’ and empower tenants to take action if their rented homes are sub-standard.
  • We will remove government restrictions that stop councils building homes and begin the biggest council building programme for at least 30 years. 
  • We will ditch the Conservatives’ ban on long-term council tenancies to give council tenants security in their homes.
  • Labour will suspend the right-to-buy policy to protect affordable homes for local people, with councils only able to resume sales if they can prove they have a plan to replace homes sold like-for-like.

=Liberal Democrats:
  • We will help people who cannot afford a deposit by introducing a new Rent to Own model where rent payments give tenants an increasing stake in the property, owning it outright after 30 years.
  • We will improve renting by banning lettings fees for tenants, capping upfront deposits and increasing minimum standards in rented homes.
  • We will help young people into the rental market by establishing a new Help to Rent scheme to provide government-backed tenancy deposit loans for all first-time renters under 30.
  • We will ensure that all local authorities have at least one provider of the Housing First model of provision for long-term, entrenched homeless people.
  • We will promote longer tenancies of three years or more with an inflation-linked annual rent increase built in, to give tenants security and limit rent hikes. 
  • We will improve protections against rogue landlords through mandatory licensing and
  • allow access for tenants to the database of rogue landlords and property
  • agents.
  • We will end the Voluntary Right to Buy pilots that sell off housing association homes and the associated high value asset levy. 
  • We will lift the borrowing cap on local authorities and increase the borrowing capacity of housing associations so that they can build council and social housing. 
  • We will scrap exemptions on smaller housing development schemes from their obligation to provide affordable homes, and strengthen the hand of local government to prevent large developers reneging on their commitments. 
  • We will require local plans to take into account at least 15 years of future housing need – focusing on long-term development and community needs.
  • We will enable local authorities to: levy up to 200% council tax on second homes and ‘buy to leave empty’ investments from overseas; enforce housebuilding on unwanted public sector land; penalise excessive land-banking when builders with planning permission have failed to build after three years; and end the Right to Buy if they choose.
  • Work with local authorities to deliver a significant increase in social and affordable housing in rural areas.


=UKIP:
  • We will roll out high quality, low cost factory- built modular (FBM) homes, affordable on the national average wage of £26,000. Homes constructed will be sold on a freehold basis to first time buyers up to the age of 40 who are British citizens and who have a 10 per cent deposit.

=Green:
  • We will introduce a living rent for all through rent controls and more secure tenancies for private renters, an end to letting fees and the introduction of mandatory licensing for all landlords.
  • We will give tenants a voice by supporting the development of renters’ unions.
  • We will introduce a major programme to build affordable, zero carbon homes, including 100,000 social rented homes each year by 2022.
  • We will end mass council house sales and scrap Right to Buy at discounted prices.
  • We will take action on empty homes to bring them back into use and a trial of a Land Value Tax to encourage the use of vacant land and reduce speculation.
  • We will help first-time buyers by aiming for house price stability - axing buy-to-let tax breaks, and backing community-led approaches to building affordable homes.
  • We will significantly improve housing choice for deaf, disabled and older people by requiring all councils to appropriately plan for their housing needs and significantly increase the numbers of homes built to lifetime home and mobility standards over the next 5 years.

=SNP:


Homelessness


=Conservatives:
  • We will continue to combat homelessness and rough sleeping including through full implementation of the Homelessness Reduction Act. Our aim will be to halve rough sleeping over the course of the parliament and eliminate it altogether by 2027. To achieve this we will set up a new homelessness reduction taskforce that will focus on prevention and affordable housing, and we will pilot a Housing First approach to tackle rough sleeping.

=Labour:
  • We will set out a new national plan to end rough sleeping within the next Parliament, starting by making available 4,000 additional homes reserved for people with a history of rough sleeping. 
  • We will also take action to tackle the root causes of homelessness, including safeguarding homeless hostels and other supported housing.
=Liberal Democrats:
  • We will end the scandal of rough sleeping by increasing support for homelessness prevention and adequately funding age-appropriate emergency accommodation and supported housing,
  • We will ensure that all local authorities have at least one provider of the Housing First model of provision for long-term, entrenched homeless people.

=UKIP:

=Green:
  • We will stop declaring people as ‘intentionally homeless’ and give Local Authorities the same duties towards single people and childless couples as to families.

Childcare


=Conservatives:
  • We will introduce, this year, thirty hours of free childcare for three and four-year-olds for working parents who find it difficult to manage the costs of childcare. 

=Labour:
  • We will overhaul the existing childcare system in which subsidies are given directly to parents who often struggle to use them, and transition to a system of high-quality childcare places in mixed environments with direct government subsidy.
  • Maintain current commitments on free hours and make significant capital investment during our first two years of government, to ensure that the places exist to meet demand.
  • Phase in subsidised provision on top of free-hour entitlements, to ensure that everyone has access to affordable childcare, no matter their working pattern.

=Liberal Democrats:
  • Provide 15 hours a week of free childcare to the parents of all two-year-olds in England. We will then prioritise 15 hours’ free childcare for all working parents in England with children aged between nine months and two years.
  • Commit to an ambitious long-term goal of 30 hours’ free childcare a week for all parents in England with children aged from two to four years, and all working parents from the end of paid parental leave to two years. This will not only help parents afford to work, but will also help all children start school confident, happy and ready to learn.

=UKIP:
  • UKIP will allow parents to use their free childcare entitlements to access a greater choice of childcare providers by removing restrictions limiting them only to Ofsted-registered childcare providers. 
  • We will extend the primary school day by offering wrap-around childcare from 8am to 6pm during term time
  • We will require local authorities to keep a register of childcare providers willing to provide emergency childcare cover at short notice

=Green:
  • We will provide free universal early education and childcare for all children, with formal education starting at age 7.

=SNP:

  • By 2021 we will increase the provision of free early years education and childcare to 30 hours [Scotland only]


Social security and employment tribunals


=Conservatives:

=Labour:
  • We will abolish employment tribunal fees – so that people have access to justice.

=Liberal Democrats:
  • We will strengthen enforcement of employment rights, including by bringing together relevant enforcement agencies and scrapping employment tribunal fees.

=UKIP:

=Green:

=SNP:

  • SNP MPs will call for the UK government to follow the lead of the Scottish Government by abolishing fees for Employment Tribunals.



Support for advice services


=Conservatives:

=Labour:

=Liberal Democrats:

=UKIP:

=Green:



=SNP:
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Friday, 7 April 2017

April benefit changes (mostly reductions...)

April is the month that changes to benefit rules announced in budgets and autumn statements usually take effect. This includes everything from major structural changes to annual inflationary increases. It won't surprise anyone, I think, that almost all the changes this April are negative ones...

Annual uprating


In the 2015 budget the then chancellor announced a freeze on the main working age benefits: there would be no inflationary increase in 2016, 2017, 2018, and 2019. There is no freeze on benefit rates for claimants who are old enough to receive a state pension.

For working age claimants, it is easiest to list which rates are going up:

  • Bereavement benefits (although see below in this post for bad news for some bereaved claimants);
  • Disability Living Allowance and Personal Independence Payment 
  • Carer’s Allowance ;
  • Disability and carer related premiums that form part of means-tested benefits (for example, a single claimant who is on income-based JSA and is also in receipt of Personal Independence Payment their basic personal allowance will remain the same as previously (£73.10 per week) but the additional disability premium they should be getting will rise (from £32.25 to £32.55 per week); 
  • The extra amount of Employment and Support Allowance and Universal Credit paid to claimants in the 'support group' - there is no increase to extra amount paid to claimants in the 'work-related activity group' (and see below for other changes for new claimants);
  • Incapacity Benefit (for the few claimants who are still getting this);
  • Industrial Injuries Disablement Benefit, and related benefits;
  • Maternity Allowance;
  • Statutory Sick Pay, Maternity Pay, Paternity Pay, and Adoption Pay;
  • Adult dependancy increases for some benefits (rare).

There's also a (very) small positive change to Universal Credit. The taper rate is being reduced from 65% to 63%. This means that any relevant earnings received by a claimant reduces their benefit by 63p in the pound rather than 65p. This does not, though, come close to redressing the reductions in 2016 of the work allowances (the amount claimants can earn without their benefit being affected).

Employment and Support Allowance (and Universal Credit for claimants who are not fit for work)


This is a real stinker (in my opinion).

Some background first. Employment and Support Allowance (ESA) is a benefit for claimants who are not fit for work (or, in government-speak, have a 'limited capability for work'). Claimants on this benefit are assessed under the work capability assessment. Those who satisfy this test are then divided into two groups: the work-related activity group (who are expected to participate in activities to help them become more able to move into work) and the support group (who are judged to be too ill or disabled to undertake any activities). Until April, claimants who were placed in the work-related activity group were paid an extra £29.05 (the 'work-related activity component') as well as their standard £73.10 per week: claimants in the support group were paid an extra £36.20 (or, sometimes £51.95).

From April this year new claimants who are placed in the work-related activity group will no longer be entitled to that extra £29.05 (existing claimants will not be affected). The government's justification, insofar as I understand it, is that giving claimants this money encourages them to stay 'on the sick' rather than look for work, and that it's not fair to give them more money than claimants who are on Jobseeker's Allowance and looking for work.

This is not the place for a lengthy critique of this position, but I will make the following observations. Firstly, most claimants of ESA - in my experience - do not choose to be unfit for work, and are not realistically able to comply with all the requirements placed on jobseekers. Secondly, those claimants who really should be looking for work will generally find it hard to stay on ESA: it's hard enough for claimants who definitely shouldn't be looking for work. Thirdly,  the extra amount was included in the original rules because it was thought that people with health problems and disabilities generally have additional expenses that the healthy and able-bodied do not have.

And finally, there's a very obvious injustice. Claimants on Jobseeker's Allowance who are also in receipt of Disability Living Allowance or Personal Independence Payment are entitled to an extra £32.55* per week: this is called the 'disability premium'. This was left out when the rules for ESA were drawn up, presumably because the extra amounts paid to claimants in the work-related activity and support groups dealt with this. The work-related activity component has been removed, but the disability premium hasn't been put back in. So a claimant on ESA who also gets Disability Living Allowance or Personal Independence Payment will get £32.25* per week less than if they were on JSA. How can this be fair?

For claimants in the Universal Credit system, there are equivalent changes that have roughly the same effect.

*For couples this figure is £46.40.

Changes to Child Tax Credit (CTC) (and to how children are treated by Universal Credit)


There are two major changes here:

  1. New claims for CTC from 6th April will not include the 'family element' - previously £545 per year in the award.
  2. There will be no extra amounts paid in respect for third  or further children born on or after 6th April. This applies to both new and existing claims.
People who are in the Universal Credit system will also no longer receive extra amounts for third or further children.

Clearly a key concern here, among others, is that of the impact on these changes on 'non-consensual conception', or what many of us might call 'rape'. Although the law does provide that a claimant will not be affected by this change in these circumstances, this puts a female claimant in the potential position  of having to prove that they were raped. This raises all sorts of questions about privacy, dignity, and burdens of proof. The Social Security Advisory Committee (SSAC) expressed these concerns in a letter to the Minister of State for Employment, but he did not change the rules to address these concerns. You can read the SSAC's letter here:  www.gov.uk/government/uploads/system/uploads/attachment_data/file/590932/ssac-to-damian-hinds-2-child-exceptions.pdf


And finally...


Bereavement Benefits


These have been completely redesigned. The information that follows is a very brief summary of the main points.

Hitherto claimants could apply for a Bereavement Payment - a one off amount of £2,000 - and either:

  • Widowed Parent's Allowance - the claimant must be responsible for at least one child , or
  • Bereavement Allowance - but this is only payable for 52 weeks, and the claimant must have been 45 years old or more when their spouse died.
All these benefits are dependent on the deceased having paid enough National Insurance contributions. In both cases the amount payable is usually £113.70 per week (but can be less, depending on NI contributions).

From 6th April these are all abolished for new claimants, and replaced by Bereavement Support Payments. 

Claimants who are getting Child Benefit (or pregnant) are entitled to monthly payments of £350 for 18 months, and an additional first payment of £3,500 in the first month.

Other claimants are entitled to monthly payments of £100 for 18 months, and an additional first payment of £2,500 in the first month.

There are some advantages to the new scheme: payment is no longer dependent on the deceased spouse's NI contributions, and claimants do not have to be at least 45 years old when they were bereaved.

On the other hand, the ongoing payments are much less (roughly equivalent to  £80.77 and £23.08 per week), and the payments to claimants with children are now time limited. Under the previous scheme, a claimant who was bereaved 10 years before their final child grew up might be entitled to Widowed Parent's Allowance totalling very roughly £60,000 over that time. Under the new rules the same person would only get £9,800 (including the initial extra payment of £3,500).


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Tuesday, 18 October 2016

The beginning of the end for appeal hearings - CONSULTATION EXTENDED

In my last post, published on 18th October, I talked about worrying proposals that threaten to restrict claimants' access to justice if they have to appeal benefits decisions (you can look at that post here: http://benefitsowl.blogspot.co.uk/2016/10/the-beginning-of-end-of-appeal-hearings.html) if it doesn't appear just below this one.

In that post I said that the deadline to submit responses to the consultation was 27th October.

Well, it seems that the Ministry of Justice didn't give us all the right documents to look at. They have therefore closed that consultation early and split the matter into different consultations, and giving new deadlines for each one:

  • For the assisted digital strategy (in which the stuff about restrictions in the right to oral hearings is located (if you look hard enough)) the deadline is now 10th November;
  • For the constitution of appeal tribunals, the deadline is now 24th November.

For more information, and to access the new consultations, go to:

https://consult.justice.gov.uk/digital-communications/transforming-our-courts-and-tribunals/


If you haven't made your own opinions clear yet, or want to add improve your previous thoughts, you've got more time!


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The beginning of the end for appeal hearings?

Did you know the government is currently consulting on wide-ranging proposals to reform the UK's justice system?

If not, you could easily be forgiven: the consultation began just a month ago, on 15th September without much of a blaze of publicity. And it closes in not much more than a week's time, on 27th October. If some of the proposals become law, it will be even harder for benefit claimants to get justice when they are wrongly refused benefit.

You can find the consultation documents (and enter your own responses) here:
https://consult.justice.gov.uk/digital-communications/transforming-our-courts-and-tribunals/

If the proposals become law:

  • It will no longer be normal to have a tribunal hearing that you can attend, if you are refused benefit. Many people appealing decisions will have their cases decided by judges just looking at the documents they have received. Others will have their cases heard on the phone, or by videolink. Much of the work involved in dealing with cases will not be undertaken by qualified judges, but by case officers. Appellants will be encouraged to resolve their cases by agreement with the DWP through mediation.
  • The tribunal administration process will be entirely digital, and will need to be accessed online.
  • Disability and capability for work tribunals will not have to include medically qualified members or disability members.
The government's stated aims of the proposals are to create a system that is just, proportionate, and accessible. I think the key word here is 'proportionate', which I read as 'cheaper'. I see no evidence that the new system will be anything other than less just, and less accessible.

Here are a small selection of the reasons why I am worried, and angry:
  • The evidence is clear that not having a hearing that you attend (an 'oral' hearing) reduces your chances of a successful appeal. For example,  The Guardian cites research by University College London that showed that people appealing against adverse Disability Living Allowance (DLA) decisions were almost three times more likely to succeed at oral hearings than if there cases were heard 'on the papers'. 
  • Mediation does not appear to be appropriate to this arena. Mediation is valuable when two, roughly equal, parties need help to resolve an emotionally charged dispute where compromise is a crucial to achieving a satisfactory outcome. But in a benefit appeal:
    •  the parties are not  equal: a individual is in dispute with a government department;
    • The only emotional content in the dispute is probably the dispute itself: and there is presumably no emotional involvement on the part of the DWP. 
    • Most importantly, compromise is neither appropriate or desirable. The purpose of a benefit tribunal is to decide whether a specific benefit, or rate of benefit, should be awarded or not (or, sometimes, whether an overpayment is recoverable or not). This is a matter to be decided on the facts. A compromise can only mean an outcome in which the appellant gets less than what they are entitled to, the quid pro quo presumably being that the DWP has to pay them more money than they would like to pay (which I imagine is nothing).
  • How will video/phone appeals work in the real world? What if the client has no phone credit, or a bad internet connection. What if they have to call from a busy flat, accompanied by barking dog and crying baby? 
  • More generally, how will a process that is entirely digitally mediated work for those claimants who cannot easily access the internet, whether through ability or resource limitations? The consultation document accepts that the proportion of the population who are 'digital excluded' may be disproportionately represented in those involved in benefit appeals, but doesn't go on to propose quantified solutions to this. (Ominously, though, it does suggest that 'legal service providers' may judge there is a sufficient demand for a paid-for digital service as a means to generating profit' [From Paragraph 37 of Impact Assessment: Assisted Digital].)
  • The proposals regarding 'lay members' of tribunals look a bit weasel-wordy to me. They talk about giving the tribunal service flexibility to chose where best to direct the resource of medical and disability experts. Translated, I think this means that the service will not have enough experts to cover all the tribunals, so will have to make difficult decisions about how to ration them out. 
Whatever the motivations behind these proposals, what they seem to be saying to those who need to appeal benefit decisions is this: You are a nuisance. You have come to believe that you are entitled to your day in court, but you are wrong. You are not worth the state paying for a judge to hear your case in an oral hearing, or for medical experts to help the judge make an informed decision. The courts are for important people discussing important things: you should not be there.




You can find the consultation document here:
https://consult.justice.gov.uk/digital-communications/transforming-our-courts-and-tribunals/supporting_documents/consultationpaper.pdf

You can also read an excellent article in the Guardian here:
https://www.theguardian.com/society/2016/oct/12/online-benefits-appeals-tribunals-disabled


(NB If you want to participate in the consultation (and I really hope you do) beware. If you look for a consultation question about the reduced role of oral hearings you won't find it. I've shoehorned my comments into the two questions on Assisted Digital (and, by the way, does anyone else think there Q1 in this section is almost completely meaningless?).
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Tuesday, 2 February 2016

Bedroom Tax - what do the recent appeal decisions mean?

On Wednesday last week, the media reported on two successful appeals in the Court of Appeal against the bedroom tax (or, strictly speaking,  the 'Housing benefit size criteria restrictions for working age claimants in the social rented sector from April 2013'). The Guardian's report on it is here: http://www.theguardian.com/society/2016/jan/27/appeal-court-rules-bedroom-tax-discriminatory-in-two-cases

However, it's important not to get too excited - firstly, because the court judgement only applies to two specific situations; and secondly, because the government has been granted permission to appeal to the Supreme Court.

You can see the full text of the Court of Appeal decision here: www.bailii.org/ew/cases/EWCA/Civ/2016/29.html

What are the two cases about?


One case concerns a women ('A') whose previous partner was extremely violent towards her (and is currently serving a sentence for attempted murder). A multi-agency initiative called a sanctuary scheme enables her to live in her own home with her son. The home has three bedrooms, one of which has been converted into a secure 'panic room'. This means that under the current rules she has one room too many, and as a result her housing benefit was reduced by 14%.

The other case is about a woman ('SR') who (with her husband) cares for her severely disabled grandson. Respite carers stay overnight twice a week to enable the couple to have two nights a week when they don't have to be ready to intervene. Once the bedroom tax came in they were found to be underoccupying, and their housing benefit was reduced by 14%.

In both cases the local authorities have awarded Discretionary Housing Payments ('DHP's)to cover the shortfall so far, but there is - by definition - no guarantee that these payments will continue.

What were the legal issues the court of appeal had to consider?


The main issue in both cases was one of discrimination. The lawyers for A and SR argued that the rules discriminated against their A on the grounds of gender (because women are more likely to be victims of domestic violence) and against SR on the grounds of disability: if her grandson were not disabled there would have been no need for an extra room.

Note: this means that if you do not have a panic room, or need your extra room for overnight carers, this case does not help you.

Unfortunately, it was not enough for the lawyers to prove that women and disabled people are discriminated against: everyone, including the government, agrees that they are. What they had to show was the discrimination in these cases couldn't be justified.

The position of the DWP, who represented the government in these cases, was (basically) that the discrimination can be justified because DHPs were available to meet the shortfall.

The judges also had to consider two other court of appeal decisions about the bedroom tax

What did the court decide?


The judges decided that in neither A's nor SR's cases was the discrimination justified. In both cases they thought that the reasons that the Burnip case was successful applied to A and to SR as well.  It was not enough for the DWP to say that DHPs were available to fill the gap: there was no guarantee that the claimants would be able to keep getting them.

However...

They also gave permission for the DWP to appeal to the Supreme Court. This appeal is likely to happen soon: the judges in the A and SR appeal noted that the Supreme Court might here these cases together with the MA case, which is due to be heard in March. 

What does this all mean for claimants now?


For most people, very little. We need to wait for the Supreme Court to look at these issues. But if you have recently had a Housing Benefit decision which includes a reduction due to the bedroom tax, you should appeal, if your situation is similar to the A's, or SR's, or any of the people in the MA case, to protect your position in case the Supreme Court rules in favour of cases like yours. 


This is a list of the situations of all the claimants whose cases will be heard by the Supreme Court:

  • A female claimant who, as someone supported by a sanctuary scheme, has a  'panic room';
  • A family with a disabled child, for whom overnight carers need a bedroom;
  • A disabled adult who needs a special, hospital-type, bed, and whose partner therefore needs to sleep in a separate room;
  • A disabled adult who shares their home with another disabled person who is a student and therefore lives elsewhere some of the time, where one room in their home is used to store disability-related equipment;
  • A claimant with mental health problems, as a result of which most of the rooms in his home are filled with clutter;
  • A claimant who lives with, and cares for, his disabled daughter, and whose home (which has one 'extra' bedroom) has been extensively adapted to meet her needs;
  • A claimant with a disabled son, who spend most of his time with his mother (the claimant's ex-partner) but sometimes stays with the claimant in an otherwise spare bedroom.


In fact, it might be a good idea to appeal even if you don't fit these categories, just in case the outcome of the hearing affects you.

I've been careful to keep my opinions out of this post, and just state the facts. But let's not forget that this is about real people. Many of them save the state massive amounts of money by choosing to care for family members, with very little appreciation or financial support. If you want to earth all this in real people's stories and circumstances, I suggest you read the 'annex' of the MA case, which describes the claimants' situations in more detail.



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Monday, 4 January 2016

A question about tax credits

I recently received this query about tax credits and self-employment. With the person's agreement I have answered his questions as this public post. Both the person's name and some non-relevant information have been changed.

'I was receiving Self Employed Working Tax Credits for 3 years after claiming Jobseeker's allowance before that. I was earning an insufficient amount to make my situation sustainable so I moved onto Universal Credit in June.  In December I received a letter from HMRC re my tax credits award for the tax year 2014-15 with a 30 part questionnaire. I am nervous about how exactly I should answer some of these questions. If unhappy with my level of activity are HMRC likely to claim all my Tax Credits back? Are HMRC likely to charge me an additional penalty if they consider my activity does not constitute 30 hrs of work and I had not informed them? I know that HMRC changed their approach to Self Employed Tax Credits in April, but I thought this was for new and current claims

 "Bill W"'

There's quite a few issues hidden inside this query: I'm going to tease these out and deal with them individually.

  1. How does self-employment fit into the tax credit rules (and how did this change in April 2015)?
  2. What powers does Her Majesty's Revenue and Customs ('HMRC') have regarding tax credits paid for previous years?
  3. What should I do if I get a letter from HMRC's compliance team?
  4. What rights do you have if they ask you to pay money back from previous years? 

1. How does self-employment fit into the tax credit rules (and how did this change in April 2015)?


To be entitled to Working Tax Credit you need to be in 'qualifying remunerative work'[1]. The work can be as an employee or as self-employed, but must be done 'for payment or in expectation of payment', and you must normally work at least 30 hours per week, or, for some people, 16 hours per week (for more details about this see www.benefitsowl.info/tax credits.html).

For employed earners showing this is easy enough: clearly for self-employed people it's a bit trickier: it may be hard to show that you're doing work for payment or in expectation of payment if you've only just started. It can also be hard to show how many hours you work.

All the above requirements have been in place since tax credits were invented.

Now let's look at what changed in April 2015.

The main change[2] was to add some wording to Regulation 2 of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002. Regulation 2 is a long list of definitions used in the rest of the regulations. The change was to add some words to the definition of 'self-employed'.
  • Before April 2015 it said '"self-employed" means engaged in carrying on a trade, profession or vocation;'
  • Now it says: '"self-employed" means engaged in carrying on a trade, profession or vocation on a commercial basis and with a view to the realisation of profits, either on one’s own account or as a member of a business partnership and the trade, profession or vocation is organised and regular;'
Who would fit the rules before April 2015 but not afterwards? This would need to be someone who was carrying out a trade, profession, or vocation, and receiving or expecting payment, but wasn't aiming to ever make a profit. For example, someone who was employed for 29 hours per week and then spent an hour each week making and selling jam as a hobby probably wouldn't be able to use the jam-making to bring the hours up to 30.

I suppose the use of the words 'commercial basis' is to rule out cases where there was a profit, but it was   never expected to be more than a trivial amount.

Note that you don't have to be making a profit to fit these rules: you just need to satisfy the authorities that you are aiming to make a profit eventually. 

As far as I can work out the change cannot be applied retrospectively (in other words, your activity shouldn't have to satisfy these rules before the rule change came in), although if someone was on Working Tax Credit before April 2015 they would have to meet the extra requirements from April 2015 onwards. If HMRC does try to apply the change retrospectively that decision should certainly be challenged (see below).

If you want to know more about the change, you might want to look at what the tax credit decision makers' manual has to say about it: http://www.hmrc.gov.uk/manuals/tctmanual/tctm02415.htm. (Note that when it says 'you' it means the decision maker, not you!). You could also look at the following page on the gov.uk website: www.gov.uk/government/publications/revenue-and-customs-brief-7-2015-new-rules-for-the-self-employed-claiming-working-tax-credit


2. What powers does HMRC have regarding tax credits paid for previous years?


As you probably know, tax credits are assessed on an annual basis. After the end of the tax year in early April, HMRC ask you for finalised information about your income for that year: they then issue a final decision: this is technically called a Section 18 decision[3]. As a result of this decision you may find that you have been overpaid, or underpaid, or paid just the right amount, for that - completed - tax year. Normally a Section 18 decision is the end of the matter.

However there are two scenarios in which HMRC can re-assess finalised decisions:

  • It has the power to open an enquiry and revise a final decision up to one year after the deadline for the annual review, if it thinks it is necessary[4];  
  • It can revise a final decision up to five years from the end of the tax year in question, if the decision was wrong due to fraud or neglect on the part of the claimant, or if a person's income liability was revised[5].

(The deadline for the annual review depends on a range of factors, but cannot normally be later than the first 31st January after the tax year in question ended.)

Unless they suspect fraud or neglect they can only look at the most recent year. If, of course, the investigations into that year suggest that there has been fraud or neglect they can then extend the investigation backwards.

The words 'fraud' and 'neglect' mean aren't defined in the rules: however the former is going to cover deliberate lies and omissions, and the latter is likely to come into play when a claimant simply can't be bothered to inform HMRC of changes, for example.

In practice, these exercises are normally carried out by the infamous compliance department. It's worth bearing in mind that just because an enquiry is started it does not mean that the compliance team are necessarily expecting to find something wrong.

So, if they compliance team ask you for information about the previous tax year, and you provide it (or their deadline to you expires) they could decide that everything checks out OK, in which case that's the end of the story.

Alternatively, they could decide that the Section 18 decision was wrong, and issue a new decision replacing it. This new decision could reduce your award for that year, remove it completely, or increase it (unlikely!). They also have the following options:

  • If they reduce or remove your award, this will have the effect of creating an overpayment which they will ask you to pay back;
  • If they think you have acted fraudulently or negligently, they can also: 
    • impose a penalty of up to £3,000[6];
    • open up the enquiry to cover previous years, up to the five year maximum.
They may decide that you were not actually in 'qualifying remunerative work', but also that you've not done anything wrong enough to count as fraud or neglect. If this is what they decide they cannot issue a penalty or investigate previous years. 


3. What should I do if I get a letter from HMRC's compliance team?


The obvious answer to this question is just to say that you need to respond to it, giving them any information they ask for. But there are some other things worth saying.

If you don't respond to the request for the information, or miss their deadline, you will still have opportunities to pass on information in the future. They will make a decision based on what they do know, but you will then have the write to ask them to look into the matter again (see below) and if that doesn't work you will have the right to take the case to an independent tribunal (ditto).

So if you're really struggling to give some information, or are reluctant to do so, that's OK. On the other hand, if there is information or documentation that supports your position, send it.

Here's some more guidelines:

  • You'll probably notice that some of the things they are for in the letter are not relevant to you (it might ask for P45s, which will be irrelevant if you've not worked as an employee): this  is not surprising as the letter you're sent is likely to be a generic one. Remember that, for all they know, you were, say, an employee for part of the time, but didn't tell them.
  • If there is information you think might be helpful but they haven't asked for, by all means include this. For example, you could talk about difficulties you faced in your self-employment, and explain how you came to your decision to move from tax credits to Universal Credit.
  • Whatever you do don't guess, or even worse, invent, information, just to get your reply complete.

Once you send your reply in, they may send you further requests for information before they make their final decision. If you're worried this is going to drag on and you have nothing else to say, reply to them saying this, and asking them to make a decision. If they fail to do this, complain.


4. What rights do you have if they ask you to pay money back from previous years? 


  • If HMRC makes a decision that you were previously awarded the wrong amount, you have the right to challenge that decision. 
  • If HMRC decided to impose a penalty, you have the right to challenge that decision (against both the existence and the size of the penalty).
  • You don't have the right to challenge the overpayment itself, but this doesn't matter because the overpayment is dependent on the decision changing the amount of the award, and this can be challenged.

If you want to challenge either a new entitlement decision or a penalty decision, or both, there is a two stage process:

  1. You must first ask HMRC to look again at their decision: this is called 'asking for a mandatory reconsideration'.
  2. If this does not resolve the matter, you have the right to appeal to an independent tribunal.
For more details about how to do these, check out http://www.benefitsowl.info/TCopay4.html.


At both stages, it's important to be clear about what you are disagreeing with, being careful to match this with the decision you are seeking to challenge:

  • If HMRC hasn't accused you of fraud or neglect but is simply saying that what you were doing doesn't count as qualifying remunerative work, don't waste time saying you haven't been fraudulent or neglectful, instead say why what you were doing should count;
  • If they are accusing you of fraud or neglect, look exactly at their reasons for saying this (if they give clear enough reasons), and respond to these point by point;
  • If they are imposing a penalty, make sure you make clear that you are challenging this as well.
I said earlier in this post that I didn't see how they could apply the April 2015 change to previous years. If they do try this, make sure you make it clear at both stages that you believe that this is unlawful. (If they are trying to do this, this should be clear because the words from the change should appear somewhere (i.e. 'on a commercial basis and with a view to the realisation of profits, either on one’s own account or as a member of a business partnership and the trade, profession or vocation is organised and regular').)


HMRC may propose to you that you agree some settlement with you: I have previously seen letters which seemed to be urging claimants against taking their cases to tribunals. Be very careful about accepting such proposals. You ultimately have the right to have your case heard by an independent body if that is what you want. If you have difficulty getting them to issue a formal response to your request for a mandatory reconsideration you should complain.

Ultimately, cases like this are decided 'on the balance of probability'. It may not be possible for you to prove you were in qualifying remunerative work: but it may also not be possible for HMRC to prove that you weren't. A tribunal will need to consider and weigh all the evidence, including your testimony and how you come across at tribunal.


Summary


To be entitled to working tax credit you need to be in 'qualifying remunerative work': this normally means working enough hours, and as well as this, for self-employed people, you need to be means engaged in carrying on a trade, profession or vocation.

Since April 2015 self-employed claimants will need also need to show that the work is on a commercial basis and with a view to the realisation of profits.

It is hard to see how the April 2015 change can be applied to tax credits paid before April 2015.

HMRC have the right to re-open tax credits award up to one year after the deadline for the final review.

HMRC have the right to change decisions going back up to five years in cases of fraud or neglect.

If their compliance team writes to you, you should respond, but be aware that you will have the opportunity to supply further information if you need to challenge their decision.

You have the right to challenge an HMRC decision to reduce an award, or to impose a penalty. You need to ask HMRC to look at their decision themselves first (mandatory reconsideration) but if that does not succeed you have the right to take your case to an independent tribunal (appeal).

If HMRC does not progress your case properly you have the right to complain.

Ultimately your case must be decided on the balance or probability. Just because you cannot provide conclusive proof of something it doesn't mean that you are not telling the truth, and HMRC and the tribunal need to take this into account when they consider your case.


Information sources


 [1] Regulation 4 of the The Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002: http://www.legislation.gov.uk/uksi/2002/2005/regulation/4/made
[2] The Working Tax Credit (Entitlement and Maximum Rate) (Amendment) Regulations 2015
[3] Tax Credit Act Section 18: http://www.legislation.gov.uk/ukpga/2002/21/section/18
[4] Tax Credit Act Section 19: http://www.legislation.gov.uk/ukpga/2002/21/section/19

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Friday, 27 November 2015

Chancellor's Autumn Statement - first the good news...

Let's look at the most talked about issue first: tax credits


Newspaper headlines excitedly reported the chancellor's annoucement in words like these: 'Tax credit cuts SCRAPPED in victory for working families' (www.mirror.co.uk, for example). Unfortunately the news, while good, is not that good (in fairness, later media consideration was more nuanced).

So what proposals has the chancellor reversed?

In my post of 13th July, I set out the proposed changes to tax credits as follows:


Changes to tax credits for new and current claimants

  • The income taper will be increased from 41% to 48% of gross income: in other words, for every pound over the threshold figure the claimant's tax credits will be reduced by 48p, rather than 41p (before 2011-12 it was 39%);
  • The threshold figure (see previous bullet point) will go down from £6,420 to £3,850: this means that any income over £3,850 will be taken into account now;
  • The income rise disregard will be reduced from £5,000 to £2,500 (at present, a claimant's income can rise by up to £5,000 during a tax year without affecting amount of tax credits paid for that year - this will change to £2,500);
  • No child element will be paid in respect to third (or additional) children born after April 2017. There will be exceptions for multiple births and disabled children. Compared to 2015-16 figures, this will reduce the maximum annual entitlement by £2,780 per child;
  • The powers available to HMRC to recover overpayments will be widened.

Changes to tax credits for new claimants only

  • The family element (currently worth £545) will no longer be included for families whose first baby is born in April 2017 or later (I suppose this could also apply to existing claimants of Working Tax Credits only, but who don't start a family until April 2017).


The U-turn is in respect of the first two bullet points only. The income a claimant* can receive before their tax credits is reduced will stay at £6,420, and any income they have above that figure will reduce entitlement by 41p in the pound, not 48p as was proposed.

That's great, and I don't want to poo-poo the acheivements of everybody, including myself (and the House of Lords) in effecting this change. But the other provisions remain:
  • The amount a claimant's income can rise before their tax credits are affected is still being reduced by £2,500 compared to the current disregard: this could result in a claimant being £1025 worse off over a year compared to their position under the old rules.
  • Entitlement calculations will still not take acount of any children born from April 2017 onwards
  • The family element, curently worth £545 per year, which is currently included in the calculation or all clients will families, is still being removed for new claimants from April 2017 onwards
  • The powers to recover overpayments will still be widened.
Furthermore, tax credits payment rates, like those of most other social security benefits, were frozen in the budget: There will be no inflationary increase in April 2016, April 2017, April 2018, and April 2019.  The Autumn Statement reports at Section 2.2 that earnings are currently rising at about 3% and are expected to reach 3.9% by 2020. Clearly this is good news for those who are working, and, if their benefit income becomes a smaller proportion of their overall income over time, this looks like meeting the stated aim of the tax credit changes.

However tax credits are not just paid to people who are working: anyone who has children of school age or younger relies on Child Tax Credit if they have a low income. For these claimants there is no good news here.

And, even for those famous 'hard-working families', there is another problem on the horizon...

Universal Credit 


It's not happening as fast as Iain Duncan-Smith planned, but Universal Credit is inexorably spreading across the land. It is designed to replace all the means-tested benefits (except Council Tax Support) including tax credits. This means that gradually more and more people with children (for example) will be getting Universal Credit, not Tax Credits. And the changes that the Chancellor announced in the Budget are not being reversed.

In the Universal Credit system, the amount a claimant can earn before their Universal Credit is affected is called their 'work allowance'.  It therefore parallels the 'threshold figure' in the tax credit system. It differs in that only earned income is ignored, and in that there is a range of different work allowances according to different specific circumstances. In the budget many of these allowances were reduced. Let's see how this might pan out.

If you read my 13th July post, you'll remember Alex and Hilary. They have three children. Alex works 35 hours per week, and earns the national minimum wage (which becomes the national living wage from April 2016). To keep things simple, they've got no housing costs - perhaps they live in a relatives house.

As you can see from the table below, they benefit from the chancellor's u-turn if they're in the Tax Credit system: in fact their overall income rises slightly because of the national living wage, But if they're in the Universal Credit system things are very different. Because the work allowance was reduced in the Budget (for a couple who are both fit for work and have children, it changes from £123 to £91 per week), they see a reduction close to the one they would have faced had they been getting Tax Credits and the Chancellor hadn't changed his mind.


(all payment figures
are per week)		 TC system
March 2016		 TC system
April 2016
before U-turn		 TC system
April 2016
now		 UC system
March 2016		 UC system
April 2016
Net earnings £219 £230 £230 £219 £230
Child Benefit £48 £48 £48 £48 £48
Working Tax Credit £49 £6 £39
Child Tax Credit £170 £170 £170
Universal Credit  £233 £184
Total Income £485 £455 £488 £490 £462
Compared with first column -6%+1% +1% -5%
Out of work benefits £333 £333 £333 £333 £333

And finally, more bad news for tenants of social landlords...


In the Autumn Statement the chancellor a change to Housing Benefit for these people. From 1st April 2018, Housing Benefit payments will be capped in the same way that they are for tenants in the private sector.

Perhaps this needs some explanation. Currently, if you rent from a social landlord, the maximum Housing Benefit you can get is equal to the rent your landlord charges you (minus the bedroom tax, of course, if you are considered to have more bedrooms than you need). However, if you rent privately, The maximum Housing Benefit  you can get is not related to the rent the landlord charges, but to a set of figures set locally, dependent on your age, the size of your household, and the location. From April 2018 this same principle will apply to social housing tenants who took out their tenancies on or after 1st April 2016.

You might say, as Osbourne does, that this move levels the playing field for private tenants versus those  of social landlords. Well yes, that's true, although it's a pity - though not surprising - that the field has been levelled by digging into the high side...

Alternatively, you might also say if you are a bit more cynical) that this change simply completes the work that the bedroom tax started, in reducing the security for tenants of social housing.

If you were even more cynical, you might see this move as consistent with other changes, such as allowing the right to buy, that indicate a doctrinaire opposition to the concept of social housing.

I couldn't possibly comment.


Additional Information


If you want to check out the Autumn Statement yourself, you can find it here:

https://www.gov.uk/government/publications/spending-review-and-autumn-statement-2015-documents/spending-review-and-autumn-statement-2015#security-and-opportunity-for-families

For more information about Universal Credit, see  www.benefitsowl.info/universal%20credit.html

*For a joint claim this should be read as 'claimants' here and elsewhere: the two memebers of a couple don't have separate income allocations

The figures in the table were drawn from the spreadsheet of which the figure below is a screen grab.



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