Understanding the changes to Universal Credit

Universal Credit (UC) is a benefit paid to people who are not working due to unemployment, caring responsibilities, illness or disability, as well as to working families with a low income. It is expected that the COVID-19 crisis will mean many more families will rely on Universal Credit.

I have been highly critical of the benefit, but it is really positive that government has moved quickly to strengthen Universal Credit as the crisis has developed.

COVID19 is expected to mean many more need Universal Credit

Below is a brief summary of the changes made to Universal Credit so far. It should be noted that UC has very complex rules that vary greatly from family to family.  A great deal of personal information is needed to calculate the effects on an individual family but it is clear these measures will increase the support available for most families claiming UC.

Increasing the standard allowance:

This is the basic amount given to a person to live on. Currently it is £317.82 a month. A £1000 annual rise would take that to around £400 a month.

The details of how or when this will be implemented are not yet clear but as this number forms the basic building block of the Universal Credit calculation it is likely to offer substantially more support to the majority of families claiming UC.

Ensuring that Housing Benefit (known as Local Housing Allowance rates) covers 30% of houses in the area:

Universal Credit includes help with rents. The maximum it will pay is the Local Housing Allowance rate.  This was set such that it could pay rent on the lowest priced third of houses in the local area. In 2016 this was frozen so the rates available did not increase in line with rents or inflation.

This announcement is essentially an unwinding of one part of the benefit freeze.  It means there will be a major uplift in some high rent areas.

Importantly, many working family’s UC in high rent areas is made up solely of help to pay their rent. That meant the increase in standard allowance to £400 would not increase their UC payments, but this measure will.

Other policies such as the total benefit cap and the housing benefit cap mean that UC does not cover the rents of 30% of houses in the area. It is not clear if these policies are being suspended but my enquiries suggest not.

Suspension of the minimum income floor for self employed people:

Universal credit assumes that people who are self employed earn at least as much as a person working 35 hours a week at Minimum/National Living Wage. Universal Credit payments were therefore reduced to reflect these assumed earnings.

Before COVID-19 that was a bad assumption; since the crisis began it is plainly ludicrous. This measure means that self-employed people applying for UC will receive more support.

Suspension of face to face interviews:

People who receive Universal Credit normally have a list of tasks to complete and interviews to attend – if they do not comply, they are sanctioned and their benefits are reduced or stopped.

Face-to-face interviews have now been suspended. However the DWP’s public statements about the tasks a person must do are less clear. Requirements will be stopped for those reporting as sick or self-isolating if they “tell us in good time” and other requirements will be adjusted to be “reasonable”.

My hope is that this means sanctioning is effectively ended, but claimants would be advised to check their journals or contact their work-coach if they are in doubt about what they must do.

Importantly, Jobcentres will stay open to help those who can’t access the benefit system online or via the phone. This is an important and welcome lifeline to many people who are street homeless and who attend local nightshelters.

Further improvements

Universal Credit is a deeply flawed benefit, but these temporary measures are in my view a well-judged attempt to shore it up and make it strong enough to withstand the coming months. They are extremely welcome.

The one glaring problem that remains is the 5-week wait between applying for UC and receiving the first payment. Loans are available but the repayments make living on UC even harder. The easiest solution is to make these loans into grants, and I hope that this will form part of the next announcement on UC.

I am also concerned about those who don’t qualify for UC or statutory sick pay, and are not covered by the jobs subsidy. Foreign nationals, some students, and people with no recourse to public funds often make ends meet through hourly paid work yet they won’t qualify for these schemes. We need some way of offering these groups (and others) support over the coming months.

JPIT wants to hear from you if you know of people falling through the net. We also want to know about good projects that are providing support to vulnerable people during this crisis. You can email us with any information at enquiries@jointpublicissues.org.uk.

By gathering information we hope to help churches, and lobby government to improve how we support our communities over the coming months.

 Get in touch with JPIT:

Email: enquiries@jointpublicissues.org.uk
Phone: 020 7916 8632
Twitter: @publicissues
Facebook: @jointpublicissues


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