UNIVERSAL Credit Benefit, How is it working ?

DoleMole

Hi everyone I understand that Universal Benefit has been rolled out on trial up North, but in the newspapers there has been no coverage of it, or how it works.

Can anyone tell me any good news about it ! and what it's about in real terms. I see calculators online that show that you can work part time and still not lose much benefit, also there is allowance for being self employed as well.

I would like to hear something positive to cheer me up, and await a reply and discussion soon !

Thanks
DM :undecided:undecided:undecided:undecided:undecided:undecided

rogerblack

It's basically lies and spin so far that it's been rolled out.

There have been small numbers - hundreds - of claimants who fall into the simplest category.
Single childless jobseekers with no housing costs or disabilities.
So - basically mostly people living at home with parents.

This is an extraordinarily unrepresentative group - from their computer literacy on.

This is widening out to a slightly larger pool of still single, childless, ... people who will then undergo 'natural migration' - if they have a child, that child gets added to their UC claim, or if they become disabled, that is processed under UC rules.

There are so few claimants, and they are so unrepresentative - and the process is so heavy in manual input as the computers are not working properly that nothing can be drawn from the existing claimants.

UC has winners - but there are also losers.
For example - if you are an owner occupier with a mortgage - and you get help with that mortgage. If you work even one hour that mortgage help goes away.
For many this makes them truly massively worse off if they take work.

As another example - if you are doing 100 hours a week, self employed, and earning under 36(?)*NMW, you will be expected to do all of the jobseeking activities as if you were not earning, as your hours worked is irrelevant.

There are many other issues - for example irregular income of self employed people can cause real problems.

dktreesea

There doesn't seem to be much positive news around. The Times has this:
http://www.thetimes.co.uk/tto/news/politics/article3855634.ece
which talks about calls to scrap UC.
We might have been able to hear Allan Beswick's take on the latest roll out in Ashton-Under-Lyne - except that the BBC BBC have decided, in their "wisdom", not to make this particular program available on their iplayer.

For sure there will be groups who benefit hugely from UC , compared to what they can get at present. For example, a lot of the internet news and talk is about self employed people who would lose out due to the minimum income floor deeming rules for income. But equally there are a (likely to be) significant group of self employed people who earn well over the current threshold annually (so currently get little or no help/top-ups) but have seasonal businesses, - or are able to buy in stock if they need to manipulate their results - so that for 9 or 10 months of the year they get a top up, due to having income for those months at or below the FT NMW ( currently the plan seems to be to set the minimum income floor at 35 hours per week at the NMW), even though, come their busy season, they make far too much to get UC and also make too much annually to qualify for any help under the current regime.

People on casual work /zero hours contracts should do a lot better under UC because they won't have to sign on and off for the periods where their income is too low. They just get whatever UC is due to them after taking this month's income into account.

Those on permanent part time work could do badly, if getting full time work is built into their claimant commitment (as opposed to the current 24 hours per week per household) and they fail to get it. Those people, fully compliant at the moment, could find themselves sanctioned for not taking on more work.

I went down to Lincoln for work recently and was talking to someone who said their job centre advisor had said that, given it is possible to sell at a car boot/outdoor market 7 days a week in the local area, there is no excuse for anyone able bodied and expected to work full time to do just that. That's no different to the situation up here in Scotland, and probably similar to many other towns down south, e.g. Manchester. What a pity such a strategy would need a car (due to starting times when typically public transport doesn't run to the sites, if it runs there at all) which presumably many people on benefits can't afford to own, let alone run!

rogerblack

dktreesea wrote: »

But equally there are a (likely to be) significant group of self employed people who earn well over the current threshold annually (so currently get little or no help/top-ups) but have seasonal businesses, - or are able to buy in stock if they need to manipulate their results - so that for 9 or 10 months of the year they get a top up, due to having income for those months at or below the FT NMW ( currently the plan seems to be to set the minimum income floor at 35 hours per week at the NMW), even though, come their busy season, they make far too much to get UC and also make too much annually to qualify for any help under the current regime.

This group also has problems.
If they are doing more than simply buying in a large pile of stock and then selling it at a different time of the year - then yes - for the 9 or 10 months of the year they are not earning large amounts they will be entitled to help.
But only if they are willing to actively seek employment.
Even if they are working 40 hour weeks making widgets from things they buy, to sell in the good months.

Also - capital rules may cause major problems - having too many assets after the 'good months' may stop them getting UC, or sharply reduce it.

Note that I'm not saying that these people should be treated in any other way than their average income would normally do - but that in some cases not having the ability to average over the year is a large issue.
As I understand it, averaging is not possible for established buisnesses.

dktreesea

rogerblack wrote: »

There are many other issues - for example irregular income of self employed people can cause real problems.

I don't have any objection to a minimum income floor per se. If you are self employed surely, at least when it comes to dipping into the public purse, the tax payer has a right to expect you to be at least as competent and skilled as you would need to be to earn the NMW. After all, that's what any labourer would expect to earn, at a minimum, for their labour - why not the self employed?

What I find bizarre is the application of that MIF - on a month by month basis, thus enabling people who would have never been able to get anything from the state based on their annual income to dip into the public purse 9 or 10 months of the year.

Is there anyone out there who makes 90% of their income at Christmas/ the festival/the harvest etc? Don't discount UC, even if you earn £30k a year, because it may just give you a windfall in months when you are a bit short!

rogerblack

dktreesea wrote: »

Is there anyone out there who makes 90% of their income at Christmas/ the festival/the harvest etc? Don't discount UC, even if you earn £30k a year, because it may just give you a windfall in months when you are a bit short!

This is not the case.
Assuming the money was spent evenly over the year, their entitlement to UC would be minimal, and would only start once the household capital fell below ~16K.

My problem with the minimum income floor is severalfold, basically that it disadvantages self employed people over the position of a person earning the same annual salary as an employed person.
The employed person is helped more under UC.

A) Seasonal incomes that require work every week, but earn in a few weeks are treated unfairly compared to workers employed on the same average wage.
If you are employed in a somewhat variable established business, but have one bad month - you will in the next be expected to be actively seeking employment, and applying for jobs that MAY EARN LESS A YEAR.

dktreesea

rogerblack wrote: »

This group also has problems.
If they are doing more than simply buying in a large pile of stock and then selling it at a different time of the year - then yes - for the 9 or 10 months of the year they are not earning large amounts they will be entitled to help.
But only if they are willing to actively seek employment.
Even if they are working 40 hour weeks making widgets from things they buy, to sell in the good months.

Also - capital rules may cause major problems - having too many assets after the 'good months' may stop them getting UC, or sharply reduce it.

Note that I'm not saying that these people should be treated in any other way than their average income would normally do - but that in some cases not having the ability to average over the year is a large issue.
As I understand it, averaging is not possible for established buisnesses.

"Gainfully employed" doesn't mean you have to have the income to show for it; just that you have to be working the required hours. So if you have your little shop and open 9-5, 5 days a week, that's "gainfully employed", even though, in some months, you don't earn all that much.

The Universal Credit regulations 2013 are now law, and for gainful self employment, it provides:

Meaning of "gainful self-employment"
64. A claimant is in gainful self-employment for the purposes of regulations 62 and 63 where the Secretary of State has determined that—

(a)the claimant is carrying on a trade, profession or vocation as their main employment;

(b)their earnings from that trade, profession or vocation are self-employed earnings; and

(c)the trade, profession or vocation is organised, developed, regular and carried on in expectation of profit.

(source: http://www.legislation.gov.uk/uksi/2013/376/part/6/chapter/2/crossheading/gainful-selfemployment/made)

I had thought, originally when this was all first mooted, that anyone self employed but unable to earn much could just go onto JSA instead, thus avoiding the deeming rules. But this doesn't seem to be the case.

If the decision makers decide you are gainfully employed, so working for oneself with the expectation of a profit, even if you actually earn very little,- it would appear, (regardless of what you actually earn) that this route to "preserving one's entitlements" seems to be closed. The self employed rules would apply instead.

I wonder how many people being persuaded by the DWP to embrace self employment over unemployment realise that being self employed is not going to be the obligation free way to a full benefits package anymore...

dktreesea

rogerblack wrote: »

This is not the case.
Assuming the money was spent evenly over the year, their entitlement to UC would be minimal, and would only start once the household capital fell below ~16K.

My problem with the minimum income floor is severalfold, basically that it disadvantages self employed people over the position of a person earning the same annual salary as an employed person.
The employed person is helped more under UC.

A) Seasonal incomes that require work every week, but earn in a few weeks are treated unfairly compared to workers employed on the same average wage.
If you are employed in a somewhat variable established business, but have one bad month - you will in the next be expected to be actively seeking employment, and applying for jobs that MAY EARN LESS A YEAR.

There would certainly be a large contingent of self employed people who earn well below the minimum full time wage, but whose household circumstances,(due to capital and/or the earnings of other people in the household), preclude them from any help form other taxpayers. Is that such a bad thing?

But focusing instead on those who do earn less than the FT NMW and have the necessary other circumstances that enable them to maximise their entitlement to benefits (e.g. children, renting rather than buying, stay at home spouse), surely being self employed gives them several advantages over an employed person?

For example, they can claim their car costs at 40p a mile, which could be well in excess of the actual cost. The employed person may use a work van instead. They can claim reasonable book keeping/admin costs for their partner. Business borrowing costs are currently allowed for HB purposes. Someone in business, faced with needing to borrow funds for personal reasons, could decide to employ those funds directly in his business, freeing up funds elsewhere for the personal requirement.

And then there's stock. For some reason, the matching principle , whereby you only expense stock once you sell it, doesn't apply for small businesses in Britain - you just expense it as soon as you buy it.
But there is no necessity to spend the money evenly over the year, is there. Certainly not for variable items like stock. Surely they can just defer, or bring forward their stock purchases according to how close they are to the FT NMW equivalent in profit that month?

With seasonal incomes, if you have, say, a farmer, who makes a loss year in year out, then taxpayers are right to feel aggrieved that their largess is supporting the farmer's lifestyle, which doesn't seem to include actually making a living.

But what if you have a farmer who earns £30k a year, so currently would get relatively few benefits? Under UC, if he makes all his money during the two months of the harvest but miniscule amounts for the remaining 10 months of the year. So during those months he would be assessed as if he had only earned the NMW for 35 hours a week, even though, over the year he will earn considerably more.

It's not just about when money is spent; it's also when it's earnt that counts for UC.

But just focusing on costs, take something like the quarterly rent bill (for people who have bricks and mortar shops). Some self employed people are already looking at when their quarterly commercial rent falls due and discussing with the landlord the possibility of changing the dates to better match their revenue streams.

For businesses who get most of their income around Christmas this is not so important in England, because the quarter days fall near the solstices/equinoxes, so can easily be offset against Christmas income.

But in Scotland and Ireland this is already an issue, because our rent days fall according to the old Celtic calendar, so first of Feb, May, August and November. This doesn't matter at all for annual income reviews like we have now, but it would certainly matter for UC, because a major expenditure item could fall outside the months when the revenue is made.

rogerblack

dktreesea wrote: »

T
But what if you have a farmer who earns £30k a year, so currently would get relatively few benefits? Under UC, if he makes all his money during the two months of the harvest but miniscule amounts for the remaining 10 months of the year. So during those months he would be assessed as if he had only earned the NMW for 35 hours a week, even though, over the year he will earn considerably more.

This is - as I have pointed out earlier - flat wrong.
If he earns 30K during harvest, he will not be entitled to UC for those two months due to income.
He will not be entitled to UC for most of the rest of the year, due to excess capital.

Purchasing items at times engineered to maximise your benefit by reducing your capital largely does not work, for several reasons.

Assets of the business are not personal possessions, and are not exempt from the capital calculations.
Taking the above farmer example - if he purchases 20K of seed and fertiliser immediately after the harvest - he will be held to have 20K (or some large portion of) as capital - and not be entitled to UC.
This - largely - negates the issue of deprivation of capital - though not for goods with no resale value. Being found to have bought things at a specific time to maximise benefits entitlement could easily be looked at as deprivation of capital.


This is _NOT_ the same issue as those on tax credits being supported in uneconomic businesses.
It is those self employed in relatively low wage jobs not being supported to the same level as those on the same average wage in employment.

rogerblack

dktreesea wrote: »

"Gainfully employed" doesn't mean you have to have the income to show for it; just that you have to be working the required hours. So if you have your little shop and open 9-5, 5 days a week, that's "gainfully employed", even though, in some months, you don't earn all that much.

http://www.disabilityrightsuk.org/universal-credit-uc
The relevant part is the claimant commitment.
For most people, if they are earning under 35*NMW per week, and not in a startup period, they will be in the 'all work related requirements' group.

This means you can be compelled to take any work, and be expected to take steps like any other job seeker.

Caring responsibilities or disabilities alter things a bit.