Calls to scrap Universal Credit savings threshold

megw

"The Government has been urged to temporarily scrap the savings test for Universal Credit for the duration of the coronavirus outbreak.

Under the current rules, people can only claim Universal Credit if they have savings or capital up to £6,000. Savings between £6,000 and £16,000 may affect their award and if they have more than £16,000, they are completely ineligible from claiming the benefit."

What is everyones thoughts on this? What is the likelihood of it happening?

poppy12345

I read this a couple of weeks ago and they still haven't changed to rules yet. I can't imagine it happening now.

kremlinbot

To me, scrapping the threshold would be fair, as people who are saving to buy a house have to use their savings to pay their rent, but people who have used their savings to put down the deposit and bought the house, can get universal credit to help with their mortgage. I reckon its pretty unlikely to happen though, so the best thing you can do if you have savings is try and get some temporary work.

GHolmesAdmin

So what you are saying is money should go to money and those with nothing continue to struggle.

whizzywoo

kremlinbot said:

To me, scrapping the threshold would be fair, as people who are saving to buy a house have to use their savings to pay their rent, but people who have used their savings to put down the deposit and bought the house, can get universal credit to help with their mortgage. I reckon its pretty unlikely to happen though, so the best thing you can do if you have savings is try and get some temporary work.

Universal credit does not give you any help with your mortgage for the 1st 9 nine months and even then it's only a loan.

If you have any paid income during that 39 weeks then it starts counting from zero again. So it's very difficult to get help with a mortgage on Universal credit.

kremlinbot

whizzywoo said:
Universal credit does not give you any help with your mortgage for the 1st 9 nine months and even then it's only a loan.

If you have any paid income during that 39 weeks then it starts counting from zero again. So it's very difficult to get help with a mortgage on Universal credit.

Yes, but you can still get the basic rate with a mortgage if I understand correctly

whizzywoo

kremlinbot said:

whizzywoo said:
Universal credit does not give you any help with your mortgage for the 1st 9 nine months and even then it's only a loan.

If you have any paid income during that 39 weeks then it starts counting from zero again. So it's very difficult to get help with a mortgage on Universal credit.

Yes, but you can still get the basic rate with a mortgage if I understand correctly

Yes but you don't get any housing benefit help. Someone who is renting would get help towards the rent in addition.

Jeremy535897

megw said:

Those with nothing are entitled to UC. The argument is that the system as it stands punishes people for saving and encourages people not to save and to spend every penny that they have so that in situations like this they can claim full benefits. You could have two people on the same income and with the same essential expenses, one who has spent every penny on non-essentials, whilst the other has carefully saved every penny. Now the one who has saved is being punished in these circumstances.

There are also people savings for house deposits or who have money locked into LISAs who are being punished for that. 

It's a tricky topic which I am seeing all over Twitter and the news today, which is why I posted it.

The means testing in UC is fundamental to it. That is one of the reasons it replaced tax credits. Those who save have always been penalised: higher tax rates, inheritance tax, loss of benefits, having to pay for their own care, tax on child benefit, loss of personal allowance, etc etc. Benefits are for those that need help and have no other resources. If that's because they have wasted every penny they have ever received, it does not matter.

kremlinbot

For a bit of nuance - a person who has saved say £2k a year over 10 years in lieu of not taking holidays, living with parents etc, sure they are lucky to have those savings but it might be a bit of a greyer area if they're out of work due to the virus - should they be forced to dwindle them down to get help? The example is not exactly me, but some points do apply.

kremlinbot

Jeremy535897 said:

The means testing in UC is fundamental to it. That is one of the reasons it replaced tax credits. Those who save have always been penalised: higher tax rates, inheritance tax, loss of benefits, having to pay for their own care, tax on child benefit, loss of personal allowance, etc etc. Benefits are for those that need help and have no other resources. If that's because they have wasted every penny they have ever received, it does not matter.

If you have the 'means' to have £80k equity in your house, then you have the means to sell it and to use that money to privately rent a house for a number of years if we get technical - maybe that is unfair, but for people who don't have a house, you can look at it from that angle too.

Jeremy535897

I have every sympathy for people who save hard, don't waste their money and then have to use their savings to ride out a storm, when they see others who have frittered everything away get benefits, but that's the way it is. When the government is spending billions of pounds trying to save businesses and the economy, and a million new applicants have applied for UC, it seems totally unrealistic to expect that the limits on capital to qualify for UC will be raised.