Universal Credit- working poor and self employed miss out

Universal Credit has done the rounds in the media this morning and it’s no surprise that it’s more negative press. This time it’s the turn of the self employed to feel the brunt of the system designed to kill our welfare state by stealth.


From The Guardian:

“New concerns have been raised about universal credit, the government’s flagship welfare reform, after a new analysis suggested that the vast majority of self-employed people with low earnings could lose thousands of pounds.

More than three quarters (78%) of self-employed people – such as Deliveroo and Uber drivers – on a low income in London will be more than £4,000 a year worse off as a result of universal credit, according to a study by the Policy in Practice consultancy.

The revelation has led MPs and campaigners to call for a rethink on the government’s flagship welfare reform. Frank Field, the Labour chair of the work and pensions select committee, said it was “another razor cut at the vulnerable human underbelly of the labour market”. The government has already been forced to slow down the roll-out of universal credit and overhaul how claimants are paid after complaints that some waiting weeks for their payments and falling behind with their rent.

However, serious problems have now emerged in the treatment of the self-employed because of the way their earnings are recorded under universal credit. The issues have arisen because a “minimum income floor” (MIF), based on the national living wage, is used to calculate universal credit payments each month.

Because self-employed workers’ earnings fluctuate from month to month, they sometimes fail to meet the minimum figure and lose out compared with salaried counterparts. They are also only given a year to get their businesses off the ground before the MIF kicks in. Using analysis of cases from 19 London boroughs over two years, Policy in Practice found that 78% of self-employed households on low-income in London are set to become £344 per month worse off under the new system.

Ministers argue that the system has been designed to encourage people to increase their work and move into better jobs. However, the new report warns that some people have little choice other than self-employment.”

Full Guardian article

From Gazette Live:

“The Department for Work and Pensions (DWP) is introducing a number of changes to the benefits system in April.

One of them is the “surplus earnings” policy – which affects roughly quarter of a million working people who claim Universal Credit.

What is it?

Lots of people who claim the new, six-in-one benefit – which has overhauled the entire welfare system – have a job, but their salary is low enough to be on benefits.

That includes those who are self-employed, work part time, are on a zero-hour contract or work in what’s dubbed the ‘gig economy’ – and they could see big changes to the way they need to claim.

As their earnings change from one month to the next it means that in a particularly good month, they might earn too much to qualify for Universal Credit – and be kicked off it, claim The Mirror.

Those reapplying for Universal Credit will now have any surplus earnings from the previous six months taken into account.

That means that particularly “good earning” months – which push people’s earnings above the limit for benefits – could see claimants not eligible during any very lean months that follow.

An independent watchdog, which monitors the Tory government’s welfare policy, has warned it will leave some self-employed people in a strange situation where they’re applying over and over for payment – knowing they won’t get it.

The Social Security Advisory Committee (SSAC) raised “serious doubts” the policy will work and warned it “risks the credibility” of Universal Credit as a whole.

It says the changes – due to come into effect on April 1 – have been described by the DWP as “an operational simplification” – but simply “transfers to claimants the burden of overcoming operational challenges faced by the Department”.

The SSAC says one of its main concerns is that the DWP appear to believe that claimants will have a detailed understanding of the policy and how it works.

And it risks people having to make repeated claims for Universal Credit – knowing full well they won’t get it. “

Read the full Gazette  Live article here

This comes at a time when the DWP are coming under fire from MPs for misleading claims that Universal Credit will get 250,000 people into employment. They concluded:

““We emphasise that the overall employment impact of UC will conceal very different effects for different groups in the population, with employment rates likely to rise for some and fall for others.”” 

Universal Credit has been widely slammed for causing rises in evictions and household debt as delays in payments and the sanctions regime now apply to families and the working poor. As many news outlets posted  in 2015, the DWP have sanction targets to meet.  If the staff do not sanction X amount of people a week, they themselves could be fired.

From: home.co.uk:

“Universal credit will cause up to 1.3 million evictions from privately rented homes, Liberal Democrat Department for Work and Pensions (DWP) spokesperson, Stephen Lloyd, has warned.

Lloyd said delays in payments meant more tenants were in rent arrears, and this could lead to a sharp rise in benefit claimants in the private rented sector being evicted, and potentially made homeless.

The MP, like many housing experts, would like to see universal credit’s rent element paid directly to landlords. But new data released this week by the Department DWP reveals that just 6% of universal credit claimants in the private rented sector have their rent paid directly to their landlords, compared to 35% in the socially rented sector.

According to the Residential Landlords Association, 73% of landlords still lack confidence in renting to tenants on Universal Credit due to uncertainty that they will be able to recover rent arrears, while 38% have already experienced UC tenants going into arrears.

Lloyd commented: “Back in January I led a Parliamentary debate calling on the government to make direct payments to private landlords the default option for Universal Credit. Consequently I am deeply disappointed these are still far lower in the private sector than the socially rented sector.

“If this doesn’t change, we should expect a spike in evictions by private landlords who are already wary of renting to people on benefits, and a rise in homelessness that local authorities will have to deal with. People on Universal Credit often live in difficult circumstances which can prevent them from paying their rent on time, as soaring rent arrears under UC testify to.

And the government cannot argue that this is technically unfeasible, because their DUP friends in Northern Ireland have already figured out how to make payments to landlords the default option. If the Universal Credit ‘computer’ allows that to happen over there, then why not here?””

It has long been known that Universal Credits aim was to include families and the working poor, we are now seeing it unravel before our eyes.


The above article was compiled and written by JSUK News Admin. Drop a like on Facebook.

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