Universal credit and other sad tales of welfare reform
It's vital that solicitors are aware of the workings of the universal credit system and prepared for its impact on low-income and vulnerable clients, says Jayne Knights
There is always a quiver of anticipation among benefits advisers as we approach the autumn and spring pronouncements from the current chancellor. For those of us who deliver training on welfare benefits, there is always hope that some of the most negative effects of welfare reform might be reversed, even if it means swift revision of our training materials before the next course or webinar.
Following the recent Autumn Statement, virtually all I had to do to my notes was change one number from 65 per cent to 63 per cent '“ this being the only amendment which will affect the actual calculation of benefits. These two percentage points will mean that a universal credit claimant in work will now be able to keep 37p in the pound above a certain threshold, rather than 35p, from April 2017. That's it '“ the only concession to ongoing criticism about virtually all aspects of the new(ish) universal credit (UC) and problem areas such as claimants running up rent arrears due to delayed payments; private landlords consequently refusing to take on UC claimants; an unstable and unreliable online application process; inconsistent payment schedules; and failure to protect vulnerable people.
Gary Vaux, the manager of Hertfordshire County Council's Money Advice Service, comments: 'There are some aspects of universal credit that make sense '“ an easier transition as people move in and out of work and only having to deal with one department rather than three are both good examples. But the devil is in the detail and the details aren't good. The implementation is not going well, with insufficiently trained staff using inadequate computer systems. And some of the actual benefit rules are either counter-productive or simply perverse.'
The 'live' or gateway service for UC is now in every job centre but only for certain claimants. It is therefore somewhat of a trial run, with very patchy outcomes to say the least. Yet the Department for Work and Pensions is continuing its rollout of the 'full-service' version of UC undaunted, albeit slightly slowed. The full-service version (aka the digital service) means that all different types of working-age claimants, employed or not, homeowners or tenants, carers or disabled, may be potential candidates for UC, and will have to make and manage their claims online. They will also be prevented from claiming any of the common means-tested benefits such as tax credits, housing benefit, and income support (the quaintly named legacy benefits).
For solicitors and other legal professionals, this is very big news, and it's vital that you're aware of the status of your own local area. As of this minute, do you know if you're in a live-service or a full-service area? If you're in a live-service area, is it only single childless new jobseekers who are eligible to claim UC, or couples and families too? Do you know what the UC lobster pot is? (No, I'm not making that up!)
The relevance to legal professionals is wide ranging, and it's vital to be able to have a conversation with your client about UC and its implications. At the moment, UC is a passporting benefit for legal aid, in the same way as income support and income-based employment and support allowance or jobseeker's allowance (capital still needs to be assessed). Outside the legal aid scope, your clients may well be upset by the way UC changes everything about the way their benefits are paid and calculated.
Your clients may also be upset about the reduction in the benefit cap '“ a drastic measure which has gone largely unremarked upon. From 7 November onwards, the weekly amount of 'benefits which count' cannot exceed, for couples and parents, £442.31 per week in Greater London and £384.62 elsewhere. Where fixed benefits exceed the cap, then either housing benefit or universal credit is reduced to keep the family within the cap. In very basic terms, a couple with four children on 'legacy' (i.e. non-UC benefits) will have just 50p a week in housing benefit, whatever their rent is.
This is serious stuff, and there's more to come. For example, from April 2017 we will have the so-called 'two child' rule, which means that there will be no financial support within child tax credit, UC, and housing benefit for any third or subsequent child born after 6 April 2017 (child benefit and any extra CTC, HB, or UC amounts for disability will be paid, and there will be some exemptions from the rule).
Take a minute to absorb the impact of these changes on your low-income and vulnerable clients, and it's not hard to see why advisers were hoping for a bit more than a 2p in the pound improvement. Awareness and preparation from the supporting and advising professions will be vital in the months ahead as claimants face new cuts and challenges.
Jayne Knights is delivering two training courses on welfare reform in London and Southampton in April 2017. Visit www.clt.co.uk for more information