People can lose the effect of work allowances, be inappropriately benefit capped while in work, and lose out on support for housing costs. These problems should surprise nobody, having been raised in parliament as far back as 2012 when universal credit was still in the design stage.
This according to the August 2018 report (pdf) from Child Poverty Action Group on the universal credit.
This report identifies a range of problems arising from the rigid system of monthly assessment of both income and circumstances in universal credit, based on cases from CPAG’s Early Warning System, and proposes practical solutions.
The report finds:
- Claimants who have children or limited capability for work due to illness or disability have a ‘work allowance’ of £198 per month (or £409 per month if they are not claiming help with housing costs) which can be kept in full, before the 63% ‘taper’ is applied
- Many working claimants are seeing their UC awards rise and fall month by month purely because of when their paydays and assessment periods fall, making budgeting extremely difficult, while others lose hundreds of pounds a year because of the knock-on effects of these mismatches on work allowances, the benefit cap, passported benefits and discretionary housing payments
- Tax credits are awarded based on annual estimates of income, which means that payments are stable and predictable over the year, with the risk that adjustments may be needed at the end of the year. Claimants wishing to avoid this, have the option to report changes in earnings when these occur and to have their award adjusted mid-year if they prefer.