Is This What Finally Stops Universal Credit?

“Universal Credit is an expensive, badly organised, error-strewn, easy to defraud shambles.”
– UC Diary.

Defrauding Universal Credit has always been easy. Yet organised crime hasn’t been involved. Until now.

UC Diary has never been specific about how fraud could be committed. To do so would be irresponsible. However, the details below are already in the public domain and given that no official warning is being given to potential victims, publishing seems justified.

The DWP is currently receiving phone calls from those whose legacy benefits have been closed because of a claim to Universal Credit. (Those benefits include Job Seekers Allowance, Employment and Support Allowance, Income Support etc.)

Routine stuff you might think, except that those people haven’t claimed Universal Credit. Claims have been made on their behalf, fraudulently by others. Once the claim has been made, new claim or benefit transfer advances have been obtained. If identify and bank details can be verified online, then those advances can be applied for without even visiting a job centre.

The amounts available are significant. For a claimant over the age of 25, with two children and declared rent of £700 a month, the advance available would be £1526.57. This amount would be repaid over 12 months from benefits. The advance can be obtained before it’s been established that the children, or the rent exists.

Potteries Gold, part of Citizens Advice Staffordshire North & Stoke, has warned that smartly dressed scammers, are operating in the Derbyshire and Merseyside areas, offering interest free loans and quick cash, in return for a fee.
Victims have been targeted in pubs and sometimes door to door, and the perpetrators often claim to be DWP staff who are helping to set up claims.

This is likely to be the tip of the iceberg. Calls have been made to the DWP because of letters received stating that legacy benefits have closed. It would be entirely possible to scam someone who wasn’t in receipt of benefits at all. The first they would know is when they get a letter from UC debt management, asking for the money back, which could be months after the offence was committed.

Abuse of the advance system is not new. Those in the know have repeatedly opened new claims, received an advance and then closed the claim, or not shown up for an initial interview. Measures to combat this were only put in place in June 2018. The advance can still be given, but there is an additional screen with details of previous advances so that staff can make an informed decision.

The problem was exacerbated in February 2018, when the amount available for a new claim advance was increased to a full month’s entitlement, having previously been half that. It’s not the first time that a sticking plaster solution, has resulted in a more grievous injury later on.

The Universal Credit Childcare Nightmare

One of the central tenets of Universal Credit is that everything the claimant does must be made as difficult as possible. The treatment of childcare costs is a prime example.

For working claimants UC pays 85% of childcare costs up to a maximum of £646.35 for one child or £1104.08 for more than one child. In the most expensive areas of the country those amounts are wholly inadequate.

Most childcare providers demand payment up front. Those payments are only reimbursed when the care takes place, which often leaves claimants out of pocket for several weeks. An example will demonstrate this.

Assessment period
Start: 6th April
End: 5th May
Payment Date: 12th May

Costs of £725 are paid on 30th April and reported the same day, for care that takes place between the 1st and 31st May.

Someone new to the game might expect £616.25 back from UC on 12th May (725 x 85%). The payment would only be £99.40. This is because there are only five days of care (1st-5th May) which are in the current assessment period. The other £516.85 is reimbursed to the claimant on 12th June, over six weeks after they paid out.

Is There Any Help For Upfront Costs?

Yes, but it’s patchy. The two possibilities are budget advances and payments from the Flexible Support Fund (FSF)

Budget Advance

This is normally available for one off household purchases or to obtain or retain work. The following conditions must be met.
1. Claimant must have received benefits for six months continuously.
2. Employment earnings received in the last six months must be less than £2600 (£3600 for joint claims.)
3. There must be enough benefit left to repay the advance. This will exclude those claimants who already have a lot of deductions.
Only one budgeting advance can be outstanding at any one time. If you’ve already got one, then tough.

Flexible Support Fund

If a claimant has started work, but not received their first wage, they may be eligible for a payment from the Flexible Support Fund. This is entirely at the discretion of the service leader in the job centre. You might get it, you might not.

A More Civilised Way?

It has been suggested that childcare costs be paid directly to the provider. This would remove much of the burden from the claimant, although they would still have to make up the difference between the amount charged and that paid from Universal Credit.

Other Problems with Childcare Costs

Childcare must be paid for and reported in the same assessment period. In the example above if payment was made on 30th April but not reported until 6th May, the costs would be referred to a decision maker for late reporting, instead of being automatically paid back. In practice, costs are almost always allowed.  This is just another way of increasing delay and typical of the spite that pervades Universal Credit.

If reimbursement is allowed, the amount is calculated manually and not by the service. Fingers crossed you have a numerate case manager. Don’t be afraid to ask how your childcare costs have been worked out.

The automated payments can’t be relied on either. Up until recently, if there was one child with care costs, but two or more children in total on the claim, the service calculated the child care costs with an upper limit of £1104.08 instead of the correct £646.35. The claimants affected were expected to make good the over payments when the mistake was discovered months later.

Work is the Best Route Out of Poverty

But is it really? Childcare and transport costs, bigger council tax bills, increased deductions from benefits and sixty three pence clawed back for every pound earned over the work allowance, means that claimants can be no better off. Far from being the best route out of poverty, work is often a path back to where you started from.

The Dark Ways of Debt Management

The government likes to lecture benefit recipients on how they should budget, as if in work. The sermon would carry more weight if more help and less hindrance were offered in this respect.

The amount paid out on a Universal Credit claim can be reduced in any number of ways. Sanctions, recovery of hardship payments, deductions for take home pay and payments to third party debtors like landlords are amongst the most common. It’s rare to find a claim where the full amount pays out. UC can take up 40% of the standard allowance in deductions, or £127.13 of the £317.82 due to someone over 25.

The most underhand of these come from debt management. These are repayments where the debt was accrued before the Universal Credit claim even started. Tax credit overpayments, outstanding social fund loans and legacy benefits which were wrongly paid come under this category.

It doesn’t matter if the debt is years or even decades old. It has to be paid back. It doesn’t matter if the overpayment was due to an official error and not the fault of the claimant. It has to be paid back. This is in direct contrast to what Department of Work and Pensions boss Peter Schofield told a House of Commons select committee some weeks ago, but then you don’t get to be a DWP fat cat with a six figure salary and a juicy pension if you’re not prepared to lie through your teeth.

A deduction of this type is taken at 15% of the standard allowance, or £47.67 a month for a single claimant over 25. However, if there are employment earnings above the work allowance then that figure rises to 25% or £79.46.

The work allowance is the amount a claimant can earn from employment before benefit is reduced due to take home pay – usually £287 for someone with children. It’s worth reiterating that the work allowance for someone without children is nil and staying that way. So as well as losing 63 pence in benefit for every pound you earn, there’s a possibility of being stiffed for an additional £31.79, no matter how small the wage was. What was that about making work pay?

It would be civilised to give advance warning before repayments of a debt from the distant past begin. Universal Credit doesn’t do civilised. The first a claimant will know about this is when the item appears on their statement. By then it’s too late to anything about it.

Those finding themselves in difficulty due to such deductions should contact debt management on 0800 916 0647. It is sometimes possible to reduce the payments for a limited time. Be prepared to hang around on the phone for a while.

If anything, reduction of benefits due to debt repayments causes even more hardship than sanctions, because a greater number of people are affected. It is another area of Universal Credit in need of urgent and genuine reform.

Universal Credit and Another Twist of the Sanctions Knife

The previous post on UC Diary covered sanctions and the way that hardship payments are recovered, which leaves claimants on reduced income for a longer period than they might have expected.

Now to look at another villain of the piece: Open ended sanctions. An open ended sanction has a start date, but no end date. It happens when a claimant fails to attend (FTA) a mandatory appointment and does not make contact to arrange a new one.

When an appointment is missed, the work coach attempts to call the claimant. If that fails a note is left on their to-do list giving seven days to provide an explanation. After that period the FTA should be processed by a case manager in the back office.

There are three possible outcomes:

Action Outcome
Contact made and  ‘good reason’ given No sanction imposed
Contact made. Good reason not applicable Referred to a decision maker
No contact made An open ended sanction is imposed.  A notification is placed on the journal detailing the decision.  The length of the sanction will increase for every day that a new appointment is not made.

Hint: When asked why you have not attended an appointment, don’t say that you forgot or mixed up the date. This will always result in a sanction. The good reasons that can be accepted are listed below, taken from the document that UC staff use for guidance.

Claimant was:

Suffering a temporary period of sickness including a mental health condition.
Undergoing emergency medical or dental treatment.
Attending a funeral of a close friend or relative.
Detained in Police custody for 96 hours or less, then released.
Required to attend court or a tribunal.
A crew member on a lifeboat, part time fire fighter or working for the benefit of others.
At work or travelling to work.
Temporarily looking after a child because the usual carer is ill or unavailable.


Adverse weather conditions.
Claimant has attended a job interview and can provide evidence of this.
Claimant has a recorded mobility issue and there was an unforeseen issue with transportation.
Serious illness, death or emergency affecting a relative or close friend.
Death of someone for whom the claimant is caring.
National or local transport industrial action and it was unreasonable for the claimant to travel.

Other hints:

Check the to-do list on your account every day. This is where details of your next appointment will be.

If you are going to miss an appointment, ring and inform UC in advance if possible. Also put it in your journal.

If an open sanction is imposed, get in touch straight away to arrange a new appointment. This will limit the length of the sanction.

If you think the decision is wrong, ask for a mandatory reconsideration, preferably within one month of being informed. If this fails you can request an appeal. This will take some time.

It has been pointed out that sanctions exist on legacy benefits. This is true, but the cumbersome bureaucracy of Universal Credit increases the effect they have.

Processing of an FTA has low priority. The trigger approach to a case manager’s work was explained previously. Fail to attend is a trigger four. It could be days, or weeks before notification of a sanction, which might spur a claimant into action, is placed on their journal. Until then, they will still be paid but the sanction which will eventually be imposed increases in length every day.

On Live Service (the original version of Universal Credit) that problem was worse. The backlog of FTAs was such that a claimant could be paid for months, without going near a job centre. The resulting sanction when it was enforced, was crippling.

Another Twist of the Knife

On Live Service, only one open ended sanction could be in place at one time. If a claimant missed an appointment, made a new one, but missed that as well, the original sanction would remain, from the start date.

For Full Service (current UC) the law is interpreted differently. An additional sanction is imposed, running alongside the original one. In the example below the claimant has no sanctions for missing an appointment in the previous twelve months.

Appointment missed: 2nd April
New appointment missed : 10 April
Appointment made: 16th April. Interview attended

Live Service
Length of sanction: 14 days plus 7 days = 21 days

Full Service
Length of first sanction (starting 2nd April): 14 days plus 7 days = 21 days
Length of second sanction (starting 10th April): 6 days plus 7 days  = 13 days
Total length of sanction = 34 days

The likelihood of this being challenged in court seems high.

Update: On 12th June 2019 sanctions on Universal Credit changed.  From that date, only one open ended sanction can be in place at one time, which is as it was on live service.   The section above has been left in place, as it demonstrates the malice and stupidity of the Department for Work and Pensions.

There is no evidence that suggests sanctions help anyone into work. The administrative cost exceeds the money saved on benefit payments.

Expecting someone who is able in body and mind to attend a job centre every fortnight to report the progress of their work search is not unreasonable. Neither is applying a penalty of some sort for those who fail to do so without good reason. But the current sanctions regime is ineffective, inflexible and extraordinarily harsh. It pushes claimants into a downward financial spiral from which some of them never recover. Urgent reform is needed.

Next up:  The Dark Ways of Debt Management

Read more:

The Sanctions Double Whammy – How sanctions are calculated and how the financial support available when you have one, comes back to bite later.

Universal Credit and The Big Journal Lie – Why you won’t get a quick answer to that journal query, and the ‘trigger approach.’

The Sanctions Double Whammy

Sanctions. It’s the word most associated with the benefits system.

A sanction is a financial penalty imposed on a claimant for not doing something they should have (or vice versa). Amongst the offences are an inadequate work search, not attending training arranged by a work coach, leaving a job without a good reason or failing to apply for a vacancy.

However, the most widespread sanction is for failing to attend a mandatory appointment at the job centre or FTA for short. Such a sanction starts on the day of failure and ends the day before a new appointment is arranged, provided that appointment is attended. Days are added to the length of the sanction depending on whether one of the same type has occurred in the last 12 months.

7 days for no other sanctions.
14 days for one previous sanction.
28 days for more than one previous sanction.

Example 1: An appointment is missed on 2nd April. The new appointment is made on 7th April and attended on 10th April. Claimant has no prior offences.

The length of the sanction is 5 + 7 = 12 days.

Example 2: The same as example 1, but the claimant has two sanctions of the same type in the last 12 months.

The length of the sanction is 5 + 28 = 33 days.

For a claimant over 25, £10.40 is deducted from the standard allowance of £317.82 for each day of the sanction. In the second example this wipes out an entire payment in a 31 day month, plus two days of the following month.

Other elements of the benefit, such as payments for children or housing are still paid.

What Do Claimants Without Money Do?

Some use the payment intended for rent, which has obvious consequences. Others apply for a Recoverable Hardship Payment (RHP). The clue is in the title. It has to be paid back. The maximum amount available is sixty percent of the sanctioned portion of benefit. This is worked out on a daily basis starting at the date of application and ending the day before the next normal payment is due.

Repayment of a hardship payment starts in the assessment period when all sanctions have been served. It is taken at forty percent of the standard allowance. Our claimant with an allowance of £317.82 loses £127.13 of it. It’s a double whammy, prolonging the period on reduced benefits.

Claimants often call, wondering why payments haven’t returned to normal now that their sanction has ended. It’s because of the RHP. The method of recovery is explained at the time the hardship payment is made, but the information isn’t always taken in. The prospect of starvation tends to do that to a person.

To apply for a hardship payment, a claimant must have arranged and attended an appointment of the type they missed – known as ‘re-engaging’. Then they need to contact the service centre for a telephone interview with a case manager, which is an exercise in ritual humiliation lasting around twenty minutes. Questions are asked to which the answers are bleeding obvious to anyone with more than half a brain. This obviously excludes Universal Credit policy makers.

The completed questionnaire is referred to a team leader who decides if the payment can be made and calculates the amount. Then it’s passed back to the case manager who rings the claimant with the decision, obtains consent to make the payment and puts it into the system. The team leader has to further approve the transaction.

The process is convoluted, time consuming and unpleasant for the claimant. The case manager isn’t having a good time either. And if the sanction is long enough to carry over to the next month, it all has to be done again.

Next up: The Open Ended Sanction and a Further Twist of the Knife

How More UC Claimants are Cheated out of Money

Previously on UC Diary we saw how someone on Universal Credit who is in work can have their benefits reduced because of employers who report earnings late to HMRC. Now we will see how new claimants sometimes suffer because of the same problem.

In this example the claimant is twenty five and has no children or housing rental costs. The benefit is therefore £317.82 per month.

Her employment ends and she receives a final wage of £1000 on 30th April, before making a claim for Universal Credit on 4th May. The first assessment period would start on that day and end on 3rd June with the first payment on 10th June.

However, the former employer only reports her earnings on 7th May. Because of this they fall within the first assessment period and are included when the benefit is calculated.

For a claimant without children, the work allowance – the amount that can be earned before Universal Credit is affected, is zero. Up until April 2016 it was £111. This is just one instance where treasury penny pinching has diluted whatever ideals UC once had.

With 63 pence deducted for every pound earned, the reduction for take home pay is £630. This is more than the claimant’s entitlement, so she would receive no payment on 10th June. She would not know about this until a statement appeared on her account on 4th June, the day after the end of her assessment period and a month after claiming. By then it would be too late to ask for a new claim advance to tide her over.

To sum up:
The last wage was received before the claim started.
This can be proved.
No payment of Universal Credit will be made for that first assessment period.
UC policy is NOT to rectify the situation.

If process is followed the claim should be closed as it is ‘nil due to earnings.’ A new claim would then have to be made.

Other Problems With RTE

On benefits such as Job Seekers Allowance, those working more than sixteen hours a week had their claims closed. With Universal Credit, the amount of employment income received is the deciding factor. This is an improvement. Pity about the implementation.

In many cases the feed from HMRC cannot be set up. This is referred to as a ‘data mismatch’. If the mismatch cannot be rectified by the case manager, it has to be referred to technical support via a Service Improvement Lead (SIL). The backlog for this problem is months long and has a low priority.

In such circumstances a claimant would need to self-report their earnings. Not all claimants affected have been instructed to do this, so they have received too much benefit, often for an extended period.

When the feed is eventually set up the over payment is discovered and has to be paid back. For single claimants earning above the work allowance this incurs a deduction of £79.46 from benefits until the full amount is recovered.

Still the government would have it that work is the best route out of poverty. It’s a route that’s littered with obstacles and pot holes.

Next up: The Benefits Double Whammy

How Universal Credit Claimants in Work are Swindled Out of Money

Work is the best way out of poverty. At least according to the government. Those on Universal Credit might have doubts about that.

Childcare costs, travel and an increase in Council Tax for those who find work often reduces any gain from employment, and in some cases wipes it out altogether. Then there’s the wacky way that Universal Credit payments are reduced when the claimant has a job.

Employment earnings are (usually) obtained from a real time earnings feed (RTE) supplied by HMRC. However, instead of taking wages into account on the day they are paid, UC uses the date they were reported to HMRC by the employer. Late reporting of earnings can affect the amount of benefit received significantly.

Let’s take an example, a single parent over 25 earning £500 per month who gets their rent paid by Universal Credit.

The first £287 is discounted. This is known as a work allowance. For the remaining amount, benefit is reduced by 63 pence for every pound earned. So the reduction is (500 – 287) x 0.63 = £134.19.

Now consider when earnings are reported late, so that two sets of wages appear in the same assessment period. This would affect two assessment periods.

In the first of these periods, the reduction for earnings would be nil, as no wage information has been received. In the second period which includes two wages, the reduction is (1000 – 287) x 0.63 = £449.19

Over both assessment periods the reduction should be £268.38 (£134.19 x 2). Instead it is £449.19  The claimant has lost £180.81 through no fault of their own.

Now here’s the head shot: Logic would suggest that an adjustment be made so the claimant does not suffer. Universal Credit policy is that NO adjustment is made. It’s just tough luck.

“Policy,” plays a big part in UC. Its function is to interpret the law so as to cause maximum distress to the claimant. In cases brought to court, which the DWP almost always loses, you may hear the phrase, “the Secretary of State has misinterpreted the law.” That’s down to Policy. It’s a nastiness that costs the British tax payer millions of pounds a year.

Can Claimants Dispute Earnings Information?

They can, but it’s made as difficult as possible. Wage slips and a bank statement have to be taken into a job centre, requiring an appointment which may mean taking time off work. When asking why those documents can’t be uploaded to the service you’ll be told it’s because of security. Child care costs and CVs can be uploaded, but not proof that you’re being screwed over.

Once the evidence has been obtained the matter will be referred to one of the dedicated RTE dispute teams. The number of people employed in those teams is expanding rapidly, due to the volume of complaints and timescales can no longer be given. So Universal Credit will get back to you. Eventually. The news probably won’t be good.

Next up: More ways that claimants are swindled out of mone