Category: RTE

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