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Universal Credit - What is it really?

Universal Credit - What is it really?

Universal Credit is very doctrinaire and full of well-meaning ideas. It is designed to reduce the cost of benefits, particularly housing costs. Enforced rises of housing standards could combine with it to cause major problems for landlords. The RLA"s view is that the system could run perfectly well, it is just that landlords will need to be much more involved with their clients and to work with them. Threat of destitution is the main driving force used on the tenant by the DWP and this will be re-enforced by homelessness when rent is absent, the landlord will take the blame for eviction even though he has satisfied his end of the bargain. The following is a list of the key points from the housing providers point of view. Culled in great part from Bill Irvine"s RLA course on 14 April 2016 by committee member and director, Julian Clokie.

Universal credit (known as UC)

1)Purpose is to shift people from benefits towards work at a non subsidised level. All those who won"t or can"t show that they are looking for work full time will not be paid even the very disabled would be expected in some circumstances to do something. It links and creates free information exchange between HMRC, DWP, registrars, councils, employers, the valuation office, clients ie tenants, their doctors, advisors and their banks and landlords and their banks. It completely removes all privacy. This is to remove mistakes and fraud. The web suggested last week that there are 300 HMRC inspectors looking at specialist high end tax evasion and 3800 inspectors looking at benefit fraud. It is very similar to the German benefit system 'Hartz 4" (Mr Hartz"s 4th system) with some unpleasantness grafted on.

2)Living costs and housing costs are paid together directly to the tenant-----to force independence and self-reliance. The DWP has now accepted that some tenants might not pass on cash intended for rent. Landlords working with their tenants need to create a paper trail demonstrating medical/mental/addictive reasons why rent money needs to be safeguarded (now known as 'alternative payment arrangements" ('APA"). Non payment of rent also automatically ensures landlord direct payment at 8 weeks with 4 weeks causing suspension of rent component of payment. APA by April 2016 30% of clients. Nil income housing benefit claims are not possible under UC but note para 6 below.

3)UC is only paid to 17-67 year olds, (claimants can be couples), who are in low paid work, could be in work with variable degrees of ability to work, from none to fully. Every effort will be made to get claimants whatever their abilities to increase their earnings with a view of becoming free of any help. 

4)Conditionality. A claim for UC will only be accepted if the claimant comes to a formal agreement with the DWP to look for work full time. All claims must be made by filling in online proformas. There will be no provision for this to be done in Job Centre Plus. If you cannot read, tough. Your landlord will have to provide facilities and assistance.

5)For claims by the self employed (info from non DWP site so check) claim is monitored monthly, all receipts and invoices to be seen, progress is reviewed 3 monthly and not accepted unless income increasing each time, capital items to be offset against earnings in month of purchase only. Employers might be visited by DWP to increase income/check on earnings.

6)The control of clients is achieved by

  • Not accepting claim in the first place
  • Letting a claim fail altogether for non compliance
  • Sanctioning by allowing an amount of UC to be paid including the rent component and a very small amount to live on. In total about 60% of the total. This rent component could be safeguarded (APA).

7)UC consists of 2 parts, the living allowance depending on age and medical condition, and the rent allowance. This is set at the local LHA level in full , ie single room rate for under 35 years and appropriate flat size rate for person over 35 and under 67 +/- other family members, both using 30th Percentile rates assessed by the Valuation Office. If rent is higher then claimant will have to top it up if rent lower then claimant keeps it. It is clearly the intention of the DWP to ensure that the claimant lives where he/she says. The hope is that this system would provide competition for tenants and cause rents to drop.

8)The aim of the DWP is that there will be enough advisers to cajole, threaten, sweet talk clients into applying for work, to better themselves when in work to take 2 jobs if necessary, and that any failure or perceived failure to follow the 'advice" will lead to sanctioning or loss of claim. Claims pro formas are complicated, need computer and computer knowledge, there in no external help for this and landlords will be often the only source of help. Targeted clients will have to be able to demonstrate that they are completely satisfying the contractual agreement.

9). At present UC is taking new claimants from JSA. This will extend. For landlords who take or specialise in taking those who claim the fully employable will have no bother with the system. For those landlords who have traditionally taken up the slack preventing homelessness for those with problems how difficult it will be depends on the attitude of the DWP to their clients.

10)When in doubt about aspects not specified here in general rules governing the benefits replaced are 'read across" to UC.

11)UC has started in some areas taking the easier cases first JSA then ESA then perhaps ESA with health difficulties, then self employed. Claims are taking up to 11 weeks. Tenants without any savings are going to be put in a financially precarious position if this gap does not reduce.

12) Bill Irvine"s point of view is that this major refurbishment of the benefits system is 'a work in progress". It started off in a paper phase (the legacy system) and is now paperless. There is nothing to stop it working as well as the last system. Some tenants will be shaken out of passivity but it will take hard work by landlords to operate their side of the process. RSLs in some areas have got it to work well given enough of their own time and energy.

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