The government introduced Universal Credit in 2013 promising to reform and unify the welfare benefits system. An important attraction of the new benefit is supposed to be that it is a system designed to “make work pay”.
The work conditions within Universal Credit continue a theme introduced with employment and support allowance (ESA), that people with a disability or illness who have the potential to work in the future must be helped to move closer to the employment market.
All claimants of Universal Credit must accept a ‘claimant commitment’. This includes any work-related requirements applicable to the claimant they must meet. For people with a learning disability who have ‘limited capability for work’ the requirements are to take part both in work-focused interviews and in work preparation, eg. participating in training, an employment programme or work experience.
People with a disability who are found to have both limited capability for work and limited capability for work-related activity are allowed to get Universal Credit without meeting any work-related requirements. If a learning disabled claimant is working part-time, and their average weekly earnings are at least at their ‘individual earnings threshold’, no work-related requirements can be imposed on them to make them seek additional work and/or working hours.
The individual earnings threshold is the hourly national minimum wage multiplied by the claimant’s ‘relevant’ number of hours. This is 16 hours a week if the claimant would otherwise be someone who only has to meet a work-focused interview requirement and a work preparation requirement, ie. has limited capability for work. In contrast, a claimant without a disability, or any other restriction on her ability to work, is usually expected to seek work of 35 hours per week.
The ‘carrot’ of the work-related activity component top-up – available to existing disabled people who claimed ESA or Universal Credit before 3 April 2017 – has been removed for new claimants. Their basic rate of benefit will be the same as the rate for jobseekers. But the ‘stick’ of the threat of sanctions remains for those disabled people who fail to take part in work-related activity.
Universal Credit is quite different to the legacy benefits in how work and earnings are dealt with. There are no permitted work rules and there is no ‘cliff-edge’ where the claimant must come off the benefit once they start to work a certain number of hours, or earn a fixed wage. It should be more flexible in dealing with the fluctuations of people doing part-time, temporary or freelance work.
Put simply, within Universal Credit the amount of the award reduces as earnings rise. Fortunately, for certain claimants, some earnings are disregarded in the benefit calculation. This is called the work allowance and is the amount of money a claimant may earn before their Universal Credit payment is affected. However, the claimant is entitled to a work allowance only if they:
– have limited capability for work and/or
– are responsible for dependent children.
The claimant can earn up to the threshold of the work allowance applicable in their circumstances, and their Universal Credit payment will then go down by 63p for every £1 they earn above this threshold. This is called the ‘earnings taper’. Claimants who don’t qualify for the work allowance will see their payment go down by 63p for every £1 on all their earnings.
Reporting earnings should be straightforward, at least for claimants being employed and paid under PAYE. This is because the employer will use ‘real time information’ to regularly inform Revenue and Customs of the employee’s earnings, which is then passed to the Department for Work and Pensions.
Helpfully, people in work who are responsible for children can get assistance with the costs of registered childcare. The level of help with childcare is 85 per cent of eligible costs, up to a maximum of £646.35 per month for one child and £1,108.04 for two or more children.
The government has been evangelical in proclaiming the benefits of Universal Credit for people who are able and willing to work. This includes disabled people who, it says, have frequently been excluded from job opportunities. It is yet to be seen, however, whether or not the combination of the Universal Credit and earnings will truly make work pay for our client group.