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Benefit updates

Benefit updates that impact on involvement

Successive governments have introduced many changes to the benefits system and these changes are causing much distress and difficulty for millions of people in the UK.  Social Security (as the Department used to be known) has been decimated. 

This brief summary of some existing benefit rules and future benefit changes is focussed on matters that impact on service user and carer involvement.

Other issues are addressed fully online by organisations such as Disability Rights and Citizens Advice. The Disability News Service provides full reports on the impact of the ‘reforms’.

The good news first

  1. The Permitted Work limit of 52 weeks was abolished from April 2017 for people who are in receipt of Employment and Support Allowance or Incapacity Benefit. This group are allowed to earn up to the higher limit of £140.00 a week without a one year time limit (from April 2020).
  2. The revised definition of service users and carers has been expanded to cover all benefits, and involvement with charities, educational establishments, health, social care, social housing, social security, child support, research or monitoring. The full details are set out in the Decision Makers Guide Memo 20/15 
  3. Notional earnings for service user involvement have been abolished. This applies to all benefits. This means that a person who is offered a payment for involvement and declines to accept it or who asks for a lower amount, is no longer treated as if the offer had been accepted. See the DWP guide for their staff ‘Decision Maker’s Guide’ Vol 3 Chapter 15 Notional earnings – paragraph 15015 
  4. Expenses that are reimbursed for involvement are ignored. This applies to all benefits. This means that a person who is reimbursed the exact amount of any out-of-pocket expenses incurred in the course of involvement, will have the amount ignored for the purpose of calculating their benefits. Previously reimbursed expenses were treated partly or wholly as earnings. People must retain evidence that the amount was a reimbursed expense. Jobcentre Plus will query any payments received in a bank account.

See the DWP guide for their staff ‘Advice for Decision Makers’ Chapter V4 ESA and Employed earners.  Expenses: Earnings do not include expenses paragraph V4017 – 8.

In receipt of Universal Credit for limited capacity to work? About to be transferred to Universal Credit from Employment and Support Allowance?

If any of the above apply to you, this is a warning. Although the government says that Universal Credit makes it easier to work, there is a nasty little rule in the regulations, which means you should keep your earnings per week to less than the Permitted Work limit. Permitted Work allows you to earn up to £140.00 a week which is the National Living Wage of £8.72 hr x 16 hrs rounded up.

If you are transferred to Universal Credit and you earn the equivalent to the National Minimum Wage which is £8.72 hr x 16 hrs a week and this amounts to £139.52, this is the threshold of earnings at which the Jobcentre may remove your ‘limited capacity for work ‘ status unless certain exceptions apply. The exceptions include being in receipt of DLA, PIP or AA, or having passed a work capability assessment for the ‘new style’ ESA or for Universal Credit.  Even if one of the exceptions do apply you may have your status reviewed again.

There is a possibility that this is a DWP drafting error which has not been recognised as yet. 

If your ‘limited capacity for work’ status is removed you will lose about £29 a week of your benefit and be required to prove you are looking for a job every week or be sanctioned.

So take great care – stay on the safe side and keep your earnings to £139 a week. 

The Universal Credit work allowance for single people has been removed

Single people without children who are in receipt of Universal Credit have had their ‘work allowance’ abolished.
This means that if a single person (no children) is paid for involvement their Universal Credit will be reduced the following month by 63% of the earnings. (For example: earnings of £100 in a month will lead to a reduction of £63 of Universal Credit the following month) (This is an effective tax rate of 63p in the £.) Other groups retain a ‘work allowance’ of either £292 or £512 a calendar month. See the DWP ‘Advice for Decision Makers’ E2 paragraphs E2160/1

Click to access adme2.pdf

Bad news  for people considering a temporary job

People who are in receipt of Employment and Support Allowance will be ill-advised to take a temporary contract for involvement (or work) off benefits.

Unless a person is certain that the involvement (or job) that is offered is on a secure permanent long-term basis they should take great care before accepting.

The previous benefit Linking Rules that protected a claim during a period of employment that did not continue, have been abolished.  Employment and Support Allowance for new claimants is reduced by £29.05 a week.

A temporary break in a claim for Employment and Support Allowance will result in a significant drop in benefit income to the same level as Jobseeker’s Allowance.

This cut to benefits for people who have been found to have limited capacity for work because of serious ill-health or disability, will deter many people from trying to get a job because they will be penalised if the job does not last.

Bad news for people who receive mortgage interest loan payments via benefits 

The waiting period for reinstatement of mortgage interest loan payments has been extended from 13 weeks to 39 weeks.

This will affect anyone who comes off any benefits which contain an element to pay for the mortgage interest, because of taking a fixed term contract of employment (provided by some organisations for involvement in a research study). When they make a new claim, the mortgage interest loan payments will not start for 39 weeks.

Payment of mortgage interest is now treated as a loan to the person receiving it. The person is now taking out a further mortgage on their home which is repayable.

Warning! People who are transferred to Universal Credit and this includes a mortgage interest payment, should consider their circumstances carefully before accepting any payment at all for involvement as even £5 will result in their mortgage interest loan payments being stopped for 39 weeks. A person who accepts a £5 note may find that they will lose their home. People who are earning from a regular reliable form of part-time work can consider paying their mortgage interest loan from earnings as they could use the Universal Credit higher work allowance of £512 a month from April 2020.


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