To think UC guidelines regarding savings are unfair

[dancinguser]

Prepared to get flamed for this and apologies if it's been done before but here goes.

So it's looking likely that DP will be made redundant within the next few weeks due to there not being enough work coming in to justify bringing back all of the staff that were working pre-lockdown.

I had a look into universal credit should this happen to see if we're able to get any support until he can find another job and we meet all of the criteria except "you and your partner have £16,000 or less in savings between you." We have been saving for a house deposit for 2 years and have just over £16k between us. Pre-lockdown we were viewing houses and have been waiting for the right one to make an offer on.

Now before the obvious is stated that we wouldn't receive support as we have money that others don't which could pay for the rent, bills etc. I've put an example below to explain why I think it's unfair -

Person A earns £30k per year, their outgoings total £10k leaving them with £20k. They spend a little of the money but put over £16k into savings for a house.

Person B earns £30k per year, their outgoings total £10k leaving them with £20k. They spend this money on luxuries such as a new car, designer clothes, a new sofa, the latest iPhone.

Both Person A & B lose their job. Person B receives UC to help pay their rent and bills, whilst sitting on their new sofa in their designer clothes with a nice car sitting in the driveway. Person A must burn through their own savings before being eligible for support, all whilst having 0 luxuries.

So whilst at face value it makes sense that people with savings pay using them, I find it ridiculous that two people who have had the exact same money coming in wouldn't receive the same support based on whether they are good at saving their money or not. Why are people who choose to save their money being penalised against someone who may have spent their money frivolously? IMO if two people both have had the same income they should be eligible the same support, AIBU?

They can only make the decision based on a fixed point in time.

Agreed as am in exactly same position. I am.however saving seriously hard to retire early.

@TARSCOUT

Agreed as am in exactly same position. I am.however saving seriously hard to retire early.

So you think the benefits system should support you in that?

You are being unreasonable, but you already know that. Benefits are a safety net.
If you want to even things up, to live life depending on UC (which by all accounts is not much), feel free to go and frivolously spend all your savings Iike person B in this scenario.

You’d still get new style JSA to help.

It's crappy, it really is, but at the same time this is unprecedented times. Under normal circumstances, given the examples you have, person B would never have the stability of owning a house and when they retire they will not have the luxury of no mortgage and equity ( you would hope).

Claim new style jsa.

Sorry but YABU.

If your partner is made redundant, he should be able to claim new-style JSA (assuming he's made enough NI contributions). It's not a huge amount but it's better than nothing.

The rules about savings are than you are expected to use your savings for reasonable expenses to live on; so if you and your partner have to dip into the £16k to pay bills while he looks for another job, that's fine, and if the savings fall below £16k you will become eligible for UC (depending on your own income too).

However, someone with £20k in savings who "blows" it all on luxuries, as per your example, would be penalised by the benefit system. When you apply for means-tested benefits they ask for bank statements and if you had a lot of savings that are now gone, they'll ask you what you've spent it on. If they decide the expenses weren't reasonable they'll calculate as if you still have the money.

www.entitledto.co.uk/help/Deprivation-of-savings-and-other-capital-Universal-Credit

If you have you savings in a Help To Buy ISA will this count?

I understand that this might feel unfair. However, benefits are actually pretty low - and the person in your example may end up having to sell some or all of those possessions. Especially during the initial five-week wait.

I’d also be interested to see stats about how many people on benefits actually fit your example - it’s a popular stereotype, but I’ve never met anyone in real life who fits it.

And that’s ignoring the fact that your example doesn’t work. I know it’s just an example, but I think it’s worth pointing out.

Someone on 30k will receive £24k after tax. It would be impossible for them to have outgoings of £10k and still have £20k left to spend.

If you think in terms of more realistic figures it might help a bit with how you feel. I know it must be really hard - it sucks for people who are saving for house deposits. But it sucks for lots of people. And the system isn’t designed to help those most in need, so why should it be designed to help you more?

YANBU to find the system unfair in these types of scenarios.

I have similar in that I was recently looking into my childcare tax account (where you get 20% top up for childcare) and realised because I was made redundant I am no longer entitled to the tax benefit.
Now I have paid THOUSANDS and THOUSANDS in tax, a lot of it was upfront on a settlement from work, so I got a lump sum and paid the tax in one go. But because I’m not actively employed at this very second I am not entitled to the tax benefit. Despite paying a significant amount within the last tax year.

I realise they are general rules and cannot take every single scenario into account but it does feel very unfair when you are penalised unfairly.

If I were you I would ask a trusted family member (parent) to hold onto the money for me. Even just a thousand to two different people.

Nobody cared how shit UC was when it only affected poor people.

If you think the worst thing wrong with UC is the savings limit then you don't know you're born.

The person who spends their money is keeping the economy moving. The person who stashes their money in savings is causing the economy to stagnate. The government don't want people to save, they want people to spend.

I do agree it isn't fair though and I'm sorry you may have to spend your hard earned house deposit. Hopefully it won't all be depleted and this will just be a blip in the long term plans.

@Thisismytimetoshine

They can only make the decision based on a fixed point in time.

In that case it makes more sense to make a large purchase that takes us below £16k, claim UC until DP is earning again and then sell said purchase.

I know that's ridiculous and not something we would actually do, just trying to point out how it massively favours those who spend rather than save.

"If I were you I would ask a trusted family member (parent) to hold onto the money for me. Even just a thousand to two different people."

That would be benefit fraud.

This is not just idiotic, it's irresponsible advice.

Claim the £73.10 new style JSA for up to 6 months based on NI contributions. Then think about if you were single with no savings and a mortgage and how you would manage on that amount done till you found a new job. You’d get a bit of a CT reduction in tip if that. Nothing else.

Making a massive purchase now is not only a stupid idea but deprivation of assets.

And if that money suddenly disappears from your accounts you will have to explain where it’s gone. Look up deprivation of capital.

"In that case it makes more sense to make a large purchase that takes us below £16k, claim UC until DP is earning again and then sell said purchase."

No you can't do that, read my post and the link I shared.

Again, benefit fraud.

What is wrong with you people?! You are incredibly privileged to have been able to save £16k in the first place. With any luck your partner will find a new job and you won't have to use much of the savings.

Meanwhile people with NO savings because they're living on the poverty line as it is are worrying about how to buy food while they wait for their first UC payment or if there is an error and they don't get as much as they were expecting.

Sorry just read through the link posted above and realised the large purchase situation wouldn't qualify, again not something we were planning on doing.

You've had almost four months to sort this out. It was terrible for anyone just dropped into it in March but at least you've had time to prepare, and perhaps also furlough?

It is a crap rule

Tax credits don't have this rule so anyone already on tax credits will stay on it without the rule about savings applying to them. To make it even more unfair.

I'm sorry about your partner's redundancy.

@AnotherEmma

"In that case it makes more sense to make a large purchase that takes us below £16k, claim UC until DP is earning again and then sell said purchase."

No you can't do that, read my post and the link I shared.

Again, benefit fraud.

What is wrong with you people?! You are incredibly privileged to have been able to save £16k in the first place. With any luck your partner will find a new job and you won't have to use much of the savings.

Meanwhile people with NO savings because they're living on the poverty line as it is are worrying about how to buy food while they wait for their first UC payment or if there is an error and they don't get as much as they were expecting.

What is wrong with you people?! You are incredibly privileged to have been able to save £16k in the first place. With any luck your partner will find a new job and you won't have to use much of the savings.

Yes and somebody else earning enough to save over 16k but choosing to spend it instead is also incredibility privileged however the system only favours one.

I agree OP, it’s really unfair. You pay into the tax system when you’re working plus save to buy your own home (which you’ll pay stamp duty on, and possibly inheritance tax when you die) but you can’t get short term help when you need it, but if you did the same but pissed your money up the wall on holidays and booze you’d get the some help. It’s like a disincentive to save when you’re in insecure employment.

If you have "just over" £16k then surely you only need to spend the "just over" amount in order to be eligible. Or withdraw the extra cash and keep it in a safe.

Universal credit actively discourages or even prevents home ownership and higher education. Both of these can reduce the likelihood of longer term benefit dependency (better paid job, no rent in old age etc) so UC is short sighted. It's born of Tory ideology to keep the lower orders in their place unlike tax credits which could help you work and study towards long term security.