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?

@Quietheart

The government could have introduced a regulation to ignore house deposit savings which are in a help to buy or lifetime isa for a short period as one of the measures to help during this crisis. The same as profit on a house sale can be ignored for up to 6 months. It will also adversely affect those with mortgage endowment savings.

Typical Tory ideology, promote the right to buy with massive discounts and subsidies and then pull the safety net.

Absolutely - spot on.

@DisobedientHamster

The thing is, DrCoconut, UC is designed so the person doesn't stay on it from age 30 to retirement age. It is designed so people get work, enough work so they are paying most if not all of their support costs. If you can, watch the BBC show about it. You are heavily, erm, encouaged to take jobs/multiple ones to pay your own way until pension age.

UC is designed so that people will be on it from cradle to the grave. Many families will never earn enough not to need a benefit top up even if forced to take multiple jobs. If this was true then no one in fulll time employment would claim benefits and history shows us otherwise.

There are people who can still make new claims to Tax Credits. It will still be years before they no longer exist, even with migration.

I guess I’d be inclined to buy a car or something that you can sell once your DH has a job again - just make sure you have a reason why it’s essential (visiting an elderly relative in lockdown/taking them to appointments maybe?). On the other hand, benefits are a safety net and frankly with £16k savings you don’t need it yet. It sucks that your DH is redundant and you have to eat into your savings, but unfortunately that’s life - and somebody can’t live off a designer handbag but can live off savings, which is why the rules are designed that way...

The other issue with UC and savings is that if you are self employed then a portion of your 'savings' will be money put aside for your forthcoming tax bill. I know a few people who are being expected to spend this first, which means they won't be able to pay their tax when it is due.

I agree with you it's shit you work hard pay in and save you get fuck all . You work hard WASTE all you money and you get UC .

@Babamamananarama

The other issue with UC and savings is that if you are self employed then a portion of your 'savings' will be money put aside for your forthcoming tax bill. I know a few people who are being expected to spend this first, which means they won't be able to pay their tax when it is due.

Money set aside to pay a tax bill should be disregarded from savings rules. If people you know are being told otherwise they need to query this.

@Babyroobs

Lyra - I guess so maybe, it will depend if people can keep enough hours to continue claiming WTC, or can hold out just on tax credits for a short while and get a new job fairly quickly. People with savings will be forced to stay on tax credits if they can't claim UC then I guess and then claim UC when their savings drop. It really is going to be a shit storm for so many people if and when we have mass redundancies. There are many aspects of Uc that are far better, it really is better for lots of people, particularly those working but not so good for other groups.

People on Tax Credits will be forced to make the choice of using their savings to avoid UC, people with no choice, but to go onto UC will have to use their savings. Either way the poor peole will be using their savings.

The fact that a few people are better on UC has allowed the colouring of the facts that the vast majority of people will be worse off.

I disagree that the "vast majority" are worse off on UC.

It's actually very nuanced as there are so many differences.

Some are worse off, some better off, some just the same.

I don't know of any evidence-based report confirming that the vast majority are worse off on UC.

There are certainly problems with UC and campaigning organisations have focused on calling to get those fixed.

I hear you OP, it is unfair that people who have made better choices than others are getting more support right now, but the alternative is that we leave people to starve and become homeless, which isn’t really an option.

I think the difference between now and normal times is that now, people have been forced to stop work by the government. It was their rules that have put people in this situation, however good a reason they originally did it for. The opportunity to earn has been taken away, when before lockdown there was at least some opportunity for everyone.

That’s why I don’t think it makes sense when posters are complaining that people have always lived on benefits that weren’t enough and that if it was good enough before it should be good enough now. It’s not the same. People that are struggling now because they can’t earn are in that position because they’ve been forced into it by government, completely unlike the people that were on benefits in February and before.

I also don't think the majority are worse of on Uc and I help a lot of people to apply for it and manage their claims, I'm surprised by how much they get. However I do work with a specific group of ill people so that may scew my perception of it.

Mumsnet doesn’t agree but I’m with you op. I think it’s really unfair that homeowners on the old tax credit system get paid whilst those on the new UC system who may have saved for a house then lost a job (this happened to us when uc was 1st brought in) can’t claim. Had we applied a month prior we would have got CTC. Friends of ours (on the old Tc system) with a nice 3 bed in an expensive town, plus all their savings, worked part time and got a nice top up and free nursery hours, whilst we blasted through our savings and that was that. We are unlikely to ever own a home now.

Babyroobs
In my role I advise (or help others advise) people in and out of work, people with and without disabilities and health conditions, so my comment is a general one.

I remember speaking to someone in the job centre who said that they thought there was going to be a protection for money ring fenced for a house deposit in the original planning of uc, much like there is a protection for cash if you’re in the midst of buying/selling a house, but it was decided that if you earned low enough to claim you were unlikely to ever be able to afford a property. I don’t know what happened to social mobility, or the idea that you might one day ear more that a basic wage with hard work a dedication.

@Dinocan

I remember speaking to someone in the job centre who said that they thought there was going to be a protection for money ring fenced for a house deposit in the original planning of uc, much like there is a protection for cash if you’re in the midst of buying/selling a house, but it was decided that if you earned low enough to claim you were unlikely to ever be able to afford a property. I don’t know what happened to social mobility, or the idea that you might one day ear more that a basic wage with hard work a dedication.

Awful - as has been said before, you probably would have costs them less in the long run by being able to buy your own home.

*hammeringinmyhead

I get it, as I was made redundant in March, so I've claimed new style JSA which isn't far off the same amount. If you've paid loads of tax and NI, that's what it's for!

Actually no its not what its for your NI contributions only count towards your state pension and cont based working age benefits, the amount of tax you pay and the amount of years you have paid in do not count and why should they, and I say this as someone who has paid tax for 50 years (in July) 24 of which have been at the higher rate.*

Oh, shush. You know I was speaking generally. I'm no suggesting it's some kind of NI rebate. Didn't really meed the humble brag either.

I suppose they made the incredibly short-sighted assumption that all UC claimants would be on UC and/or a low wage in the long term, and they failed to consider the fact that some people may need to claim UC as a short-term measure but before/after claiming, may be in a position to save for and buy a house.

The SMI loan is so useless as to be a rather token afterthought. Babyroobs you are right in that mortgage payment protection insurance is a must because the state will certainly not help.

@AnotherEmma

I suppose they made the incredibly short-sighted assumption that all UC claimants would be on UC and/or a low wage in the long term, and they failed to consider the fact that some people may need to claim UC as a short-term measure but before/after claiming, may be in a position to save for and buy a house.

The SMI loan is so useless as to be a rather token afterthought. Babyroobs you are right in that mortgage payment protection insurance is a must because the state will certainly not help.

I don't think I've helped one person claim SMI since the rules changed ! It is useless. If it wasn't for the fact that most of my clients are eligible for PIP, I think most would probably lose their homes whilst going through their cancer treatment. I now PIP is for the extra costs of disability but in reality many of my clients are using it to keep afloat with their mortgage payments when they suddenly find themselves dropping to just SSP and then getting UC.

And sadly even with insurance it can be a battle to get them to pay out.

@AnotherEmma

I disagree that the "vast majority" are worse off on UC.

It's actually very nuanced as there are so many differences.

Some are worse off, some better off, some just the same.

I don't know of any evidence-based report confirming that the vast majority are worse off on UC.

There are certainly problems with UC and campaigning organisations have focused on calling to get those fixed.

It's the nuances that matter and make people worse off though.

If you only use £ for £ to compare legacy to UC then some are worse off, some better off, some just the same. But that is a very narrow view.

Even £ for £ the monthly payment, the five week wait with a repayable advance, puts you at a disadvantage. The cut off of housing benefit and tax credits creating unavoidable overpayments .

How those whose pay cycle is not monthly are paid less UC over the year and or subject to the benefit cap where they would not be while on legacy benefits.

The removal of disability premiums, the loss of premiums in mixed age couples. The treatment of SMP and maternity allowance, reducing benefits available to pregnant women and women returning to work.

The difference in conditionality, the age restrictions, less allowances for parents under 25, the EU national restrictions, care leavers and sheltered accommodation.

Overpayment recovery, the decline in good decision making from UC compared to legacy decision makers.

Yes campaigners are campaigning but it often takes years to win a case.

And that is without even looking at capital

Nice to know after all our years of paying tax, in our time of need we get basically get told you’re on your own

Welcome to the real world. Are people only just discovering how it works? Wait until you need a care home, that’s a real wake up call after paying tax for 60+ years.

Quietheart

If someone will be significantly better off on UC, this can be the case even when you factor in an advance payment to cover the 5 week wait. With HB there is a 2 week run on (which obviously only covers 2 weeks, not 5, but it's better than nothing). As for tax credits overpayments - actually one of the biggest problems with tax credits is the tendency to significant overpayments or underpayments, due to the weird way tax credits are calculated, and this is less of a problem with UC since the calculation is based on actual monthly income.

Correct me if I'm wrong but I believe the benefit cap applies to legacy benefits as well as UC; the benefit cap is a controversial policy that predates UC.

SMP is treated as earnings whereas Maternity Allowance is not (similar to SSP v nsESA) and yes that is unfair to women who qualify for MA but not SSP.

You are right to point out the numerous problems with UC (and I did acknowledge that they exist in my earlier post) but it is not particularly balanced to list the problems without also considering that UC does have some advantages for some - dare I say many - people.

@Babyroobs I agree that sometimes the monthly payment looks a lot especially if includes their housing costs. However people with PIP are one of the groups who are worse off on UC than on legacy benefits.

Some issues/ problems seem to be sorted very quickly on UC though. I left a message on a clients journal a few weeks ago because I he was missing an element that he should have been paid for some months. It was the clients mistake as he had not reported the change. I reported the problem late on the Wednesday and by the Friday of the same week the problem was rectified and over a thousand pounds of back payments credited to his account within a couple of days. In my experience of tax credits , a recalculation used to take weeks to sort out.
There have always been lower amounts for younger claimants on legacy benefits like JSA and ESA so I don't think you can compare tax credits to UC in that respect as the child element has not changed.
Uc is better in that you can claim the carers element even if earning too much to claim carers allowance - it recognises caring responsibilities.

YY re carers element.
Also the childcare element of UC covers up to 85% of childcare costs, whereas the childcare element of WTC only covers up to 70%.

@Babyroobs

I also don't think the majority are worse of on Uc and I help a lot of people to apply for it and manage their claims, I'm surprised by how much they get. However I do work with a specific group of ill people so that may scew my perception of it.

The vast majority of ill and disabled people will be worse off on UC.

Some massively so.