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?

@Ilovechinese

Is it 16,000? I was told your only allowed to have £6,000?

You can only have 6k before you start losing some of the UC entitlement but it's a sliding scale between 6 and 16k. So if you had 7k you'd get most but not the full amount.

Thing is that the savings level hasn't changed in forever, when Income Support was introduced in 1988 the savings were 6k - 16k.

Having 6k - 16k savings in 1988 is like having 11k - 30k in 2020, many more people would be eligible if the capital limits had risen with inflation.

Tax Credits were unique in that they were a means tested benefit that ignored savings. (some one off grants also ignore savings)

I get where you are coming from. By using your money responsibly and making sacrifices to do so, you are being penalised compared to those who squandered the same amount of income, whilst enjoying yourselves.
You aren't saying you are as entitled to support, as those on a smaller income in the first place.

So what? No one is arguing that they should be excluded.

Arguing that someone with £16k savings isn't fortunate is BOLLOCKS.

@RandomLondoner
Checking savings isn't a new thing that arrived with UC. It has always been done for people who are on benefits and have no income from working.

Not for Tax Credits so you can have 2 neighbours one with 20k savings being refused UC and one with 50k receiving Tax Credits.

Oops, missed a page. I was responding to @WaffleCash
"People who own a house and have equity are also in a fortunate position compared to those who cannot save but that doesn't exclude them from claiming UC."

But if the savings are in a lifetime ISA which can only be accessed when buying a home/retirement, would they count that? As you would be severely penalised for withdrawing the money

Yes they would

The savings element is not unfair. Why should us taxpayers support people that have money in savings/shares/second properties etc...

Many taxpayers rent and may have no savings due to low income/high outgoings etc... why should they support someone who is sat on money?

Perhaps clear any debts?

UC isn’t there to reward people for making ‘good’ decisions. It’s there to prevent them starving to death.

Not always

Everyone earning moaned & complained about those on benefits, about how they're lazy and not trying hard enough. About how much money they get for doing nothing.

And now the tables have turned and there's threads popping up all over about how unfair the system is, how it isn't enough to live on, how if you have SIXTEEN THOUSAND POUNDS saved up you should be allowed to keep that AND claim!

Can you see the irony here?

You have savings - use them.

Also some people have had to relie on UC before covid-19 and apparently they were living the life of luxury according to many ill informed people... you know... they have big tv's, phones, blah de blah....

Hoepfully you partner will get some redundancy that will also help ease the way. Get him to take any job and good luck...

PS there are people on tax credits with huge savings - this is why the UC rules were different so that people claiming don't have a large cash pot/second home etc etc whilst claiming benefits...

Not for Tax Credits so you can have 2 neighbours one with 20k savings being refused UC and one with 50k receiving Tax Credits.

Tax credits aren't for people who have no income from working, which is why I was careful to put that in. (At that point I assumed OP wasn't working herself.)

It's true that there's an inconsistency between tax credits and UC for working people, but that inconsistency is only a short-term thing caused by the need to phase in UC. I don't see any logical reason why working people should have more generous benefits rules than people who are in a worse position.

Tax credits only came into existence fairly recently, relative to the rest of the benefits system, so it's less surprising if the rules for that group of people need to change. (Although I have heard that there were benefits for working people before tax credits, which surprised me. I'd be interested to know how generous those were, and if they had a means test.)

Just before lockdown, DH had a very small 10 year investment come into fruition, about 3k in total, saved from 20 quid a month or so over a long period. For the last few years we have been earmarking that money for new carpets and other much needed home improvements. As it happens, we spent it on surviving the last few months and felt very grateful to have it rather than the stress of having to join the millions of others in the queue for UC. Get your DH to get a job, any job ASAP. Then, as soon as you can, buy a property, even if it is smaller or in a less desirable location then you would have liked.

@dancinguser (sorry haven't read the whole thread)- so the worst comes to the worst and DH looses his job. Say you have 18k in the bank. It's not possible for him to find a job quickly due to economic downturn.
a) he is still entitled to jobseekers (if he paid enough in)
b) you draw down 1k / month from said saving, that leaves you with 15k after 3 months...
c) that leaves you eligible for UC and 15k better off than person B in your scenario...

So you loose some of your saving, it's not the end of the world or the dream of home ownership.

"Someone with enough disposable income to be able to save some is fortunate."

"There are some people who are only just able to pay the bare essentials and have nothing left for savings."
I know. They may be unfortunate but that doesn't mean that those who can save are automatically fortunate. Some may be, lots aren't.

There are lots of different circumstances.
Choosing to study on evenings and weekends after work to attain a professional qualification in order to secure a good well-paid job is one set of circumstances which isn't down to being fortunate. That is down to pure hard work, drive, determination and the sacrifice of years of social life to achieve it.

Do you think a doctor is fortunate for being able to save after years of study and sacrifice?

Well in my circumstance I inherited some money but with covid looming OH may not have a job to go back to. This inheritance is my only chance at buying a house and it may be taken away from me. Its depressing. But I half agree with the rules.

But if the savings are in a lifetime ISA which can only be accessed when buying a home/retirement, would they count that? As you would be severely penalised for withdrawing the money

I googled this when it was first raised on the thread, and apparently they would be counted.

In 1991 when I claimed income support, I had 10K in shares which could have caused me to fail the means test, but they were in illiquid shares that would have taken several months to sell, if they could be sold at all. I declared them, and they were disregarded. (The rules did allow savings to be be disregarded if they were completely inaccessible.)

I understand there are a lot worse situations to be in that require UC, but for the posters saying it's only for those with nothing, you're able to have just under £6k with no implications and still supported until just under £16k. I don't think that £5,999 and £15,999 is nothing.

I understand there are a lot worse situations to be in that require UC, but for the posters saying it's only for those with nothing, you're able to have just under £6k with no implications and still supported until just under £16k. I don't think that £5,999 and £15,999 is nothing*

Where would you make the cut off? Wherever you make it people with £1 over it and £1 under it are going to be in different positions.

Just as people a few pounds under the next tax threshold can have the anomaly of people better off than someone a couple of pounds over it.

Some people have missed the point, comparing my situation to somebody with low income unable to save. The point I was trying to make was that had we spent our money along the way aka I bought a more expensive car last year instead of the relatively cheap second hand car I did buy, the government would support that and I'd have more in personal assets (assuming the purchase wouldn't count when checking our accounts as it's a year old? Feel free to correct me if I'm wrong).

No-one has missed the point. This is carped about all the time in threads about benefits, and especially on ones about care home fees.

However, no one yet has ever come up with a system to make it “fair” that ever sounded like anything other than them being a deserving poor and other people being feckless poor so therefore less worthy.

The dwp also run fraud checks where they run people's details electronically to check for matches of bank accounts etc. So you can't just move money round either.

You have over 16k. Why would you think you should receive benefits? You do know that there are people out there who have no savings, just debt, no chance of buying their own home, little chance of being able to afford to even rent their own home. Stop being so entitled.

@NotEverythingIsBlackandWhite

I'm not saying they shouldn't have to use their savings to live on but it is wrong to refer to them saving diligently as being "fortunate"

Being able to save at all puts them in a more fortunate bracket than many, many others. The definition of 'fortunate' is ambiguous; to some, it means 'affluent', to others, it means 'lucky'.

On the converse side, I don't think anybody with £16 000 in savings would class as 'unfortunate', financially.

I own my own home with my STBXH. I'm on UC. I don't get any help paying the mortgage (I'm aware I could claim interest but that has to be paid back once house is sold). Problem is, once the house is sold and the mortgage paid off, take off STBXH share, I've not enough to buy somewhere else but too much 'savings' to claim. I have a young son to look after so getting a job where I'd earn enough to get a mortgage will be almost impossible. So, I'll have to live off my share of the equity. I feel your frustration OP as it seems all these years of being sensible and paying our own way count for nothing. I think I'd rather buy a static caravan and live there than rent a house. At least when my circumstances improve, son is older, I can sell the caravan, get a mortgage and live happily ever after!! tongue in cheek.

People have been pointing out the unfairness of this for years. So now you're paying attention because it's about to affect you?

Yes, it's shit. And has been for years.

@RandomLondoner

Not for Tax Credits so you can have 2 neighbours one with 20k savings being refused UC and one with 50k receiving Tax Credits.

Tax credits aren't for people who have no income from working, which is why I was careful to put that in. (At that point I assumed OP wasn't working herself.)

It's true that there's an inconsistency between tax credits and UC for working people, but that inconsistency is only a short-term thing caused by the need to phase in UC. I don't see any logical reason why working people should have more generous benefits rules than people who are in a worse position.

Tax credits only came into existence fairly recently, relative to the rest of the benefits system, so it's less surprising if the rules for that group of people need to change. (Although I have heard that there were benefits for working people before tax credits, which surprised me. I'd be interested to know how generous those were, and if they had a means test.)

Child Tax Credits are paid to people who don’t work, whatever their savings, and there are inconsistencies between these and UC.

Working Tax Credit can be paid to people who are employed but on the sick with no income from employment, for a limited period.

Tax credits were introduced in 2003 and UC will take at least until 2023 to roll out completely so not too short term.

Before UC means tested Income Support could be paid to some working people and before Tax Credits there was a benefit called Family Income Supplement for working parents which was also means tested.

All old benefits were more generous particularly contribution based. For example 20 years ago the old invalidity benefit could pay more than the current employment support allowance actually pays now as it was linked to earnings and included dependants. And as a pp mentioned they didn’t deduct any of it if you had a pension.

Benefits are a minefield, social security law is ridiculously complex.