To think that universal credit wrongly penalises...

[User78890]

Posted a while ago about universal credit and savings... I can't get my head around it.

The rules are that above 6k you get deductions to your claim. The more you save, the more that gets deducted. 16k or above means that you cannot claim.

I am (hopefully) going to be training for a profession for a few years which will be a low wage. I'll have to rely on universal credit as my wage wouldn't cover childcare costs on top of everything else. But where does this leave those who want to save for a mortgage?

Surely anyone who saves will be in a constant cycle as you will then need to use your savings to live on, claim again, and repeat.

Before anyone jumps on me, I know benefits are for those who need it, and if you have savings, yes, you are obviously not in the priority of those who need it. But, those who spunk their money or use it wrongly are unaffected. Those who are trying to better their situation and are sensible, however, are in a constant trap. We are both equally entitled to the same financial help, but one is penalised and the other isn't.

So surely you would be best of spending your money, and you will never get a mortgage (unless obviously you was to secure a higher paid job)...

Except that many people are already working and don’t need to get back on their feet. Their wages are topped up because they are too low. If they then manage to save because they are frugal, why should they lose that top up? Especially if they are saving for a house, which will ultimately save the taxpayer money.

@minnieok except that's not how it works. Many people work full time and get top ups because wages don't pay enough.

@Waxonwaxoff0

Some people on this thread are actually pretty ignorant. Many people can't just "get a better job" as they're not capable of that. All these low paid jobs - carers, supermarket staff, cleaning jobs - somebody has to do them.

Quite. But unfortunately that just means these people won't be buying a house.

@ChickenwingChickenwing yes, I understand that. It's the benefit bashing here that's getting my goat, "relying on tax payer money" "get a better paid job" as if it's that simple.

I agree with you OP. There are third generations of benefit claimants who have never worked, but when you try and make a long term plans do you aren’t reliant on the benefits system you are penalised.

I agree with a welfare system, people should have something to fall back on whilst there’s temporary blips or re-training etc. But they shouldn’t be seen as a lifestyle choice and people such as yourself should not be penalised.

If their UC tops them up enough to save for a deposit and they can then cover the mortgage, why shouldn’t they get a house?

(That was to @ChickenwingChickenwing.)

@MrsTerryPratchett

The whole system is stupid.

We shouldn't be paying people wages below a living wage and then having the government top it up. Madness.

Buying a house isn't aspirational and isn't the best way to live, if we had this attitude we could be like all the civilised countries and treat renting as a valid choice. Legislate it properly, have long leases and secure renting. Make it a stable and safe affordable option.

But no, benefits should be for topping up in case of emergency or more in case of people with a disability. Not to fund people buying houses (except in case of people with a disability). If you're saving to buy a house, maybe you don't need benefits. I know it's frustrating in the current stupid system but there it is.

This.

There is already an attitude in the UK of house-buying being a moral achievement (or a human right, but only for People Like Us), which, along with the concept of the 'property ladder', does a lot of societal damage. Effectively enshrining that in the benefits system would be outrageous.

Same as tax credits- interest on savings over £300 a year is counted as income, not the savings themselves

But UC doesn't just replace tax credits. It replaces housing benefit, Income Support, JSA and ESA as well. All those benefits had the same capital rules. It's just brought the tax credit element in line with the rest.

However, I think the capital limits need to be raised. They've been set at £6k and £16k for years and years, and haven't risen in line with inflation.

I think it is because there is only so much money to go around and the people who have low/no income and low/no savings are the ones that need the help!

@Tumbleweed101

I do think it's silly that a sensible person putting money away is penalised over someone spending it all. Remember UC is for working people in full time jobs who happen to not be getting the living wage for all their long hours as well as people who aren't working at all. Why should those working hard be looked down on as if they are scroungers? During the pandemic I was counted as an essential key worker but my wage is still below the living wage and my family survives on tax credit top ups. Apparently I - and many like me - aren't essential enough to deserve some savings to help their lives run smoothly in harder times.

You should be able to save if you want to and are able to. If i choose to only eat beans on toast for a month and put the rest I'd spend on other food away I should be able to do this and not have the assumption I am profiteering.

Also the rent element of UC is probably one of the largest parts of the payment, especially with private rents over £1k in many areas. It would make sense for more people to be able to buy if they choose rather than putting it into the pockets of private landlords.

Yes, this exactly! If I choose to rent in a less desired area than my friend 'sue', I choose to stay in while said friend chooses to spend her extra money on nights out, I choose to have no Internet or phone contract whilst Sue does.. MN's are happy to fund it. But if you are to scimp and save and live off very little, you are 'entitled' and a benefit scrounger 🧐 despite the fact that if you are working full time, with childcare costs, you would be better off working part time and contributing less in tax.

@Waxonwaxoff0 100% agree. If it wasn't for childcare, graduate salaries are liveable.

When you have just graduated with little experience, you are not going to walk into a job paying £40k, although MN seems to think anyone can secure a job like this overnight. Good professions take years of training and working up, I cannot magically jump this stage.

The issue isn't Universal Credit, it's that a single wage is often not enough to live on, especially if you have a family.

My wage is less than average but above minimum and I rely on Universal Credit to top up my rent and childcare. I physically can't work any more hours and unless I want to cram my son and I into a smaller place there is little leway for us to save money.

I hate relying on UC. I'd be much happier if my wage covered the cost of living, I am penalised from every direction. Even when I become better qualified and my pay goes up, I won't see the benefit in the same way someone without UC would - because they'll deduct 63p for every extra £ I earn, any bonuses I receive at work are deducted from UC in the same way. I even overpaid tax before I claimed UC and because I received the rebate after my claim, they deducted it from my entitlement.

It's a horrible, unfair system if you are working and I imagine not much better if you are unemployed.

@WALKING2 yes but it IS those people getting help. If you are working on a low wage, you are still entitled to some help, albeit far less than if you were unemployed.

A large proportion of people don't seem to acknowledge that UC is designed such that there is a working allowance. If you are a single parent for instance you are able to keep around £300 of your income without it affecting your universal credit!

I think other have also backed me up on this so please read. Not everyone on UC is eating from the bins and drinking from the rivers. If you think this is the case, please do some volunteering with a benefits agency because you will soon learn different

@FlatShite it is totally unfair and it is an issue with low wages I agree. It is the same if you are a student, it is deducted £ for £ and so you are expected to like of £10k a year.

But according to MN this is entitled.

@User78890

Wow so aggressive! You also make assumptions. I don't believe the things you have said. You don't know anything about me or what I do .
There is only so much money to go around and one way of deciding who gets what us having a savings cap. It is unfair that those still on tac credits have no limit on savings but that will gradually change.
Enjoy your day.

Eating from bins and drinking from the rivers so much drama because you aren't able to claim if you have over £16,000 in savings ...oh well so what.

It is quite scary the entitlement of some people, wanting tax-payers money in benefits so u haven’t got to spend your own. Whilst most tax is paid by high earners it is also paid by people on lower incomes who earn just a little too much to be in receipt of any help themselves. These include people who are working 12 hour shifts and rarely get a day off with their family. People who can only dream of retraining or saving for a house deposit. And now you want these people to fund your house deposit?

@User78890 you keep saying your wages will pay your mortgage deposit, not your uc. But thr point you're missing here is that you are only able to use your wages to save as uc are paying your childcare costs, if you weren't getting uc you'd be paying the childcare costs out of your wages and be unable to save for the mortgage. So, regardless of whether you save the money from your actual wages, you're able to save because of your uc, so your uc are being used by you so you can save.
All that said, I do think it's OK to save (if you are able to) when on benefits for a deposit, but to a limit of say 20k. I mean really if you wanted to risk it you could have the money in your home, rather than a bank account, and not be affected 🤔

[quote User78890]@Waxonwaxoff0 100% agree. If it wasn't for childcare, graduate salaries are liveable.

When you have just graduated with little experience, you are not going to walk into a job paying £40k, although MN seems to think anyone can secure a job like this overnight. Good professions take years of training and working up, I cannot magically jump this stage.[/quote]
That's why condoms exist.

Maybe people should start thinking before having kids about financial implications of it. If you want a house, obviously it will be harder with a child costs. That's why many of us wait with kids until we are financially sound.

@penguinIce but answer this for me please.

Friend 1 and friend 2 both work full time, both single parents receiving top up of £200. Friend 1 lives in a less desireable place to get cheaper rent. Friend 2 chooses to spend more on a more desireable area. Friend 1 lives doesn't have Internet, phone and doesn't turn the heating on. Friend 2 does. Friend 1 doesn't socialise much, friend 2 choses to go out once a week, spending £50 a night. Both friends entitled to the same among of UC, the same amount of tax payers money.

But... Friend 1 is seen as entitled, friend 2 is not, friend 1 is a benefit scrounger for saving, friend 2 is not.

I'm not saying either is right or wrong, and perhaps you believe there should be no work allowance so people on low wages are not better off working, but that is the way universal credit have made it. That is not an issue to throw onto its claiments.

If friend 1 saves the £200 each month that friend 2 spends, after 3 years they receive deductions based on capital. Friend 2 continues to receive the full amount. Whether you spend or save it, you are paying for ones savings or for ones life choices.

Benefits aren't given to give people a leg up above the rest of us that have trained or grafted and work full Time and have to save for things in life. They are a safety net to ensure a minimum standards in quality of life that many now abuse and think is an entitlement.

There isn't an endless pot of free money to dole out to people. I think from some post here getting £800 top up is significant amount of money and yet people want more so they can save some of it too?

The real issue is that jobs should pay enough in the first place. A company shouldn't be able to pay lesser wages and make a profit with the tax payer picking up the rest of their employees bill.

And you certainly shouldn't be able to save 16k alongside getting benefits. Wouldn't we all have liked a bit of free government money to put away for a rainy day or house deposit?

@Hahaha88 apologies, I do understand that completely. I think either way, yes, those on universal credit and employed are still going to be living off tax payers money even if it is a very small amount. But UC has been fundamentally designed so that you can keep some of your wages and universal credit will contribute, so that you work out better off. Say you get a job, you will at the very least be around £200 better off than when solely relying on benefits, it's just down to the claiment on what they do with this.

Uc is designed as a safety net to pay for the bare essentials. The amount of uc received is directly related to the exact rent and then to cover the absolute essentials nothing more.

It is not designed to facilitate retraining or the decision to have children before progressing in a career

In your example ... all it does is confirm the belief that the top up is too generous in both cases.

@Dishwashersaurous couldn't have put it better myself