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)...

@Babyroobs I can’t lie I’m hoping I’m one of those people obviously nobody wants to be in a worse position I’m still on the old style. Thanks for the response.

@kerkyra

Tax credits dont take into account your incomings and outgoings. My mortgage used to be nearly £900 a month but since I downsized considerably (tiny terrace) it's now just over 200. Tax credits have not changed. They also dont take into account any maintanance from non resident parent. So yes,things need to change. Also,think I'm right in saying 30% of students do not get a c grade in maths. So there alot of young people now on minimum wage. My son for one who works about 40 hours a week for a thousand pounds. It's tough for alot of people.

UC also does not take Child maintenance into account.

It isn't a particularly intelligent system that disincentivises saving for a house deposit, and thus makes it more likely that the individual will continue to rent and be entitled to support for housing costs.

[quote Neversayn1]@Babyroobs I can’t lie I’m hoping I’m one of those people obviously nobody wants to be in a worse position I’m still on the old style. Thanks for the response.[/quote]
I do worry for all those people about to lose their jobs and end up on UC. there will be a lot who can't claim it due to savings, and like I said if you have no earnings and no kids UC is a pretty dire amount to try to live off.

Taking away from OP’s choices yes you are in a trap

I was at one point doing 70 hours a week working and at the end of the period of time I essentially took home no more than I was already. So say you earn £1000 and claim £700 tax credit, what happens is you earn £1500 and then you get £200 tax credit (or UC) which is £1700 both ways.

To earn yourself out of UC you need to earn about £35k pa or find someone to share finances with.

I have never been able to save: I’ve been able to have a budget but comfortable life so far. When DC leave home I’m on my own with no support so I do not blame anyone for taking a low salary for a short time to train in pursuit of a higher one further down the line.

You are going to need it

And for anyone who loses their job now and has a mortgage to pay and has to go onto UC, they are in a very bad situation because if no-one on the claim is working and therefore you don't benefit from the higher work allowance, there is absolutely no help with paying your mortgage for the first nine months on UC. I think the government are seriously going to have to review this if mass redundancies start happening when furlough ends or there's tragically going to be a lot of homeless families. I do believe we are facing a crisis on scale never seen before unfortunately

I don’t think UC was ever created for people who had mortgages. It made a huge assumption that the economy would be great forever and people who owned a house wouldn’t need it.

Most of the UC rent element they claim is going to pay for often extortionate private rent to pay off the mortgage on someone else's buy to let property.

Absolutely. This is the root of the problem.

I think the government are seriously going to have to review this if mass redundancies start happening when furlough ends or there's tragically going to be a lot of homeless families. I do believe we are facing a crisis on scale never seen before unfortunately

Yep

Those homes will go to wealthy BTL owners and as demand will be huge the rents will be huge too. People will be paying double or triple in rent what they paid on a mortgage to live in the same house and UC will have to pay a big chunk of that. It’s a very shortsighted system.

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?

You need to put that into some perspective. There is no political will to ensure child maintenance is paid. I have supported 3 children now for over 10 years. All of them required wrap around care for many years at the same time. My childcare bills used to top £800 a month. When I first started teaching, I was on £1.2k a month. Without the top up, I would have been unable to pay a mortage/rent and my basic bills let alone fund a car that would get me to work and back. Eating would have become a thing of the past and I certainly wouldn't have been able to fund essentials such as insurance. Sure, it's a lot of money - but if we are saying that people at the bottom of a career rung or those in lower paid jobs can't have top ups, there are many people out there who would struggle to work. There would be a knock on effect on society - more people on the streets, rising crime levels, potentially gated communities with guards as you see in some developing countries.

Of course, it would be better if we had perspective and wages were living wages that didn't need top ups. But in the meantime, it is what it is. People do need the support to be productive members of society.

Babyroobs you are right. I calculated all this based on some typical scenarios when I did my MA. I don't have the figures to hand but it works out better long term for UC to give a bit of a break to people saving for a deposit or studying for a degree as these people will have significantly reduced benefit dependency in future, as will their children. Keeping people in a cycle of low paid work and crappy rentals when a little help (like the old tax credits) would allow huge self improvement is ridiculous. It's not a race to the bottom where people should be punished for needing help. Obviously there will be some who take advantage unfairly but that will always be the case in any system (see tax evasion by big companies) generally though the social contract should be that are helped to move out of poverty and dependency and in return you behave responsibly and respectfully to the help you get and pay it forward when you are in a position to.

there is absolutely no help with paying your mortgage for the first nine months on UC. I think the government are seriously going to have to review this if mass redundancies start happening when furlough ends or there's tragically going to be a lot of homeless families.

Homelessness has been rising since UC's introduction. The privately renting sector have been hard hit. The government's done nothing. I can't see a Tory government reviewing this to pay the mortgages of people on UC; they'd rather pay the mortgages of BTL landlords than that. Plus, they've borrowed to the hilt.

@Smallsteps88

I think the government are seriously going to have to review this if mass redundancies start happening when furlough ends or there's tragically going to be a lot of homeless families. I do believe we are facing a crisis on scale never seen before unfortunately

Yep

Those homes will go to wealthy BTL owners and as demand will be huge the rents will be huge too. People will be paying double or triple in rent what they paid on a mortgage to live in the same house and UC will have to pay a big chunk of that. It’s a very shortsighted system.

It's a huge worry. I think the government will have to revise the help with mortgage interest scheme as a matter of urgency to help keep families in their homes. As you say they will not be able to pay huge rent elements on UC to millions of people.

@Batshitbeautycosmeticsltd

there is absolutely no help with paying your mortgage for the first nine months on UC. I think the government are seriously going to have to review this if mass redundancies start happening when furlough ends or there's tragically going to be a lot of homeless families.

Homelessness has been rising since UC's introduction. The privately renting sector have been hard hit. The government's done nothing. I can't see a Tory government reviewing this to pay the mortgages of people on UC; they'd rather pay the mortgages of BTL landlords than that. Plus, they've borrowed to the hilt.

It's a massive worry what could happen to the benefit system in the next few years.

They'll probably just bring eligibility for the mortgage loan forward so you don't have to wait 9 months. What else would be 'fair'?

@Enoughnowstop

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?

You need to put that into some perspective. There is no political will to ensure child maintenance is paid. I have supported 3 children now for over 10 years. All of them required wrap around care for many years at the same time. My childcare bills used to top £800 a month. When I first started teaching, I was on £1.2k a month. Without the top up, I would have been unable to pay a mortage/rent and my basic bills let alone fund a car that would get me to work and back. Eating would have become a thing of the past and I certainly wouldn't have been able to fund essentials such as insurance. Sure, it's a lot of money - but if we are saying that people at the bottom of a career rung or those in lower paid jobs can't have top ups, there are many people out there who would struggle to work. There would be a knock on effect on society - more people on the streets, rising crime levels, potentially gated communities with guards as you see in some developing countries.

Of course, it would be better if we had perspective and wages were living wages that didn't need top ups. But in the meantime, it is what it is. People do need the support to be productive members of society.

I’ve glad you broke it down for that poster. Are people that thick? You can’t live off of £1200 a month with kids and be paying full rent and ct it’s ridiculous

Not to mention childcare so you can actually maintain your job FFS.

Sorry, I’m I reading this right?

You think you should be able to save for a mortgage whilst claiming benefits, benefits which are designed to help people in need, not to help people save up towards their deposit!

If you can afford to save, you don’t need UC.

@Floralbean

They'll probably just bring eligibility for the mortgage loan forward so you don't have to wait 9 months. What else would be 'fair'?

Yes hopefully they will. I think they reduced it to about 3 months wait when we were in a recession before so hopefully can do that again. So many people have no mortgage protection insurance.

For everyone saying that UC is a survival benefit, that’s really not how it works. It isn’t used by people who are in dire straights until they get on the straight and narrow, it is used by the millions of people who earn minimum wage often on zero hour contracts.

Women who have become single parents who put their careers on hold to have DC will always struggle. In the U.K. it’s been the case for a very long time that women alone with children have poor earning potential. There are also a lot of 2 parent families who couldn’t manage without it either

It is not realistic that everyone or even a fraction of the population in the U.K. is going to be able to physically earn £40k per year in their lifetime, and even if they did, they would probably only be able to do that by living nearer the South East which is in turn very expensive.

For instance even if a 2 parent family both the adults worked 40 hour weeks in Tescos, they would still only earn about £18k a year each.

Before the pandemic I would look at jobs all the time and pretty much most of the salaries were around £25,000 for a full time job. The average rent in the U.K. is £925 per month. This would be 55% of someone salary going on rent alone. This is why people can’t manage.

Your mortgage lender won’t lend you that much but you are expected to find it in rent or you have to claim for help.

I’ve glad you broke it down for that poster. Are people that thick? You can’t live off of £1200 a month with kids and be paying full rent and ct it’s ridiculous grin

Not to mention childcare so you can actually maintain your job FFS.

This.

37.5h/w NMW = take home £1267
Full time childcare for 2 DC £1300

I suppose that problem sorts itself out when the children die of starvation and no longer need childcare.

A survival benefit doesn’t mean short term. A survival benefit means people couldn’t survive without it.

@SchrodingersImmigrant Well people who have mortgage or live with parents don't rent so. You aree both right... yes but babyroobs completely missed my point to another poster, which was that thousands of UC claimants do not claim rent and council tax support.

[quote AldiAisleofCrap]**@SchrodingersImmigrant* Well people who have mortgage or live with parents don't rent so. You aree both right...* yes but babyroobs completely missed my point to another poster, which was that thousands of UC claimants do not claim rent and council tax support.[/quote]
Apologies.

@Smallsteps88 I hope the people with lame views read your example. Your absolutely right.

It doesn’t mean we SHOULD be living on the bread line why the hell should it? I earn a decent hourly rate I just have lack of childcare and that’s just how it is until my DS gets older.

It doesn’t necessarily mean you should be on the breadline, but if universal credit were much more generous, it would have to be given to many more working people who currently don’t receive it. I can’t see the government going for that.

The person who was getting £800 and complaining was doing so because they wanted to keep 20 grand they were about to inherit.

I don’t see an ethical difference between someone inheriting an extra 20 grand in a year and someone earning an extra 20 grand in a year. Why should one have benefits cut and not the other?

I may end up in that position myself, as I get universal credit and have elderly parents. I wouldn’t expect to get a lump sum and claim the same benefits.

I would prefer that the U.K. had free childcare and social housing. Then we wouldn’t be arguing over people getting these sums.