Universal Credit - how can this be right?

[beentheretoo]

I’ll admit I know very little about Universal Credit apart from what you hear on the news thankfully (touch wood) never had to claim).

A friend recently got a new job 2 days a week I congratulated her and said it’s the type of job they are always looking for people I bet they’ll be offering you more days in no time. She then said oh I don’t want more days it’ll affect my UC, I’m allowed to work up to 16 hours before they take money off me and besides I’m really looking forward to having 3 days to myself once the kids are back in school. She’s a single parent her DH left her when she was a SAHM she was on full UC for a bit then had another PT job now this new one (she has a degree but doesn’t want to go back into that field).

I was thinking about it how can they be right that if you work 16 hours you get full UC but if you work 20 you get money taken away? Where’s the incentive to work more hours? My friends DC are older so doesn’t need childcare and I’m sure loads of people would love 3 days to themselves I bloody would.

Am I getting it correct then?

@Ylvamoon

Anyone who thinks they can save ££££ on benefits needs to think again. They either receive to much or (more likely) have a distorted view of the cost of living v benefits entitlement. Yes, some single parents seem to get "a lot" but this time will pass... and then? How much will a single adult in their 50's actually get?

That is part of the problem though. There should be more to reward parents of children under 12 who go back to work because otherwise there's a good chance they'll be out of work or working minimal hours for 12 or more years, and much less likely to have good options later.

In Scandinavia the heavily subsidised childcare means that the vast majority of single parents work, it's better for everyone in the longer term.

Well perhaps this is what needs to change. Women by default are usually single parents who take time off work. Getting maternity leave almost right is not enough. We support women to gave children but not to raise them. Childcare should be heavily subsidised to aid equality and the economy. Women opting back into work should be supported and not vilified.

Unless you are a two parent family it is so difficult, with so many barriers in place to hinder instead of help. Fix the maintenance system as well so non resident parents aren't paying £5 a week or having huge levels of debt forgiven without the consultation of the resident parent.

People may complain about helping families in this way but they also complain about parents not working because of the lack of financial incentives. Well surely a government and work culture that supports parents and keeps them in work by understanding the needs of parents and paying fair wages is best for everyone. It means skills are not lost due to workers staying home for ages, more working adults and better prospects and living standards for everyone.

I don't understand this attitude of begrudging anyone a good standard of living. If you are working all hours and barely breaking even - the problem is not someone receiving benefits, it's employers exploiting employees and paying low wages.

@May17th,you response makes no sense as I was responding to someone who was staring that people in benefits should be able to save to become owners, those happy to rent are clearly not included in this statement.

Gold star for having worked FT all my life even when single with 3 kids? No, a choice and one that allowed me to become a home owner which I couldn't have done otherwise.

Many people who work full time can't become home owners anymore. That's what's absurd
I agree with that although there are often other issues at stake, but I do agree. I hope the 5% deposit will change this for many.

When it's a mother with a partner, being a sahm is considered such a gruelling full on job it's a struggle to do housework, let alone diy etc. But a single parent is a lazy scrounging fucker if they can't do a ft job on top of all of all of that
I don't think these are the same people. I personally think that being a sahm is a privilege. Good for those who can afford to do so and are not worried for their future.

Yet because I work ft I'm entitled to a 'reward' in the way of buying a house? Confusing!
Obviously not immediately, it can take years (12 for me), and it might start with a small flat, but you are certainly much more likely to get there if you work FT once the kids are out of childcare and hopefully you go up the ladder, if only one step.

Childcare should be heavily subsidised to aid equality and the economy. Women opting back into work should be supported and not vilified
In France, kids can start school, is. fully subsidised from 2. The day doesn't finish until 4:30, then 5pm, with cheap after-school clubs.

The problem, as it's been shared here, is mothers don't want to leave their kids in FT childcare with the belief that those who do are cruel mothers, so it's a catch 22.

I have interviewed a number of women for FT roles asking if it was possible to work 16 to 20 hours and no more because they don't want to work FT but still want enough of an income to have a decent life.

If the employer can offer her more hours then they can cut them right back to basic hours with no notice whatsoever. Your friend is being sensible- she has children to take care of and housing and bills to pay for and can’t afford to be shafted at a later date because there’s a sizeable gap between her wages and her UC. I was the same when working part time and on tax credits in the past- I never did overtime because I didn’t want to be out of pocket at a later date.

No they aren't correct, they are confusing it with the old tax credit rules (but still incorrectly). UC is based on your monthly earnings not your number of hours and it pays you to work, the more she does the more she will earn up to quite a substantial amount. Yes they deduct some but not all, so she will get what she earns plus the UC top up on top for every £1 she earns. Fair enough if she's a single parent though, she's getting some time to herself but she is worse of as a result. Her choice. Under tax credits you had to work 16 hours to get help but it was often pointless doing much more as you'd end up with the same income but doing more work.

@midnightstar66

No they aren't correct, they are confusing it with the old tax credit rules (but still incorrectly). UC is based on your monthly earnings not your number of hours and it pays you to work, the more she does the more she will earn up to quite a substantial amount. Yes they deduct some but not all, so she will get what she earns plus the UC top up on top for every £1 she earns. Fair enough if she's a single parent though, she's getting some time to herself but she is worse of as a result. Her choice. Under tax credits you had to work 16 hours to get help but it was often pointless doing much more as you'd end up with the same income but doing more work.

We've gone through this with worked examples o this thread a few times.

Even on UC, you do not keep nearly enough of the additional income to make it worthwhile. The effective marginal rate is over 75% after tax and taper rate.

@dontdisturbmenow how can you say that it's the parents fault subsidised childcare wouldn't work? The situation is that many parents in the UK do put their DC in full time childcare, or they can't afford to even with the help offered because full time childcare is so expensive.

It's very sweeping to assume that people would still not work if those barriers were removed. You can't compare that to choosing option A if Option A is staying at home with your DC or option B is putting them into FT childcare to work longer hours but not seeing any financial benefit and possibly being even worse off.

Even on UC, you do not keep nearly enough of the additional income to make it worthwhile
Any extra is worthwhile when you don't consider OT work to be the status quo and benefits to just be a necessary stepping stone. That's why UC changed these rules. Too many making a choice of working PT because they felt they should have much more, immediately, to do what should be standard and what indeed many others do without complaining.

I have interviewed a number of women for FT roles asking if it was possible to work 16 to 20 hours and no more because they don't want to work FT but still want enough of an income to have a decent life

It is their prerogative to seek this, and also, how do you know that it's not because those women will see no financial benefit to working full time as it has been pointed out many times here that that can be the case.

Ah so in your eyes the statua quo of working 40 - 50 hours is a universal expectation everyone should hold up as the best practice, even though flexible working has shown to be beneficial to productivity and employee loyalty?

Even on UC, you do not keep nearly enough of the additional income to make it worthwhile. The effective marginal rate is over 75% after tax and taper rate.

That depends on individual circumstances. If you don't have childcare or travel costs then it's still more spare money. Who's to say what's worthwhile? The person in the OP doesn't feel it is and as I said that's fine. personally I prefer to be out at work than being at home on my own, before I got my job I did what I do now voluntarily so even a little bit of extra money still makes that worthwhile.

@dontdisturbmenow

Even on UC, you do not keep nearly enough of the additional income to make it worthwhile Any extra is worthwhile when you don't consider OT work to be the status quo and benefits to just be a necessary stepping stone. That's why UC changed these rules. Too many making a choice of working PT because they felt they should have much more, immediately, to do what should be standard and what indeed many others do without complaining.

I work 28 hours a week. I really don't understand the views some people have that working an extra 9 hours a week will suddenly make me a better person.

@dontdisturbmenow

Even on UC, you do not keep nearly enough of the additional income to make it worthwhile Any extra is worthwhile when you don't consider OT work to be the status quo and benefits to just be a necessary stepping stone. That's why UC changed these rules. Too many making a choice of working PT because they felt they should have much more, immediately, to do what should be standard and what indeed many others do without complaining.

We'll have to agree to disagree then, because there is absolutely no way I would work extra hours for 1/4 of my nominal hourly rate.....unless I stuffed the entire amount in my pension so I got to keep it.

@midnightstar66

Even on UC, you do not keep nearly enough of the additional income to make it worthwhile. The effective marginal rate is over 75% after tax and taper rate.

That depends on individual circumstances. If you don't have childcare or travel costs then it's still more spare money. Who's to say what's worthwhile? The person in the OP doesn't feel it is and as I said that's fine. personally I prefer to be out at work than being at home on my own, before I got my job I did what I do now voluntarily so even a little bit of extra money still makes that worthwhile.

Each to their own. I would derive more satisfaction by earning the trading income allowance tax free, flipping stuff on eBay or Facebook marketplace then bothering with highly marginally taxed additional hours on minimum wage work.

Or learning to spreadbet and earn an unlimited tax free income or something else. Anything but the indignity of ending up with a pittance in your pocket for all that extra work.

I work 28 hours a week. I really don't understand the views some people have that working an extra 9 hours a week will suddenly make me a better person.

To add I don't work full time, that would hit me with significant childcare costs and I agree would absolutely not be worthwhile but i do find for myself, working 25 hours rather than 16 even though it's for a pretty crap hourly rate is worthwhile.

We'll have to agree to disagree then, because there is absolutely no way I would work extra hours for 1/4 of my nominal hourly rate

There's no need to agree or disagree, just accept that everyone's circumstances are different. Just because it suits me doesn't mean it suits you, or the subject of the OP who I stated in my initial post, is perfectly within her rights to make that choice for herself

Incidentally the work allowances have been much reduced since inception. Iain Duncan Smith originally envisaged work allowances for everyone. And the taper has also reduced slightly from 65% to 63%.

www.entitledto.co.uk/help/Work-allowance-Universal-Credit
(See footnotes)

... child care in the UK is subsidised.
Maybe not to the extent some posters like to see, but there is a childcare element that can be claimed.

The bigger issue is that "going to work" costs money and time. There is a sense of entertainment for benefits and spending time with your children while they are young. I don't know anyone that didn't struggle financially while their DC were little through childcare cost (either paying out or loss of income).
There are some strange calculations on here where posters claim that money that is earned is taken away from the benefits entertainment.

No it's not, you earn money, you have to support yourself with that earned money.

@Ylvamoon

Semi subsidised.

My child receives 30 free hours- but these have to be stretched across 50 weeks of the year.

When that’s been done, the relative value is deducted from his fees.
For my DS, that’s around £500pcm outstanding. He’s there 4 days a week. Full time would be over £700pcm.

Yes I can claim childcare fees through universal credit. Generally these come in around 50% of what I pay. I’m lucky. The reason I get 50% and not 85% is because I’m on a “good salary”.

But by no means is EY provision adequately subsidised for FT working parents.

I’m not sure about the working of the uc but she must be living on a strict budget.
If she’s a single mum as well as working she is looking after her home and her children mostly on her own.
If she values a bit of time to herself over earning a lot more money I think that is up to her.

At the tax payers expense?! The attitude seriously pisses me off. I work full time, have a young daughter, run a home and care for my partner who is extremely ill and bed bound. Why am I finding her 'time to herself'?

Not sure how UC works but I know back when I was on the old system, I worked part time and as a single parent got WTC and CTC top ups. When I looked into going full time, I would have actually been worse off financially, plus have all the headaches of child dare etc.

@UhtredRagnarson

Because 6k is, excuse the language, fuck all in the context of buying a house thanks to the other problem - house price inflation. Punishing people by reducing their income for trying to save to escape isn't going to help social mobility and adds to the disenfranchisement.

It's by design.

This.

I get £438 per month from UC towards my rent. If I can’t save whilst on UC I can never get a mortgage. Never. So that £438 per month is a continuing cost to the government of housing me. Whereas if I am allowed to save a deposit for a mortgage the government will then be saving that £438 per month. Does that not make sense?

I would very happily accept my savings being ringfenced and locked in like the help to buy ISA scheme if UC would allow such a system. They won’t.

Benefits are not there to help claimants build up assets. They are a bare minimum safety net. Would you give the cost of your deposit and associated inflation back to the taxpayer when disposing that asset? Yes this situation creates a cycle of dependency, which is also not good, but the idea is that money goes straight back into the economy, even if it is on your landlords mortgage.

@UhtredRagnarson

I tried to post this earlier but Mn went down for a while and my post hasn’t been saved.

I did some calculations on entitled to for a single parent on minimum wage with one child under 3 in my area. I used the nearest nursery’s rate of £35 per day (no reduction for using more days) and travel cost of £8/day.

Basically it worked out as follows that with take home + UC minus childcare and travel

Working 7.5 hours you’re left with £288.29 a week

Working 16 hours you’re left with £317.66 a week

Working 25 hours you’re left with £331.88 a week

Working 35 hours you’re left with £329.01 a week.

So you’re actually taking home less money working 35 hours a week than you are working 25 hours a week.

The financial difference between working 7.5 hours and 35 hours is £40.72. So for working those extra 27.5 hours you are essentially working for £1.48 an hour.

And this is only with one child and without taking into account the council tax/rates Reba the reductions.

I can see why people don’t see the point in working more.

I can also assure those frothing at the idea that I am stashing away all my UC to buy a house that I am not. They don’t pay enough to enable me to I’m sure that will make you very happy to know.

You’ve missed the point that so many have made. Choose to work 7.5 hours and you warnings never grow. Choose to work full time and you could earn double eventually although the latter route is harder. But good things never come easy. Short term thinking vs long term reward.

So you're happy for tax payers money to end up paying for the assets of leveraged landlords, where the claimant is just a proxy to do this?

But not for the claimant themselves to save any money in order to eventually make society more equitable?

Smart thinking there. You should be employed in a right wing think tank.